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

222. Memorandum of a Conversation, Buenos Aires, September 6, 1960¹

Buenos Aires, September 6, 1960

PARTICIPANTS

• His Excellency, The President of the Argentine Nation, Dr. Arturo Frondizi;
• The Minister of Foreign Affairs and Worship, Dr. Diogenes Taboada;
• The Minister of Economy, Ing. Alvaro Alsogaray
• Mr. Maurice M. Bernbaum, Chargé d’Affaires ad interim

SUBJECT

• Economic Program—Loan Requests

I saw the President at the Casa Rosada at his request. Also present were the Ministers of Foreign Affairs and of Economy. The President did most of the talking.

President Frondizi said that the meeting had been arranged in anticipation of the departure for the United States on September 24 of the Minister of Economy. While in the United States, the Minister expected to consult with the IMF and other international agencies, as well as with economic representatives of the United States Government. The President said that he wanted to emphasize two points upon initiating the conversation. The first was that the Argentine Government had absolutely no intention of linking political matters with economic matters. Argentina had a very well-defined position on political matters which had been clearly demonstrated at various conferences, the most recent having been the Conference of Foreign Ministers at San José.² The position taken there by the Argentine Delegation was in accordance with Argentine tradition and with the innermost convictions of the Argentine Government. The Argentine economic initiative at San José and at Bogotá³ for increased aid to Latin America was in line with statements made by the Foreign Minister and by the President since his assumption of power in 1958 and specifically during his recent trip to Europe. These views were based on the President’s conviction of the need for a greatly expanded program of economic aid to facilitate Latin American development. At the same time, the Argentine Government wanted to maintain and strengthen its bilateral economic relations with the United States. The President always had in mind the great assistance rendered the Argentine stabilization program by United States aid. This was done on a bilateral basis and he hoped the same kind of relationship would facilitate further economic negotiations with the United States in order to ensure the stabilization program.

The President said that in addition to the various projects which the Minister of Economy planned to discuss in Washington he also had in mind a review of the obstacles being encountered by the export of Argentine products to the United States. Without giving any details, the President wanted to emphasize that regardless of the technical factors involved in each case, the fact was that the progressive restriction on Argentine exports to the United States was making it progressively more difficult for Argentina to earn the dollars it needed to service its loans from the United States. He did not expect that the Minister of Economy would be able to solve this problem during his visit, but he did look forward to a clearing of the air which he hoped would lead to measures leading eventually to the elimination of the restrictions. The President emphasized at this point that the failure of the Minister to secure the elimination of the restrictions would not in any way affect Argentina’s attitude on political matters.

The President said that there were no political problems between the United States and Argentina. He was happy about this and determined that this kind of situation would continue. Aside from bilateral relations, the international interests of the two countries coincided, thereby permitting cooperation not only in hemispheric affairs but also in international forums such as the United Nations. The President went on to say that this happy situation did not, unfortunately, prevail with regard to economic relations. Aside from the problems just mentioned with respect to Argentine exports to the United States, there were a number of outstanding problems, the solution of which depended largely on him and which he was determined to resolve. One of these problems involved the ANSEC settlement. He was happy to say that this settlement was close and that he expected to find the American and Foreign Power constructing another power plant within a few months or otherwise investing the money which it is to receive from the settlement. Another problem which was on the road to imminent solution related to the back accounts of the American meatpackers. This too was in the last stages of resolution and a definite decision was expected soon.

Minister Alsogaray interrupted to say that he had already sent a questionnaire to the packing firms to verify the manner in which the final settlement should be made. He expected a solution soon.

The third point related to civil aviation. The President said that he had spoken the day before with the Secretary of the Air Force and the day earlier with the Minister of Economy. This was a problem, the solution of which depended on good will by the United States and the exercise of considerable good will by Argentina. He, the President, had personally undertaken the solution of this problem and was personally assuming the responsibility for the decision taken. Despite the rigid position of the Secretariat of the Air Force which would not have permitted an agreement, he had on his own responsibility decided that an agreement along the lines previously worked out with Ambassador Beaulac should be reached. He had, therefore, decided that draft legislation prepared by the Secretariat of the Air Force for presentation to Congress would not be presented. The decision would instead be taken by the Government without consultation with Congress. The President said that I could feel free to inform the Department that he expected within a very short time, probably before Alsogaray’s arrival at Washington, to make a formal request for the renewal of negotiations. Such negotiations would be confined for practical purposes to the determination of routes since the other points of conflict would already have been resolved within the Argentine Government.

Referring to our previous conversations which the President said had cleared the air of misunderstandings, he wanted to turn to the pending loan applications of the Argentine Government to the United States Government. These related to highways and airports. The Minister of Economy had previously mentioned to me his proposal to add housing to the pending loan applications. It had been decided, however, that housing would fall within the scope of the Eisenhower Program now being discussed at Bogotá and could, therefore, be handled on a multilateral basis. Bilateral negotiations on this occasion would be confined to highways and airports. Fingering a sheaf of documents before him, the President said that there had been worked up the entire government program for highways and airports. This had already been sent to Ambassador Del Carril in Washington for discussion with United States Government agencies. Copies of these documents were being turned over to the Embassy for its own study.

