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 You are in: Under Secretary for Public Diplomacy and Public Affairs > Bureau of Public Affairs > Bureau of Public Affairs: Office of the Historian > Foreign Relations of the United States > Johnson Administration > Volume XXXI
Foreign Relations, 1964-1968, Volume XXXI, South and Central America; Mexico
Released by the Office of the Historian
Documents 499-521

499. Memorandum of Conversation/1/

 

Washington, November 8, 1967, 5:15 p.m.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–1/69. Secret. Drafted by Jones and Bowdler. Copies were sent to Rostow and Oliver. The meeting was held in the President’s office and according to the President’s Daily Diary the meeting was from 5:26 to 5:36 p.m. (Johnson Library) Rostow had recommended that President Johnson meet Jones since "it would strengthen his [Jones’] hand considerably if he could say to President Belaunde that he had discussed Peruvian developments with you." (Memorandum from Rostow to the President, November 8; ibid., National Security File, Country File, Peru, Vol. III)

 

PARTICIPANTS
The President
Assistant Secretary of State Covey T. Oliver
William Bowdler—White House
American Ambassador to Peru J. Wesley Jones

 

The President asked Ambassador Jones about the situation in Peru and the chances of survival of the Belaunde Administration. Ambassador Jones replied that Peru was going through a severe financial crisis caused by balance of payment difficulties and devaluation. The crisis however was primarily fiscal and not economic, since Peru is basically sound with its free enterprise system, its natural resources and its diversification of exports. The recent devaluation of the sol had been a shock to all Peruvians, including President Belaunde. Unfortunately, he had not prepared the Peruvian people for a devaluation, but rather had assured them it would never happen. He thus had painted himself into a corner and found it difficult now to explain and rationalize to the Peruvian people the sudden drop in the value of their currency.

 

The President asked about the Mirage deal and whether the Peruvians would cancel their contract with the French. Ambassador Jones replied that on his last of many conversations he had with President Belaunde on this subject Belaunde had told him categorically, "No"; that what had been done could not be undone, and that the United States must accept this as a fact in its future relationship with his country. Nevertheless, on previous occasions President Belaunde indicated that our F–5s would be an acceptable substitute. Ambassador Jones told the President that he would like therefore to have the Northrop representative authorized to make a firm offer in writing to the Peruvian Air Force as soon as possible to include training of Peruvian pilots next year plus the delivery of some aircraft in the latter part of 1968. Once this offer had been made, Ambassador Jones would like to be authorized to go back to President Belaunde with a copy in hand and a $40 million program loan to make another try. The conditions for the $40 million would be F–5s for Mirages and improved performance in the fiscal field. Ambassador Jones confessed to the President that he was not sanguine that it would work, but he thought it was worth a try.

 

Ambassador Jones referred to the danger of a Peruvian military intervention in the Government of Peru if another devaluation, followed by increased cost of living, followed by strikes and violence were to occur. That, Jones said, was the sort of condition in which the Peruvian Military traditionally moved to take over the government.

 

The President said he had not been impressed at Punta del Este with President Belaunde. In rating him with all the other Latin Chiefs of State, he put him just above Arosemena. However, the President noted that Ambassador Jones seemed to have a good opinion of the Peruvian President. Ambassador Jones replied that he saw no alternative to the Belaunde Administration. It was important for Peru’s democratic and constitutional progress that Belaunde finish his term of office (July 1969). He was the first President in a long line of military and aristocrats to have any interest in the development of all of Peru. He was not interested just in the coast, but in developing the high sierra and the jungle as well. If Belaunde completed his term in office, he would be only the fifth President in this century to do so. Finally, a military take-over of the government was no solution to Peru’s problems. The military could not make the deficit or balance of payments problems disappear any more than a civilian government.

 

At one point in the conversation, Ambassador Jones said he would like authorization to sign some project loans on his return to Lima—loans which had been authorized in Washington but never signed. One particularly was for commercialization of agriculture which would be not only useful to the agricultural sector, but would be an evidence of United States interest for Belaunde’s administration.

 

The President asked what the next step would be if the F–5 ploy were unsuccessful. Ambassador Jones confessed that we had not yet reached that point in our thinking. Mr. Oliver said that depending upon the interpretation given the Symington amendment and the final outcome on the Conte amendment, he hoped we could continue sector and project lending, although program assistance would be out.

 

The President indicated that he thought our offer involving substitution of F–5s for Mirages did not have much chance for success but wished us luck if we wished to try.

 

Finally, as the meeting was breaking up, the President again expressed his doubts about President Belaunde and his ability and political convictions.

 

 

500. Action Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

 

Washington, November 13, 1967.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–1/69. Secret. An attached note to the President states: "Mr. Rostow asked if you could give your attention to this memo at your earliest convenience." Another note indicates that "the President called Mr. Rostow about this and talked at 2:47 p[.m.] 11–16–67." Although the President’s Daily Diary confirms that the conversation took place, no substantive record has been found. (Johnson Library)

 

SUBJECT
Peru

 

At Tab A is a memorandum from Nick Katzenbach recommending approval of talking points for Ambassador Jones on the Mirage–F–5 question./2/ The talking points have been approved by DOD (Nitze) and AID (Poats).

 

/2/ Tab A was a November 13 memorandum from Katzenbach to the President; attached but not printed. The talking points, drafted by Bowdler on November 10, presented the latest proposal to replace the existing Mirage contract with a similar agreement for F–5 fighter aircraft, including early pilot training and delivery beginning in December 1968. (Ibid., Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–1/69) In telegram 2347 from Lima, November 20, Jones proposed to avoid the aircraft issue in his conversation with Belaúnde, "as means help us evaluate future IPC impact on our overall interests here." (National Archives and Records Administration, RG 59, Central Files 1967–69, PET 6 PERU) The Department replied that discussion of the issue was left to Jones’ discretion; the program loan, however, was not to be raised without further instructions. (Telegram 73160 to Lima, November 22; ibid.)

 

Over the weekend three developments in Peru both improve and complicate the prospects for Peruvian acceptance of our F–5 offer:

 

1. Flexibility in War Minister Doig’s Attitude on Mirages.

 

Jerry O’Leary and our Chargé talked to General Doig (Reports are at Tab B)./3/ Both detected certain flexibility in his attitude toward the Mirages. Doig noted the difficulty of making a change now, but he also volunteered the precedent of the Peruvian switch from French to US helicopters in 1965. The Chargé thinks we have a fighting chance if we give the Peruvians a firm offer on F–5s.

 

/3/ Telegrams 2213 and 2215 from Lima, November 11 and 12. (Both ibid., DEF 12–5 Peru) The telegrams were retyped and forwarded to the President. (Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–1/69) Jerry O’Leary, a Washington Star correspondent, was in Lima to interview General Doig.

 

General Doig spoke warmly of General Harold Johnson to O’Leary and our Chargé. Our Chargé recommends a confidential message from General Johnson to Doig to stimulate him to reverse the Mirage decision. I am leery of any written messages, but I think Ambassador Jones could talk to General Johnson and carry an oral message. We have so suggested to Covey Oliver.

 

2. Trouble on the International Petroleum Case.

 

For the past two years, President Belaunde has skillfully wended his way through the difficult IPC case to keep his pledge to me not to impair the Company. Last summer when the opposition-controlled Congress forced his hand with a law nationalizing IPC’s oil properties, Belaunde came up with what seemed like a wise solution. He signed the law nationalizing the oil fields which IPC was willing to give up in exchange for an operating contract, but he also worked out a formula allowing IPC to continue operating and referred to the Fiscal Tribunal the controversial question of IPC past taxes.

 

This past Friday/4/—on the eve of senatorial bye-elections—Belaunde published the Fiscal Tribunal’s finding that IPC has "unjustly enriched itself" and issued two resolutions instituting judicial proceedings against IPC to recover IPC profits over the past 15 years and back taxes over the past 8 years. It is hard to see how Belaunde will be able to continue delivering on his "no impairment" pledge. But before making a final judgment, we should await Ambassador Jones’ talk with him. Belaunde understands that there is no program loan if his bargain with me is not kept.

 

/4/ November 10.

 

Politics seems to have dictated Belaunde’s action.

 

3. Belaunde Suffers Reverse in By-elections

 

An important senatorial by-election was held yesterday. Despite the grandstand play on IPC, Belaunde’s candidate is running far behind the opposition candidate. To compound Belaunde’s difficulties, the Christian Democrats announced on the eve of the elections that they were withdrawing from their alliance with Belaunde’s party. These reverses are not likely to improve Belaunde’s capacity for decision and leadership.

 

Despite the gloomy outlook, I think it is still in our interest to proceed with the F–5 offer—if Belaunde is willing to cancel the Mirage contract—and with the $40 million program loan offer—if he takes the self-help measures and finds the formula for undoing what he appears to have done to IPC. Belaunde is a weak reed to lean on but better than a de facto military junta. We should try to prop him up if he is willing to do those things which are indispensable for our support. The record should show we did everything possible, within reason, to preserve constitutional government in Peru.

 

I recommend that you approve the talking points.

 

Walt

 

Approve talking points/5/
See me

 

/5/ Neither option is checked, but a note on a copy of the Katzenbach memorandum indicates that the talking points were approved by the White House on November 17. (National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 12–5 PERU)

 

 

501. Telegram From the Embassy in Peru to the Department of State/1/

 

Lima, November 22, 1967, 2251Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, PET 6 PERU. Confidential; Immediate; Limdis.

 

2397. Ref: Lima’s 2347./2/

 

/2/ See footnote 2, Document 500.

 

1. President received me at noon today and was with him almost an hour. I reminded him I had been in Washington for week’s consultation since we had last met and felt he would be interested in report of my activities there. Said I had found in Washington great interest in Peru and sincere desire to help Belaunde administration in these present difficult moments. I was received by President Johnson same day I arrived and during subsequent days my Washington sojourn I had interviews with Secretary of State,/3/ Under Secretary Katzenbach and of course Assistant Secretary Oliver. All I had found very preoccupied by situation in Peru and especially concerned that Belaunde administration continue until end its term in July 1969 and that there be no interruption of constitutional government in Peru. As President Belaunde was aware from conversations over past nine months principal obstacle to US financial assistance had been acquisition of supersonic fighter aircraft. While I was in Washington there had been serious effort to find way to overcome this obstacle and I had been encouraged by progress made. Unfortunately almost at end of my consultations news had arrived of Peruvian government’s action on November 10 against IPC. This news was so unexpected and for me inexplicable that I had asked permission return to Peru to investigate new situation thereby created. To me it seemed I concluded that position of company had drastically worsened and that government had taken new tack in its policy La Brea y Parinas.

