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The Ambassador in Uruguay (Dawson) to the Secretary of State

364. From Spaeth34 for the Under Secretary. The intimate relations between the economic situation here in Uruguay and the political objectives which we are seeking to accomplish in cooperation with Doctor Guani induces this special reference to economic matters. Almost every day the Foreign Minister renders some significant assistance to the work of the Committee and we will, of course, be increasingly dependent upon him and the Government of Uruguay. This aid in political matters would seem to justify the viewpoint that special efforts should be made to guard against unemployment and economic unrest. The Ambassador and his staff are properly concerned about the economic problems which are developing as a result of inadequate shipping facilities, the iron and steel allocation and the lack of [apparent omission]. These problems are, of course, common to the hemisphere, but I am satisfied that Uruguay is in a particularly vulnerable position at a time when we badly need her political assistance and when it is particularly important that Uruguay appears to receive substantially better treatment than Argentina.

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With regard to shipping, special care should be taken to insure that boats over which we have control take more or at least as much cargo from Montevideo as they take from Buenos Aires. Even better shipping treatment might be justified for Uruguay in view of the substantial number of Argentine ships which are able to sail safely without convoy.

With regard to the fuel supply it is important to stress that unlike other South American countries Uruguay has no domestic fuel resources whatsoever. It has no coal, no petroleum and no natural forests. Recent quotations on Argentine wood for fuel purposes go as high as 48 pesos a ton.

With regard to iron and steel the Embassy advises me that on a comparative basis with Argentina, Uruguay’s very small allocation for the second quarter indicates that it is not being given the preferential treatment which her political leadership on our behalf would seem to justify. It is true that most of the iron and steel is for construction, but our Government is well aware of the importance of the building industry to the economy of the country, and is also aware of the absence of any alternative employment for the thousands of workers employed in that industry. It should be emphasized also that the amount required to bring Uruguay’s allocation to the minimum recommended in the Embassy’s survey would be insignificant in comparison with the political damage that will ensue from the present drastic curtailment. In order to be certain that we are effectively implementing our policy as to Argentina by giving Uruguay preferential treatment and in order that the assistance of Uruguay in political matters may be given its appropriate recognition, I strongly urge an overall reexamination of the economic assistance projected for Uruguay during the next 6 months. [Spaeth.]

  1. Carl B. Spaeth, member of the Emergency Advisory Committee for Political Defense.