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Enter I.P.C. At that point, London & Pacific sold out to I.P.C. The U.S. company did much to make itself welcome. The company oil town of Talara (pop. 35,000) on the Pacific Coast became a model of its kind, with neat houses, abundantly stocked supermarkets, modern schools, a fully equipped hospital. I.P.C. paid some of the highest wages in Peru—about 40% higher than the Lima average—and provided fat fringe and pension benefits for its workers. Employee turnover was almost nonexistent; the average blue-collar worker at Talara has been with the company 20 years. Under government prodding, I.P.C. held gasoline prices in Peru to a cut-rate 14¢ per gal.
Nevertheless, Peruvians of every political stripe clamored for action against the I.P.C. contract as a living insult to their national dignity. In last June's national elections every major—and minor—party denounced the oil company. The army had already called the agreement "injurious to national sovereignty." Major newspapers were against I.P.C.—even La Prensa, Lima's prestigious daily owned by former Premier Pedro Beltrán, who is probably the best friend U.S. businessmen ever had in Peru. The end of I.P.C.'s privileged position, said La Prensa, was "an aspiration of all Peruvians."
No Agreement. Once in office, Belaúnde opened negotiations for a new contract with I.P.C. President Milo M. Brisco. But the talks quickly turned sour. The company argued that Belaúnde's demand for $50 million plus a future 60% income tax amounted to "economic confiscation," took ads in Lima papers to show that I.P.C. would be losing money. I.P.C. wanted a 50% income tax; it agreed to pay the $50 million but insisted that these payments be considered deductible expenses against future taxes. All of this, the Peruvians refused.
As Belaúnde prepared to take the matter to Congress, the U.S. State Department expressed hope of an amicable settlement "before the Peruvian Congress passes a law that the government of the U.S. does not consider satisfactory." But in the present Peruvian mood, chances are that Peru's Congress, having already revoked the I.P.C. concession, will now pass the second bill, putting it squarely up to I.P.C. to come to terms or get out.