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

222. Memorandum of a Conversation Between George Blowers of the Export-Import Bank and the Director of the Office of South American Affairs (Bernbaum), Washington, August 23, 1956¹

Washington, August 23, 1956

SUBJECT

• Argentine Loan Applications

While lunching with George Blowers today, we discussed the Argentine situation. He stated that he, Walter Sauer and Vance Brand had had a long and frank conversation with Dr. Coll Benegas, in which they made it clear that prompt action on the meat packers and American and Foreign Power problems would in effect be a prerequisite for action by the Export-Import Bank on Argentine loan applications.

Coll Benegas assured them that they had absolutely nothing to worry about on either problem and that action would surely take place in the reasonably near future to settle both of them. The Eximbank response was that the Argentines had been giving such assurances for a number of years without any results to date. Although they were reassured by the fact that Coll Benegas was one of those giving such assurances, they felt that he should know the Bank would find it extremely difficult to justify to its public, action on Argentine loan applications before the Argentines themselves had come through on their commitments to American business enterprise.

Blowers stated that all of the Directors were determined that no action would be taken on electric power in the absence of concrete action on American and Foreign Power. He inquired whether we felt in ARA that the same should apply to the relationship between other loan projects and the meat packers. I described our position as involving no concrete action on any Argentine loans prior to satisfactory action on the meat packers and American and Foreign Power. I expressed the opinion, with which Blowers agreed, that this was the best opportunity we have ever had to get action by the Argentines and that our failure to take advantage of it might result in the indefinite postponement of an improvement in the situations of the meat packers and American and Foreign Power.

Blowers stated that there was nothing clear as yet regarding what action the Bank will take on electric power. He and his colleagues in the Bank felt that Coil’s negative reaction to the Sargent proposal indicated that this would not be satisfactory in the absence of drastic modification. So far as he knew, no decision had been taken on whether the Eximbank would be disposed to lend money for a new Government-owned power plant in Buenos Aires in the event that CADE were allowed to operate unmolested. The question discussed by us in this connection was whether private power enterprise would be ready to put up new money for CADE expansion or for the proposed superusina.

Blowers confirmed that present thinking in the Bank was for the extension of a $100 million line of credit on transportation. They were thinking specifically of six projects aggregating about $30 million. The question now being debated in the Bank was the manner in which an announcement of the Bank’s readiness to lend the money could be tied in with action on American and Foreign Power and the meat packers. He also confirmed that the Bank was interested in sending a mission to Argentina to verify the actual state of Argentine railway equipment. Their concern at this time was whether the railroad beds were in sufficiently good condition to justify the apparent desire of the Argentines to concentrate on locomotives. I promised to send him some of the despatches we had from the Embassy on the subject.²

1. Source: Department of State, Central Files, 835.10/8–2356. Limited Official Use. Drafted by Bernbaum.

2. In despatch 169 from Buenos Aires, August 24, Ambassador Beaulac enclosed a memorandum of a conversation which he had on August 22 with Argentine Minister of Foreign Affairs Podestá Costa, Minister of the Treasury Eugenio Blanco, and Under Secretary of the Navy Arturo Rial. Blanco, he reported, “promised rapid action by the Government to settle (1) the meat packers’ problem, and (2) the problem of American and Foreign Power.” Beaulac pointed out that the Embassy would continue to insist on a prompt settlement of those two problems and recommended that “urgent and favorable consideration be given to Argentina’s requests for loans in the field of railroad transportation.” “I believe also,” he continued, “that the President’s fear that failure by Argentina to obtain some prompt concession may have adverse political effects is correct. Such a development would constitute a reverse for the United States in this area.” (Ibid., 835.00/8–2456)

   In despatch 188 from Buenos Aires, August 29, Beaulac enclosed a memorandum of a conversation which he had that morning with Argentine Minister of Industry and Commerce Rodolfo Martinez regarding the power problem. Martinez insisted that his government was moving with reasonable speed toward reaching a solution with American and Foreign Power. On the other hand, Beaulac pointed out, American and Foreign Power “takes the view that nothing is being done. The Embassy is exploring this apparent contradiction.” (Ibid., 835.00/8–2956)