TO A/S MEYER AND MR. KISSINGER: SITUATION REPORT AS OF 20 SEPTEMBER

Created: 9/21/1970

OCR scan of the original document, errors are possible

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ASST. SECY MEYER AND MR. KISSINGER SITUATION REPORT

1. IN THE COURSE OFEPTEMBER, AMBASSADOR KCRRY EXCHANGED VIEWS ABOUT THE CHILEAN SITUATION AND ABOUT AVAILABLE COURSES OF ACTION TO DENY ALLENDE THE PRESIDENCY, WITH MINISTER OF ECONOMY CARLOS FIGUEROA AND WITH MINISTER -OF DEFENSE SERGIO OSSA. BOTH ENJOY THE PERSONAL CONFIDENCE .OF PRESIDENT FREI AND BOTH BELONGTO'aN INFORMAL WORKING GROUP WITHIN THE. CABINET, COMPOSED OF FIVE CABINET MINISTERS WHO ARE CONVINCED THAT STEPS NEED BE TAKEN TO PREVENT ALLENDE'SONGRESS. THE FOLLOWINGET MINISTERS BELONG TO THE AFOREMENTIONED GROUP!

OSSA, MINISTER OF DEFENSE

TROKCOSO, MINISTER WITHOUT PORTFOLIO

FIGUEROA, MINISTER OF ECONOMY

ZALDIVAR, MINISTER OF FINAflCE

ROJAS, MINISTER OF INTERIOR

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ANTIAGO

FOLLOWING THREE CABINET MINISTERS HAVESAME DEEP CONCERN OVER THE SITUATION, BUT HAVE NOTTO JOIN THE INNER GROUP (BECAUSE OF THEIRUTILITY)ERE FORE NOT' PR IVY- TO ANY-ACTION PLANS:

DONOSO, MINISTER OF HOUSING

LEON, MINISTER OF

. C RAMON VALDIVIESO, MINISTER .OF

OF MINES ALEJANDRO HALES AND MAXIMO; APPEAR RESIGNED TO ALLENDE'S ADVENT, BUT DOUBTWILL LAST, IFE CA RELATIVE OF ALESSANDRI *WORKING ON HIM". MINISTER OF AGRICULTUREOMPLETELY LOST AS USUAL" GABRIEL VALDES IS TRYINGKOLITICAL SKIN, KEEPING LINKS OPEN TO ALL END EHOWEVER, HE HAS NOTPENLY YET* ^OF JUSTICE GUSTAVO LAG.GSIS AN -AVOWED FOLLOWER

A. ACCORDING TO FIGUEROA, BOTH HE AND HIS COLLEGUE ZALDIVAR ARE PREPARED TO RESIGN, BUT ARE DOUBTFULEl'S WILLINGNESS TO USE THEIR RESIGNATION AS EXCUSE 'T^

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ANT lAGOfONSTITUTIONAL CRISIS. SHOULD THEY RESIGN, THE COLLEGIATE PRINCIPLE WOULD APPLY AND ALL OTHER MEMBERS OF THE CABINET WOULD PUTTHEIR RESIGNATION. BOTH ARE CONCERNED LEST THEIR RESIGNATION BE CONSIDERED AN.ACT OF .'AND OF ABANDONMENT OF FREI.' <IN THISIGUEROA EMPHASIZED FRETS WELL KNOWN PROPENSITY FCR LETTING OTHERS MAKE THE PAINFUL DECISIONS). WHAT WOULD HAPPEN IF FREI INVITES THE MILITARY TO FILL THE VACANT CABINET POSTS AND THE MILITARY DECLINE? THEN FIGUEROA AND ZALDIVAR WOULD LOOK LIKE THE PROVERBIAL RATS ABANDONING THE SHIP AND THE FULL BLAME WOULD FALL ON THEM. FIGUEROA DOUBTS WHETHER HIS AND ZALDIVAR'S RESIGNATION WOULD, BY ITSELF, TRIGGER NATIONAL CRISIS." IT MAY TAKE ONE OR TWO MOSTHS BEFORE THE CHILEAN PEOPLE FEEL THE FULL IMPACTNFLATION AND UNEMPLOYMENT. HEWCE, THEIR DEPARTURE FROM PUBLIC OFFICE WOULDITUATION WHOSE EFFECTS HAVE NOT AS YET MADE THEMSELVES FELT. SOME BUSINESSMEN ARE ALREADY TRYING TO MAKE THEIR PEACE WITH ALLENDE.

