711.35/5–1349

Memorandum by Mr. Henry Dearborn of the Division of River Plate Affairs1

secret

Foreign Minister Bramuglia gave Mr. Guy Ray a document which he said was a copy of the instructions given to Ambassador Remorino [Page 501] to guide him in his talks with the Secretary of State.2 Below are comments on this document.

First of all there were listed the Argentine Government’s comments on Mr. Ray’s 14 points which were handed to Bramuglia3 as possible prerequisites to a general understanding between the US and Argentina and to a solution of Argentine economic problems.

With respect to Article 40 of the Argentine Constitution, President Perón’s message of May 14 is quoted. As we now know the President was reassuring in tone. Also quoted however are comments on the concern which we manifested regarding this Article by the Minister of Finance which Ambassador Remorino has not yet brought to our attention. The Minister continues to hold that it is just and proper to deduct excessive profits from the price to be paid for an expropriated property. We have reserved our rights in this respect and there is probably nothing further for us to do until a case arises.

In reply to Mr. Ray’s suggestion that action be taken to relieve US companies of the hardships they have been undergoing, the instructions point out that US firms are in the same situation as foreign and Argentine firms which suffer from lack of dollars and that the only way to solve their troubles is to increase exports which are paid for in dollars. As for the packers, it is said that they depend on meat exports and that the Government is doing all it can to help them through the present crisis and to reestablish normalcy in the industry. To say that the troubles of US firms are wholly attributable to the dollar shortage is, of course, to simplify too much and the Argentines must be aware of this. It is likely that they are without an answer on the remainder of the problem. As we know, it is true that Argentine officials have been working to reach a solution of the packing house problem.

The instructions reiterate various times that US business is not treated any differently than other foreign or Argentine business. Under present conditions in Argentina this is hardly reassuring to US business.

Regarding Mr. Ray’s recommendation that the remittance of profits be guaranteed when dollars are available, the instructions state that Argentina has not restricted profits when dollars were available and [Page 502] that a part of Argentina’s dollar income was now being reserved to cancel its debt. This is in all likelihood one of the accomplishments of our recent discussions with Argentine officials.

The instructions state flatly that Argentina has sound reasons for not joining the International Bunk and Monetary Fund. These are that during a time of instability and economic readjustment it is not possible to adopt rigid standards regarding the exchange rate and to restrict liberty of action. It is said that this is a better position than to join these organizations and then not comply with their standards as have other countries.

On the matter of shipping discriminations, the instructions point out that the US discriminates in this regard in the transportation of ECA financed goods and of goods financed by Eximbank loans. One might say “touché” at this juncture. It is a counter-charge which we should expect and the answers which we give ourselves cannot be expected to satisfy the Argentines.

The instructions say that Argentina cannot accept the view that its prices ought to be lower than those of other exporting nations if that means maintaining a lower living Standard. With respect to Mr. Ray’s suggestions on the adjustment of the exchange rate (see Point 7, page 65) the instructions do no more than emphasize that it is a complex problem without indicating what action, if any may be taken.

The instructions maintain that Argentina has not been inclined to deviate from its trade agreement of 1941 with the US though it believes revision would be advisable to bring the agreement into harmony with present conditions. Mr. Ray had recommended the prompt implementation of the US-Argentine air agreement and the instructions properly point out that Argentina is now awaiting a reply from the US with respect to a route agreement.6 RPA has been, urging a prompt reply.

Mr. Ray had suggested that US-Argentine trade should be carried on through established commercial channels, and the instructions stated, as Ambassador Remorino pointed out to us, that this would be done and that I API would no longer engage in business.

The instructions pointed out that Argentina hoped to solve its economic difficulties in the cattle industry (see Point 13, page 8) by [Page 503] agreeing on prices with foreign buyers that would pay for the efforts of the producers.

The nearest the instructions come to answering Mr. Ray’s observations on onerous wage and labor regulations is the statement that the policy of the Argentine Government in favor of industrialization and of raising the Standard of living has necessitated full employment and that the problems resulting from this readjustment will be solved.

Mr. Ray had said that lack of freedom of the press in Argentina made US-Argentine relations more difficult and he recommended that US publications be permitted to enter freely and that US correspondents be permitted to send news freely by radio, cable and mail. The instructions stated that the Argentine Government would study as soon as possible how to increase the introduction of US publications and the diffusion of news by US correspondents. We probably cannot expect much from this, though if US-Argentine economic relations should improve one might look for an improvement in press relations the latter lagging behind the former.

Referring to Mr. Ray’s invitation that Argentina likewise make known any grievances it might have, the instructions authorize the Ambassador to take up the following matters of which he or others in the Embassy have mentioned all. 1) Argentina is concerned by the unfulfillment by the US of ECA purchases in the amount of several hundreds of millions of dollars announced repeatedly to the Argentine Government by the US Embassy in Buenos Aires early in 1948 and by Assistant Secretary Armour in Bogotá.7 2) The unfulfillment by the US of the promise in Washington made by Mr. Bruce of ECA to Dr. Bramuglia to acquire immediately one hundred million dollars worth of purchases in Argentina and several millions of dollars worth during the current year. 3) The concern of the Argentine Government with the constant anti-Argentine campaign carried on in the US press. 4) The sale of US pork to England financed by ECA dollars during the Argentine-British meat negotiations.8 There is no doubt but that [Page 504] these are all serious matters to Argentina and all serve as an effective basis of propaganda against the US in Argentina and elsewhere regardless of how we explain them.

Finally the Ambassador was instructed to effect the following: 1) The normalization of current US-Argentine trade. 2) The appropriate means for the acquisition in Argentina of ECA financed purchases, considering all the variations which operations of this nature offer. 3) Establishment of a mixed committee to facilitate normalization in economic relations. 4) The best political understanding between the two governments.

It is noteworthy that contrary to the reports which we received from Buenos Aires while Ambassador Remorino was still there, no part of these instructions mentions the application for an Eximbank loan to build a steel plant.

  1. The memorandum was addressed to the Assistant Chief of the Division of River Plate Affairs (Atwood) and the Director of the Office of American Republic Affairs (Daniels).
  2. The Spanish text of these instructions was sent to the Department under cover of a letter (not printed) from Mr. Ray to Mr. Daniels, dated May 13, 1949 (711.35/5–1349); the English text was transmitted with despatch No. 401, May 26, from Buenos Aires, not printed (711.35/5–2649).
  3. See telegram 297, March 29, from Buenos Aires, p. 493.
  4. Reference is to an address by President Perón on that date before the Argentine National Congress.
  5. Reference is to the document identified in footnote 2.
  6. See footnote 2 to telegram 297, March 29, from Buenos Aires, p. 493.
  7. Norman Armour, formerly Assistant Secretary of State for Political Affairs, had been a member of the U.S. delegation to the Ninth International Conference of American States, held in Bogotá, March 30–May 2, 1948.
  8. Telegram 299, April 29, to Buenos Aires, not printed, had reported the allocation by the United States of 73 million pounds of pork for export to the United Kingdom and 10 other countries followed by approval by ECA of financing for United Kingdom procurement of 66 million pounds of pork (840.50 Recovery/4–2949).