CONFIDENTIAL
an area which included the Blake Plateau but about three weeks ago the State Department finally managed to persuade the Interior Department to withdraw this offer. The Bahamas authorities had also sought to link the bases negotiations with US economic assistance. The US said that they were legally prevented from linking these two subjects in an agreement but would be prepared to consider economic assistance separately. They had sent a mission to the Bahamas to look into possibilities of such assistance but the Bahamas would not normally qualify because of their relatively high per capita income. No date had been set for the next round of
technical talks' but the US hoped to resume in late June or early July. The US believed that the Bahamas authorities wanted to leave discussion on the basic subject of compensation until the very end. The US would be prepared to review their original $6 million offer to take account of the time elapsed since the offer was made but would not consider any fundamental change.
2. Mr Duff asked what was the US offer to the Turks and Caicos Islands for their bases there. Mr Hewitt said they had offered $125,000 for cach of the two facilities but this had been rejected. The State Department had a political interest in maintaining these bases but the finance for compensation came from the Defence Department's budget and the latter Department had no interest in political considerations. Furthermore, the money had to come out of the overall Defence budget and the Defence Department, in allocating money, had to decide where their highest priorities lay. There was a danger that the Bahamians would insist on such a high price that the Defence Department would decide to close the bases. Although the AUTEC base was important to them and they would like to retain it, if the US cannot reach agreement on a reasonable level of compensation, they would transfer the facilities to the US Virgin Islands, although there were disadvantages in the site there and the cost of moving the base would be substantial.
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Reverting to the negotiations with the Bahamas on maritime boundaries Mr Hewitt said that the chances of reaching agreement were improved by the fact that neither stood to lose face by backing down. The US had chosen boundary lines for practical purposes such as control of fishing, etc, but these had been chosen at random and the boundaries were different for each purpose. The US hoped for reasonable, fairly rapid negotiations, but negotiations of this nature were always protracted and would take at least 1-2 years. US are keeping the BIIC, Nassau fully informed of progress. The best way the UK could help the US was by playing a quiet background role and try to persuade the Bahamas of US good intentions. Before independence, the US had originally offered HMG the use of the US base facilities at a suggested cost of £32 million. When the current negotiations are nearing a satisfactory agreement it would help if HMG would support a similar offer, suitably adjusted to allow for the lapse in time since their offer was first made. Mr Joy asked what was the US assess- ment of Bahamian intentions in the negotiations. Mr Hewitt said that the US believed that the Bahamians were not opposed to the principle of US bases in the Bahamas. Indeed they realised they stood to gain economically from the existence of the bases. What was at issue was
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