IDB LOANS TO CHILEAN UNIVERSITIES

• Document Type: CREST
• Collection: Library of Congress
• Document Number (FOIA) /ESDN (CREST): LOC-HAK-108-7-13-0
• Release Decision: RIFLIM
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: January 11, 2017
• Document Release Date: September 16, 2011
• Sequence Number: 13
• Publication Date: December 28, 1970
• Content Type: MEMO

ti.
No Objection to Declassification in Full 2011/09/16: LOC-HAK-108-7-13-0
Loans for two private Catholic universities, which had been negotiated with
the previous Chilean government, would not be the best grounds on which
to take a public posture of hostility toward the Allende Government; U. S. op-
position to the loans would give Allende an opportunity to charge us with
"economic aggression" and gain support in. Chile and Latin America.
-- These loans will not provide any significant help to the Chilean economy.
NSS review completed.
SECRET
MEMORANDUM FOR THE PRESIDENT
FROM:
SUBJECT: IDB Loans to Chilean Universities
INFORMATION
December 28, 1970
In accordance with the policy direction you set forth in the NSC meeting on
Chile on November 6, U. S. representatives in the international financial
institutions have used their influence in a non-overt way to delay considera-
tion of new credits for Chile. In the Inter-American Development Bank (IDB),
consideration of two pending loans (totaling $11 million) for two private Catholic
universities in Chile has been delayed.
On December 21, however, the Chilean Finance Minister formally gave the IDB
assurance that his Government would provide its local cost contribution to the
loans, and requested approval of the loans by the end of this year. The Chilean
Government's commitment to put up its contribution removed the last possible
technical objection to consideration of the loans, and the U. S. Executive Direc-
tor will be forced to vote on it soon. Since these loans would be from the Fund
for Special Operations, where we have veto power, a positive U. S. vote is re-
quired for approval. Our Executive Director blocked the loans in the IDB Board
meeting on December 24 by indicating he is uninstructed, but he believes that if
he takes an "uninstructed" position in the Board meeting next month it will be
clearly seen as an overt U. S. political position against the two loans to Chile.
The NSC Senior Review Group considered this question at its meeting on Decem-
ber 23, and agreed that our overall interests would be best served by approval
of the two university loans at the next IDB Board meeting on January 7. The
Review Group based its decision on the following factors:
No Objection to Declassification in Full 2011/09/16: LOC-HAK-108-7-13-0
 - The IDB loans will help the two universitiesto remain independent of
GOC control; our Embassy and CIA note that although there is some
leftist influence in the Catholic University of Santiago, it increasingly
is becoming an intellectual center for the anti-Allende wing of the
Christian Democratic Party. (Catholic leaders in this country have
urged U. S. support for the loans.)
-- We can make clear to the financial community that the university loans
are a special case and do not signify a "go-ahead" for other economic'
credits; in fact, approval of these loans may make it easier for us to
take a harder stand later on loans which are more significant economi-
cally.
No Objection to Declassification in Full 2011/09/16: LOC-HAK-108-7-13-0
The NSC Review Group recognized that careful consultations with the Con-
gress are necessary to explain the reasons for our position on these loans,
particularly in view of the expected copper expropriations and the fact that
the IDB Replenishment Bill is still pending. However, the consensus of the
agencies, including Treasury, is that our position could be justified to the
Congress. Therefore, unless you object, the Review Group will.. authorize
our Executive Director of the IDB to vote in favor of the two university loans
at the next IDB Board meeting, and State and Treasury will undert1ke appro-
priate consultations on the Hill.
No Objection to Declassification in Full 2011/09/16: LOC-HAK-108-7-13-0
SECRET