168. Memorandum of a Conversation Between the Assistant Secretary of State for Inter-American Affairs (Rubottom) and the Under Secretary of State for Economic Affairs (Dillon), Department of State, Washington, January 29, 19591
SUBJECT
- Loan to Argentina for Military Equipment
Mr. Rubottom said that he wanted to tell Mr. Dillon about a very private talk with the Argentines on the matter of military equipment.2 [Page 536] He said that President Frondizi had mentioned the matter to the Secretary when he called on him at Blair House, and then had talked to the President about it.3 The President had called in Mr. Rubottom with the Secretary after Frondizi left and Mr. Rubottom had given the President an oral outline on it.4
Mr. Rubottom said that the Argentines want to get loans for equipment for their armed forces totaling a minimum of ten million dollars. They have indicated they cannot handle the loan on a three-year credit basis, but might start payment in two years if they could then make repayment over a period of three years, or a total of five years. Mr. Rubottom said he would like to have Mr. Dillon’s opinion of possibilities because he was certain President Frondizi would raise the matter when he saw Mr. Rubottom at the Reader’s Digest dinner.
Mr. Dillon said that it is perfectly possible that a loan could be made in that manner, although legally the funds would be lost if the loan were not covered within a period of three years, since when they are paid back, the funds go to the Treasury rather than the fund.
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Mr. Dillon asked what our Defense people think, and Mr. Rubottom replied that they believe the Argentina Army is the best in Latin America and they would like to have something worked out. However, he did not think they were interested in pushing them into a MDAP agreement. He said that we do not want any agreements tied in with the visit anyway, for political reasons.
Mr. Rubottom concluded that he would not make any commitment, but would tell President Frondizi that his last talks on the subject have opened up more possibilities than had appeared before. He said he thought it might be vital to the security interests of the United States, as well as of Argentina, which has [less than 1 line of source text not declassified] communist elements to contend with.
Mr. Dillon agreed.