835.6363/12–547: Telegram

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

us urgent

1416. President Economic Council Miranda, Acting Secretary Commerce Barros, and No. 2 YPF man Canessa met in Miranda’s office yesterday with local representatives Standard, Shell and Ultramar. Companies were told it was highly desirable political reasons announce on December 13 anniversary discovery petroleum in Argentina, that Argentina had taken over all the oil properties. Proposal apparently is that government would buy oil rights owned by Shell and Standard. Companies offered long-term refining marketing contract probably 15 or 18 years stating guarantee would be given for “generous profits”. Local representatives inquired whether failure to make affirmative reply by December 9 would mean expropriation and Argentine officials replied they were not prepared to answer for present. Miranda stated three times plan was not his idea but apparently entire motivation was political.

My action pending instructions will be: 1. Inquire whether this [Page 296] plan has full approval President, and 2. Point to obvious unfairness presenting plan on complied basis ultimatum with such short notice. I shall point out to Bramuglia today and ask him inform President immediately that local representatives have no authority make commitment and 4 days in which weekend included is assuredly short time expect representatives obtain decision on such an important question. Argentine officials emphasized necessity foreign companies continuing imports and desire not to prejudice interests of foreign companies. Argentines said continuation of imports would make it possible for Argentina to develop its oil resources “without unnecessary haste”. Argentine proposal presented in form of “request” by practical demand for reply by December 9 places it somewhat in the category of an ultimatum.

My conviction is if companies agreed sell oil properties and continue operating contract for refinery and sales, the latter contract would be unsatisfactory over period of years, especially if YPF succeeded in increasing local production. I assume Dept’s attitude will be based at least some extent on whether Standard desires sell properties. Ultramar owns no oil properties but operations are confined to importing, refining and selling.

Shell representative was informed his answer would have bearing on negotiations of British Commercial Mission now in Buenos Aires. Such tactics come close to blackmail.

I feel that regardless whether companies wish sell or not, we should make it clear to Perón that presenting such far-reaching demands with so little notice constitutes sharp tactics which will make our relations extremely difficult.

I expect see Bramuglia today and also discuss this with British Ambassador.19

More later.

  1. Sir Reginald Leeper.