Memorandum, Chilean Cooper Situation

chileon amboweded CHILEAN COPPER SITUATION BACKGROUND In addition to a brief press conference statement by the Secretary of State on Chile's abrogation of the copper agreement, the substancé of the following has been communicated informally to the Chilean Ambassador by the State Department: The reaction in the United States to the Chilean action is extremely bad; It will affect every aspect of our relations with Chile; It would make it almost impossible to obtain further investment of American private capital in Chile; It would strongly affect Chile's credit position in the United States which might not be able to grant additional loans. Chile's action is against her own interest and will make her an high-cost and residual supplier of copper at a time when production is increasing in other countries and aluminum is being developed as a substitute. The United States Govern- ment had shown itself willing to discuss the price of copper or any other specific proposal made by the Chilean Government, and it was Chile who called off the talks. United States hands are clean since we lived the up to/copper agreement, and showed willingness to negotiate whereas Chile had not fulfilled its obligation of the agreement and specifically failed to pass the copper contract law. ARCHIVES 'NATIONAL RECORDS AND RECOMMENDATION - SERVICE 1. That the President reinforce the above position in his conversation with the Ambassador and express regret that Chile tbok this action which in our view is against her long run interests. 2. That the President recall this Government's sympathy toward our