Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

189. Memorandum of a Conversation, Department of State, Washington, July 28, 1955¹

Washington, July 28, 1955

SUBJECT

• Argentine Developments and US-Argentine Economic Relations

PARTICIPANTS

• Argentine Ambassador Hipolito J. Paz
• Assistant Secretary Holland
• OSA—James F. O’Connor, Jr

Ambassador Paz (who recently returned from a visit to Argentina) said that he had found the Argentine scene outwardly calming and the Church–State difficulties no longer a burning issue. He reported that he had had a meeting with Peron, whom he found optimistic as regards the course of Argentine political developments and as regards the prospects for his pacification policy, although with the realization that there were still difficulties in the way of carrying the latter through. Paz went on to say that the current attitude of the Radicals, Socialists, and Democrats (Conservatives) had taken a course adverse to US-Argentine relations, with specific opposition to the petroleum contract with the Standard Oil Company of California signed April 25, which is now encountering difficulties in Congress from extreme Peronistas as well as from members of the Radical opposition. The Ambassador said that he had a direct message from Peron for Mr. Holland in this regard, to the effect that Peron was firm in his intention to see the Standard of California contract approved by Congress and would put his shoulder to the wheel to achieve this. Paz added that the reports on the status of the legislation involving the petroleum contract from the legislators responsible for managing the bill were favorable as to its eventual approval, although there would have to be some modifications, more of form than of substance, in order to placate the opponents of the measure. Paz advanced it as his opinion that a significant difficulty arose from the inept translation of the contract into Spanish which cast some sections in unfortunate language.

Mr. Holland asked the Ambassador whether he had also had a chance to discuss the remittances problem with Peron. The Ambassador said he had and that Peron was fully committed to solution of the problem, but that Secretary of Economic Affairs Gomez Morales, with whom Paz had argued this matter, continued to maintain shortsighted opposition to a fully satisfactory solution. Mr. Holland said that failure to move forward on the remittances problem, which after all only involved a sum in the vicinity of $5 million, made it difficult for the State Department to support Argentine desires in such fields as additional surplus cottonseed oil, since the Department was faced with questions as to Argentine progress on US business problems in seeking additional US economic cooperation for Argentina. Ambassador Paz commented that the cottonseed oil problem was indeed a serious one for Argentina, and particularly because the Government was concerned over the political implications under present circumstances of being unable to satisfy domestic edible oil requirements. Mr. Holland referred to the important effect which concrete Argentine steps in authorizing remittances would have on the Department’s ability to aid Argentina in other economic fields, bracketing remittances progress with approval of the Standard of California petroleum contract as significant items, but stating that favorable remittances developments would carry more weight in more quarters in the US in facilitating further US economic cooperation with Argentina. The Assistant Secretary went on to say that in no sense was Argentine action on the remittances issue the sine qua non to State Department assistance to Argentina in attempting to secure favorable consideration of its cottonseed oil desires, and that he was ready and willing to go to bat for the Argentine request irrespective of the remittances question, but that he could only do so under present circumstances without adequate ammunition for securing sympathetic attention to Argentina’s needs. Ambassador Paz replied that he appreciated the situation and that a country could not expect to seek and obtain satisfaction of one request after another without displaying cooperation on its part, and that he would consequently prefer to point out to Buenos Aires that action on such matters as cottonseed oil would have to be preceded by Argentine action on the pending remittances issue. Mr. Holland said that he would leave himself in the Ambassador’s hands as to any such message to Buenos Aires, but reiterated that he was not suggesting a quid pro quo approach and would not like that impression to be obtained in Buenos Aires.

. . . . . . .

1. Source: Department of State, Central Files, 411.35/7–2855. Confidential. Drafted by O’Connor.

   In a memorandum of July 26 from O’Connor to Watrous, Dearborn, Lyon, and Holland, O’Connor recommended that Holland raise the issue of the interrelationship of the remittances problem and the cottonseed oil question in this scheduled meeting with Ambassador Paz. He suggested that Holland “increase the pressure on the Argentines through a modified and tactful quid pro quo approach.” (Ibid., 811.05135/7–2655) Argentina had recently requested an additional 50,000 tons of cottonseed oil under Public Law 480.