The Secretary of State to the Chargé in Argentina ( Reed )
The Confidential List was originally conceived as a means of preventing goods from reaching the hands of Proclaimed List nationals through cloaks. Its paramount function has been, and is, to supplement the effect of Proclaimed listing and to make that list effective by preventing the indirect receipt of American goods by listed persons and firms.
It has been thought that the persons most likely to serve as cloaks for Proclaimed List nationals were those who occupied some position in the firm, such as partners, directors, managers and employees. As a result the Confidential List has, in a large measure, come to consist of potential cloaks, that is to say, persons occupying positions of importance and responsibility in Proclaimed listed firms; and, to a much lesser extent, minor and unimportant employees. Furthermore, the Confidential List for many countries has not been constantly revised by additions, deletions and amendments, as has been the case with respect to the Proclaimed List, with the result that many of the inclusions are now stale and serve no useful purpose. Largely as a result of the considerations mentioned, the Confidential List has grown steadily in size until it now contains a total of 10,088 names, 6443 of which are in the Western Hemisphere section of the list. The administrative burden on the Department in compiling so large a list and distributing it to the interested agencies and missions is apparent.[Page 443]
Furthermore, the proportion of license applications which are denied by the Foreign Economic Administration because of the inclusion of the consignee in the Confidential List is very small. This would suggest that the great majority of names now in the Confidential List no longer attempt to import United States merchandise in their names. It suggests, too, that responsible officials of Proclaimed listed firms seldom use their names for cloaking purposes; and that they usually select as a cloak some minor employee or commercially unimportant third person who would not be seriously affected if he should come to be included in the Proclaimed List as a result of his actions. The difficulty of extending the present Confidential List to include all those who are potential cloaks of the kind described is obvious.
Finally, the Department was recently informed that no more additions would be made by the British to their Black List, a list which, as regards the Western Hemisphere, is estimated to be approximately one-seventh the size of the Confidential List. The Department is now discussing with the British the possibility of continuing an active Black List and of coordinating the Confidential and Black Lists in much the same way as the Proclaimed and Statutory Lists are now coordinated. Obviously it will be impossible to bring about such a coordination if the Confidential List is not reduced; and even if an agreement to bring the two lists together cannot be made, it will be desirable to bring the two lists as near into balance as possible.
Notwithstanding the difficulties above-mentioned, it is believed that the Confidential List continues to serve as a desirable, if not a necessary, adjunct to the Proclaimed List, not only because of the number of export license applications which are rejected because of it, but also because it poses a continuing threat, known to most Latin American merchants, that they will be unable to obtain American goods if they render assistance to the enemy even though they may not be included in the Proclaimed List.
It has been decided therefore to preserve the advantages of continuing the Confidential List but to reduce its size. It is believed that, with the cooperation of the missions, its effectiveness can be increased rather than diminished by the reduction.
The Department has therefore undertaken to revise the Confidential List for the Western Hemisphere in accordance with the criteria hereafter explained. A list of the names which appear to qualify for retention in the list for Argentina under these criteria is enclosed.85 …
The Embassy is requested to review the names and to report whether the attached list should be modified in any manner. If possible your report should reach the Department not later than March 1, since that [Page 444] is the date on which work on the revision will be commenced in the Department.
The criteria used in revising the list and which should be followed in adding names to the Confidential List in the future are the following:
- Actual Cloaks. Names retained because of their cloaking activities are identified by the number 1 appearing opposite their names in the attached list. In the future the names of cloaks should be recommended only where there is satisfactory evidence of an actual cloaking operation involving goods from the United Nations, or where there is reasonable cause to believe that such a cloaking transaction has taken place or is about to take place. This of course eliminates the inclusion of names on the precautionary ground that a person or firm, because of relationship to a Proclaimed List national, is a potential cloak.
- Some cloaks will, of course, continue to qualify for addition in the Proclaimed List; and some may continue to be handled by undertakings.
- Special Blocked Nationals. Names which are recommended for inclusion in the Schedule of Special Blocked Nationals will continue to be automatically included in the Confidential List solely in order to prevent administrative difficulties which would otherwise arise. Names in the attached list included in the Confidential List solely because of their blocking by Treasury are identified by the number 2.
- Reexportation of American goods to Argentina. In the Western Hemisphere it is believed necessary to support this Government’s present policy towards Argentina by continuing to list those persons who, in violation of that policy and of the export controls of the Foreign Economic Administration, reexport goods of United States origin to Argentina. It does not apply, however, to the exportation of indigenous goods to Argentina.
Since in the nature of the case the reexportation to Argentina occurs in a Latin American country other than Argentina the Confidential List for Argentina will contain only an occasional name in this category. It is only when Argentine concerns are actively involved in reexportation from other American Republics to Argentina that names in this category will appear in the Confidential List for Argentina. The name of Juan A. Bracamonte, who is identified by the number 3 in the attached list, is a case in point.
In conclusion it may be said that cases included in the Confidential List because the evidence was not quite strong enough to warrant inclusion in the Proclaimed List, cases involving an exploitation of commodity shortages by exacting exorbitant prices, and other categories previously included in the Confidential List have now been, and should continue to be, excluded therefrom. Only in this way can the original purpose of the list be preserved and its continued effective existence as a complement to the Proclaimed List be assured.