243. Memorandum of a Conversation, Department of State, Washington, October 17, 19571
SUBJECT
- Argentina: US Loans
PARTICIPANTS
- Ambassador Mauricio Yadarola of Argentina
- Dr. Carlos Coll Benegas, President, Banco de la Nación
- Mr. C. Douglas Dillon, Deputy Under Secretary for Economic Affairs
- Mr. Thomas C. Mann, Assistant Secretary for Economic Affairs
- Mr. R. R. Rubottom, Assistant Secretary for Inter-American Affairs
- Terry B. Sanders, Jr., Acting Director for South American Affairs
Ambassador Yadarola stated that he had been instructed by his Government to call at the Department to ask that full consideration be given by the United States Government to important political factors bearing on further United States financial assistance to Argentina. The Ambassador and Dr. Coll were having talks with the Export-Import Bank. The Bank officials were very attentive and desired to be helpful if possible, but they understandably gave great weight to strictly economic considerations. If the Provisional Government in Argentina had had more cooperation from the United States and if that Government had been able to accomplish more since the overthrow of Perón, the Communists, Peronistas and extreme nationalists would not have won as many votes as they did in the election for the Constituent Assembly. Further US loans would strengthen liberal, pro-US elements in Argentina. This is important for Argentina, for promoting close US-Argentine relations, and for the well-being of the Americas. Additional US assistance would demonstrate the utility and importance to Argentina of close relations with the US, and the effect would be a favorable influence on the elections in February 1958. In brief, there is an important connection between the political and economic factors not only in Argentina but also in terms of the interests of the other American Republics. Furthermore, as compared with Brazil, for example, Argentina has received only a relatively small amount of loans from the Export-Import Bank, although the Argentine economy is certainly as important and as strong as that of Brazil. On economic grounds, Argentina has a great potential and is undoubtedly a good risk.
Mr. Dillon answered that we very much appreciate the desirability of close US-Argentine relations and that the US sincerely [Page 488] wishes to see Argentina prosper and to achieve the important place in the hemisphere that it should have. We are also aware of the … difficulties confronting the Provisional Government in its efforts to rehabilitate the Argentine economy. Evidence of US interest in Argentina has already been given in a variety of ways, including a sizeable amount of loans already made available to the Provisional Government. It would be a mistake, however, for Argentina to look to sources of US public funds for all of the financing required to promote Argentina’s rapid recovery. It may be that Argentina would actually need a $1 billion or more, but obviously US public funds in this amount will not be available because of the worldwide demands on the United States. Argentina must necessarily look to private domestic and foreign capital. It is very important that the Provisional Government comply with requests already made of it by the US with respect to the American & Foreign Power Company, the banks, and the meatpackers. The progress already made with respect to the meatpackers’ problems is welcomed. Nothing, however, has been done about the banks’ balances and the A&FP. A solution to these problems is necessary to improve the private investment climate and also to make it easier for the US Government to be helpful. With respect to the A&FP, for example, the most important thing is to achieve a settlement, whether the Argentine Government decides to buy the company entirely or whether an arrangement is agreed on to allow the company to continue operations on a satisfactory basis.
The Ambassador said that he was under specific instructions from his Government to devote his best effort to solving the A&FP problem. This issue, he assured, can, must, and will be resolved. The Ambassador has already had two interviews with A&FP officials. Next week he will have another meeting with them to receive data he has requested. He hopes soon to have prepared his own proposals for settling the problem, and he will be happy to make these known to Mr. Dillon and other officials in the Department. The Argentine Government has nothing to hide with respect to its relations with the A&FP, and it earnestly desires to reach a settlement.
Dr. Coll pointed out that the Provisional Government, despite shortcomings, has made much progress in coping with economic problems. For example, many controls have been abolished, and foreign exchange is free so that foreign firms can remit profits. The US firms in Argentina, he said, are generally pleased with the conditions under which they can now operate. In effect, the private investment climate has improved considerably. The Provisional Government is grateful for the support already provided by the United States. Also, it is gratifying that the New York banks have just extended a credit of $27 million to the Argentine Central Bank.
[Page 489]Mr. Dillion said that the banks had consulted him before making their decision. He told them that in terms of United States-Argentine relations their loan would be desirable, although the business aspects of it would have to be decided by the banks themselves.
The Ambassador and Dr. Coll expressed their appreciation for Mr. Dillon’s support on this loan.
In conclusion Mr. Dillon indicated that he will discuss with the Export-Import Bank Argentina’s request for further credits.2