 

/3/ According to the Secretary’s Appointment Book Jones met Rusk at 11:45 a.m. on November 13; the Secretary’s next appointment was scheduled for 12:30 p.m. (Johnson Library) No substantive record of the meeting has been found.

 

2. Belaunde replied that recent actions involving IPC had been taken as result of moves made by opposition back in July to force his hand on this issue. He recalled that law 16674 which expropriated the La Brea y Parinas reserves, (Lima’s 133)/4/ had cancelled previous law giving him carte blanche to settle petroleum issue in any way he thought best. This law sponsored by opposition had for first time mentioned debts owed by company. Since these had to be determined he had referred matter to fiscal tribunal which was appropriate authority to determine what if any debts were owed state. From tribunal would go to courts where it would undoubtedly result in long drawn-out legal case. Issue is now in courts where it belongs and IPC can defend its position there. Company claims no back debts owed while tribunal has estimated sum to be collected. Courts will have to decide. Action of tribunal is not final verdict. This can only be made by courts, he explained.

 

/4/ Dated July 8. (National Archives and Records Administration, RG 59, Central Files 1967–69, PET 6 PERU)

 

3. As further explanation government’s action against company November 10 Belaunde referred to recent by-elections Lima and Trujillo and said that while elections had been clean and accepted verdict of voters in electing opposition candidate, they had nevertheless dragged petroleum issue into elections. On November 9 Andres Townsend, Aprista congressman, had in electoral speech on TV charged Belaunde administration with having done nothing to resolve IPC problem (finding of tribunal against IPC was actually dated November 2 although not published until November 11). Finally, President said, IPC mixed too much in local politics; that it had some kind of relationship with Pedro Beltran, publisher of opposition newspaper La Prensa, and that it also was among those along with Marcona Mining Company that supported Ravines weekly television program which had consistently attacked Belaunde administration and had done so much damage to country. These people would probably like to see someone else in palace to resolve IPC issue in hurry, Belaunde said with some bitterness, adding that perhaps they should bring back General Odria to do it. I expressed surprise at these charges against IPC and said my knowledge of its extra-commercial activities in country in support of Peruvian culture had been favorable. Belaunde admitted that company worked efficiently and had excellent labor relations. Nevertheless during first 20 years of exploitation of La Brea y Parinas Peru had been badly cheated. I also remonstrated over Belaunde’s inference that IPC and perhaps even we would prefer military dictatorship to resolve La Brea y Parinas. I assured him again of deep interest in Washington in democratic constitutional government throughout hemisphere and particularly of genuine concern that his administration survive to end its term as one of principal objectives of our policies. Belaunde said if anything happened to interrupt his tenure of office before July 1969 he would, unless they shot him, never give a moment’s peace to interloper in palace since he would consider himself until mid-1969 Peru’s legally elected chief of state. Should he be exiled he would station himself as near Peruvian border as possible to make life difficult for incumbent until next elections.

 

4. In response my repeated request for assurances that IPC’s position had not been impaired by this recent action, Belaunde replied that he did not feel company’s position had changed; that it had always been bad, and that he did not see that it had worsened. In response my reference to constant unfavorable publicity since government action November 10, including $150 million worth of so-called debts and almost daily speeches in Congress against company as evidence that its position had indeed deteriorated, President said people already knew that IPC had been reason for hold-up on aid to Peru which he estimated had cost country $100 million.

 

5. In response my question President said reference of tax and debt matter to tribunal had not shut door to continued negotiations with company. He felt settlement could still be found through direct talks even while case is in courts. Should additional debts eventually be confirmed by court verdict company could add some of its installations or other fixed assets over years to make up difference. He did not anticipate much change in company’s position either through early conclusion to negotiations or through court action. Since company had its authority to continue operating under petroleum director’s resolution (Lima’s 647)/5/ he felt things would continue as they were and that whole issue would continue to remain unresolved and "somewhat on the shelf." There would certainly be no conclusion by end of year as opposition congressman had suggested last night (Lima’s 2390)./6/

 

/5/ Dated August 10. (Ibid.)

 

/6/ Dated November 22. (Ibid.)

 

6. In response another question Belaunde said he was of course willing continue negotiations with company and to resume conversation with Espinosa, adding he would telephone to invite him to palace when company manager had returned from States. He explained had not seen him before his departure because had been very busy in those days and because he had new Min of Development (Carriquiri) whom he wished to introduce into and make familiar with this old problem. (When Espinosa tried see Belaunde following decrees of November 10 he passed him off on Carriquiri.)

 

7. Supersonic issue came into conversation incidentally on several occasions during our long meeting. At one point Belaunde said laughingly he kept hoping Dessault Manufacturing Company might fail so Mirage would never arrive. In next breath he said whole issue was so unimportant in relation to Peru’s needs and our assistance program. (I took some time to explain temper of US Congress on this issue which I had been able observe first-hand during my recent consultations.) I said of course supersonic issue had been thoroughly discussed in Washington and that I would hope sometime within next few weeks to go see him again to discuss its relationship with our desire to help Belaunde administration. I repeated again evident concern and willingness to help his government survive through its constitutional period which I had found at all levels in Washington. President replied with laugh that what he needed was "supersonic program assistance" or aid at supersonic speed.

 

8. In general I found Belaunde in good humor; even made few jokes and our personal relationship seemed unimpaired by recent events. However on occasion he spoke of "many, many problems" besetting him, of his many enemies in country and somewhat wistfully of final months of his term of office as period preparing to leave things in good order for his successor.

 

9. While assurances on IPC not very satisfactory I interpreted President’s explanation of recent events as motivated by domestic political objectives and that continued negotiations are still possible. I believe it clear President has no intention of resolving La Brea y Parinas problem during his tenure in office and that he will accept any tactic that drags issue out over next 20 months. If, as he says, IPC can continue to operate as usual and take all legal steps to defend itself in courts, company’s position may well continue to be tenable during rest of Belaunde administration. It then certain, however, to be hot issue in 1969 campaign. Consequently I believe press campaign by company either in US or in Lima at this time not advisable although no objection certainly to company restating its position regarding validity its titles and lack of debt GOP in press releases or advertisements and taking whatever vigorous action is open to it in local courts or eventually through British government in International Court of Justice.

 

Jones

 

 

502. Telegram From the Embassy in Peru to the Department of State/1/

 

Lima, February 27, 1968, 1826Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 1 Peru. Confidential; Immediate; Limdis. Repeated to USCINCSO and La Paz. Retyped and sent to the White House as an attachment to a memorandum from Oliver to the President, March 4; Rostow forwarded the memorandum to Johnson the next day. Oliver recommended that the President postpone any decision as to whether the Symington or Conte–Long amendments would apply to Peru. "An official finding," he argued, "could well provoke a crisis of confidence in the Belaunde Government leading to a military takeover." (Johnson Library, National Security File, Country File, Latin America, Vol. VI, 10/67–4/68) Oliver also gave a brief account of his trip, including his conversation with Belaúnde, at a meeting of the NSC on March 6; see Document 69.

 

3720. Ref: Under Secretary’s Memorandum of Feb 16 to me and Tabs./2/ Subj: Conversation with President Belaunde on Military Expend-itures and IPC Case. From Oliver.

 

/2/ The February 16 memorandum from Katzenbach to Oliver contained instructions for Oliver’s trip to Peru, including talking points for his discussion with Belaúnde. An unsigned copy of the memorandum is in the National Archives and Records Administration, RG 59, ARA Files, 1967–69: Lot 74 D 467, Peru 1968. See also Document 66, and footnote 5 thereto.

 

1. With Ambassador and Fowler, had talk with President Peru on above subject over period ninety-five minutes afternoon February 26. Conversation with President based on reference and tabs, especially talking points in Spanish to which I had added introductory paragraphs designed to highlight (I) genuineness wish USG to be of development assistance to Peru (II) my interest in "opening interior" programs, and (III) explanation that theme my presentation was to be "Obstacles To Beginning New Aid Negotiations." President met us alone; was cordial throughout; showed some physical tension during periods I was trying to read out or paraphrase talking points; intervened repeatedly during my presentation, speaking more in sorrow than in anger about USG incomprehension Peru’s military needs and casual effects past failures aid to assist Peru effectively.

 

2. Symington and Conte–Long amendments.

 

(A) Military Budget.

 

I explained fully to President that Executive Branch USG was under legal obligation apply these amendments effectively and fully proposed do so. Sketched upcoming legislative session. Tendency of President (as Ambassador had predicted) was to interrupt in defense of importance of military to Peru and to blame policies of "State Department" for denying Peru assistance. With persistence I eventually got President to focus on point that US Executive has law to enforce; this was done by getting him to read Symington amendment in Spanish. In summary (see detail below) President promised us a memorandum tending to show that for Peruvian FY 1968 (begins April 1, 1968) budget just now being voted under leadership PM will present reduction overall budget from dollars 1.3 billion to 1 billion (". . . a superhuman effort whose repercussions may be far reaching. . ."); total military portion Peruvian FY 1968 budget will be down slightly from 1967; additions to new military budget being made in Congress not only do not reverse downward trend but represent mainly allowance increases designed to keep up with price rises following devaluation; identification portions military budgets going into civic action, pay, uniforms, food, training, and "services to public."

 

(B) Unnecessary Military Equipment.

 

President was not forthcoming with assurances. While not objecting on "intervention" grounds, he firmly denied validity foreign opinion on subject. (At one point I offered to prepare for his personal

consideration a list of what I would consider tentatively to be "unnecessary" and/or "sophisticated." He did not take me up.) I did get it out that missiles, supersonics, certain naval vessels in these categories. (Comment: CT will be following very closely and reporting developments as to weapons categories, especially with regard to extent to which we might be able to hold Peru off from certain naval acquisitions during immediately critical year ahead.)

 

President said a number of things related to this subheading. Most worthy of reflection is this: United States unfortunately sees South America through twin veils of Mexico and Caribbean countries. Therefore does not see it clearly. United States does not stop to think that Mexico has enviable low military expenditures, because ".... as Diaz Ordaz told me, Mexico is the primary defense orbit of the United States and knows it." USG would inevitably and immediately respond if international aggression or aggressive subversion should threaten the security of Mexico. Would US surely and under all circumstances respond if Peru were similarly threatened? Even during a Vietnam? Could the US response come soon enough? The President said that no Peruvian chief of state could take the risks that these questions imply.

 

3. Other presidential observations: as to "jet aircraft" (he did not use "Mirage"); "they are just a few to experiment with. Flying is like making love, one does not learn how to do it from a manual."

