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

225. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Secretary of State¹

Washington, September 13, 1956.

SUBJECT

• Appointment with Argentine Ambassador, September 13, 3:30 p.m.—Financial Assistance

Background:

You have an appointment today with the Argentine Ambassador, Dr. Adolfo Vicchi, regarding Argentina’s request for financial aid.² We understand that the Ambassador is under instructions to convey to you his Government’s disappointment over the Exim-bank’s decision and to request an upward adjustment. As you know, the NAC and the Bank approved a $100 million line of credit to finance urgent requirements in public and private sectors for transportation, industrial and agricultural equipment, allocation of which will be made following an on-the-spot survey by a special Bank mission. The Bank refused to make commitments in electric power since present Argentine proposals in this field contemplate Government projects for which private capital is believed available. It is, however, prepared to consider power development projects at such time as broad power principles are clarified in relation to the Bank’s basic policy on financing public and private projects.

The Ambassador may be expected to argue as follows:

1. The credit is inadequate to meet emergency needs in even one field. “Boiled down” estimates of urgent requirements in railroads alone exceed $100 million. The figure moreover bears no relation to any estimates made for specific projects.

2. Great expectations of at least $250 million were roused in Argentina, and the Government looked to the US for help in this critical matter. Disappointment will be deep and will reduce the Government’s ability to justify a policy of cooperation with the US. The US is losing an opportunity here to establish really close friendship.

3. While Argentina understands the Bank’s policy in the power field, hers is a special case, in which needs are urgent and in which domestic politics dictate temporary Government participation in power development pending transfer to private hands. The US should understand these domestic factors and help in this special case.

I recommend that you answer these points as follows:

1. Argentine estimates of its needs were carefully considered. However, the Bank was not in a position to confirm immediately precisely what the needs are, and recognizing the urgency of the situation it decided on a global credit to be allocated as specific on-the-spot studies indicate.

2. You should stress US desire to help Argentina, pointing out that the question was never whether to help but only how to best do so. You should point out the almost unprecedented character of the Bank’s willingness to establish a line of credit before determining specific allocations, and emphasize that this decision represents only the initiation of close economic cooperation between the two countries.

3. With regard to power, you should say that the US fully appreciates the internal limitations governing Argentine action in this regard. The Bank, however, has no choice but to adhere to its basic policy which is consistently applied world-wide, and cannot deviate in this case. You should point out that it has not closed the door in the power field, but is prepared to consider projects if the situation modifies.

Should the Ambassador specifically request that you seek to have the credit adjusted upward, you should say you see no possibility of that at this time. You should point out, however, that the information which the Eximbank will gather as to specific magnitudes of urgent requirements will be very important.

You will recall that the Ambassador discussed this problem with you at Panama. I attach a memo of conversation covering that discussion,³ should you wish to review it in anticipation of this meeting.

Mr. Maurice Bernbaum, Director of OSA, will accompany the Ambassador.

Recommendation:

I recommend that you discuss this matter with the Ambassador along the foregoing lines.

1. Source: Department of State, Central Files, 835.10/9–1356. Confidential. Drafted by Vaky and cleared by Prochnow.
2. In a memorandum to Dulles, September 8, Holland pointed out that Vicchi requested an appointment with the Secretary for September 13 in order to discuss Argentina’s request for financial assistance. “Considering the importance with which the Argentine Government views this matter in terms of relations between the two countries and the Ambassador’s deep desire to see you,” Holland wrote, “I believe that it would be desirable for you to grant him an appointment on the date requested.” Dulles approved Holland’s recommendation. (Ibid., 835.00/9–856)
3. Document 219.