Foreign Relations of the United States, 1958–1960, American Republics, Volume V

158. Memorandum of a Conversation Between the Ambassador in Argentina (Beaulac) and President Frondizi, Buenos Aires, October 13, 1958¹

Buenos Aires, October 13, 1958

I said I had had a very interesting week in Washington which I wanted to tell him about.² Everyone is interested in his visit and enthusiastic about it.³

The President said at this point that it was odd that he should be the first President of Argentina in all history to visit the United States.

I said, also, that people in Washington were enthusiastic about the progress being made in Argentina.

The President recalled that he had told me that he and I might help bring about a new relationship between our two countries. He said he thought that this was going to be the case. I said I was sure of it.

The President noted that the petroleum problem was in process of being solved. He hoped that the Congress would approve the petroleum bill and the CADE agreement this week. An agreement has been reached with ANSEC and needs only to be formalized.⁴ He is awaiting the proper time. Timing is essential. Everything is agreed to with ANSEC except the price which, of course, will be fixed by arbitrators. He hopes ANSEC will build a new power plant and there will be discussions about where that plant will be.

I referred to a letter he had addressed to Secretary of Energy and Fuel Dr. Gregorio Meira last week,⁵ in which he anticipated a solution to the ANSEC problem. He did not comment on this letter.

I said people in Washington admired how he was solving problems one by one. He said he would continue to do this. Right now the Central Bank needs dollars and we can be helpful in that regard.

I referred to press reports published locally of the formation of an Inter-Departmental Committee in Washington to consider cooperation with Argentina. I said that Argentina was fortunate in having in Washington friends in high position who knew Argentina intimately and who were anxious to be of help. These friends included Secretary of Treasury Anderson, Deputy Under Secretary of State Dillon, Assistant Secretary of State for Inter-American Affairs Rubottom, and Messrs. Waugh and Brand of the Export-Import Bank. I said I had the opportunity to discuss Argentina with a number of these persons and with others, and I wanted to read to him a summary which I had prepared and which I considered accurate of the present thinking in Washington with reference to Argentina. I said I would be happy to leave this memorandum with him if he wished. He asked that I do this. I then read him the following memorandum in translation:

“I found public and official opinion very much impressed by reports of progress in Argentina, particularly in the economic field.

The steps already taken in the field of petroleum and power have been particularly effective in creating a favorable opinion. There is a general assumption that the Government also will proceed as quickly as possible to attack the country’s serious monetary problem which is tied up with the difficult problem of inflation.

The Export-Import Bank is very favorably inclined toward Argentina. The hope is expressed in Washington that Argentina also will develop close relations with the International Bank, which has access to European currencies. However, neither of these Banks is in a position to give short-term credits such as Argentina undoubtedly will need. Such credits can be advanced by the Monetary Fund but only in connection with a plan of monetary and financial reform aimed at bringing about monetary stability.

Within Government circles there is apprehension at the Argentine Government’s failure, so far, to give satisfactory treatment to the meatpacking industry, not only with reference to past accounts which are covered by a decree-law of the Provisional Government which, however, has not yet been carried out, but also with respect to the system of sales in the future. This apprehension is based largely on the importance which the meat industry has in Argentina. Persons commenting on this situation have in mind that meat exports are one of Argentina’s principal sources of foreign exchange and that the importance of the meat industry as a source of foreign exchange not only will not diminish in the future but will increase. It is recalled, in this connection, that the kind of economic development, including industrial development, which the Argentine Government has in mind, instead of lessening the demand for foreign exchange tends to increase the demand, particularly in the early stages. In other words, foreign exchange needs increase with industrialization and with real increases in productivity and in living standards.

For these reasons, the persons referred to consider that one of the principal objectives of the Argentine Government should be to place the meat industry on the best possible basis, including not only the production of cattle but the processing and export of meat.

Because of the excellent progress being made and the expectation that further progress will be made, particularly in the fields referred to, there is an excellent atmosphere for cooperation with Argentina, and the Argentine Government at the appropriate time will undoubtedly want to take advantage of that improved atmosphere.”