 

As to Canberras: "You (USG) also said they had no internal security effectiveness, but they do; and they fly slower than even the passenger airplanes subversives could fly in on. Is it not illogical to expect that the military aircraft of Peru should be slower than the commercial planes that come into our airports?"

 

"The Washington Post called the aircraft our air force wants ‘playthings’; well, when someone is in the market for a new automobile, he does not buy a 1960 model in 1968."

 

"De Gaulle and Lubke while visiting here got nothing from Peru. Peru buys more from the US than it sells to her. When Vietnam is over you will be looking to your markets even more seriously than now."

 

4. Belaunde on USAID: (He never used "Alliance"; I always did.) For one reason or another AID has never given Peru the capital assistance it gives to Brazil, Chile, Colombia, all in the hundreds of millions of dollars. Peru has had to finance its own development by going to the commercial banks. It is this that caused Peru’s foreign exchange reserves to go down and forced devaluation. AID assistance has now become urgent, because AID can soften the burden of Peru’s development debt. We have spent what we borrowed on commercial terms wisely; we did not waste it. After 4-1/2 years as President, he had come to have more faith in Peruvians with pickaxes and shovels than in international lending agencies. What Peru cannot do for itself, aid should do with soft loans. (Paraphrased.)

 

In response to my comment that while Fowler and I were in Colombia, with lending program absolutely stopped for 15 months, I had envied Ambassador Jones and had looked with longing at Peru’s flourishing export trade, Belaunde said: In those days when things were going well financially in Peru, you (USG) told us we were too prosperous to qualify for aid and now when our reserves are running out, you say we do not qualify because of poor fiscal performance.

 

5. Belaunde on Chile: "Peru has lost its national territorial treasure in considerable part to this neighbor. My own family suffered greatly (his ancestors came from Arica) and Peru was set back financially until only recently by the loss of territory to Chile. But we are not revanchists. We have our military system for domestic protection. We would never move against another country. We respect our international obligations. But if out of this country there should come further aggression or subversion against Peru, we must be able to defend ourselves." (Paraphrase of three statements, each substantially along above lines.)

 

6. Belaunde on development and public services by military: The President’s first interruption of my presentation was to sound this theme. He ranged from civic action to disaster relief and dealing with urban disorder. (Comment: At no time did Belaunde allude to his political situation in relationship to armed forces. He did roundly castigate Odriista group in Congress for irresponsible obstructionism and stressed the accomplishments of his administration in establishing democracy.)

 

7. IPC Case: In closing minutes I finally got to IPC case as "second obstacle," stating that I had had a good lawyer-to-lawyer talk with his Prime Minister about case (septel)./3/ Belaunde began complaining that company did not want to negotiate, that it was continuing to be intransigent. Went on to say that only two ways to handle this case: either do nothing ("company has not had one can of gasoline taken from it") or settle it completely with a "good situation". Ambassador and I both weighed in on side definitive settlement now, I saying that seemed to me all elements needed for a complete and fair solution now at hand. Ambassador pointed out that conversations between company and EPF most encouraging and asked President to support actively director of EPF in these negotiations. President said he would.

 

/3/ Telegram 3716 from Lima, February 27. (National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 1 LA)

 

8. Toward end of conversation Belaunde said he had only 18 more months to serve. On whole he was pessimistic. He had not had the US support that would have permitted him to lead Peru where it ought to go. Later at dinner in honor our traveling group he seemed tense at first but mellowed as we talked of University of Texas days we had shared (without knowing each other), mildly insulted Texas A&M and Rice, exchanged warm toasts to President Johnson and host. Despite my expectation based on my suggestion at afternoon meeting, Belaunde did not initiate further substantive talks after the dinner. Both at dinner and in earlier meeting Belaunde spoke warmly of President Johnson: said he realizes President Johnson has problems of world to cope with and that Congressional situation sometimes did not permit a US President to do what he wanted or knew was desirable.

 

9. Ambassador’s comment: The President had obviously been briefed on subjects to be broached by Assistant Secretary and at first mention of "military" interrupted Oliver’s presentation to expound on virtues and constructive role of armed forces in Peru. (Using authority Deptel 115825 we had already informed Quintanilla, President’s private secretary, of nature of Oliver’s mission.)/4/ While President continued to interrupt in defense of military, of his democratic administration and of Peru’s position in hemisphere, Assistant Secretary patiently persisted in making full presentation his case based on instructions referred to above. At end of one hour and 35 minutes I am satisfied Belaunde understood our problem and issues involved despite his reluctance to discuss military expenditures and particularly military equipment items. President maintained his composure throughout though there were signs of emotion when defending role of military or complaining of lack US support for his development programs. Although evasive in his replies throughout President did not cut us short—as he might have done—on grounds of "national dignity" or unwarranted interference in Peruvian internal affairs. On balance conversations went well considering President’s position vis-à-vis military here and delicate nature of subject discussed.

 

/4/ Dated February 15. (Ibid., AID(US) 5)

 

Jones

 

 

503. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Oliver) to the Deputy Under Secretary of State for Political Affairs (Bohlen)

 

Washington, May 13, 1968.

 

[Source: Department of State, INR/IL Historical Files, 303 Committee Files, c. 69, May 22, 1968. Secret; Eyes Only. 2 pages of source text not declassified.]

 

 

504. Information Memorandum From William G. Bowdler of the National Security Council Staff to President Johnson/1/

 

Washington, July 30, 1968, 5 p.m.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–11/68. Confidential. A notation on the memorandum indicates the President saw it.

 

SUBJECT
President Belaunde Announces International Petroleum Company Settlement

 

On Sunday, July 28, in his annual message to the Peruvian Congress, President Belaunde announced settlement of the long-standing dispute with the International Petroleum Company (ESSO-N.J.) over the La Brea-Parinas (LB–P) oil fields.

 

The settlement is based on a formula proposed to Belaunde by IPC. Agreement so far is only in principle. The detailed agreement remains to be negotiated.

 

The essential elements of the deal are:

 

—IPC hands over to the government all subsurface rights in the LB–P oil fields and all surface installations.

 

—The government gives IPC a quit-claim on past taxes on LB–P operations, agrees to sell at a mutually acceptable price all crude, natural gasoline and gas from LB–P fields to IPC for processing at its Talara refinery, and grants IPC the right to explore and produce petroleum in an area outside LB–P.

 

—IPC will expand its Talara refinery.

 

—The government will grant storage, distribution and marketing concessions to IPC in Peru.

 

The deal is a statesman-like way out of a difficult problem. I hope it does not founder in the negotiation of the specifics. Until these are completed, and the agreement signed, it would be premature to consider the dispute closed./2/

 

/2/ On August 13 Rostow informed the President that the IPC problem had been finally settled, thereby removing "this dangerous matter from U.S.-Peruvian relations once and for all." (Telegram CAP 81956 to the LBJ Ranch; ibid.)

 

WGB

 

 

505. Editorial Note

 

In a meeting with Ambassador Jones on September 18, 1968, President Belaúnde requested U.S. assistance for five transportation projects. Belaúnde expected that the United States would support the projects "as evidence of its appreciation of government’s courage in finally resolving this explosive problem [IPC case] and as a token of its support for government’s fiscal policies and democratic constitutional character." (Telegram 7386 from Lima, September 18; National Archives and Records Administration, RG 59, Central Files 1967–69, POL 2 PERU) While citing several factors that would delay approval of the request, the Department indicated that "in light of strong GOP self-help program we have positive attitude." (Telegram 245358 to Lima, September 26; ibid., AID(US) 9 PERU) In a September 21 letter to Director of the Office of Ecuadorean-Peruvian Affairs William P. Stedman, Jr., Jones made a personal appeal for swift action: "I cannot over-emphasize the urgency of a favorable response to the Belaunde Administration in what is perhaps the most precarious period of his entire six years." (Johnson Library, Papers of John Wesley Jones, Classified [Correspondence]) Stedman replied by describing the bureaucratic difficulties involved in processing the loans: "The memorandum to get Peru off the Symington black list has been approved by Mr. Gaud and the White House has been notified. That opens up the way for the PL 480 for rice for which a memorandum approved by Secretary Freeman and Mr. Gaud was sent last week to the Bureau of the Budget for transmittal to the President. We ought to have word soon." Stedman insisted, however, that the Department fully appreciated "the urgency of getting the rice and the loans." (Letter from Stedman to Jones, September 30; ibid.)

 

 

506. Information Memorandum From the Assistant Secretary of State for Inter-American Affairs (Oliver) to Secretary of State Rusk/1/

 

Washington, September 20, 1968.

 

/1/ Source: National Archives and Records Administration, RG 59, ARA Files, 1967–69: Lot 74 D 467, September 1968—CTO Chron. Confidential. Drafted by Shumate on September 20 and cleared by Vaky and Stedman. The memorandum is an uninitialed copy.

 

SUBJECT
Peru—Delicate Political Situation Threatens Upset of Recent Economic Advances and Possibly Constitutional Government

 

The decisive action of the Hercelles Cabinet to remedy the deteriorating economic situation in Peru and to solve the long-standing IPC problem has brought about a reaction from the right and the left which now threatens the stability of the Cabinet, its economic recovery programs, and quite possibly the constitutional process.

 

Background

 

After a steadily deteriorating economic situation had continued for ten months, the Peruvian Congress granted the executive branch sixty days of extraordinary powers to cope with the situation. The Cabinet of Premier Oswaldo Hercelles acted quickly to remedy the economic deterioration. New taxes such as a large gasoline tax increase, however, were bound to elicit adverse reaction.

 

The package of measures taken by the Finance Minister, Manuel Ullos, re-established confidence on the part of the IMF, foreign banks, and foreign investors, and they are cooperating with the Government on stand-by arrangements and foreign debt rescheduling.

 

The Government also arrived at a settlement of the long-standing dispute with the American-owned International Petroleum Company. A complicated arrangement was devised in which the Company turned over the disputed oil lands in return for an exoneration from all alleged past debts and the right to continue its other operations in Peru.

 

The good effect of the Peruvian Government’s actions of the past three months and its capacity to continue its recovery program are now in jeopardy because of domestic political considerations.

 

In addition to the public reaction against the new taxes, the IPC settlement is under strong attack. Die-hard elements on the extreme right and the extreme left have joined together to attack the solution as being unfavorable to Peru and a "give-away." The Peruvian military has been reported as being quite concerned about the reaction to the IPC solution and there are even rumors of certain elements considering this as a pretext for a coup.

