Talking It Over

Returning to Santiago from a visit to neighboring Peru, Chilean Foreign Minister Gabriel Valdes hastily summoned U.S. Ambassador Edward Korry. In Lima, Valdes had held two long talks with Juan Velasco Alvarado, leader of the military junta that seized power last fall. Subject: the approaching showdown between Peru and the U.S., which neither nation really wants. Soon after his junta overthrew President Fernando Belaunde Terry in October, Velasco expropriated the U.S.-owned International Petroleum Co. As a result, the U.S., under a congressionally imposed retaliation called the Hickenlooper Amendment (TIME, Feb. 14), would have no choice in six months but to cut off aid and favored trade with Peru unless "appropriate steps" were taken toward a settlement compensating the oil company.

Velasco, reported Valdes, was finally beginning to realize that the U.S. actually intended to invoke the amendment and that the two countries were on a collision course. With 350,000 sugar workers immediately dependent on exports to the U.S., Peru's previously adamant president was now open to negotiation.

Disintegrating Relations. Valdes' message, relayed to Washington from Santiago, contained four face-saving provisos for the sovereignty-conscious Peruvian junta. Velasco would receive a U.S. emissary, but that representative must be 1) a high-level personage, 2) President Nixon's special representative, 3) armed with discretionary powers to negotiate broadly, and 4) willing to come to Lima. The Administration has been increasingly concerned over its disintegrating hemispheric relations; at his press conference two weeks ago, President Nixon ruefully admitted that imposing the Hickenlooper Amendment would have an anti-American domino effect all over South America. Therefore the President speedily agreed to all four considerations. Off to Lima last week flew John N. Irwin, 55, a Wall Street lawyer who served briefly in the Eisenhower Administration as a Deputy Assistant Secretary of Defense for International Affairs and who helped to negotiate new treaties with Panama covering the Panama Canal.

Peruvians received the President's representative cordially and prepared to get down to serious negotiations this week to head off the Hickenlooper deadline of April 9. To demonstrate good faith, moreover, Velasco held his first press conference and made a point of answering questions from U.S. correspondents.

Not Willy-Nilly. "We want to converse," the retired general said somewhat nervously, standing in khaki army uniform behind his desk. Velasco praised the U.S. as "a just nation" and suggested that "immoral companies" were the real barrier keeping the two countries apart. How would the spread be resolved, he was asked, between the $120 million that the IPC is asking for its expropriated properties and the $54 million that Peru up to now has been prepared to pay? "Courtappointed appraisers will decide what the property is worth." Was the $690 million that Peru insists it is owed by IPC subject to modification? "Yes, naturally. We are not acting willy-nilly." With that, the two sides retired for private discussions to defuse the crisis.

This file is automatically generated by a robot program, so reader's discretion is required.