Foreign Relations of the United States: Diplomatic Papers, 1944, The American Republics, Volume VII

740.00112 European War 1939/12–444: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary of State

London, December 4, 1944—7 p.m.
[Received 8:27 p.m.]

10700. We have just received reply from the Foreign Office on the general questions of exports to and imports from Argentina. It reads as follows:

“My dear Ambassador, I fear that much delay has proved inevitable in giving you our considered views on the suggestions of the United States Government for the curtailment of our economic relations with Argentina, a matter of such far-reaching importance to this country that it has required the most careful and exhaustive examination by all the interested departments of His Majesty’s Government. This study has been carried out with the earnest desire to meet, if at all possible, the wishes you expressed on behalf of your Government as I know they will realize.

2. I should like to take this opportunity to assure them once again, through you, that we do entirely appreciate the importance which they attach to an early solution of the problems presented by the existing political setup in Argentina, and that we are at all times anxious to help them over this to the limit that our powers and situation permit. Our capacity to help in economic ways is, however, very definitely limited by considerations of a severely practical nature, as I hope to explain in this letter. Understanding of the American position and good will to assist are most emphatically not lacking, but there are certain risks which we simply cannot afford to take, especially at this stage in the war, after all the trials to which our people have been exposed.

3. It will, I think, first be convenient to recapitulate the recent correspondence on this subject.

4. In a letter of the 14th August,¹⁵ you communicated to me a message from the Department of State to the effect that the United States Government proposed to cease purchases of all Argentine products except those absolutely essential to the prosecution of the war, and suggested that this reduction must be correlated with parallel British action in order to be effective. In your subsequent letter of the 23rd August, you communicated a tentative list¹⁶ of industrial and agricultural items in the United States-Argentine import programme which might be reduced or eliminated if it should be decided to cut the current level of this programme.

5. In my letter to you of the 25th August,¹⁷ I stated that we could clearly not wish to discourage your Government from discontinuing any inessential purchases from Argentina at the present juncture, but that, so far as we were concerned, we should be very surprised if it were found that we ourselves were making any non-essential purchases in that country. The result of the detailed investigation which we have since made has shown that my impression was correct. For shipping and currency reasons, we have never been eager to take from Argentina anything that we did not really need, and I can now definitely confirm that we have for some considerable time confined our purchases in Argentina to materials which we are bound to look on as absolutely necessary either for the prosecution of the war or for the maintenance of the essential economy of the United Kingdom and which cannot be obtained elsewhere. So long as the present emergency lasts, therefore, we are simply not in a position to help by giving effect to any suggestions that our purchases from Argentina should be reduced below their present level.

6. On the 11th September, you wrote to inform me of a further series of economic measures, directed against Argentina,¹⁸ which the United States Government proposed to take, in particular a drastic reduction in exports to approximately 10% of their 1941 value. His Majesty’s Government were invited to cooperate by effecting a parallel reduction in their exports to Argentina.

7. In discussing this proposal, it must be recalled that there are certain fundamental differences in the economic position of the United States and the United Kingdom with regard to Argentina, which, though familiar enough, are sometimes perhaps overlooked.

8. Both the United States and Argentina are large suppliers of Agricultural produce, and in normal times the primary products of Argentina are of little interest to the United States, which even today can afford to reduce or eliminate purchases in Argentina, or exports to that country, with but slight and transitory, if any, inconvenience.

9. The economic systems of the United Kingdom and Argentina, on the other hand, are complementary and have for generations been closely interdependent. We are, as you are aware, unable adequately to supply our dense industrial population with food and raw materials from our own resources and those of our Dominions.

Argentine supplies have traditionally been of the greatest importance in filling this gap. Our dependence on Argentina, in spite of the volume of supplies furnished by the United States under lease-lend, has been intensified by the present war (which has necessarily involved the retention of large quantities of Dominion foodstuffs in the area of the Pacific War) and is significantly illustrated by the accumulation in London of large sterling balances in favour of Argentina because, during the war, we have been unable to liquidate the adverse balance of our trade by paying in goods, services or gold for the foodstuffs and raw materials we have received.

