The Ambassador in Argentina (Armour) to the Secretary of State
[Received October 29—5:12 a.m.]
1210. With reference to the Department’s 837, October 24, 7  p.m., local Intava office apparently has not received instructions immediately to cease sales to Axis airline Condor, but as mentioned in [Page 354] the Embassy’s telegram 1178, October 22, 7 p.m., it was instructed to restrict deliveries to immediate operating requirements, or approximately plane to plane basis. Intava has not supplied Lati in Argentina since August.
YPF was again consulted this morning, and general manager Villa reiterates his company has not sold to Lati since September and in future intends to restrict sales of YPF aviation fuel to Argentine Army and Navy. Villa denied YPF constructing storage tanks Quilmes for Lati, which information given Embassy by Intava. Upon further inquiry Intava unable substantiate this rumor. YPF apparently showing earnest desire cooperate in keeping gasoline from Axis airlines, this attitude possibly due to its dependence on American materials and patents. It is very much concerned about suspension of negotiations with Phillips Petroleum Company. With regard to Department’s 842, October 25, 5 p.m., Phillips contract does not involve purchase of “highly specialized machinery for manufacture high octane gasoline”. It merely covers use of Phillips patents and benefit of Phillips research, plus training of YPF technicians and interchange of operating experience between the two companies. Contract was signed December 1940 after months of negotiations, and extends for 5 years. YPF made initial payment of $250,000 and is to pay five subsequent annual installments of $50,000 each.
In view of YPF’s present disposition to cooperate, and fact that Phillips contract does not involve delivery of machinery, it is recommended that Phillips be allowed to carry out its contract. Embassy would appreciate learning Department’s reaction as soon as possible, as YPF has made several inquiries regarding status of the matter.