811.20 Defense (M) Argentina/142: Telegram
The Ambassador in Argentina (Armour) to the Secretary of State
[Received 9:20 p.m.]
403. For the Under Secretary. My 271, February 13, 10 p.m., was explained to Williams on his return and he is in entire agreement.
On February 25, Williams called on Alonso Irigoyen8 and informed him that due to the changed international situation it would be necessary to reconsider proposals included in the over-all purchase program and therefore negotiations would be suspended for the present. Irigoyen was greatly disturbed and urged that the agreement be concluded without delay stating that whatever might be said to the contrary every one would consider suspension as reprisal for not following our Government’s international policy. Williams explained that shortage of shipping, the possibility of having to take delivery of commodities here and to advance substantial sums, combined with possible local storage difficulties, were well founded reasons for reconsideration of the program. He emphasized that such reconsideration was in no sense a reprisal: that such action was necessitated by a situation now existing which did not exist when the original offer was made; and furthermore that the commitment to supply essential materials would now be more difficult to fulfill because of increased demands for our own and our Allies’ requirements. He also pointed out that export control was less important now than previously.
Williams also spoke to Coll Benegas9 along similar lines. Latter also was disturbed and appeared pessimistic regarding the Argentine economic outlook. He considered it unfair that the negotiations be suspended claiming that the possible motives mentioned had previously been contemplated.
On February 27, Williams made similar statement to Torriani10 and also discussed export control clause since Torriani was previously opposed to our wording. Torriani while stating that he felt an [Page 310]acceptable formula could be agreed upon still maintained previous viewpoint. A detailed report will be airmailed.
Williams requests Federal Loan Agency to advise what commodities they desire to purchase independently. Beryllium oxide contract will be signed March 3. It contains clause making effect dependent on conclusion of over-all agreement. If over-all purchase negotiations should be suspended indefinitely, would Metals Reserve Company be disposed to ratify beryllium contract independently of overall agreement?
Without any indications that negotiations of over-all agreement are being resumed, it may be found advisable to effect separate agreements for the purchase of certain other specific products, such as linseed, as better terms probably would be offered than obtained in open market. For example it is probable that a separate agreement could be concluded for linseed purchases on the same basis as proposed in over-all agreement.