800.6363/1251: Telegram
The Ambassador in Argentina (Armour) to the Secretary of State
[Received 10:58 p.m.]
1688. Department’s telegram 1103, July 24, 7 p.m. apparently sent before receipt of Embassy’s despatch 10960 July 13,48 please refer particularly to discussion covering point 2 commencing page 3. Is it clear to the Department that the negotiations have been concluded, so far as bargaining is concerned and that a reduction in the quantity of material can be made if the expressed quantity is unavailable, but not otherwise unless the Embassy’s basis for the whole petroleum negotiations is declared to be mistaken? The bargaining was based on the quantity of material to be made available, if Argentina would supply the rationed needs of the neighboring countries. To determine a reasonable quantity, each operating company reported its [Page 400] requirements to maintain production for 12 months. The total was finally reduced by bargaining to 36,000 tons, determined as explained in despatch 10960. The 36,000 tons was subject to confirmation by the Department not in principle but only as to physical availability. The Department may reduce the quantity to the extent desired without affecting the validity of the Embassy’s negotiations, if handled as above. But if new considerations are now injected, such as using a new estimate of Argentina’s rock bottom necessities as the basis for determining the quantity of material to be made available, the Embassy’s previous negotiations are thereby discarded, and it would seem necessary to begin again from the beginning.
Therefore, before reopening the question of materials with the authorities, which is a prerequisite to approaching the YPF, the Embassy requests an instruction from the Department as to the scope of the new negotiations. When the previous negotiations are discarded the Argentine Government will probably require a written proposal of some sort before entering into new negotiations. Presumably, they will make it possible to determine the minimum quantity of material required to maintain production, but will wish to know the purpose of the survey, since so many have already been made, at the cost to YPF of very considerable time and effort, without the securing of any tangible results. If the Department has any doubt about the advisability of carrying through a new proposal which might be made the Embassy believes that it would be highly preferable to postpone indefinitely any further petroleum discussions, rather than risk a repetition of the present situation.
The Embassy’s recommended solution is contained in telegram 1622, July 20, 7 p.m.49 An alternative would be to retain the 12–month period, but reduce the quantity of material. This might or might not affect Argentina’s willingness to export the entire quantity of petroleum. Once the total quantity of material is named by the Department, the makeup could be developed here to accord with most urgent needs, and tonnage and value then reported in detail to the Department.
- Not printed.↩
- Not printed; this telegram indicated that the basis for agreement transmitted in telegram No. 1165, June 2, from the Ambassador in Argentina (p. 385), be again used with the condition that delivery of materials be made subject to supply conditions in the United States (800.6363/1242).↩