10. Argentina’s willingness to accept sterling up to the present stage of the war has, of course, been based on her trust that such sterling will, in the not-too-distant future, be realizable in the form of goods. Our exports to Argentina have, however, been progressively and drastically reduced since the war began, not least because of the conversion of so enormous a proportion of our industries to war purposes. In 1939 the last normal trading year, exports from this country amounted to 297,000,000 pesos: In 1944 on the basis of the first six months, it is anticipated that they will not exceed 100,000,000 pesos, none of which can be of benefit, for example, to the Argentine armed forces or the Argentine arms industry, while imports over a similar period have increased from 565,000,000 to 868,000,000. To our regret therefore, we are not at present in a position to impose any specific percentage reduction on our exports to Argentina, but the situation will be watched constantly in case it should seem possible to do something on the lines which have been suggested.

11. The latter part of your letter of the 11th September defines under eight heads the proposed revised export policy of the United States. While I would not propose to comment on the measures contemplated at any length, I should like to recall that the general attitude of His Majesty’s Government to such matters, indeed to the whole question of our war-time economic relations with Argentina, was defined in a letter addressed by Sir Ronald Campbell to Mr. Sumner Welles on the 11th December, 1942,¹⁹ after the consultations between our Governments in regard to the first Argentine policy directive. This letter explained that His Majesty’s Government would cooperate in the policy in question, subject to one general reservation (the importance of which is specially great today in view of the vast relief programmes which have been set on foot), namely, the maintenance of the conditions necessary for the continuance of United Nations imports from Argentina at the level required for the prosecution of the war.

12. In conclusion, may I be permitted to mention a few points under some headings of the list of revised measures contemplated by the United States?

13. In regard to (2), virtually no exports of oil field equipment have been made from the United Kingdom to Argentina since the end of 1942, but it will, I think, be readily appreciated that we could not further reduce our fuel oil exports to Argentina without the risk of curtailing our essential imports from Argentina. For example, a reduction in oil might lead to the increased use of linseed, wheat, et cetera, for fuel, and hence to a reduction in the export of foodstuffs to the United Kingdom. Similarly, a reduction in lubricants involves the curtailment of the use of harvesting equipment. Crude oil on the other hand presents no special problem and some supplies are in the process of being diverted from Argentina to Canada.

14. As regards (3) the supply of foodstuffs to the United Nations and for the relief of the war-stricken countries is a matter of such paramount importance that I feel sure it will be readily appreciated by the United States Government that it is desirable to maintain the Argentine railways at the requisite level of efficiency to achieve this objective.

15. Finally I feel I should explain, in connection with the procedure proposed in (7), that navicerts and certificates of origin, which in our view are essentially instruments of the blockade control of the enemy, cannot in view of prize court law to which His Majesty’s Government’s actions are subject, be used for the purpose of restricting exports to Argentina except in a very limited and clearly defined degree. So far as the exports by European neutrals are concerned, our belligerent rights entitle us to refuse consular certificates of origin in cases where (a) an enemy financial or other interest exists, or (b) the goods have an enemy content in excess of a permitted percentage. These rights do not entitle us to refuse, on grounds other than those set out above, facilities in respect of transactions between neutral countries in which there is no enemy interest.

16. The limitations that are imposed by the essential supplies required from Argentina on the degree of economic assistance that this country can afford the United States were set out in Sir Ronald Campbell’s letter of the 11th December 1942 to Mr. Welles. Further light is thrown upon them in the report of the Combined Food Board of the 5th April of this year addressed to the State Department and His Majesty’s Embassy in Washington.²⁰ Unhappily these limitations remain after nearly two further years of war since Sir Ronald Campbell wrote his letter. Outside these limitations, His Majesty’s Government would at all times be ready to discuss with the United States Government all forms of cooperation that might contribute towards a solution of the Argentine problem, but the limitations are very definitely there, and have influenced the substance of my present letter, which I wish could have been more helpful to you.

Yours sincerely, Anthony Eden.”

In connection with the foregoing, see our 10255 of November 22, 3:00 p.m.²¹ and previous telegrams.

Winant

15. Letter based on telegram 6339, August 11, 11 a.m., to London, p. 342.
16. See telegram 6629, August 19, midnight, to London, p. 344.
17. Not printed.
18. Based on telegram 7285, September 8, to London, not printed.
19. Not printed; the letter was addressed to Mr. Welles as Under Secretary of State.
20. Not printed; this report concluded that all supplies available were being used to the fullest extent; any cut in Argentine supplies would have to be made up by a reduction of civilian consumption in the United States and Canada; the British Ministry of Food could not contemplate any further reduction in stockpiles if it were to fulfill its commitments to the Supreme Commander, Eisenhower (835.50/180).
21. Not printed.