The President then asked whether the Minister of Economy had anything to add. The Minister said he had already discussed the problem with me in general terms and did not have to go into any detail. He repeated what the President had said about the restriction of pending loan applications to highways and airports since the Eisenhower Plan could take care of the housing problem. The President here interjected that $100 million loan to Argentine for housing construction would, of course, have a good effect but would be one limited to the localities where these particular houses were built. In contrast, the whole country would benefit as would the economy from the same amount of money loaned to various government and private lending institutions which could supplement it with the considerably larger volume of internal savings. This illustrated, he thought, the advantages of the Argentine economic program of self-help in providing the great bulk of the needed resources with foreign aid supplying the much smaller additional amount required for success. The Minister of Economy endorsed this heartily. The Minister also made the point that the manner in which the Eisenhower Program was implemented would determine its success or failure. A mere division of $500 million amongst the various countries, regardless of the manner in which they could take advantage of the assistance, would have only limited effect. However, the concentration of these funds on sound projects in those countries undertaking extensive programs of self-help would carry the maximum impact. This would apply not only in the countries themselves but throughout the whole area as a demonstration of the necessity for self-help without which economic development was illusory. The President interjected his agreement with this concept.

The Minister of Economy then went on to say that he also wanted to emphasize what the President had already said—that is, the complete absence of any relationship between Argentina’s political actions in the foreign field and economic matters. Argentina had undertaken its economic stabilization program in its own interest, not as a favor to us or anyone else. The fact that its program was also of importance to us was a positive factor, but not the dominant one. Similarly, Argentina was following political policies in accordance with its own interests and not in return for economic favors received. He wanted to emphasize this as the President himself had. The President here again nodded his head.

The Minister of Economy then said that he wanted to clarify the character of the loan requests being made. They were not being presented in the form to which United States and other bankers were accustomed. They were not clear-cut projects relating to specific works and calling for specific amounts of money. What was being presented instead was the Argentine Government’s complete highway and air program in broad terms. The only elements lacking in this presentation were the amounts of money which would be forthcoming from the United States. This would determine the speed with which the program would be pursued. The Minister said also that the details of the various programs would not be found in this presentation. He expected that they would be furnished, having been already prepared, after it was determined in Washington just which of the various phases of the overall programs would be of interest to the United States. He said, for example, that if the United States agency concerned found it more feasible to finance a road from Buenos Aires than other roads, the loan project could be made up in that manner, thereby permitting the shifting of Argentine funds from that road to other roads of first priority. The objective was flexibility and to facilitate quick decisions.

I said that the Minister was perfectly right in his understanding of our loan procedures. It was always much easier to consider loan projects and to facilitate decisions on them if they were cast in the usual form understood by the lending agencies. I understood the problem described by the President and by the Minister of Economy, but I did want them to realize that it might possibly lead to some delay, at least in the formulation of the problem. In any case, I was certain that this loan proposal, as would any other loan proposal from Argentina, would find a sympathetic reaction.

The Minister said that he was hopeful of such a reaction. It seemed to him as it did to the President that the broad highway and airport program already under way would be an important factor in facilitating the success of the government’s economic program. Although there was a shortage of skilled labor, as indicated by the large number of advertisements in the newspapers, there was already noticeably a surplus of unskilled labor of the kind which could be put to work on highways and airports in various parts of the country. This surplus promised to become more acute. The highway and airport program would, therefore, serve the dual purposes of facilitating economic development as well as of eliminating the social problem of unemployment consequent upon the progress being made in the stabilization program. It would also have the very important political effect of enhancing the prestige of the Government and thereby its ability to carry forward with the economic program. The President interjected more or less the same kind of comments.

It was decided at the end of the meeting that the Minister of Economy would furnish the Embassy with a memorandum synthesizing the points made in the loan applications. I said that this would be most helpful.

The Foreign Minister did not say very much during the meeting except to clarify from time to time the points being made by the President. He did, however, comment when the President spoke of the lack of relationship between loan applications and Argentina’s political policy that there was, of course, a relationship between the ability to go forward on airport construction and the President’s ability to negotiate an aviation agreement in the face of Air Force opposition. He pointed out that such an agreement was going to involve possibly serious political difficulties in the country and that it would be most helpful for the President to be able to point out that the domestic airlines would in the long run be better off because of the availability of greatly needed airports. The President remarked at this point that these airports would serve many objectives, political, strategic, as well as economic.

1. Source: Department of State, Central Files, 835.10/9–860. Confidential. Drafted by Bernbaum. Transmitted in despatch 321 from Buenos Aires, September 8.
2. Reference is to the Sixth and Seventh Meetings of Consultation of the American Foreign Ministers held at San José, Costa Rica, August 16–30.
3. The third meeting of the Special Committee of the Council of the Organization of American States To Study the Formulation of New Measures for Economic Cooperation (Committee of 21) met at Bogotá, Colombia, September 5–13. Regarding the Committee of 21, see Document 15.