Foreign Relations of the United States, 1947, The American Republics, Volume VIII

711.23/7–847

Memorandum of Conversation, by Mr. James Espy of the Division of North and West Coast Affairs

confidential

[Washington,] July 8, 1947.

Participants:	Peruvian Foreign Minister, Dr. Enrique García Sayán
	Peruvian Ambassador, Don Jorge Prado
	Assistant Secretary of State, Mr. Norman Armour
	Mr. Wright, ARA
	Mr. Cecil Lyon, RPA
	Mr. Wells, NWC
	Mr. Espy, NWC

The Foreign Minister opened the conversation with an expression of pleasure at being in this country and he stressed the long friendly and cooperative relations between Peru and the United States.

The Minister then spoke of the internal affairs of Peru saying that they had reached politically and economically a stage of confusion and strain. He described the situation in the following effect: Politically, the Graha murder in January of this year brought into the open the conflict between the Aprista party and the conservative elements in the country. Antonio Graiia was a leading conservative newspaper editor and the conservatives immediately assigned a political character to his murder endeavoring to implicate the Aprista party in the crime. The danger in the conflict is that one side or the other might endeavor to overthrow the democratic and liberal régime of President Bustamante and take over the government. Contrary to rumors that have been circulated the President has no intention on his part to assume arbitrary powers to meet this threat such as suspending the Peruvian Congress and is determined to follow democratic practices and to steer a middle of the road course. But the most important factor with which the President is faced in this problem is the economic stability of the country.

Dr. García said that Peru is now confronted with serious economic difficulties which arise primarily from insufficient foreign exchange for the purchase of necessary commodities from abroad and that are needed for the welfare of the country. He cited as examples the fact that there had to be cancelled the construction of a paper mill, using sugar cane pulp, because the $300,000 foreign exchange could not be made available for the purpose. Another example he said was the cancellation of $100,000 worth of fertilizers required for Peruvian agriculture.

The Minister stated that to meet the situation Peru needs financial assistance from the United States. Dr. García declared that he feared that if Peru was unable to obtain such assistance there might well be an economic and political upset in the country which would not only have serious effects in Peru but as well to the hemisphere. He explained this remark by saying that Peru is on the Pacific the counterpart of Brazil on the Atlantic and that they form, so to speak, a transverse axis through South America. Therefore due to this geographical and political position should Peru be shaken by internal disturbances this might well affect all the other American nations. He concluded by reiterating the hope that the United States could render assistance to his country.

The remarks of the Foreign Minister were followed by an emphatic statement by the Peruvian Ambassador. The Ambassador averred that his country had shown a warmer friendship toward and a longer record of close cooperation with the U.S. than any other nation of this hemisphere. He made particular reference to Peru’s successful efforts to thwart an attempted plan, at the time of the Rio de Janeiro Conference,²³ to create a division of American hemispheric solidarity. Despite this attitude of Peru toward the U.S. the door had been closed to it to obtain any financial assistance, the most recent example of which was the announcement of the Treasury Department²⁴ declining to grant a stabilization loan to Peru. He pointed out that in contrast to this position taken toward Peru, we had been granting financial assistance in large amounts to other countries, even to former enemy states. He said he felt that Peru was entitled to more consideration than this and should be accorded preferential treatment.

Mr. Wright²⁵ suggested to the Minister and the Ambassador that the question of these economic matters should be presented and discussed frankly at the meeting with Assistant Secretary Thorp on Wednesday at 3 p.m. July 9th.

. . . . . . .

23. The Third Meeting of the Foreign Ministers of the American Republics held at Rio de Janeiro, January 1942. For documentation, see Foreign Relations, 1942, vol. v, pp. 6 ff.
24. Supra.
25. James H. Wright, Acting Director, Office of American Republic Affairs.