Foreign Relations of the United States, 1977–1980 Volume XXIV, South America; Latin America Region

310. Memorandum From Robert Pastor of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)¹

Washington, May 8, 1978

SUBJECT

• Peruvian Consultations

You will recall that the President changed the letter which we drafted for him to send to Morales Bermudez to read that he would “consult closely” with the Secretaries of State and Treasury “to assure maximum cooperation between our governments”.² Given the importance of Peru’s financial problems to U.S.-Peruvian relations and also given the President’s addition to the letter, I have kept abreast of Foreign Minister de la Puente’s meetings with Mrs. Carter and today with Secretary Vance.³ I had planned to attend his meeting with Secretary Blumenthal tomorrow, but I have been informed⁴ by Treasury officials that no one outside the Department will be permitted to sit in on the meeting. I think this is a mistaken precedent; if the NSC is going to help coordinate the President’s policy, then it is important for us to ensure that there is consistency in approach between the White House and the Departments on important matters such as this.

The meeting is scheduled for 10:00 a.m., Tuesday, May 11, but I think the significance of Secretary Blumenthal’s decision to exclude other agencies is sufficiently important that if you cannot or do not wish to be in touch with him before this meeting, you would want to raise it at some future time.⁵

As to the substance of the meetings, I noted that de la Puente’s appearance had changed rather dramatically from last Friday when he made an emotive, political appeal to Mrs. Carter for help. Yesterday, Dick Cooper and John Bushnell hammered him for his country’s fiscal irresponsibility,⁶ and he was unquestionably shaken by the directness of their arguments. Today, with Secretary Vance, he was much more reticent, and did not make nearly as strong a case as he had on Friday.⁷ Still, he told Secretary Vance that his team was negotiating a statement, which the IMF would (hopefully) issue to the private banks informing them that Peru’s program was satisfactory. De la Puente said that he had spoken to Morales Bermudez, who agreed to all of the measures demanded by the IMF except the increase in the oil price. (It is unclear whether the Peruvians have accepted the IMF’s stringent conditions.)

De la Puente also said that an executive from Occidental Petroleum had asked Wells Fargo to advance $25 million to Peru to be paid back with local currency. This would permit Peru to last until after the elections in June. Secretary Vance said that “we will use our good offices with the IMF to the extent permissible, as we have done in the past”. De la Puente also said that his country would defer the purchase of two German submarines and two Dutch frigates.

In discussions about the non-aligned movement, de la Puente said that he had received an invitation to attend the NAM, but he had some reservations. Secretary Vance encouraged de la Puente to go. De la Puente said that he had been in touch with the Egyptian and Yugoslavian Foreign Ministries, and they plus the Indians are eager to try to get the NAM to “return to the original principles”. He said that if Egypt initiates the discussion about Cuba’s activities in Africa, Peru would support them. But he said that it would be difficult for Peru or other Latin American countries to initiate such a discussion without being branded a surrogate of the U.S. De la Puente said that Boumedienne of Algeria had sent a special representative to Peru to voice Algeria’s concern about Cuban involvement in Africa.⁸

After the meeting with de la Puente, I had a long conversation with our Ambassador, Harry Shlaudeman and John Bushnell, about what to do with regard to Peru’s request for some FMS credits. We agreed that it would be inappropriate at this time to approve such credits, but the issues are quite complicated (relating to Peru’s purchase of submarines and frigates), and we decided that the best way to proceed would be for me to float in very indirect terms a question with de la Puente about whether, in the light of Peru’s extreme financial problem, they would consider withdrawing their request at this time. In the meantime, we will defer a decision. I will float this question at a dinner at the Peruvian Embassy this evening.⁹

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 64, Peru, 1/77-12/79. Confidential. Copies were sent to Erb and Denend. Bartholomew and Inderfurth initialed the top right-hand corner of the memorandum.
2. Pastor inserted the phrase “Tab A” at the end of this sentence. A copy of the paragraph with Carter’s changes is attached but not printed. The letter is printed as Document 309.
3. In telegram 120369 to Lima, May 11, the Department transmitted a report on the meeting between Vance and de la Puente. (National Archives, RG 59, Central Foreign Policy File, D780200-1214) Vance reported to Carter about his meeting with de la Puente in a May 8 memorandum: “Tomorrow de la Puente meets with Mike Blumenthal and will probably ask for U.S. help within the Fund on what appear to be stalemated negotiations. Within the bounds of our limited influence I believe we should use our good offices.” In the left-hand margin next to that sentence, Carter wrote: “They only need until 6/6/78-ok.” (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 20, Evening Reports [State], 5/78) No record of Rosalynn Carter’s meeting with de la Puente was found.
4. An unknown hand underlined the word “informed.”
5. An unknown hand underlined the phrase “would want to raise it at some future” and placed a check mark in the left-hand margin next to it. In telegram 123341 to Lima, May 15, the Department transmitted a summary of Blumenthal’s meeting with de la Puente. (National Archives, RG 59, Central Foreign Policy File, D780205-1003)
6. A record of this meeting was not found.
7. May 5.
8. An unknown hand underlined the phrases “NAM,” “Secretary Vance encouraged de la Puente to go,” “if Egypt initiates the discussion about Cuba’s activities in Africa, Peru would support them,” and “Algeria had sent a special representative to Peru to voice Algeria’s concern about Cuban involvement in Africa.” The unknown hand also placed two vertical lines in the left-hand margin next to the last sentence in the paragraph.
9. No record of this conversation was found.