The Ambassador in Argentina (Bruce) to the Secretary of State

No. 3265

Sir: I have the honor to inform the Department of certain recent developments in the Argentine petroleum situation which have been the subject of conversations between Embassy officials and representatives of the private petroleum companies. The latter complain that the recent changes in the directorate of Y.P.F. have resulted in a further hampering of their activities and that the formation of an inimical bloc of high officials has once again raised the specter of expropriatory action on the part of the Government.

In the Embassy’s report No. 871 of September 3, 1947,18 the departure of General Albarino, President of Y.P.F., for a four months’ leave of absence for reasons of health was reported, together with the appointment to the Board of Directors of that organization of Ing. Julio V. Canessa, a former official of Y.P.F. who was recently serving as President of the Dirección General del Gas del Estado. Captain Alberto Job had been named as acting President of Y.P.F.

Subsequently, Ing. Canessa was elevated to the presidency pro-tem and shortly thereafter, on November 14, a decree was signed which granted Y.P.F. the authority to intervene in the operations of the private companies. A critical shortage of petroleum products and slow down strikes on the part of the company personnel were cited as the justification for this move, and though the latter allegation was denied by the private companies, the immediate result was the placing of interventors in their organizations and the issuance of numerous directives which were a source of embarrassment to the companies. These, for the most part, took the form of charges of failure to maintain normal deliveries of gasoline to gasoline stations and though unfounded, gave Ing. Canessa the opportunity to threaten “appropriate measures” if the companies did not comply promptly and fully with [Page 294] his directives. The presence of the government interveners throughout the private organizations has been another annoyance.

The concern of the companies was further heightened by an announcement of policy made to company representatives by Sr. José Constantino Barros, Minister of Industry and Commerce and a close collaborator in policy matters with Ing. Canessa, who stated flatly that his idea of future petroleum policy for Argentina envisioned the government as sole producer with the private companies relegated to the roles of importers and refiners. When asked point blank whether such a policy meant “nationalization” of the private producing properties and equipment, he answered that it did, and when asked whether it meant “expropriation”, he again replied in the affirmative.

This conversation took place in the office of Miguel Miranda, and although the latter was not present at the moment he was aware of the remarks made by Sr. Barros and later informed the company representatives that the Minister spoke only for himself and that his views were not shared by Miranda, himself. He did not elaborate on this point, however, so his own views are not yet known.

The trend of thinking on the part of Sr. Barros and Ing. Canessa, whose views evidently coincide, has aroused considerable anxiety among the private companies since it has been officially announced that a public pronouncement of future petroleum policy will be made on National Petroleum Day, December 13, and the companies maintain that if the ideas of the Minister and Ing. Canessa should find acceptance among other higher officials it might be found on December 13 that the Government had committed itself to a course of action most prejudicial to company interests.

The Embassy considers that undue panic is evident in the attitude of the company officials, for although Barros and Canessa are unquestionably strongly nationalistic in their attitudes and in a position to cause petty annoyances to the private operators, it seems apparent that their idea of future policy differs from that of President Perón, Miguel Miranda, and other high officials. There may be some significance in the fact that General Albariño has just returned to his duties as President of Y.P.F., a development which may result in a modification of policy in the higher level of that organization.

The rumors of expropriatory action have been discussed by the Ambassador with President Perón and with the Foreign Minister. The former has stated emphatically that his government would not expropriate the petroleum properties or any other American property in Argentina, and that although he would like to see increased production on the part of the private companies, he saw no way of bringing this about under existing laws. He added that the Government [Page 295] was disposed to give the companies long-term contracts, say for 15 years, which would justify increases in their refinery capacity.

Foreign Minister Bramuglia has also given assurances that rumors of expropriatory action are unfounded. He stated on December 2 that President Perón had not, in their conversations, so much as hinted at any such course and that it was evident that if any action of such international ramifications were under consideration, he, the Foreign Minister, would certainly have been apprised.

In the face of these two categorical assertions, the Embassy is forced to the belief that the private company fears of a drastic policy pronouncement on December 13 are immoderate. Although it is conceded that some statement of petroleum policy may be made on that date, it appears highly unlikely that the Argentine Government would irrevocably commit itself to a course of action which would cause such grave international complications as would a policy of outright expropriation, particularly at this time when the President is soliciting the participation of American capital in the expansion of Argentine industrial activity.

Respectfully yours,

For the Ambassador:
Julian Greenup

Counselor of Embassy for Economic Affairs
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