I told the President that my purpose in reading the memorandum to him was not to exert pressure on him or try to influence him, but to give him exactly my impression of what was being said in Washington with reference to Argentina. I said that the memorandum, of course, was unofficial especially since I had referred to international agencies such as the Monetary Fund, which I was not authorized to discuss officially. The President said he understood that completely.

The President said it was obvious that there were two problems that had to be met. One was the problem of the meatpackers and the other inflation. He said he had met with the meatpackers in my absence and told them he would reach an integral solution to the problem.

With reference to inflation, he had already told me the Central Bank needed dollars in order to help meet that problem.

I asked the President whether he had in mind freeing the meat industry. He said not exactly, but he was sure of one thing and that was that Argentines must eat less meat in order to build up the cattle population.

I told the President that I had talked to Mr. Guy Whitney, Vice President of Swift International, today. He had simplified the problem for me. The problem has two aspects: the first has to do with past accounts. This should be no problem at all. An agreement was reached between the packers and the Provisional Government. This agreement is carefully worded. It was embodied in a decree-law which now has the force of law, and which the Argentine Government is obligated to carry out. There is nothing to discuss. There are no technical or political obstacles. The only obstacle is that the auditing office of the Meat Board will not carry the agreement out.

The second problem has to do with future sales. This, in turn, has two sub-problems: the first is to define the expenses of the companies for the purpose of calculating the 53/4 percent profit; the second is to provide that there will be no subsequent revision of accounts. Again, the auditing office of the Meat Board insists on subsequent audits. This is the old Peronist system which will not work.

I said it seemed clear, therefore, that the stumbling block was the auditing office. I noted that Secretary of Finance Dr. Antonio López had promised the packers a settlement of the problem by August 1, but there had been no settlement.

The President took notes. He said the problem was clear to him. It was a common problem. It was a bureaucratic problem. He had inherited the same officials that the Provisional Government had inherited from Perón. These officials or technicians always found some pretext for not carrying out orders. I said I had the same opinion.

The President said that he had talked to Minister Del Carril on the telephone today. Minister Del Carril is leaving New Delhi tomorrow for Washington. He will want to talk about dollars for the Central Bank. The Government is determined to attack the problem of inflation.

I reminded the President that the press in the Casa Rosada customarily asked for a statement after I had talked to him. I handed him a translation of the following statement for his approval:

“I came to greet the President and inform him concerning consultation in Washington. I told him his coming visit had aroused great interest in government and private circles in the United States, not only because he will be the first Argentine President to visit the United States but also because of the manner in which he has faced up to basic problems during the short time since he became President. It is evident one result of the program he is carrying out will be to widen the base for future cooperation between Argentina and other countries, including the United States.”

He said he thought such a statement would be very helpful.

Before leaving I noted that I had found a great many people seriously worried about the labor situation. The President said he thought that could be worked out. He made no further comment on that subject.

1. Source: Department of State, Central Files, 835.10/10–1558. Confidential. Drafted by Beaulac. Transmitted in despatch 597 from Buenos Aires, October 15.
2. Beaulac left Buenos Aires on September 19 for consultations in Washington. He returned to Argentina on October 5.
3. On August 26, the Department authorized the Embassy in Buenos Aires to invite Frondizi to make an official visit to the United States in mid-January. (Telegram 215 to Buenos Aires, August 26; Department of State, Central Files, 735.11/8–2658) On August 28, the Embassy reported that Frondizi had accepted the invitation in principle. (Telegram 296 from Buenos Aires, August 28; ibid., 735.11/8–2858)
4. On October 2, in conversation with Department officials, Henry Sargeant, President of the American and Foreign Power Company, reported that on September 25 he had signed a contract with the Argentine Government for settlement of that company’s claims. (ibid., 835.2612/10–258) On November 28, the Embassy reported that the agreement had been finalized. (Telegram 774 from Buenos Aires, November 28; ibid., 835.2614/11–2858)
5. Not found in Department of State files.