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

223. Memorandum of a Conversation, Department of State, Washington, September 28, 1960¹

Washington, September 28, 1960

SUBJECT

• Additional Financial Assistance for Argentina

PARTICIPANTS

• Eng. Alvaro C. Alsogaray, Argentine Minister of Economy
• Dr. Julio Gonzalez del Solar, Second Vice President, Arg. Central Bank
• Acting Secretary Dillon
• Ambassador-designate to Argentina R. R. Rubottom, Jr.
• Assistant Secretary Edwin M. Martin
• Mr. C. A. Boonstra, ARA:EST/A
• Mr. Charles R. Harley, Treasury
• Mr. James F. O’Connor, Jr., ARA:EST/A

Minister Alsogaray reviewed Argentine stabilization progress, which he said had exceeded his Government’s expectations and made it unnecessary for Argentina to seek further assistance in this field. He also referred to the constructive results of the petroleum development program and to steps being taken to seek majority private capital participation in the SOMISA steel plant and to reorganize the Dock Sud (Buenos Aires) power project under private auspices with IBRD assistance.

Mr. Dillon said that he had discussed the Dock Sud matter with Vice President Knapp of the IBRD and found that organization very interested and disposed to help, although questioning the availability of Argentine private capital. Eng. Alsogaray indicated that this was not a problem.

The Minister said that the Frondizi Government’s policy was to promote private activity in the fields of oil, steel, petrochemicals, pulp and paper, and transportation, and concentrate its activity in the sectors where private capital was not available, such as road-building and housing. He added that fifteen years of decay in the Argentine highway system had to be overcome by repair and new construction, and said that an IBRD transportation-survey mission was studying Argentine needs. The Minister also explained that housing plans were designed to serve two ends: facilitate worker relocation in combatting unemployment and providing labor where needed; and to provide tangible evidence to the Argentine people that the sacrifices required by the stabilization program were bearing fruit and that the Government’s economic policy was a constructive one. He added that economic progress would eliminate political and labor problems, and that Argentine success in this regard would promote the spread of the Frondizi Government’s philosophy elsewhere in Latin America. Receipt of aid from the United States and international financial institutions for the first stages of the highway and housing programs would eliminate major problems for his Government.

In reply to a query from Mr. Dillon as to whether Argentine highway planning was being carefully worked out, Alsogaray said that close contact was being maintained with the foreign transportation experts now in Argentina to assure that plans were well-founded. While in Washington he had been discussing export credits for road-building machinery with the Eximbank, and a peso loan for local costs with the DLF. In reply to another query from the Acting Secretary, the Minister said that Argentina did not contemplate direct government building, but financial assistance by the National Mortgage Bank and the new Housing Administration to private builders.

Mr. Dillon referred to the favorable impression which President Frondizi had made in explaining his economic program when he visited the United States, and went on to say that the success of this program was important, not only for Argentina, but as an example for other countries. The United States wanted to cooperate, but this would have to be done carefully, and procedures were important. It did not give loans unless requested, and it would need more details before it could make commitments, taking also into account its own availabilities. Managing Director Vance Brand of the DLF would be visiting Argentina shortly, and he could look into the highway program in detail. He could also look into the housing program, although funds for this should be channelled through the Inter-American Development Bank and had not in fact yet been appropriated by the Congress.

The Acting Secretary then said that he had been surprised by the attitude displayed by some of the Argentine delegates to the meeting of the Committee of 21. One of them, Mr. Musich, claimed that Argentina had been forgotten by the United States and advocated a strong stand to make the United States aware of its problems.² He (Mr. Dillon) felt that this attitude was the result of a misunderstanding, since approaches in such contexts made it more difficult to extend financial assistance.

Minister Alsogaray said that he was not responsible for political matters in Argentina, but that the attitude to which the Acting Secretary referred did not represent the policy of the Argentine Government, and he would take this up with President Frondizi on his return. Argentina did not like to come to the United States frequently for assistance, as some other countries seemed to be doing. It did not expect the United States to solve the Argentines’ own problems.

The Minister then said that Argentina would like to undertake a new policy of developing its armed forces with some assistance from outside. The Government wanted to organize the armed forces, which had been of assistance in connection with stabilization, as leaders in carrying forward the Government’s economic program. This would involve a small amount of US financial assistance to groups which had supported the Government and its pro-Western policies.

Eng. Alsogaray went on to suggest that the United States could not spread its foreign aid to help all peoples raise their standard of living, and that it would be most practical to concentrate its efforts where they would produce the best results. If the Argentine emphasis on private enterprise were successful, it would spread elsewhere. Despite what had occurred at Bogota, Mr. Dillon could be assured that President Frondizi and Alsogaray’s own team believed in self-help above all. However, it needed some basic assistance to show the Argentine people that the Government’s policy was a good one, thus inhibiting Communism. Argentina’s present needs were for aid in road-building and housing.

The Acting Secretary said that he agreed with the Minister. US financial aid could not solve all the world’s problems. A people’s will and own efforts were important, and Argentina was in this regard a well-qualified country with whom the United States could work very cooperatively.

Mr. Dillon then said that he wanted to raise two less important problems. He hoped that something could be done to move the civil aviation problem, on which he understood the Argentines had internal problems, toward solution. Minister Alsogaray said that President Frondizi had authorized him to discuss the basis for possible agreement while in Washington and he would be free to do so on Friday, September 30. He added that the United States had no cause to worry about this matter. Mr. Dillon said advance understanding on the basis for an agreement would be useful.

Mr. Dillon then referred to the concern of US meatpackers over a projected subsidy within that industry which would be prejudicial to their interests. The Minister said immediately that there was no cause for alarm. When fixed capital had been set a year ago for CAP, a cooperative which had Government support, no working capital had been established. The present payment was merely to establish the working capital in proportion to the fixed capital to complete this matter. Mr. Dillon asked if this were then a one-time operation and Eng. Alsogaray replied that it was.

Ambassador Rubottom asked the Minister about the status of the valuation of the American and Foreign Power Company’s properties. Alsogaray said Mr. Sargent of that firm had talked to him about this recently. He (Alsogaray) hoped that the Chief Justice of the Argentine Supreme Court would make his decision by the end of October.

Minister Alsogaray commented that he was very pleased at Ambassador Rubottom’s assignment to Argentina.³ Mr. Dillon said that Ambassador Rubottom was a good friend, who shared his views on major problems.

1. Source: Department of State, Central Files, 835.10/9–2860. Confidential. Drafted by O’Connor.
2. The memorandum of conversation with Arnaldo T. Musich, chief of the Argentine Delegation to the meeting of the Committee of 21 is ibid., Secretary’s Memoranda of Conversation: Lot 64 D 199.
3. On August 27, the Senate confirmed the appointment of Rubottom as Ambassador to Argentina. Rubottom presented his credentials on October 20.