835.796/200: Telegram

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

1169. Department’s 797, October 16, 10 p.m.62 On October 15, a representative of Intava visited local Quilmes Airport for purpose of verifying Lati stocks. He reported 50 empty drums and 130 full drums of YPF gasoline each containing 200 liters. This means Lati still has enough gasoline for a month or two at least. It likewise indicates Foreign Minister’s statement that Lati would be allowed gasoline for only two or three trips more was a general rather [Page 350] than specific promise. I also feel his stand might have been prompted by pressure which we can bring on YPF rather than by the desire to eliminate Lati because it is Italian.

As mentioned in previous telegrams there has been confusing information given by YPF and other official sources. Intava also hears that YPF has been installing storage tanks at Quilmes, Airport for Lati. Although Lati still has a supply of YPF gasoline larger than we anticipated it is believed that YPF is now quite worried over possibility of having Phillips contract suspended, as mentioned in Embassy’s 1129, October 13, 5 p.m.

While YPF did not ask for a quid pro quo arrangement it anticipates some reaction as to whether it can continue with its Phillips contract. Should Department wish to reply along these lines, and if such proposal is feasible, it is suggested that YPF be informed that Phillips contract will be resumed but only if YPF makes every effort to withhold gasoline from Condor, Lati, Air France and also Corporación Sud Americana de Servicios Aéreo. This latter Argentine company is Italian controlled and although receiving its own gasoline from Intava it might also be buying from YPF for diversion to Lati. Under such arrangement it is believed that YPF can be restrained from supplying pro-Axis airlines even if Intava subsequently stops supplying Condor.

With regard to Condor, the Embassy appreciates the desirability of abolishing such service between Buenos Aires and Santiago but it is problematical whether Argentina would be sympathetic. Following factors raise question as to whether matter should be taken up with Argentine officials and whether Argentina would be willing to take action desired: (1) Condor is nominally a Brazilian company which might make Argentina double [doubly] hesitant to cancel its concession. (2) While Condor’s service to Chile is undoubtedly extension of Lati trans-Atlantic service Argentina would not regard this as sufficient excuse for cancellation. As long as Lati connects Europe with Brazil, Pan American Airways as common carrier is obliged to act as feeder for other ports of South America. (3) Argentina would have natural reticence in eliminating competition and placing its air connections with Chile in the hands of single foreign company. It would have difficulty in justifying cancellation of Condor which ostensibly has given satisfactory public service, incidentally at lower rates. This angle covered in article page 40 of magazine American Aviation of September 1st. (4) Regardless of Condor both Pan Air and Panagra would have little difficulty in filling a daily service. In fact present difficulty in getting reservations is creating some feeling [Page 351] against the company. (5) If Condor service to Chile were canceled before similar action in Brazil it is believed that both Argentina and Chile would question this move particularly if Intava continued to supply Condor in Brazil. I realize that situation in Brazil is complicated and that more factors are involved but past conversations with Intava and other reliable observers confirm opinion that it is difficult to treat Condor and Lati operations in Argentina as a separate problem and that prior or concurrent action in Brazil is essential in properly handling the situation in Argentina.

Assuming that daily service will soon be offered by Pan Air and Panagra and Intava should then curtail or cancel supplies to Condor it is probable that above mentioned arrangement with YPF would keep it from becoming substitute supplier. However, should matter of Condor cancellation be discussed beforehand with Argentina and as seems probable the response should be negative, we would find it doubly difficult to act later on our own initiative through Intava.

Paraphrase to Rio de Janeiro and Santiago via courier.

Armour
  1. Not printed.