5. THE INNER GROUP HAS BEEN RECEIVING THE ECONOMIC

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A SANTIAGO ANALYTICAL SUPPORT OF CAUAS, MOLINA AND MASSAD, NONE OF WHOM ARE IN ON THE SECRET. MAS SAD IS ON RECORD IN THE GOC'S "ECONOMIC COMMITTEE" AS REFUSING TO LEND HIMSELF TO_ INFLATIONARY SOLUTIONS OF THE TYPE "ADVOCATED BY ALLENDE'S ECONOMIC LIAISON MAN, VUSKOV1C, WHO HAS BEENORMULA OF VIRTUALLY UNLIMITED CREDIT AND RECOURSE TO THE PRINTING PRESS IN ORDER TO MAKE UP THE CURRENCY

6. FIGUEROA DENIED ANY KNOWLEDGE OF DIRECT TALKS BETWEEN FREI AND THE LEADERSHIP OF THE THREE ARMED SERVICES. HE FURTHER DOUBTED THAT THE MILITARY HAD BEEN APPRISED OF THE FACT THAT FREIARLIAMENTARY SOLUTION AS NO LONGER FEASIBLE. FIGUEROA DID NOT CHALLENGE THE LOGIC OF THE.AMBASSADOR'S OBSERVATION THAT, INASMUCH AS SEVERAL. FOREIGN AMBASSADORS HAD BEEN SO AD-VISED, THERE WAS. NO COMPELLING'REASON:FOR KEEPING GENERAL SCHNEIDER, CINC ARMY, IN THE DARK. THE AMBASSADOR THEREFORE URGED' FIGUEROA TO PREVAIL ON FREI TO RIVATE TALK WITH SCHNEIDER AND THEN WITH THE REST OF THE MILITARY TO PUT THEM IN THE.PICTURE.

SCOT TEO

5 SANTIAGO!

IGUEROA WAS INTERESTED IN LEARNING THE AMBASSADOR'S VIEWS ABOUT THE STATE OF MIND AMONG THE JUNIOR RANKS OF THE OFFICER CORPS. HE WAS TOLD THAT SOME JUNIOR OFFICERS WERE

H AND THAT THERE WAS OBVIOUS

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REPORTEDLY FED TO THE TEET!

DANGER OF RASH ACTS ON THEIR PART, OR OFUCH AS AN ATTEMPT AGAINST THE LIFE OF FREE*

IGUEROA URGED THE AMBASSADOR TQ GET WORD. TO THE MILITARY PROMPTLY THAT, WITH ALLENDE WAITING. IN THE.ELATIONS BETWEEN THE UNITED STATESHILE .WERE BOUND TO UNDERGO DRASTIC CHANGE AND THAT ANY FLOW OF MILITARYWAS BOUND TO END, FIGUEROA FURTHER AGREED THAT THE CANCELLATION OF FURTHER OFFICIAL VISITS SY CHILEAN MILITARY TO THE UNITED STATES WOULDALUTARY EFFECT . THE AM3ASSADOR, IN TURN, SUGGESTED THAI ZALDIVAR'SDDRESS ON THE ECONOMIC SITUATION' OF CHILE MAKE GENERAL MENTION OF THE LAWS OF THE UNITED STATES WHICH WOULD HAVE TO BE INVOKED IN CASE OFLECTION AND PROGRAM IMPLEMENTATION AND SIMILARLY ALLUDE TO THE FACT THAT THE WEST GERMAN GOVERNMENT HAS ALREADY PROCEEDED TO CUT OFF

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7 SANTIAGO

WHAT, IF ANYTHING, COULD BE DONE ONCE ALLENDE WAS IN POWER. THE AMBASSADOREPLY WAS "NOTHING". IF CONFRONTEDHOICE TO EASE CHILE'S ECONOMIC PLIGHT UNDER AN ALLENDE REGIME, OR HASTEN ECONOMIC COLLAPSE THEREBY FOR CING ALLENDE TO ADOPT THE HARSH FEATURESOLICE STATE EARLIER THAN PLANNED, THE AMBASSADOR WOULD NOT HESITATE TO OPT FOR AND SEE TO ITCONOMICALLY SPEAKING, CHILE WOULD GO TO HELL FASTER.

11. FIGUEROA QUOTED TIE PCCH AS HOLDING OUT THE FROMISE OF PROMPT SOVIETE AMBASSADOR VOICED DOUBTS ABOUT THE VALIDITYATUT POINTED OUT TO FJGUERCA THAT ANYN ON SOVIET RESOURCESIOUSLYE tGLSBALVBE NE FIT OF THE UNITED STATES. FIGUEROA OPINEDERE TO PUTHOW OF FORCE INULD BE NO CIVIL WAR AND THAT THE MAJORITYEPEOPLE PREFERRED TRANQUILITY AT ANY PRICE-

Original document.

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