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

No. 1403

Sir: Reference is made to the Department’s telegram No. 842 of October 25, 5 p.m., advising you that it would not be feasible in the near future to provide the Yacimientos Petrolíferos Fiscales of Argentina with facilities for the manufacture of high octane gasoline, since these facilities include highly specialized machinery the production of which for some time to come has been earmarked for urgent defense needs.

There are enclosed for your strictly confidential information, and for dissemination only to the members of your staff who in your discretion [Page 355] will have need thereof, (1) a copy of the War Department’s letter of September 19, 1941,66 recommending denial of export license for the plant contemplated in the contract between YPF and the Phillips Petroleum Company and (2) a copy of a memorandum prepared by an officer of this Department on October 16, 1941,66 regarding the necessity of deferring the provision of identical equipment to the Union of Soviet Socialist Republics, despite the country’s critical needs and our policy of all-out help.

It will be evident from a perusal of the enclosed papers that the continued denial of license to export to Argentina plant for the manufacture of high octane gasoline is in no way linked to YPF’s dealings with Axis airlines. Under existing conditions it would not be possible to purvey the desired equipment to Argentina even if YPF agreed completely to stop all sales to firms on the Proclaimed List. Action in this case for the time being is dictated by actual and urgent defense needs.

It is appreciated that you will be subjected to great pressure in this matter when it becomes clear to YPF that the plant is not being withheld as a bargaining weapon in negotiations looking towards the elimination of Axis airlines in Argentina. However, the Department is confident that you and the members of your staff who may be involved will bear in mind the wisdom of keeping from the aggressors information as to the tightness of our situation in aviation grade gasoline and our plans for improving that situation.

Very truly yours,

For the Secretary of State:
Sumner Welles
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