 

Present Situation

 

At the present moment, according to our Embassy, [less than 1 line of source text not declassified], and even the Peruvian Embassy here, the situation is delicate. President Belaunde is in his sixth and final year, with elections scheduled for June, 1969. The apparent probable winners of next year’s elections, APRA, hold one of the keys in the situation. Its majority congressional bloc supported the President in granting extraordinary powers and on settling the IPC dispute. Nevertheless, APRA does not wish to be tied to the program if it becomes unpopular, especially with regard to taxes or the oil dispute. More importantly, it desperately wants elections to be held and realizes it must give Belaunde at least enough support to ward off coup-minded elements. However, influential elements in the military still fear APRA, and would prefer a coup to a democratic Aprista victory.

 

The Peruvian military thus holds another key in the situation. They can, of course, intervene at a moment’s notice and often have in the past. During the last year of crises, however, despite the numerous opportunities at hand, the military has refrained from taking action. As the presidential elections draw closer, this crisis is a greater danger to constitutional government.

 

President Belaunde is the third key element. He is a skilled politician, and on many occasions has fashioned solutions from apparently irreconcilable political problems. His will to finish his term in office and preside over an orderly and democratic transition is an important element in the equation.

 

Since the President is not directly threatened by a Cabinet crisis, one of the safety valves in moments of extreme stress is the resignation of the Cabinet. In the past year, there have been four Cabinets in Peru. The present Cabinet is by far the strongest Peru has had in years. Its demise would be a body blow to the economic recuperation of the country and would inflict a staggering set-back to confidence both within and outside of Peru. Further, the fact is there are practically no competent individuals left who would accept Cabinet positions in this lame duck Government. Therefore, the military might feel compelled to take over or to install military officers in key civilian ministeries.

 

The United States is largely on the sidelines in this situation. Our aid involvement has varied from minimal to naught (in 1968) and our relationship has been beset by serious and emotional problems—IPC, the Mirage purchase, tuna boat seizures, etc. Unfortunately, at almost any moment these U.S.-Peruvian bilateral issues can create problems of great importance in Peruvian politics. This is especially true when the problem involves possible application of legislation such as the Symington, Conte–Long, Hickenlooper, Pelly and Ship Loan Recall Amendments.

 

We expect Mr. Hercelles (who holds both Prime and Foreign Minister portfolios) to attend the UNGA—probably after October 5—if the political situation is sufficiently calm. We will provide you with current briefing material when an appointment with you is arranged.

 

 

507. Telegram From the Embassy in Peru to the Department of State/1/

 

Lima, September 28, 1968, 0007Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 15–1 PERU. Confidential; Limdis. Repeated to USCINCSO for POLAD.

 

7578. For Oliver from Ambassador. Subj: Political Atmosphere.

 

1. As you have seen from our recent cables reporting the political battle which erupted out of criticism of the IPC settlement, and the related subsequent split in the Belaunde Accion Popular Party, there has been a drastic change in the political atmosphere in recent weeks. Heretofore, considerable optimism had been engendered as a result of the Hercelles’ cabinet acting effectively and capably for ninety days in use of the special powers granted by the Congress. The fact that the Congress was out of session during that period also assisted by bringing about a sort of moratorium on politics. Unfortunately, the feeling of optimism has been seriously eroded as a result of the spectacle of the President and Vice President, through their adherants, engaging in demeaning battle over the party machinery and facilities and the bitter nightly debate of the issues in the Congress. This together with widespread mistrust of the government’s handling of the IPC settlement has clearly reduced confidence in the democratic machinery and has doubtless encouraged many Peruvians to think along traditional lines of an authoritarian solution. As a result there is a great deal of talk about golpe and some air of expectancy.

 

2. We have not been able to pinpoint anything specific and have reason to believe that there is considerable lack of unity within the military itself. However, if a pretext were provided, as for example by serious public disorders, the military might move institutionally.

 

3. Last night a rightist demagogue, Leon Velarde, who manipulates some Barriada dwellers for his own purposes spoke seriously to a political officer of the Embassy in terms of the imminence of a golpe in which he planned to be involved. The Embassy officer, in response to his query as to our attitude, told him in no uncertain terms that the US Government and this Embassy is dedicated to the fulfillment by the Belaunde administration of its term of office and the democratic selection of a successor. You may be sure we will lose no opportunity to make this policy crystal clear wherever we think it should be stated.

 

4. I don’t intend that this be an alarmist telegram but believe you should know that there has now been created an atmosphere of tension and confusion. Up to this moment, however, all [less than 1 line of source text not declassified] and service attaché sources are negative on specific military plans for golpe. /2/

 

/2/ Rostow repeated this assessment in a note to the President, October 1: "There is some talk of a military coup, but it does not appear imminent." (Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–11/68) A CIA information report on the possibility of a coup is [text not declassified]; ibid.

 

Jones

 

 

508. Action Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

 

Washington, October 2, 1968, 4:40 p.m.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–11/68. Confidential. Received in the President’s office at 4:55 p.m. Another copy indicates the memorandum was drafted by Lewis. (Ibid., Memos to the President, Walt W. Rostow, Vol. 97)

 

SUBJECT
Peru—PL 480 Agreement for Rice

 

The attached memorandum from Bill Gaud and Orville Freeman (Tab A)/2/ recommends that you authorize a $10.7 million PL 480 sales agreement with Peru for 60,000 tons of rice. Charlie Zwick concurs(Tab B)./3/

 

/2/ Tab A was a memorandum from Gaud and Freeman to the President, September 20; attached but not printed.

 

/3/ Tab B was a memorandum from Schultze to the President, September 30; attached but not printed.

 

This agreement will be the first major new aid for Peru in over a year. A proposed AID loan package of about $25 million will also be ready for your approval in the near future. This proposal serves three important purposes:

 

—to provide much needed food supplies after a severe drought struck Peru this year;

 

—to provide tangible political support for President Belaunde at a key point in his administration, after he has taken several difficult development decisions;

 

—to help increase US commercial sales of rice and counter Communist Chinese competition.

 

In recent months, Belaunde has shown real courage in tackling Peru’s economic problems, including putting through a major tax reform. He has also resolved the old and vexing dispute with the International Petroleum Company to IPC’s satisfaction, thereby removing it as an irritant from US-Peruvian relations. These acts have produced expected political turmoil, and a Cabinet shake-up has just occurred. However, the new Cabinet, headed by a respected close friend of Belaunde, includes the key Ministers from his predecessor’s Cabinet. It should continue the encouraging direction the Peruvian Government has recently followed.

 

Ambassador Jones has appealed for quick action on this request to help demonstrate our support for Belaunde’s position./4/ I agree that a show of support at this moment is both warranted and needed.

 

/4/ In telegram 7619 from Lima, October 1, Jones reiterated the importance of U.S. assistance: "It is urgent that I be authorized as soon as possible to make favorable response to Belaunde’s appeal for help as mark of confidence and support for him as constitutional President. I had hoped both PL–480 negotiating instructions and approval of Pucallpa–Aguaytia road project would have been in our hands by now. Belaunde needs help and needs it now. Swift approval of either or both these programs could be significant." (National Archives and Records Administration, RG 59, Central Files 1967–69, POL 15–1 PERU)

 

As outlined in Charlie Zwick’s memorandum, there was a question last year as to whether Peruvian military expenditures would not warrant application of the Symington Amendment. Belaunde has held down the level of military spending since that time, however, and State/AID have now determined that Peru is not diverting any US assistance to military expenditures, nor investing its own resources unnecessarily to a degree that interferes with its development.

 

All interested parties agree in recommending that you approve the PL 480 program for Peru at this time. The only difference in view concerns whether some notice should be given to Congress that you are proposing new aid to Peru after a hiatus. Katzenbach and Zwick think it might be advisable to inform key members of the Congress, particularly Senators Symington and Morse, that Peru does not fall within the purview of the Symington Amendment. Gaud and Oliver prefer not to take any initiative towards the Congress, but are fully prepared to defend the determination should any question be raised. Mike Manatos agrees with Gaud and Oliver that the less said the better at this moment. I also share this view.

 

Walt

 

Approve loan
Disapprove loan
Call me
Inform key members of Congress, particularly Senators Symington and Morse
Do not inform Congress
Call me/5/

 

/5/ The President checked this option. When Rostow learned that the President had read the memorandum without taking positive action, he urged Larry Temple, Special Counsel to the President, to ask that Johnson read the "marked passages" again. Temple returned the memorandum to the President. (Memorandum from Temple to the President, October 2, 5:10 p.m.; Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–11/68) According to the President’s Daily Diary Rostow did not call Johnson until 11:45 p.m. (Johnson Library) No substantive record of this conversation, or evidence that it concerned Peru, has been found.

 

 

509. Information Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

 

Washington, October 3, 1968, 10:50 a.m.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–11/68. Confidential. A copy was sent to George Christian. A notation on the memorandum indicates the President saw it. Another copy indicates that the memorandum was drafted by Lewis. (Ibid., Memos to the President, Walt W. Rostow, Vol. 97)

 

SUBJECT
Peru Coup

 

Contrary to our latest intelligence assessments, the Peruvian Army moved early this morning to oust President Belaunde and install a "Revolutionary Junta"./2/ Unhappiness over the IPC settlement was one obvious motive.

 

/2/ President Johnson was informed of the coup d’etat at 6:30 a.m., when a briefing officer in the White House Situation Room forwarded a cable from the Embassy. The officer noted that he had briefed Rostow. (Note from Wotring to the President; ibid.) The cable in question, flash telegram 7639 from Lima, 030859Z, stated: "Apparent golpe in process, but have no details." Embassy reports on the progress of the coup are in the National Archives and Records Administration, RG 59, Central Files 1967–69, POL 23–9 PERU.

 

No violence or active resistance has yet occurred, but some could develop during the day. Early reports suggest the Navy and Air Force were not fully supporting the Army.

 

President Belaunde was arrested by the Army at his palace and flown to exile in Buenos Aires by the military.

 

We will soon have to face the question of recognition of the Junta, but should not do so until the dust settles./3/ Full consultation with the other OAS governments will be required. Meanwhile, our AID Mission Director—now here on consultation—will remain here and AID will suspend plans for new aid to Peru.

 

/3/ In telegram 249329 to Lima, October 3, the Department reported: "Although we have not said so publicly, overthrow of Peruvian Government has effect of suspending diplomatic relations with GOP. We are assessing details of this general problem and in meantime know you will observe the cautions about contact with revolutionary forces." (Ibid.)

 

The last coup in Latin America occurred June 1966 in Argentina.

