835.6363/470: Telegram

The Ambassador in Argentina ( Weddell ) to the Secretary of State

214. My 209, October 7, 11 a.m. Bylaw passed by City Council on October 6 considered by oil companies as infinitely more drastic than marketing arrangement in that while latter provides at least for a quota for the private oil companies, the municipal bylaw may be interpreted if so desired as eliminating these companies entirely from the Federal district, the profitable marketing area.

Standard and Shell-Mex state that they will protest bylaw perhaps today and will sue the Government if bylaw is signed. These two oil companies are also trying to bring smaller companies into line on the protest.

I am inclined to agree with the Standard that crux of problem is based largely on political considerations whereby the President must find a way to assist bad financial plight of YPF which began with his administration, the oil companies offering the most natural and convenient source for this assistance.