835.5034/3–1449: Airgram
The Chargé in Argentina (Ray) to the Secretary of State
A–134. I saw Bramuglia again on Friday, March 11, 1949, regarding the provision of the new constitution which deals with the expropriation of public services. He said President Perón had endeavored to have the objectionable provisions removed but had been unsuccessful. Bramuglia went on to say that the President had stated categorically that the provision would never be invoked while he was in office. I said that nevertheless the threat would be in the constitution, and while the President’s assurances might give some temporary comfort to foreign companies operating here, the law would be on the books and should effectively serve to keep further foreign capital out of Argentina. The Foreign Minister said he regretted the situation, but he had done the best he could.
Bramuglia added that for political reasons he and the President could not push the matter further; they would be accused of being “Cadistas”. CADE (Compania Argentina de Electricidad) is one of the largest light and power companies here and has been most vigorous in its protests to the Government. I understand CADE is controlled by the SOFINA interests. The Belgian Minister has protested strongly to the Argentine Government. The American & Foreign Power, ITT’s radio companies and remaining telephone companies, Transradio and Swedish Ericsson Telephone properties are interests chiefly affected, however, the term “public services” could easily be made so elastic [Page 487] us to include almost any concern especially other companies and packing houses.
Bramuglia said Perón told him to inform me that he saw the point made by American and other interests that under language as now passed a company could be expropriated and might well end up owing the Government money.
I respectfully suggest that the Department refer to the Embassy’s airgram no. A–113, March 7, 19491 and the Embassy’s telegrams no. 230, March 9 and no. 248, March 12, 1949,1 and send us instructions to make representations in writing to the Foreign Minister asking him to inform the President and the Cabinet of our concern over legislation which might amount either to partial or total confiscation. I think we should say that in spite of the President’s assurances and the fact that a special law will have to be passed in each instance calling for expropriation, the existence of such a provision will be a constant threat to companies operating here and would be an effective barrier to the investment of any new United States capital in Argentina; the United States Government could certainly not advise private capital to invest in Argentina under such conditions.
I have discussed this matter with local representatives of United States companies and they fully agree with the above recommendations.
With regard to the President’s assurances, I pointed out to Bramuglia that with such a law in the constitution the President might not be able to do anything about confiscation for the same political reasons which he had already mentioned. I also told him that under the new constitution any of the provinces could apparently confiscate American property and the Federal Government would not be able to prevent it because of the autonomy enjoyed by the various provinces. Bramuglia admitted that this was correct. I told him that for these reasons I did not derive much comfort from the President’s assurances.
I wish to point out that the draft of the constitution as originally presented did not contain the objectionable provisions which would make expropriation amount to virtual confiscation. These provisions were added at the last minute, and when the Belgians and others protested, they were told it was too late to make changes. This matter was brought not only to the attention of Bramuglia but was also taken up personally with Perón and with Mrs. Perón. They all gave the same general assurances but said it was too late to change the law.