 

Walt

 

 

510. Telegram From the Embassy in Peru to the Department of State/1/

 

Lima, October 3, 1968, 2045Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 23–7 PERU. Confidential; Immediate. Repeated to Buenos Aires, La Paz, Quito, Santiago, USCINCSO for POLAD, DOD for DIA, and USUN. Rostow forwarded a copy of the telegram to the President on October 3; a notation on his transmittal memorandum indicates that Johnson saw the telegram. (Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–11/68)

 

7661. Subject: Preliminary Analysis of Coup Motives.

 

1. Embassy telegram 7578 of September 27 [28]/2/ reported drastic deterioration in political atmosphere which reduced confidence in democratic machinery and produced air of expectancy on possible coup. It also contained one clear report of a coup threat. It is our preliminary view that military move was basically motivated by a determination to prevent an APRA victory in the election scheduled for next June. The total disarray of all other political parties which split along factional lines, culminating in the division of Belaunde’s Accion Popular Party into warring factions, one headed by him and one headed by Vice President Seoane, served to dramatize the fact that the single, unified and disciplined party remaining was APRA. The fact that APRA leaders were increasingly confident of victory and insisted that Haya de la Torre would be their candidate served to ignite the fears of those in the military determined that Haya would never become President of Peru.

 

/2/ Document 507.

 

2. In the above conditions, military golpistas could take preventive action now, utilizing a pretext, or they could wait to see what happened. Apparently their preference was to execute a preventive coup rather than risk nullifying the results of an election which probably, as viewed at this time, would have resulted in an APRA victory./3/

 

/3/ In telegram 7651 from Lima, October 3, the Embassy reported that Juan Velasco Alvarado, commanding general of the army and chairman of the Joint Command, had emerged as the leader of the coup d’état. The Embassy considered Velasco "highly nationalistic and suspicious of U.S. policies," "ambitious, self-confident, not easily influenced, highly respected, extremely competent and intelligent," a "strong anti-Communist" and "firmly anti-APRA." (National Archives and Records Administration, RG 59, Central Files 1967–69, POL 23–9 PERU) In telegram 7705 from Lima, October 4, the Embassy offered a "preliminary evaluation" of the new military government. (Ibid.)

 

3. The political confusion and divisions which erupted out of criticism of the La Brea y Parinas settlement, and general public believe that the government had not been fully honest in what it revealed about this settlement, provided a pretext which was seized by the golpistas.

 

4. Factors which helped create the atmosphere in which the military golpistas could find pretext to move were such things as the unrelenting, bitter attack on the government and its financial and economic policies made by Pedro Beltran and his La Prensa newspaper, as well as by El Comercio newspaper, once a staunch supporter of Belaunde, which was bitter in its attack on the government over the La Brea y Parinas issue. The ineptness of APRA leadership which forced resignation of the Hercelles cabinet and thus contributed to the atmosphere of political crisis also helped bring on the coup which APRA did not want.

 

5. There are undoubtedly many conservative Peruvians who will welcome this move and some may have been involved in it. Such people have been increasingly hostile to the general trend of the Belaunde government and to many of the measures taken by the Hercelles cabinet under its special powers such as the imposition of a land tax, the tax on profits, the abolishment of bearer shares, and the reform of the tax collection system.

 

Jones

 

 

511. Information Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

 

Washington, October 4, 1968.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–11/68. Confidential. A copy was sent to George Christian. A notation on the memorandum indicates the President saw it. Another copy indicates the memorandum was drafted by Lewis. (Ibid., Memos to the President, Walt W. Rostow, Vol. 97)

 

SUBJECT
Peru Coup

 

The Military Junta appears firmly in control in Peru, supported by a united military establishment and some conservative civilians. Scattered violent protest acts by students are being quickly suppressed./2/ Labor has not heeded an effort to mount a general strike. Leaders of the majority APRA party strongly oppose the coup, but are apparently lacking weapons or capability for active resistance.

 

/2/ On October 5 the Embassy received a note, dated October 3, which officially announced the formation of a new government under Division General Juan Velasco Alvarado. The note declared that the government had decided to respect its international obligations and intended to maintain cordial relations with the United States. (Telegram 7726, October 6; National Archives and Records Administration, RG 59, Central Files 1967–69, POL 23–9 PERU)

 

Detailed contingency plans for the coup were drawn up by the Peruvian Army many months ago which accounts for the smoothness of the operation. We don’t know exactly what triggered their final decision, but the main motives apparently included:

 

—the growing conviction that a much hated APRA leader would succeed Belaunde as President if elections were held next year;

 

—unhappiness with political instability and economic doldrums;

 

—lack of confidence in Belaunde’s choice of military ministers and his disregard of "military interest" in such matters as budgets and sophisticated weapons;

 

—resentment at the terms of the IPC oil settlement;

 

—personal ambition of General Velasco, Army Chief of Staff, soon to be retired.

 

State is carrying on consultations with other OAS governments prior to making any recommendation about recognition of the new regime. This process could go on for an extended period, perhaps as long as a month.

 

Unlike the case of the Argentine coup in 1966, we have made no official statement condemning the action of the military leaders, although State officials have made our unhappiness clear on a background basis. Oliver believes it better to allow the weight of Latin American sentiment to register first. So far, only Venezuela has officially deplored the coup.

 

Secretary Rusk appears Sunday morning on "Issues and Answers" and may, of course, be questioned about these events./3/

 

/3/ Rusk was interviewed, but did not receive any questions on Peru. For a transcript of the interview, see Department of State Bulletin, November 4, 1968, pp. 471–480.

 

Walt

 

 

512. Telegram From the Department of State to the Embassy in Peru/1/

 

Washington, October 6, 1968, 2001Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 16 PERU. Secret; Priority. Drafted and approved by Oliver. Repeated as Tosec 83 to USUN for Rusk, who was attending the 23rd session of the United Nations General Assembly.

 

250839. For Ambassador from Oliver. Subject: Recognition Doctrine and the Peruvian Crisis.

 

1. My reply to you Saturday night was approved above me in Department as to general line./2/ This message relays for your consideration some so far entirely individual thoughts of mine as to possible courses for "post dust-settling" future. Herein I shall seek to open dialogue on relative desirability in Peruvian case of moving U.S. recognition doctrine and practice toward a variant of Estrada Doctrine/3/ without losing positive elements of Rio Resolution 26/4/ as pressure points in favor of early return to elected government and assured respect for basic human freedoms.

 

/2/ The Embassy had requested instructions on overtures from individuals claiming to represent the new government in telegram 7725 from Lima, October 5. (Ibid., POL 23–9 PERU) The Department’s response, drafted by Oliver and cleared in substance by Acting Secretary Katzenbach, stated: "Your reception of overtures should be cool and you should make it clear to intermediaries that you are only receiving suggestions for transmittal to Washington. You may add that USG especially interested in Junta’s plans as to timing return to elected government." (Telegram 250828 to Lima, October 5; ibid.)

 

/3/ Doctrine espoused in September 1930 by Mexican Foreign Minister Genero Estrada held that recognition of another government does not necessarily imply acceptance of its legitimacy. See Marjorie M. Whiteman, ed., Digest of International Law, Vol. 2, pp. 85–89.

 

/4/ Resolution XXVI of the Final Act of the Second Special Inter-American Conference, signed on November 30, 1965, in Rio de Janeiro, recommended that OAS members consult before recognizing a de facto government, giving due consideration to: a) whether a foreign country was involved in the overthrow of the old regime; and b) whether the new regime promised to hold free elections, to honor its international obligations, and to respect human rights. After consultation, each country was free to decide whether to maintain diplomatic relations. (The OAS Chronicle, February 1966, p. 27)

 

2. Your preliminary characterization of Junta/5/ coincides exactly with my feelings about it. There was no justification for this heavy-handed move; and it is very much in doubt whether Junta will be able to pick up quickly and ably enough the complicated strands of Peru’s critical fiscal, foreign exchange, credit, and development needs. Junta officers probably do not have the savvy—and they may not be able easily to mobilize it outside their uniformed circle—that is essential if Peru is not to slip into a real economic and financial tailspin. For example, I wonder today and shall try to find out early in the week what IMF’s thinking is about future of standby.

 

/5/ See Document 510 and footnote 3 thereto.

 

3. On recognition, it is apparent to me that our developing practices as to responses to coups no longer fits exactly within the textbook doctrinal pattern, i.e., one that assumes that the constitutional discontinuity caused by a coup automatically bars all standard inter-governmental relationships pending a new act of recognition of a golpista regime as the government of a State. (Hereinafter, "traditional doctrine.") Analytically, the main disadvantages of the traditional doctrine center on (i) historically-based general Latin-American distrust of USG use of power to withhold recognition; (ii) inhibition of any substantive relations, including diplomatic protection, during period of non-recognition; (iii) vast uncertainties about status of contractual relations (below international agreements level) between USG and the other state. Advantages of traditional view are (i) provident utilization of pressures arising from extra-constitutional regime’s needs for our recognition; (ii) symbolization of our dislike of "bad" extra-constitutional changes, such as Peruvian one is.

 

4. Rio Resolution 26 may be based on assumption that traditional doctrine as to recognition will continue. (I have not been able to research this.) However, it does not seem to me that Rio 26 absolutely requires use of traditional doctrine. And as we know from Argentine case and current editorial comment about Peru, formal recognition following consultations under 26 does "ring hollow", as October 6 New York Times editorial says./6/

 

/6/ The New York Times editorial reads: "The State Department has properly withheld diplomatic recognition of the military junta that has unconstitutionally seized power. But the announcement that the United States is consulting with Latin American Governments on how to deal with the situation rings hollow."

 

5. At some appropriate time, I think USG ought to shift toward the notion that a coup affects the intensity, intimacy and levels of our relations but does not automatically cut them off. I do not speak for anyone but myself on this. The question I raise with you in context of this message is whether the Peruvian coup might be the occasion for announcing and following a new doctrine. It does not require an immediate response from you, of course. Moreover, it may be that my personal views will not be acceptable. You will be kept informed.

 

6. Another alternative would be to follow in practice, but not announce, a new doctrine on this occasion. So far our responses (press briefings and your authorizations) fit within traditional doctrine, albeit somewhat imperfectly as some uncertainties already expressed by the involved American public show.

 

7. Related to para 6 is the problem of divergent attitudes in our business community arising from conflicting interests as to continuity or discontinuity in our formal relations. Moreover, if I may refer to legal matters outside present responsibilities, there are problems arising from tendency judiciary here to follow Department’s views as to recognition or not in litigation involving a revolutionary regime’s authority or lack of it to deal with state assets and other interests localized in this country or to make laws and rules that our Courts will treat as having governmental authority.

 

8. I want you to know that my personal feeling is one of revulsion and that if it were otherwise feasible and in our interest, I would not want to deal with Junta at all. Here I think I only reflect general feeling in this country. But I know that indefinite "suspension" is not going to be possible; and I am seeking the best way, not only to minimize losses, in the public affairs field and otherwise, but to help develop a more adequate approach to the coup problem in today’s world.

