Aftermath of Belco Petroleum Seizure : Peru Seen as Isolated From U.S.

Peru’s takeover of U.S.-owned Belco Petroleum is a symptom of the country’s growing isolation from Washington and improving ties with the Soviet bloc as it follows a new non-aligned course, Western diplomats say.

They say the government’s seizure of Belco, a New York-based company, last Friday could widen the rift between Lima and Washington unless the company gets compensation.

Possible sanctions available to Washington include suspending aid, raising import tariffs and opposing loans from international agencies such as the International Monetary Fund and the World Bank.

Peru has been closely linked to the United States since democracy was restored in 1980. It is the biggest recipient of U.S. aid in South America, and 36% of its exports go to the United States.

But the inauguration of President Alan Garcia in July heralded a dramatic change in foreign policy.

As Peru established its non-aligned credentials, it stopped payments on U.S. loans. In response, the United States suspended new aid projects in Peru in September.

A longer-running dispute over airline traffic rights has simmered since May, 1984. Commercial flights between the two countries have been suspended since then.

Peru’s failure to tackle its debts with the United States contrasts with its success in persuading Moscow to accept repayment of more than 90% of its Soviet debt in goods instead of cash. An agreement signed Dec. 2 allows Lima to repay $800 million, mainly loans for the purchase of military equipment in the 1970s, in this way.

Peru has South America’s biggest Soviet-made arsenal, recently bolstered by the delivery of 42 MI-24 helicopter gunships, according to the London-based International Institute for Strategic Studies.

Averted Confrontation

On the aid question, Washington has so far averted a confrontation. It had planned to hand over about $100 million in previously committed aid up to September, on top of the $600 million supplied to Peru since 1980.

Washington has warned Lima that this aid and Peru’s access to the U.S. market for its imports at a preferential tariff rate are in jeopardy.

Only hours after the Belco takeover was announced, Information Minister Hugo Otero said the United States had told the Peruvian ambassador in Washington that failure to compensate the company fairly could provoke severe economic sanctions.

The absence of compensation might mean the United States would begin suspending aid and raise tariffs as early as Feb. 28, six months after Peru suspended its contract with Belco after accusing it of misusing tax exemptions, diplomats said.

Garcia has said the Belco takeover was not an anti-U.S. move and the dispute was with only one company.

“I don’t know why anyone would understand it as something that affects the relations between Peru and the United States,” he said Friday.

Diplomats estimate the value of Belco’s installations, mostly offshore oil platforms, at about $400 million, but Peruvian officials say they are worth $138 million.

A joint Belco-Peruvian commmission will work out the firm’s book value, but Peruvian courts will have the final say.

Garcia’s tough position allowed him to extract $655 million from another U.S. company, Los Angeles-based Occidental Petroleum.