YOUR MEETING TOMORROW WITH PERUVIAN FOREIGN MINISTER MERCADO

• Document Type: CREST
• Collection: Library of Congress
• Document Number (FOIA) /ESDN (CREST): LOC-HAK-17-2-24-4
• Release Decision: RIPLIM
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: January 11, 2017
• Document Release Date: December 9, 2011
• Sequence Number: 24
• Publication Date: September 27, 1971
• Content Type: MEMO

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MEMORANDUM
NATIONAL SECURITY COUNCIL
CONIDNTIAL
ACTION
27 September 1971. ey
MEMORANDUM FOR: DR. KISSINGER
FROM: ARNOLD NACHMANOFFIJ
SUBJECT: Your Meeting Tomorrow with Peruvian
Foreign Minister Mercado
You are scheduled to meet with Foreign Minister Mercado of Peru
at 12 noon on Tuesday. I will also attend and Ashley Hewitt will stand
by to interpret since the Foreign Minister speaks little English.
Mercado will be accompanied by the Peruvian Ambassador Fernando
Berckemeyer. They will be coming directly from a meeting with
Secretary Rogers./
Peru is a key country in South America, and an important element in
our strategy in trying to isolate Chile and bring external pressures to
bear tending to moderate its policies. For all their nationalism, the
Peruvian military remain stoutly anti-Communist and are disturbed by
events in Chile. Unfortunately, we have been prevented from developing
a more cooperative relationship with Peru by a number of specific
irritants to our bilateral relations (the IPC and Grace expropriations,
law of the sea and fishing, etc.). These are dealt with in detail below.
However, your main purpose in meeting with Mercado should be to:
--Emphasize the importance we place on good relations with Peru.
--Indicate our interest in seeing the irritants in our current relation-
ship eliminated in a pragmatic way so that our mutual collaboration
can take more concrete and active forms.
We don't know precicely what points Mercado will emphasize. However,
the items listed below may come up.
CONFIDE?
NSS, DOS Reviews Completed.
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CONFIDENTIAL
Visit From Mrs. Velasco and the Prospects of a Visit by President
Velasco: You will recall that the President had extended an invitation
to President Velasco for a State visit to the U.S. this year, but he had
scheduling problems and also internal political difficulties that prevented
him from either accepting or refusing the invitation. Instead, he asked
if the visit could be delayed, but there has been no discussion of a new
date. However, Mrs. Velasco visited the U.S. in June, reciprocating
Mrs. Nixon's visit to Peru.
You may wish to:
--Say that the President and Mrs. Nixon were delighted to receive
Mrs. Velasco during her visit in June but were disappointed that
it had not been possible for President, Velasco to come to Washing-
ton for a State visit at that time.
--Feel out Mercado's thinking with regard to a possible State visit
later, but avoid any commitment.
Expropriation Cases and Sugar Legislation: The International
Petroleum Company (IPC) expropriation case remains at a standstill -
and there have been no substantive conversations since 1969. Since it is
a highly emotional matter in Peru it would be extremely difficult for
the present government to make overt moves in the direction of settling
it. However, there have been indications that the GOP is groping for
some way of getting rid of this irritant in its relations with the U.S.,
and we have information that IDB President Ortiz Mena has had some
secret conversations with the Peruvian Finance Minister about ways of
getting rid of this issue (Mercado may not be aware of this.)
The picture is brighter with respect to the W. R. Grace expropriation
case. The GOP and Grace are now closer to agreement on some of the
major issues and it seems possible that this case may eventually be re-
solved on a basis satisfactory to Grace, though some problems are still
outstanding.
For the past six months we have fought a running battle with the Congress
to prevent the attachment of riders to the Sugar Act designed primarily
to penalize Peru because of the Grace expropriation which included sugar
plantations. Our opposition was based on the conviction that the riders
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would only enrage the Peruvians, and would not be successful in
resolving the Grace case or preventing further expropriations. The
legislation would also have damaged our relations with other sugar
producing countries. The Senate-House Conference Committee has
now reported out a bill omitting the offensive riders, but this result
was achieved only after extreme efforts on our part, including the
threat of a Presidential veto.
You may wish to:
--Express our satisfaction that conversations between GOP
officials and Grace are showing positive results and say that
you hope this impediment to our collaboration will be removed
shortly.
--Note that the IPC case continues to be a problem for us
especially in the way it limits what we can do with our Congress
in our efforts to improve relations with Peru, but indicate your
awareness that the IPC case also has domestic political coxnpli-
cations for the GOP.
--Emphasize the extreme efforts which the Administration has
gone to over the last six months to limit the reduction in the
Peruvian sugar quota or other amendments to sugar legislation
adversely affecting Peru as an example of our concern for close
working relations.
CHIR.EP and Relations with Communist China: The Peruvians are
reportedly engaged in conversations with Communist China with a view
to eventual establishment of diplomatic relations. Initially the GOP indi-
cated flat Peru would like to see both Peking and Taiwan in the United
Nations, but more recently Peru has retreated to a more noncommittal
position.
You may wish to:
--Explain the reasons for our position on the CHIREP issue and
urge that Peru give us its support.
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Law of the Sea and Fisheries: Peru is one of the CEP (Chile,
Ecuador, and Peru) which led the way in claiming national sovereignty
to a limit of 200 miles off shore. In recent years it has been more
moderate than Ecuador in pursuing these policies, however, and only
siezed one U.S. fishing boat this year. Peru has indicated its willing-
ness to resume quadrapartite talks with us but only if Ecuador is
willing to do so. As you know, we are caught in a paradox with Ecuador
arising from our inability to waive the Foreign Military Sales Act (FMS)
suspension with regard to Ecuador without assurances on future tuna
boat siezures, and Ecuador's unwillingness to negotiate with us while
"under sanction" meaning the FMS suspension.
You may wish to:
--Say that you see hopeful signs in the fisheries dispute which
leads you to believe that a practical solution might be achieved
pending the 1973 Law of the Sea Conference.
--Note that we are prepared to go back to quadrapartite talks and
that we are having conversations with the Ecuadoreans on this
rra tter.
Loans and Credits: The Foreign Minister may point to the gradual
improvement in our relations and to the fact that in spite of that improve-
ment, the credit pipeline remains almost dry.
You may wish to:
--Reiterate that what we can do is very closely controlled by the
Congress and the laws which it has passed, and that putting into
effect our obvious desire for a more concrete collaboration with
Peru depends very largely on the success of our joint efforts of
removing the outstanding irritants in that relationship.
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