 

9. I have cancelled a Southwestern speaking trip under Council for Foreign Relations auspices and shall tend store here during period immediately ahead. We are working closely with Cates and Poole (on TDY) at USUN, and I think that Vaky ought to go up to New York during week. The Latin Americans are meeting at UN on morning October 7. We are in close touch as to lines of inquiry and expect to have rather full readbacks.

 

10. Nearer to immediate operations, we need to get as clear a view as we can of circumstances surrounding IPC settlement. Junta’s perjorative statements are receiving uncritical acceptance here. I do not propose we get into act, certainly not before IPC itself; but we do need to know all there is to know./7/

 

/7/ In telegram 7797 from Lima, October 9, Jones agreed with the "pragmatic approach" of Oliver’s recognition policy: "a prolonged suspension of several months or more would place intolerable stain on traditional ties between U.S. and Peru, seriously endanger private U.S. interests and probably prove counter productive in end." (National Archives and Records Administration, RG 59, Central Files 1967–69, POL 16 PERU)

 

Katzenbach

 

 

513. Telegram From the Department of State to the Embassy in Peru/1/

 

Washington, October 10, 1968, 1701Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 23–9 PERU. Confidential; Limdis. Drafted and approved by Oliver.

 

253028. For Ambassador from Oliver. Reference: Prior Traffic on Recognition Doctrine.

 

1. "Pragmatic" is a term I never use in relationship to our foreign policy. It simply has too much lustre and anyway it is an incorrect reference to the philosophies of James, Royce, and Peirce.

 

2. ARA/LA had a good talk out with U, M and L, Wednesday/2/ forenoon. Naturally, the doctrinal point was not central. I very much doubt that the Peruvian situation, as it is beginning to shape up (IPC expropriation), will be the occasion for announcing any new recognition doctrine./3/

 

/2/ October 9.

 

/3/ On October 9 the Velasco regime issued a decree expropriating IPC property in Peru, including La Brea y Pariñas oil fields and the industrial complex at Talara.

 

3. But, and this is quite important: it was agreed that we can communicate with Junta on a wide range of matters, provided we assert that the act of communication is not "implied" recognition. This includes activities as to diplomatic protection and of warning about possible Sugar Act consequences of expropriation. Hereafter our suggestions and instructions on above and other matters will take this evaluation into account. (What has been done, you see, is to free ourselves from tyranny of concept that a coup automatically cuts permissible communications during "suspension" down to those rather narrowly related to the resumption of relations.)

 

4. As we go forward, there is one thing we have to watch with great care: our public deprecation of coup has for various reasons been limited to working levels. (Personally I think it wiser not to advise public lamentations at very high levels, only to resume relations, as in 1962, within month. This is not to be taken as a time estimate this occasion.) But not having rended our garments and torn our hair in public heretofore, it would be bad in Latin America and here if we should go very suddenly (even though happenstantially) into great public outcry after IPC nationalization. Fortunately, IPC’s parent does not want us to. We shall not comment on IPC at press briefing Thursday unless asked; and if we are, response is a careful one that I drafted./4/

 

/4/ In the press briefing on Thursday, October 10, the Secretary fielded several questions, including a query into the expropriation of IPC holdings in Peru. Rusk admitted that "we were concerned and disappointed about the developments in Peru." "We don’t know yet what this announced move against the IPC will involve," he explained. "Presumably, the company will be the first to discover that and see what the issues are. But we shall be following that closely at the appropriate time." (Department of State Bulletin, November 4, 1968, p. 481)

 

5. I am sure you agree that CT and you have to keep an almost psycho-ward watch on Junta leaders. Balance between firmness and therapeutic permissiveness is very critical. As in the World War II story about national character (as told by the Spanish), we do not want to goad Peru into jumping out of airplane without a parachute! It is going to be hard, I very well know, to square what is professionally wise with wide public expectations based on this or that simplistic notion. But I still have faith that if we do it right and express ourselves adequately, results will not be adversely viewed by public here and elsewhere in Hemisphere.

 

Rusk

 

 

514. Telegram From the Embassy in Peru to the Department of State/1/

 

Lima, October 11, 1968, 1602Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 23–9 PERU. Confidential; Immediate. Repeated to USCINCSO and USUN.

 

7870. Ref: (A) State 252730;/2/ (B) Lima 7850;/3/ (C) State 253684./4/

 

/2/ In telegram 252730 to Lima, October 9, the Department instructed Jones to deliver an "ordinary business letter" to General Edgardo Mercado Jarrin, addressing the new Foreign Minister by military title only, in response to the revolutionary government’s note of October 3. "There is no danger," the Department explained, "that such a response will itself be taken as marking official resumption of relations." The letter asked: (a) when the government intended to return to constitutional rule; and (b) whether it would observe the property rights of foreign nationals in accordance with international law. (Ibid.)

 

/3/ In telegram 7850 from Lima, October 10, the Embassy doubted that the new government would offer assurances about property rights "in light of developments yesterday regarding certain assets of IPC." (Ibid.)

 

/4/ In telegram 253684 to Lima, October 11, the Department replied: "Your points carefully considered when sending letter decided and conclusion reached that essential ask questions." (Ibid.)

 

1. DCM met privately last night with FonOff SecGen Ambassador Javier Perez de Cuellar and delivered letter as directed ref. (A). In doing so DCM called attention to fact that communication was a letter and not a note and that it addressed to General Mercado without further title. DCM said USG considered it important informally to establish dialogue for development of essential information without in any way implying recognition. Perez de Cuellar expressed understanding and agreement.

 

2. SecGen noted he career officer devoted without political inclination to serving his country and therefore continuing with revolutionary regime. He noted unhappily that General Mercado was his fifth Foreign Minister in about two years. He expressed opinion that President General Velasco and cabinet were patriotic Peruvians; nationalistic but not leftists. He hoped there could soon be constructive relations with the US so that the government would not become so frustrated as to find it necessary to deal with Communist regimes and which was not its desire.

 

3. SecGen said that he had received alarming information from Carlos Gibson in Washington about Hickenlooper and Sugar Act implications but in telex conversation with the Peruvian Chargé had been reassured on basis that USG had made no drastic public condemnations either of the golpe or of the expropriation.

 

4. DCM said the lack of condemnatory statements by the USG should not be interpreted as in any way approving either act. DCM said it should be clear to the new government that the US deplored the interruption of constitutionalism and hoped for its prompt resumption. As for IPC, the United States recognizes the right of expropriation but also expects fulfillment of the obligation under international law to make just compensation. DCM noted then that it was precisely these concerns which motivated the letter at this time to General Mercado and that the questions posed therein were on these two subjects. As for the IPC matter, DCM said, an important earnest of the new regime’s good intentions would be for it to put itself in contact with the company for the purpose of discussing compensations. Since this obviously is an issue in dispute, willingness of the regime to submit it to established procedures for negotiation, mediation or adjudicating of such disputes would be important.

 

5. Perez de Cuellar welcomed opportunity for informal contact and said GOP had already established such contacts through its missions in Washington and USUN. DCM said for time being it would probably be inadvisable for any direct meetings between Ambassador and General Mercado and asked to be advised whether the latter would wish to communicate informally with DCM via the SecGen or name another intermediary without official position in the GOP. SecGen expressed opinion that he would be intermediary as he had been, as Chief of Protocol, during the 1962 golpe.

 

6. General Mercado’s reply will be communicated as soon as received. Assume Dept will instruct other ARA posts as to content this message as needed.

 

Jones

 

 

515. Memorandum From Secretary of State Rusk to President Johnson/1/

 

Washington, October 11, 1968.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–1/69. Confidential. Another copy indicates the memorandum was drafted by Shumate on October 10. (National Archives and Records Administration, RG 59, Central Files 1967–69, POL 23–9 PERU) Forwarded to the President as an attachment to a memorandum from Rostow, October 14, in which Rostow explained: "Since Rusk’s memorandum was drafted, the Junta has announced its intention to hold a national ‘referendum’ on the question of whether a new constitution is required before any elections are to be held. None of the Latin governments, except Venezuela, is disposed to insist on a commitment to hold elections as a pre-condition for recognition." (Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–1/69)

 

SUBJECT
The Peruvian Situation

 

A Military Junta headed by Juan Velasco, Commanding General of the Army, deposed Peru’s President Belaunde October 3, sending him into exile, installing an all-military Cabinet. As a result of the coup, diplomatic relations are in a state of suspension and U.S. assistance programs are under review. The Revolutionary Government, which appears to be highly nationalistic, justified its action on grounds of general unrest and loss of public confidence in the Government. The new regime particularly stressed the pretext that the August 13 agreement with the Government and the International Petroleum Company (IPC) over the La Brea y Pariñas oil fields was a sell-out. One of the Junta’s first acts was to declare null the Act of Talara, which formed the basis of the IPC settlement, and on October 9 the President announced the expropriation of IPC’s oil fields, refinery, and other assets. In other statements the regime has given no indication of plans for scheduling of elections, but it has stated that all international obligations will be met.

 

The United States has initiated bilateral consultations through its Embassies with other Latin American Governments on the situation in Peru and the question of recognition, in accordance with procedures established at the Second Inter-American Conference of 1965. Public comment by Department of State spokesmen has been limited to factual answers to questions about the situation and expressions of concern about the coup.

 

Preliminary indications are that, in addition to those countries which follow the practice of automatically recognizing new regimes on continuing relations, most Latin American countries will resume relations relatively soon. This would also be true of Western European and other trading nations. Only Venezuela has announced it is severing relations.

 

The implications of the IPC expropriation are being explored, including all relevant U.S. legislative provisions. These include the FAA and Sugar Act which can require a cutoff of U.S. assistance and of the sugar quota when property owned by U.S. citizens is taken without compensation. Standard Oil of New Jersey, the parent company of IPC, has asked that we take a reserved public position of the IPC take-over pending their own exploration of the possibilities of reaching some acceptable solution with the Peruvian regime.

 

In the period of "suspended" relations, we are making a realistic attempt to obtain from the military regime indications of its intentions to return to constitutional government within a reasonable time. We are also seeking its views as to international obligations to foreign citizens and property in Peru. While seeking clarification of these points, we are maintaining a flexible attitude to lower level administrative contact with the Military Government so that selectively we can do what we determine to be in our own interest, such as protecting American citizens, obtaining clearance for aircraft, and disbursing on loans to private parties. It is too early to judge when we will make a recommendation to you on resumption of relations.

 

Dean Rusk

 

 

516. Telegram From the Embassy in Peru to the Department of State/1/

 

Lima, October 16, 1968, 2042Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL PERU–US. Confidential; Immediate; Limdis. Repeated to USCINCSO for POLAD and USUN.

