Foreign Relations of the United States, 1969–1976, Volume E–10, Documents on American Republics, 1969–1972

620. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon¹ ²

Washington, October 12, 1970

SUBJECT:

• Reconstruction Assistance for Peru

In the memo at Tab A Secretary Rogers recommends you confirm to Peruvian President Velasco our intention to provide earthquake reconstruction assistance. He believes it is time to give Peru a clear statement as to our intentions. His memo also responds to your request of June 8 (Tab B) for recommendations in this regard.

The Secretary outlines three possible courses:

1. The safest course would be simply to assure Peru in general terms of our intention to help on a case-by-case basis as specific projects are developed, but with no specific commitment or level mentioned. Funds would come out of existing authorities and prospective future appropriations.

2. At the other extreme would be a course aimed at maximum political/psychological impact: Make a specific commitment of up to $100 million over three years. This could be funded by relabelling $50 million already available from existing authorities and programs—PL 480 aid, housing guarantees, ExIm Bank loans—and providing the additional $50 million either from future regular appropriations or by requesting a special appropriation.

3. An intermediate option would be to make an initial offer of $50 million from available funds (see 2 above) and indicate we are prepared to extend additional but unspecified aid as needed later. The additional funds would come out of regular future appropriations.

The Secretary, supported by OMB, recommends the budgetarily safe option—Option 1. Since the Peruvians have not yet formulated specific reconstruction plans, he thinks it premature to try and fix a precise level of aid. He also fears that a specific pledge prior to completion of project proposals may create future problems of un-utilized funds or implementation problems and may arouse congressional criticism. He cites a House Foreign Affairs Committee staff report urging caution concerning the ability of Peru to plan and administer large-scale aid.

Bill Timmons also supports this option. At a time when you are vetoing domestic spending bills, he believes it may be unwise to indicate a specific commitment on foreign assistance, especially prior to the elections. He also believes there may be adverse congressional reaction to expending significant sums on a nation which has nationalized a US investment, and that this may further alienate congressional sentiment with regard to the foreign aid issue.

Option 1 is sound from a budgetary and economic procedures viewpoint. However, it is the least satisfactory from a political/psychological point of view:

• —Peru will make invidious comparisons with the $100 million we extended to Chile in 1960 after its much less severe earthquake.
• —A general expression of intent without specifics will appear in marked contrast to emergency aid and the warmth and symbolism of Mrs. Nixon’s visit, and will probably be seen by the Peruvians as evasive and as a backing away.
• —Thus, not only are we not likely to advance the general climate in which bilateral problems may some day eventually be solved, we may even sour that climate.

The other extreme—Option 2—seeks maximum political/psychological impact. However, the Secretary and OMB have made very strong budgetary and economic arguments against it. Timmons also points out the domestic reaction problems for this option.

The dilemma in all this is that while there is economic need and humanitarian reason to extend aid to Peru, the most compelling reasons for our getting involved are political and psychological:

• —We have a commitment to help; how we follow up will be seen as symbolic of our policy toward Peru and therefore have an effect far beyond the strictly economic/technical.
• —Our best chance to influence developments and secure greater tractability on our difficult bilateral problems is to maintain a constructive relationship where we can. Assistance in reconstruction would best help do that. This will not guarantee solution of our problems, but it gives us the best chance of that. Without that kind of strengthened general relationship the chances for their solution will definitely be nil.
• —Given Chilean developments it is all the more important that we maintain constructive relations with Peru; the Communists and Allende will make a great bid for Peruvian support. If Peru has no alternative source to look to for support, Peru may well go down this line. The Peruvian Government is economically statist and nationalistic, but not Marxist.

The issue we have, therefore, is whether we are to be guided primarily by budgetary/economic considerations at some cost in foreign policy objectives, or whether we should primarily seek political gain at some cost in budgetary/economic terms.

There is a variation to the intermediate option—Option 3—which holds promise of treading a satisfactory line and I recommend this means of making satisfactory political impact while limiting the budgetary liabilities:

• —Make an initial offer of the $50 million from current capabilities as proposed in Option 3, and express our readiness to extend additional assistance on a project basis as these are developed up to an additional $50 million.

This offer has the disadvantage of mentioning specific figures, but it has the advantage of:

• —gaining maximum probable political impact, and avoiding the invidious comparison with our Chilean earthquake aid;
• —funding the initial $50 million from existing funds so that there is no added budgetary impact; new money would be based on essentially the same criteria as Option 1, that is, the prior development of projects; moreover it would be sought in the context of regular future foreign aid appropriation and the Peruvians would be given to understand that our commitment is contingent on availability.

If we delayed informing the Peruvians until after November 3, we could avoid the risk of domestic reaction related to the election that Timmons is concerned about. The reconstruction nature of the aid should soften congressional reaction to the idea. I also believe that the Peruvians should be informed of our intentions through normal diplomatic channels. A personal message from you might draw adverse domestic and congressional reaction and is not really necessary.

Secretary Rogers and OMB point out that if you desire to pledge specific amounts it would be better to absorb these within regular future appropriations; a special appropriations request at a time when we are requesting other high priority supplemental appropriations would be inadvisable. I agree.

Secretary Rogers also points out that none of the commitments proposed in any of the options could be completely met if the Hickenlooper amendments were applied. He therefore recommends that we continue to follow our present policy of deferring application of the Hickenlooper amendment. I concur.

RECOMMENDATION:

That you approve the intermediate course, which would offer an initial $50 million and indicate your readiness to authorize additional aid to another $50 million over the next three years on a case-by-case basis as reconstruction projects are developed by Peru, and subject to budget availabilities. All of these funds would come out of future regular appropriations and existing authorities.

Approve
Disapprove
No, approve Secretary Rogers recommendation

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 793, Country Files, Latin America, Peru, Vol. 2, July 1970–13 December 1971. Confidential. Sent for action. Nixon approved Rogers’s recommendation on October 19. Nixon wrote: “I agree” in the left-hand margin next to the sentence that begins “A personal message from you might draw adverse.” Next to the last recommendation, Nixon wrote “No” in the right-hand margin and wrote below: “I want to give Velasco just as little as we can—in specifics—He is using the earthquake to build his socialist state.” Tab A, a September 8 memorandum from Rogers to the President, has not been found. Tab B is published as Document 616.
2. Kissinger summarized a memorandum by Secretary of State Rogers in which he discussed options for earthquake aid to Peru. Kissinger recommended a specific amount of approximately $100 million dollars to be distributed over three years. President Nixon, however, approved Rogers’s recommendation of assistance on a case-by-case basis.