Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

210. Memorandum of a Conversation, Department of State, Washington, April 25, 1956, 4:30 p.m.¹

Washington, April 25, 1956, 4:30 p.m.

SUBJECT

• Developments in Argentina

PARTICIPANTS

• Dr. Adolfo Vicchi, Argentine Ambassador
• ARA—Mr. Holland
• OSA—Mr. Vaky

Ambassador Vicchi said that he wanted to give Mr. Holland a rundown of developments in Argentina as he saw it following his recent consultation in Buenos Aires.

The Ambassador said that there was no question regarding the stability of the present Government. Aramburu’s prestige had increased enormously. The danger of the return of Perón had disappeared and Peronista support and sentiment had declined greatly. The plots and sabotage reported in the press were terroristic, but any feeling for a return to Peronismo had been largely dissipated. The Ambassador did say that there were political differences within the Government’s support such as those between the political parties. He said that for example the Radical Party was deeply divided, and other political elements were apprehensive over Frondizi² and the Intransigent Radical Group. For this reason it was extremely difficult to estimate when constitutional government might be formed. He said, however, that if the present Government can carry out its policies and if economic health and stability can be achieved, the Government would secure undoubted majority support and a politically stable climate.

The Ambassador said that it should be remembered that the Government was composed of heterogenous elements, each with its own criteria and ideas. This, plus the fact that the present government members, however sincere and well-intentioned, had little experience in government, meant that the evolution of policy and formulation of important decisions was necessarily slow. He said, however, that the Government was moving firmly, if slowly, in the direction of constitutional stable government and a freer healthy economy. He said that for that reason the United States should be patient with respect to the speed with which new policies are set and decisions are taken in Argentina.

He had been perturbed, he said, over some internal economic measures, such as price control, which he felt were not leading in the right direction. He had been assured, however, that these were necessary emergency measures which would be eliminated as soon as possible. The Government’s intention was to move toward less state control and a freer economy. He mentioned that the power had now come to the fore, and said he felt that the political parties had adopted a somewhat demagogic attitude, but that the Government did not share that view. The Government was determined to adopt a policy of working out satisfactory arrangements to permit private companies to operate in the electric power field.

Dr. Vicchi said that the question of Kaiser’s contract had been satisfactorily settled. The company was making additional investments, and agreement was reached on the production of trucks, tractors, jeeps instead of passenger cars in the immediate future. Decisions had also been made to remove Kaiser and other American companies from the interdicted list, but that this would occur slowly because the Government wanted to remove several foreign companies from various countries all at once.

The Ambassador mentioned that public reaction to the announcement that Argentina would join the Fund and World Bank had been good, and in response to Mr. Holland’s question, said that public reaction to the ratification of the OAS Charter and adherence to the Caracas Resolution was also favorable.³

Mr. Holland pointed out that if one or two large companies could invest large amounts in Argentina in whatever fields were mutually agreeable, this would greatly stimulate confidence abroad. The Ambassador agreed. The question of electric power again came up, and Mr. Holland mentioned that he had talked with representatives of SOFINA. The Ambassador pointed out that there were three foreign companies in the electric power field in Argentina—SOFINA (CADE), Italo (Swiss), and American and Foreign Power. The problems of CADE and A&FP were very different, he said. CADE had a bad reputation as a result of charges and countercharges of bribery over the securing of its 1936 concession. Nevertheless, the Government was willing to work out with CADE mutually satisfactory arrangements for continued operation by the company. The Ambassador repeated several times that although there was considerable sentiment for nationalization of the electric power industry, particularly on the part of political parties, he was convinced that the Government would stand firm on its policy of permitting private companies to operate and would establish that policy. Mr. Holland said that the interesting point to him was that he had been told by representatives of both A&FP and SOFINA that, if satisfactory conditions can be established, the companies would be willing to invest large amounts of new money.

Mr. Holland then referred to his luncheon with Ambassador García, that afternoon, in which the latter expressed the desirability of having young Argentine military officers trained in the US. Mr. Holland stated that the same problem arose in this regard as had arisen on the question of purchase of armaments. If a bilateral military pact existed, funds would be available for large scale training or provision of armaments. Without such a pact, the US was limited in what it could do in this connection by non-availability of funds and statutory limitations. He said he merely wished to point out these advantages. On the other hand, he did not consider that there was any pressing military reason to conclude a pact immediately, and he fully appreciated that to conclude such a pact with this country would present the Argentine Government with serious internal problems. Ambassador Vicchi said that was certainly the case. If, for example, a military pact was concluded simultaneously or shortly after the extension of economic assistance to Argentina by the US, the Government would immediately be charged with “selling out” to the Pentagon. This would give to certain elements a handy club with which to beat the Government over the head, and would present a serious internal problem. Moreover, the Ambassador went on, the Argentine public is traditionally isolationist and antipathetic to military obligations abroad or military alignments with other countries. He pointed out two recent incidents of this, stating that when Perón was considering participating in the Korean effort there was a sincere, spontaneous and widespread public reaction against it. Secondly, the major criticism directed against the Standard of California contract was that it would provide foreign military bases on Argentine territory. However wrong this conclusion might have been, it was a real concern to the public. He admitted that some military elements, desirous of obtaining armaments, were partial to the conclusion of a pact, but felt that the Government could not at this time do that without seriously exposing itself to public antipathy and internal opposition that would greatly weaken it.

On the other hand, the Ambassador went on, he felt that such a pact would come by itself in time. He pointed out that Argentina was now embarked on a policy of greater hemispheric and international cooperation, having ratified the OAS Charter, decided to join the IMF and adhered to the Caracas Resolution. As this policy continued Argentina would evolve to the point where a military pact would logically follow. He added that there was no question but that in a war or military crisis Argentina would be at the side of the US with or without a pact, but he agreed that there was no immediate crisis or military need for conclusion of a pact now.

The Ambassador then said that this raised the point of reequipment of Argentina’s armed services. He said that there was a need for this, and military leaders were naturally concerned with obtaining modern equipment. He stated that he had brought back with him a list of equipment which the military [he seemed to be referring largely to the Army here]⁴ desired. If some facility or manner could be found to provide this equipment, such as favorable credit or discounts on terms which Argentina could accept, it would serve to tranquilize the military sectors. He said that, if there was any conflict between providing military equipment and extending economic and financial assistance, the latter must take priority. But he hoped that some way could be found to aid Argentina in this military aspect. He said that he wanted to discuss this at greater length with Mr. Holland at a later date, at which time he would bring the list, but he did want to advise him that this matter was coming up.⁵

1. Source: Department of State, Central Files, 735.00/4–2556. Confidential. Drafted by Vaky.
2. Arturo Frondizi, leader of the Radical Party.
3. Argentina ratified the Caracas Resolution in March 1956 and the OAS Charter on April 10. On September 20, Argentina joined the IBRD and the IMF.
4. Brackets in the source text.

5. On May 24, Vicchi presented Holland with two lists enumerating military equipment which the Argentines wished to procure in the United States. During their meeting, Holland informed Vicchi that the United States would do everything possible to aid Argentina in obtaining the equipment in the most practical manner. (Memorandum of conversation by Watrous; Department of State, Central Files, 611.35/5–2456)

   In a letter to Gray, June 19, Barnes summarized the Argentine request, commenting that “The Department of State desires to assist the Argentine Government in every appropriate way in obtaining the military equipment it requires.” He pointed out that the Department of State was unable to assess the economic implications of the Argentine request “without a pricing and availability study by your Department”, and requested that Defense offer its recommendations on the request along with a pricing and availability study. (Ibid., 735.5–MSP/5–2456)