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--------------------- 002986
O 171550Z JAN 74
FM AMEMBASSY KINGSTON
TO SECSTATE WASHDC IMMEDIATE 3777
S E C R E T SECTION 1 OF 2 KINGSTON 0206/1
EXDIS
E.O. 11652: GDS
TAGS: EMIN, PINT, JM
SUBJ: BAUXITE NEGOTIATIONS SITREP 7
REF: KINGSTON 205
1. MEYER MATALON PASSED BY DCM RESIDENCE TUESDAY EVENING TO
DELIVER A COPY OF THE BAUXITE COMMISSION REPORT, AND TO DISCUSS
WITH CHARGE A MEETING HE HAD HAD WITH PM MANLEY THAT MORNING.
THE MEETING, WHICH LASTED OVER AN HOUR, HAD BEEN REQUESTED BY MAN-
LEY IMMEDIATELY UPON HIS RETURN FROM LONDON MONDAY EVENING.
MATALON SAID THE MEETING WAS ONE-ON-ONE, AND HE GAVE THE PM A FRANK
APPRAISAL OF THE BAUXITE COMMISSION REPORT AS WELL AS HIS OWN
ESTIMATE OF THE STRENGTH AND WEAKNESSES OF JAMAICA'S POSITION IN
THE FORTHCOMING NEGOTIATIONS.
2. MATALON REPORTED THAT PM SAW SERIOUS PROBLEMS WITH PRO-
POSAL "A" IN THE COMMISSION'S REPORT (REFTEL), BUT WAS ATTRACTED
TO PROPOSAL "B". HE SAID HE POINTED OUT TO THE PM THAT EVEN PROP-
OSAL "B" HAD GRAVE DIFFICULTIES IN ITS PRESENT FORM, BUT ADDED
THAT HE AGREED WITH THE PM IN PRINCIPLE THAT THE COMPANIES COULD
NOT BE ALLOWED TO SIT UPON EXTENSIVE RESERVES WHICH THEY HAD NO
INTENTION OF EXPLOITING IN THIS CENTURY. MATALON MADE CLEAR TO
THE PM, HOWEVER, HIS OWN VIEW THAT THE MAIN ISSUE AT STAKE WAS
NO THE LANDS AND RESERVES QUESTION BUT THE LEVEL OF REVENUES ACC-
RUING TO THE GOVT, AND THAT THIS SHOULD BE THE MAIN FOCUS OF
THE FORTHCOMING NEGOTIATIONS.
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3. MATALON REPORTED THAT HE AND THE PM DISCUSSED HOW THE NEGOT-
IATIONS SHOLD BE CONDUCTED, AND BY WHOM, AT CONSIDERABLE LENGTH.
HE SAID HE TOLD THE PM THAT IT WOULD BE DISASTROUS IF THE PM HIM-
SELF ATTEMPTED TO LEAD THE JAMAICAN NEGOTIATING TEAM (AS HE SUS-
PECTED THE PM SECRETLY HOPED TO DO). HE SAID THE PM VIGOROUSLY
DENIED ANY SUCH INTENTION. BY THE SAME TOKEN, MATALON TOLD THE
PM THAT ARTHUR BROWN, ALLAN ISAACS, AND SIR EGERTON RICHARDSON,
SHOULD NOT LEAD THE NEGOTIATING TEAM, EACH FOR DIFFERENT REASONS.
HE DESCRIBED ISAACS AS AN OLD FUDDY-DUDDY WHO WOULD SNARL THE
NEGOTIATIONS IN NO TIME. HE SAID ARTHUR BROWN WAS OUT BECAUSE OF
HIS PROMINENT ROLE IN NEGOTIATING THE ORIGINAL BAUXITE AGREEMENTS
WHICH WERE, IN MANY OF THEIR FEATURES, VERY UNSUCCESSFUL FROM
JAMAICA'S VIEWPOINT. MATALON SAID HE TOLD THE PM THAT
A NEGOTIATING TEAM LED BY SIR EGERTON RICHARDSON WOULD PRODUCE AN
IMMEDIATE POLITICAL CONFRONTATION BETWEN JAMAICA AND THE US WITH
DISASTROUS RESULTS NOT ONLY FOR THE BAUXITE NEGOTIATIONS BUT FOR
THE JAMAICAN ECONOMY.
4. MATALON SAID THE PM SEEMED TO BUY HIS REASONING ON BROWN AND
ISAACS BUT SAID THAT FOR A VARIETY OF REASONS IT MIGHT BE DIFF-
ICULT FOR HIM TO KEEP SIR EGERTON RICHARDSON OUT OF THE NEGOT-
IATIONS ALTOGETHER. HE THEN ASKED MATALON IF HE WOULD BE WILL-
ING TO HEAD A THREE-MAN NEGOTIATING TEAM INCLUDING PATRICK
ROUSSEAU, CHAIRMAN OF THE BAUXITE COMMISSION, AND HORACE BARBER,
PERM UNDERSECRETARY OF MINISTRY OF FINANCE, AS THE OTHER TWO
MEMEBERS. MATALON REPLIED THAT HE WAS AGREEABLE IN PRINCIPLE AND
WOULD HAVE TO DISCUSS THE POSITION WITH ROUSSEAU AND BARBER
BEFORE HE COULD COMMIT HIMSELF FINALLY TO THE PM, SINCE HE FELT
HE COULD NOT LEAD A TEAM WITHIN WHICH THERE WERE FUNDAMENTAL
DISAGREEMENTS ON POLICY OF PRINCIPLE.