 

7963. Department for Oliver. Subject: Meeting With GOP Officials. Ref: A) State 252730;/2/ B) Lima 7923;/3/ C) Lima 7888./4/

 

/2/ See footnote 2, Document 514.

 

/3/ Dated October 14. (National Archives and Records Administration, RG 59, Central Files 1967–69, POL PERU–US)

 

/4/ Dated October 12. (Ibid., POL 15–1 PERU)

 

Summary: Ambassador and DCM met last night with revolutionary government Foreign Minister General Mercado and Foreign Office Secretary General in private home./5/ Re questions transmitted in letter authorized by ref. (A) General Mercado indicated the following:

 

/5/ On October 11 Perez de Cuellar called Siracusa to propose a meeting between Mercado and Jones. Siracusa agreed to the meeting, subject to further instructions from the Ambassador and the Department. (Telegram 7896 from Lima, October 12; ibid., POL PERU–US) The Department gave its assent, suggesting, however, that Jones "merely listen and say only that you will transmit replies or views to Washington." (Telegram 254614 to Lima, October 12; ibid.)

 

(A) Revolutionary government referendum reported ref (C), which will put to people question whether they wish future elections under the present constitution, the present constitution amended or a new constitution, will take place during calendar year 1969. This is first step in electoral process but date for actual elections thereafter is indefinite;

 

(B) The revolutionary government’s undertaking to carry out international obligations does include those under general international law as to the rights and property of foreign nationals. The question of compensation for IPC expropriation will be decided in Peruvian courts. [End summary.]

 

1. I met last night for about an hour and ten minutes in a private home with General Mercado. I was accompanied by the Deputy Chief of Mission and the General by the Secretary General of the Foreign Ministry, Javier Perez de Cuellar. The atmosphere of the meeting was businesslike and cool although not unfriendly as we have been closely associated for many years with Perez de Cuellar, a professional diplomat, and have also had some previous association with General Mercado on a friendly social basis. At the outset I referred to my informal letter of October 10 and said the USG was interested in knowing the revolutionary government’s position on the questions posed therein. General Mercado, in responding, spoke first about the second question regarding undertakings under international law.

 

2. With some passion he asserted that the IPC expropriation was a special case and that the government’s action was necessary to correct a long standing problem. He said the action had met with the unanimous approval of the Peruvian people and was completely irreversible. I replied that it was not my purpose to discuss expropriation since the United States recognized the right of a sovereign nation to take territory within its jurisdiction for public purposes. I said, however, that the US also expected fulfillment of the corresponding obligation under international law to make prompt, adequate and effective compensation. In this regard I referred to the notes no.’s 116 and 152 of August 8 and 21, 1967 which we had given the Foreign Ministry making clear the US position on expropriation and compensation in specific case of La Brea y Parinas./6/ I suggested General read them. General Mercado replied that as provided in the Expropriation Act, decree law number 4, the question of compensation would be established in the Peruvian courts. He said it would be up to the courts to place a value on the property expropriated and also to determine the amount of the debts which IPC owed the GOP. The question of compensation would be solved by the balance of these accounts. When it was pointed out that the company does not acknowledge any debts, General Mercado replied that the Peruvian people nevertheless unanimously believe the debt existed. The DCM then suggested that opinion and fact might not be the same thing and asked whether, if the courts found the debts not to be real, the GOP would be prepared to make direct compensation to IPC. General Mercado seemed shocked by such a concept, said he could not imagine any court making such finding, but finally said that the decision of the courts would be respected. To illustrate he mentioned a recent decision by the Supreme Court which found in favor of the Conchan Oil Company (Calif. Standard) in a habeas corpus suit against the government on a tax dispute. I then suggested that it was the responsibility of the GOP, having themselves initiated the expropriation, also to take the initiative with respect to compensation which is its obligation and not leave it to the dispossessed to seek redress.

 

/6/ The texts of the notes are in telegrams 15548 and 22415 to Lima, August 3 and 17, 1967, respectively. (Ibid., PET 6 PERU)

 

3. In connection with the foregoing discussion on IPC, General Mercado sought repeatedly to give assurance as to the "special" nature of IPC case. He said the revolutionary government, while it is nationalistic, is neither statist nor leftist and that it recognizes the need to protect and encourage private capital and to attract foreign private investment. He said Peru did not have the resources for development in any other way. At the end of the conversation, in response to a direct question by the DCM, he vehemently denied that the revolutionary government was influenced by a group of "Nasserist" colonels. He asserted that the armed forces were unified as a single man in determination to carry out their obligations to their country as they saw them under the constitution and to bring about necessary revolutionary reforms, before return to constitutional government. In this connection, he said the era of "old liberalism" was gone and the state must interest itself in the development of the nation. It must therefore take a promotional interest and that it must establish the channels in which private enterprise could operate freely.

 

4. In turning conversation to question number 1 of my letter regarding human rights and return to constitutionalism I said it was perhaps more important fundamentally than the other question we had just discussed. I felt I should make clear, I continued, how deeply the USG regretted the interruption of constitutional government in Peru and how concerned it was to have assurances of an early return to constitutionalism. General Mercado nodded his understanding of US attitude but asserted that the revolution had been necessary and that in carrying it out the armed forces had been fulfilling their obligation under the constitution. He said the politicians had prevented the constitution from working (had made a joke of it) and thus had defrauded the people from achieving their aspirations and blocked progress. While the legislature was supposed to be the primary power of the state in representation of the people, it had not functioned as foreseen in the constitution and the politicians had prevented fulfillment of Article 89 of the constitution which called for a "functional" Senate. This had never been fulfilled, he said, and the Senate, in being politically based, was simply a duplication of the Chamber of Deputies. The revolution had been carried out, he said, in order to give the people a chance to restructure their political organization and to correct its weaknesses. The only way this could be done, including rewriting constitution, he said, (and in this he was strongly supported by the Secretary General) was through the armed forces as the politicians would never set politics aside long enough to make the changes. He implied that the trend in recent years had been toward chaos and if not checked would have led Peru into communism. He said the only bulwarks for stability in a society such as Peru’s were the church and the armed forces. In making these observations he asserted that we must understand that Peru is different from the United States and different from other L.A. countries and having its own character, it also has its own manner of resolving its problems. Referring to Chile and Venezuela, he expressed fear that failure of the democratic regimes there would open gates to communism.

 

5. On the specific question of a return to constitutionalism, General Mercado referred to the announcement of a referendum by the Prime Minister, General Montagne, on October 12. He said this was the first step and that the people would be asked in it whether they wanted to hold elections under the present constitution, under the present constitution amended or under an entirely new constitution. He said the referendum would be held during 1969, and that political parties would have full freedom of action in connection with it. He said the revolutionary government believes the people want to change the constitution, but that if the referendum should prove otherwise, it would be considered a rebuff (vote of no-confidence) and the armed forces would "go home". Presumably he meant turn the reins of government back to civilians although he did not specify. He said no other de facto government "had the courage" to consult the people through plebiscite. Assuming the people opt for a new constitution or a modification of the present one, General Mercado said a "broadly based" commission would be established to do the draft. Asked whether there would then be a constituent assembly he admitted possibility but did not consider it necessary. He was quite vague as to any plans beyond the referendum and the constitutional change, but asserted that the whole process was designed to move toward eventual elections. As an analogy he said the elections were like D Day in Normandy and that "even Eisenhower" did not know exactly when D Day would occur.

 

6. In response to my question, Secretary General said this informal "non-official" meeting constituted answer to my letter of October 10./7/

 

/7/ In telegram 7994 from Lima, October 17, the Embassy judged that the assurances given by Mercado were sufficient to recommend prompt recognition of the new government. "Further delay in resuming relations," the Embassy maintained, "could only damage our interests, and would deny us the opportunity to have contacts which might have a beneficial influence on the future action of the revolutionary government." (Ibid., POL 16 PERU)

 

Jones

 

 

517. Telegram From the Embassy in Peru to the Department of State/1/

 

Lima, October 18, 1968, 2252Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, PET 15–2 PERU. Confidential; Priority; Limdis.

 

8032. For Oliver. Ref: State 257311./2/ Subj: IPC.

 

/2/ In telegram 257311 to Lima, October 17, the Department reported a formal request from officials of IPC and Jersey Standard to invoke the Hickenlooper amendment. The Department also issued the following instructions: "You are authorized in your discretion pass word to military government that matter now in hands our lawyers; that we cognizant as we trust they are too of consequences of application of Hickenlooper; but proceedings are required by law and so we are bound to act accordingly." (Ibid.)

 

1. Reftel discussed at length within Embassy this morning. We under no illusions as to grave repercussions on US relations with Peru for years to come, and in hemisphere if amendments invoked. We nevertheless decided best course was to advise revolutionary government informally that possible application of Hickenlooper amendment and Sugar Act as a result of 1967 expropriation is under active consideration in the Department. In doing so we felt it best not to reveal that IPC and Jersey Standard have asked USG invoke these provisions. We therefore presented current study by lawyers as a natural requirement of the law itself which binding on executive.

 

2. DCM informed FonOff SecGen privately in latter’s home this afternoon. Siracusa was careful to reiterate that no decision has been made and that USG respects the right of expropriation so long as there is compensation. He presented to the SecGen for ready reference copies in English and Spanish of our Notes numbers 116 and 152 of August 8 and 21, 1967, which were presented in reaction to the expropriation at that time./3/ He also presented copies of the two amendments in question as well as of our aide-mémoire of Nov. 7, 1963 presented in reaction to the nullification in that year of the arbitration award which is basic to IPC case./4/

 

/3/ See footnote 6, Document 516.

 

/4/ A copy of the aide-mémoire is in the National Archives and Records Administration, RG 59, Lima Embassy Files, Subject Case File on the International Petroleum Company: Lot 71 F 154, Sep–Dec 1963.

 

3. Ambassador Perez de Cuellar’s reaction was grave. He said this was not the kind of a government likely to respond to pressure. He felt invocation of these acts by the USG would unify Peruvians against US and that Peru would receive solid support of other countries in the hemisphere. He thought such acts would prejudge the legal determination of compensation now in the courts. (See Lima 7982.)/5/ He promised to inform the Foreign Minister, General Mercado, with great care so they would not jump to premature conclusions. He and the DCM agreed on the imperative necessity of keeping this matter out of the public domain until the two governments had had a chance to try to deal with it.

