The Ambassador in Brazil ( Berle ) to the Secretary of State
[Received 7:46 p.m.]
2524. Deptel 1836, July 25. Embassy is obliged for Dept.’s careful and detailed explanation. Ambassador hopes he made situation clear in Washington. Facts appear to have been that we had a surplus of oil but little transport: Argentines had good deal of transport but only limited if any moral right to oil; Brazil had no transport, was short of oil and had moral right to both. Obvious policy would have been to consult Brazil and negotiate joint arrangement with Argentina requiring Argentina to share transport, we sharing oil, and Argentina contributing her linseed oil as quid pro quo for her share. Embassy made recommendation that Warren Mission,47 if it had to negotiate with Argentina at all, take all the considerations together, requiring Argentina to agree to all points and thus covering entire situation. Ambassador’s position of course was that entire Argentine matter should have been postponed during a “probatory period” lasting some months to see whether Argentina would really fulfill understandings and assumptions contained in the Act of Chapultepec, and this was also position of Brazilian Govt.[Page 686]
However this is history and we are wrestling as best we can with present situation. Embassy appreciates gasoline arrangements which have helped matters somewhat and textile people are making good progress toward securing additional textile production. I should guess that situation will remain relatively easy for immediate present but that increased requirements of oil will cause stringency perhaps 2 or 3 months hence which will have to be kept in mind so that we can meet situation before it becomes acute. Embassy is separately answering Dept.’s suggestion that 5,000 tons of oil be specifically ticketed for food and textile program. Rough forecast is that textile program will go forward for present but that we shall run into resistance possibly in October or November as oil position becomes increasingly tight and textile people need additional supplies. Naturally we are not encouraging program to break down merely because of situation created. Save for occasional humorous thrust Brazilians are taking friendly and tolerant attitude that all govts, make mistakes occasionally and that Argentina is one of the best traders in the world.
In summarizing, situation is that we shall presently get by with the 5,000 tons of oil but all hands ought to realize that there will be high pressure area somewhat later on which will have to be dealt with.
With specific reference to food supply, my own travels in country seem to indicate that gasoline rather than fuel oil will be needed. Problem is that of truck transport to railhead and in some places reasonable and limited supply for motorized agricultural machinery.