5. PM TOLD MATALON THAT HE WAS CONSIDERING INVITING THE CHIEF
EXECUTIVE OFFICERS OF THE ALUMINUM COMPANIES TO JAMAICA FOR A
MEETING WITH HIM IN MID-FEBRUARY AND ASKED WHAT MATALON
THOUGHT OF THIS SCHEME. MATALON REPLIED THAT SUMMITRY OF THIS NATURE
WOULD BE DISASTROUS AT THE BEGINNING OF A NEGOTIATION, AND
WOULD TEND TO FREEZE ALL THE PARTIES IN THEIR OPENING POSI-
TIONS. HE ADDED THAT HE FELT THAT THERE WAS NO REASON TO DELAY
FURTHER IN COMMENCING THE NEGOTIATIONS. HE SAID JAMAICA WOULDN'T
KNOW ANY MORE IN A MONTH THAN IT DOES NOW ABOUT THE ALUMINUM IND-
USTRY, AND THAT THE PM HAD A BUDGET TO WRITE IN THE SPRING.
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GIVEN THE PROBABILITY THAT THE NEGOTIATIONS WOULD TAKE FROM TWO
TO THREE MONTHS THEY MUST BEGIN NOW IF THE PM WAS GOING TO WRITE
HIS NEXT YEAR'S BUDGET ON THE BASIS OF NEW CONTRACTS WITH THE
COMPANIES.
6. MATALON SAID THE PM INDICATED HIS PREFERENCE FOR DEALING WITH
THE COMPANIES ONE BY ONE BEGINNING WITH KAISER WHICH WAS REGARDED
AS THE SOFTEST AND ENDING WITH REYNOLDS LOOKED UPON AS THE TOUGH-
EST CONTENDER. MATALON SAID THAT THIS WAS AN OLD LABOR NEGO-
TIATOR'S TRICK AND HE WAS NOT SURPRISED THAT THE PM PREFERRED IT
GIVEN HIS BACKGROUND AS A LABOR NEGOTIATOR. MATALON SAID THAT HE
HIMSELF WOULD PREFER THE SIMULTANEOUS NEGOTIATING OF A MODEL
OR SKELETON CONTRACT EMBODYING BASIC PRINCIPLES WHICH COULD THEN
BE APPLIED TO THE PARTICULAR CIRCUMSTANCES OF EACH COMPANY IN
INDIVIDUAL NEGOTIATIONS.
7. MATALON SAID THAT FOR SOME MAD REASON THE COMPANIES
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O 171550Z JAN 74
FM AMEMBASSY KINGSTON
TO SECSTATE WASHDC IMMEDIATE 3778
S E C R E T SECTION 2 OF 2 KINGSTON 0206/2
EXDIS
ALSO FAVORED INDIVIDUAL NEGOTIATONS AT THE PRESENT
TIME AND INTENDED TO USE THEIR JAMAICAN ATTORNEYS AS
NEGOTIATORS RATHER THAN COMPANY OFFICERS OR OUTSIDERS
HIRED FOR THE PURPOSE. THEIR PREFERENCE IS APPARENTLY
BASED ON THE NOTION THAT THEIR JAMAICAN ATTORNEYS
COULD SAY THINGS AND TAKE POSITIONS THAT AMERICANS
COULD NOT. MATALON SAID THAT HE HIMSELF THOUGHT THE
COMPANIES VIEWS WERE SHORTSIGHTED AND THAT, GIVEN THE
MENTALITY OF MOST JAMAICAN LAWYERS, THE DECISION TO USE
THEM AS NEGOTIATORS WAS MORE LIKELY TO PRODUCE A
CONFRONTATION THAN NOT. IN PARTICULAR, HE SAID THAT IF
DEREK STONE, ATTORNEY FOR BOTH KAISER AND REYNOLDS,
WAS ONE OF THE CHIEF NEGOTIATORS, HE (MATALON) WOULD
SIMPLY WITHDRAW FROM THE NEGOTIATIONS
8. COMMENT: THERE IS NO DOUBT THAT MATALON IS TRYING
TO PROMOTE HIMSELF INTO THE JOB OF CHIEF NEGOTIATOR FOR
THE GOJ IN THE FORTHCOMING BAUXITE NEGOTIATIONS.WHILE
HE WOULD BE A HARD BARGAINER HE IS INTELLIGENT AND FAIR-
MINDED, AND HIS CAPTURE OF THIS KEY POSITION WOULD
CERTAINLY BE MORE IN THE INTERESTS OF THE UNITED STATES
AND THE COMPANIES THAN ANY OF THE OTHER CANDIDATES
MENTIONED ABOVE WITH THE POSSIBLE EXCEPTION OF ARTHUR
BROWN. WE FIND IT EASY TO UNDERSTAND MATALON'S ARGUMENTS
AGAINST THE EMPLOYMENT BY THE COMPANIES OF THEIR JAMAICAN
ATTORNEYS AS THE CHIEF NEGOTIATORS BUT HAVE NO EXPLANATION
FOR MATALON'S VIOLENT REACTION TO DEREK STONE WHO IS WELL
AND FAVORABLEY KNOWN TO CHARGE. WHATEVER THE PROBLEM
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BETWEEN THEM, IT IS APPARENTLY OF MANY YEARS STANDING.
WE AGREE WITH MATALON THAT SIR EGERTON RICHARDSON'S
CHAIRMANSHIP OF THE BOJ NEGOTIATING TEAM WOULD HAVE
EXTREMELY SERIOUS CONSEQUENCES, AND EVEN HIS PRESENCE
ON THE TEAM MIGHT SERIOUSLY DISTURB THE CONSTRUCTIVE
PROGRESS OF THE NEGOTIATIONS. HENCE THE PM'S APPARENT
INTENTION TO USE HIM IN SOME CAPACITY IN THE NEGOTIATIONS
IS OMINOUS. HEWITT
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