 

/5/ Telegram 7982 from Lima, October 17, reported that the IPC had filed a "habeas corpus action" in an attempt to nullify expropriation of its property. (Ibid., Central Files 1967–69, PET 6 PERU)

 

4. Comment: We assure IPC and Jersey Standard’s decision to request invocation of the amendments represents a willingness on their part to accept the possible total expropriation of their interests in Peru and a termination of all their activities here. Their attitude as expressed in para. 3 of reftel seems clearly to suggest this. If we interpret para. 3 correctly it would seem almost a challenge to the GOP to intervene or in someway take over, possibly by expropriation, IPC marketing system to avoid the exhaustion of stocks implied by the company’s unwillingness to purchase from the expropriated refinery. We believe that if matters come to this the military government will be more unified than ever and, at the outset at least, will be enthusiastically supported by Peruvians on a patriotic basis. The reaction would be not only against IPC but US-Peruvian relations would suffer an historic setback. A wave of anti-Americanism, which might endanger American lives and property, would result. We hope therefore that the Department in making its study will do so with fullest appreciation of potential consequences. Also urge make every effort to avoid publicity so long as the matter is under study and the vital decisions have not been taken.

 

5. With reference to the Embassy telegram no. 7994/6/ recommending a prompt resumption of relations with the revolutionary GOP, we suggest that this is now more desirable than before. We have already said the GOP meets the normal requirements and should be recognized. Because of the seriousness of the subject of this telegram it is important that the avenues of normal intercourse be opened immediately so that we can deal with the matter. It is essential that the GOP not get the impression that recognition is being delayed as a pressure tactic in favor of IPC.

 

/6/ See footnote 7, Document 516.

 

Jones

 

 

518. Action Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

 

Washington, October 19, 1968, 3 p.m.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–1/69. Secret.

 

Mr. President:

 

Sec. Rusk requests your authorization to resume diplomatic relations with the new Peruvian Government which took power on October 3. (Tab A)/2/ His memorandum projects this action on or about Wednesday, October 23. I understand, however, that State may now wish to recognize as early as Monday, October 21.

 

/2/ Tab A was a memorandum from Rusk to the President, October 19; attached but not printed.

 

—The Military Government is in full control, and no significant opposition has materialized. It has met all the traditional tests for recognition.

 

—We have carried out full consultations with other OAS members. Argentina, Brazil, Mexico, and several others have already recognized. Most of the others will have recognized by Monday./3/

 

/3/ October 21.

 

—The new government has assured it will honor its international obligations and that it will hold a referendum to decide whether a new constitution shall be drafted before holding new elections. However, it may be many months, or even years, before freely elected government returns to Peru.

 

—The IPC expropriation will gravely complicate our future relations, but should be kept separate from the diplomatic recognition question. Prompt recognition may help us protect IPC’s interest in obtaining a reasonable settlement.

 

—Resumption of relations does not imply resumption of all assistance programs.

 

Events in Panama are also moving toward early recognition by most countries. State may recommend that we follow suit next week. The Peru case should be resolved first.

 

I recommend that you authorize the resumption of diplomatic relations with Peru whenever Sec. Rusk wishes to move./4/

 

Approved
Disapproved
Call Me

 

/4/ No option is checked, but see Document 519.

 

Walt

 

 

519. Notes of Meeting/1/

 

Washington, October 22, 1968, 1:20–2:24 p.m.

 

/1/ Source: Johnson Library, Tom Johnson Meeting Notes. No classification marking. Drafted by Tom Johnson. The meeting was held during lunch.

 

 

THOSE ATTENDING THE MEETING WERE
The President
Secretary Rusk
Secretary Clifford
General Wheeler
CIA Director Helms
Walt Rostow
George Christian
Tom Johnson

 

[Omitted here is discussion of other subjects.]

 

Secretary Rusk:... We recommend that the USA now recognize Peru, if you approve.

 

The President: What does that do?

 

Secretary Rusk: Colonels have it in Brazil and Argentina.

 

The President: What if we didn’t recognize Peru?

 

Secretary Rusk: It would complicate ourselves. But we have recognized 50 countries where coup d’etats have taken place.

 

Secretary Rusk: We are denied AID for Peru.

 

CIA Director Helms: Sugar quota would fall off once the Hickenlooper Amendment takes over.

 

Secretary Rusk: We don’t get anywhere by not recognizing them. This is the 62nd coup I’ve lived through since I’ve been Secretary of State and Dick Helms did not cause a one of them—contrary to popular belief.

 

We can’t impose our will over other countries. They will conduct elections in Peru.

 

We went two years without a coup in Latin America./2/

 

/2/ At the end of his notes, Tom Johnson recorded the President’s decision on Peru as follows: "Recognize him [Velasco] as soon as you want to." Rostow later told Benjamin Read that the President had given Rusk a "reluctant go-ahead to recognize, if that’s what he [Rusk] wants to do." (Note from Bromley K. Smith to Lois Nivens, October 22; ibid., National Security File, Rostow Files, Meetings with the President, January–December 1968 [1])

 

[Omitted here is discussion of other subjects.]

 

 

520. Information Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

 

Washington, October 25, 1968.

 

/1/ Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–1/69. Confidential. A copy was sent to George Christian. Another copy indicates the memorandum was drafted by Samuel W. Lewis. (Ibid.)

 

SUBJECT
Resumption of Diplomatic Relations with Peru

 

At the Tuesday lunch/2/ you authorized Secretary Rusk to resume diplomatic relations with Peru as soon as multilateral and Congressional consultations were completed.

 

/2/ See Document 519 and footnote 2 thereto.

 

All countries outside this hemisphere with whom Peru traditionally maintains relations have now recognized. All major Latin American countries except Venezuela have also resumed relations.

 

State has consulted with Senator Hickenlooper (the only Senator accessible) and the staffs of the Senate Foreign Relations Committee and House Foreign Affairs Committee, as well as staffs of Representatives Mailliard and Purcell./3/ No objection to our resumption of relations was voiced.

 

/3/ Representatives William S. Mailliard (R–California) and Graham Purcell (D–Texas).

 

Secretary Rusk authorized our Embassy in Lima to answer the Peruvian Government’s note at noon today (text of our note is attached at Tab A),/4/ thereby signalling the resumption of diplomatic relations.

 

/4/ Attached but not printed. The text of the note is also in telegram 261223 to Lima, October 24. (National Archives and Records Administration, RG 59, Central Files 1967–69, POL 15–1 PERU)

 

A brief low-key announcement will be made by State’s press spokesman at the noon briefing today (a copy is attached at Tab B of this announcement)./5/

 

/5/ Attached but not printed. The text of the announcement is in Department of State Bulletin, November 11, 1968, p. 497.

 

Walt

 

 

521. Telegram From the Embassy in Peru to the Department of State/1/

 

Lima, November 6, 1968, 2340Z.

 

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 15–1 PERU. Confidential.

 

8336. Subj: Call on New President, General Velasco.

 

1. General Velasco received me very cordially on my first official visit since reestablishment diplomatic relations. He had press photographer present to record event. I told President I was happy to assure him that my government wished to continue the close and happy relations which had always existed between our two countries; that as Ambassador I was happy to have this opportunity to greet him personally as well as in the name of my government. I added that I hoped to continue working with his government as I had with past Governments of Peru in the best interests of Peruvian-American relations.

 

2. I informed the President that I had already had the opportunity to call on the Minister of Foreign Affairs and on the Prime Minister/2/ and that I hoped to call on the other members of his cabinet within the next days and weeks. I told him that we had some urgent and important bilateral problems such as IPC, Cerro de Pasco, fisheries conference, Investment Guarantee Agreement, etc. I added that I had discussed the IPC case at some length with both the Prime and Foreign Ministers and assumed they would be informing him of our conversations on this subject. I expressed the hope that, if at any time in the future I needed to discuss these matters directly with him, he would be good enough to receive me. He assured me that this was the case and that his "door was always open to me".

 

/2/ A report on Jones’ meeting with Mercado is in telegram 8201 from Lima, October 30, and a report on his meeting with the Peruvian Prime Minister, General Ernesto Montagne Sanchez, is in telegram 8337 from Lima, November 6. (Ibid., PET 6 PERU and POL 15–1 PERU, respectively)

 

3. President Velasco then spoke about the revolution and the reasons why he and the military had felt it necessary to move. He said the country had gotten into a mess, that the people were desperate, particularly those in the highlands. He mentioned particularly the area around Puno where there was near starvation. He referred to the desperate condition of Indian population and said "something must be done" for them. This was not one of those military coups in which the country was prosperous and the participants would benefit. On the contrary, the position of Peru had been desperate and he and his "team" had felt it necessary to save Peru from disaster. They did need help and understanding from the United States and he hoped that some assistance would eventually be forthcoming. He said if they failed they would not only be hanged but the country would fall into either chaos or a Castro-type of government. The President said his government had an overall plan of general improvement but that it could not be revealed all at once since it was more prudent to proceed one step at a time. He referred to the chaotic situation of Peruvian universities which he said were centers of subversion and political agitation rather than of higher education. He also referred to what he considered were unsatisfactory conditions within Peruvian labor unions but did not elaborate. Finally, he referred to the press and insisted that he had said from the beginning and sincerely felt that freedom of press was essential. However, two periodicals Caretas and Expreso had exceeded bounds of correct behavior by insulting and attacking personally members of the junta. This, he said, could not be tolerated and that they must learn respect for the uniform. Hence the paper and magazine have been closed down and will not be permitted to reopen until November 15, which would require Caretas to miss one of its fortnightly issues. He expressed appreciation for attitude of daily newspaper El Comercio which supported the junta (he assured me without their having requested it to do so) and even for La Prensa which although it had criticized the government on many issues he felt was the kind of constructive criticism which the junta could accept. When the various reforms have been accomplished, the military junta would look forward to holding elections and turning the government back to a civilian administration. At that time he and his comrades in arms would very happily go back to their homes. In response to my question, he said he could not fix even an approximate date for this event.

 

4. Finally he mentioned that the last and decisive meeting of his group which led to the coup had been held at 7:00 p.m. on the night of October 1. He said the decision had been very tightly held and that this group consisted of "only six officers". He said the commanders of the five military regions had been informed except for the date and the hour when the coup would commence. With obvious relish he recalled he had seen me, the Mayor of Lima, Luis Bedoya Reyes, and the publisher of La Prensa, Pedro Beltran, at a dinner party the night of October 1 shortly after the decisive meeting on the coup. It seemed to please him that none of us suspected what he had just decided to do.

 

5. At end of interview I informed President of agrement, of Fernando Berckemeyer as Peruvian Ambassador in Washington, saying that I had handed written communication to this effect to Chief of Protocol that same morning. Velasco expressed his pleasure at this news and his confidence that Berckemeyer would serve Peru well in this important post.

 

Jones

 

 


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