Foreign Relations of the United States, 1961–1963, Volume XII, American Republics

202. Memorandum of Conversation¹

Washington, December 3, 1963.

SUBJECT

• US-Argentine Relations

PARTICIPANTS

• Argentine Ambassador Alemann
• Under Secretary Harriman
• Mr. William H. Sullivan, Special Assistant to the Under Secretary
• Mr. Bruce M. Lancaster, Deputy Director, ARA:EST

The Under Secretary turned over a letter to Vice President Perette which Ambassador Alemann had undertaken to deliver when he went to Buenos Aires on the inaugural Pan American flight December 5 (copy of letter attached).² The Under Secretary recalled that, just as he was put-ting on his hat after an informal Thanksgiving Day lunch at the Argentine Embassy, Perette had stated his hope that the oil contract issue would be resolved equitably and mentioned the possible desirability of concluding new contracts through the process of open competitive bidding.³ Perette had been on the point of leaving for New York and lack of time had prevented the Under Secretary from responding directly. He did not, however, want the Argentine Government to believe that his failure to comment immediately should be construed as agreement with the suggestion regarding open competitive bidding. The letter which he had prepared for Vice President Perette set forth, in general terms, the US view that new oil contracts which would be equitable could best be worked out by direct informal negotiations between the oil companies and the Argentine Government.

Ambassador Alemann commented that it was his belief that any new bidding process arranged by the Argentine Government would take previous investments already made by the companies into account. For example, every company bidding for a new contract on an oil field which had already been partially developed should be required in their bid to agree to compensate the developer of the field for previous investment. The necessity to compensate for previous investment would in most instances leave the company which had made this previous investment and had already worked the field in the best competitive position when bids were called for.

The Under Secretary pointed out that the risk which the companies had taken in opening up new fields had to be considered when the value of their investment was evaluated. He believed that as a result of talks here Perette had a better knowledge of the deep US concern over the new Argentine Government’s action in annulling the oil contracts.

Ambassador Alemann agreed that Perette had gained a better understanding of international features of the problem. The latest reports received from Buenos Aires indicated that informal negotiations between the companies and his Government were going quite well. If nothing untoward happened during the next ten days, the long Argentine Christmas vacation lasting until the end of January would begin and these informal negotiations could continue without the burden of the previous public pressure and publicity in Argentina. It should be recognized that the negotiations could be upset from the US side too, as the reaction to the new Hickenlooper amendment⁴ had shown.

All the members of the Argentine delegation, according to the Ambassador, were deeply impressed by the courtesies accorded them during President Kennedy’s funeral. Their visit here had given them a chance to discuss many subjects on which Argentina and US had a strong community of interest. The Ambassador realized that some actions of the new Government had upset US public opinion greatly, and there were still those in this Government who were pressing for unusual solutions to problems before they had had time to profit from the understanding of the complex nature of many issues which would come with experience in power. The US would have to be very patient initially with this group, which had been out of office so long, and be prepared for some noisy and unpleasant speech making. It should be recognized, however, that the UCRP was fundamentally democratic in outlook and had been friendly to the US even during World War II when most other Argentine parties were not. After referring to the Argentine support during the Cuban quarantine last year the Ambassador said that he believed the new Government would stand very strongly with the US on Cuba and other important world problems and that Argentina continued to show good prospects of becoming the most dependable ally of the US in the hemisphere.

The Under Secretary agreed that the Perette visit had been useful and said that the US was very appreciative of the continuing support we had received from Argentina in international bodies.

Ambassador Alemann then went on to make a strong personal plea for continued efforts to strengthen ties between the US and Argentine military. He regarded early conclusion of an arrangement to provide military equipment to Argentina as essential. He recalled the remarks of the Argentine Secretary of Army, General Avalos, to the Under Secretary about his discussions in the Pentagon and the Department. General Avalos wanted to proceed as rapidly as possible to conclude an agreement under which Argentina could obtain equipment from the US. The Ambassador hoped that the US could meet the General’s desire to avoid possible difficulties with sensitive Argentine politicians which would arise if the US insisted that the new agreement be extremely lengthy and be couched in terms of a “mutual defense pact”.

The Under Secretary said that he favored close ties between the military of the two countries and asked how negotiations for military aid stood. The Ambassador said that conclusion of an agreement to supply equipment was not possible prior to the elections of last July because of US concern over the role of the Argentine military in politics. General Ongania had, in the course of preparations for the elections, provided leadership for a demonstration of fundamental support by the military for democracy. General Avalos now wanted to help Ongania reorganize and streamline Argentine forces and some US equipment and training were needed to do this. In response to a question from the Under Secretary, Mr. Lancaster stated that training at a greatly increased level was already being provided. The US was awaiting specific suggestions on the form of an agreement for military assistance, which General Avalos had stated would be put forward initially by Colonel Castro Sanchez as a preliminary to formal negotiations to be undertaken by the Argentine Foreign Affairs. The fact that Congress had not yet completed action on the military aid appropriation for FY 1964 had to be kept in mind. The Under Secretary stated that he would maintain a continuing interest in this question and asked to be kept informed as negotiations for an agreement proceeded.

Before the Ambassador left, the Under Secretary gave him a Spanish translation of his book “Peace with Russia” to be delivered to Vice President Perette. He said that the State Department was considering means of meeting the Argentine Foreign Minister’s request for special training of Argentine diplomats assigned to Communist countries. He hoped to be able to provide initial information on what we could do before the Ambassador left on the inaugural flight. In any event the Ambassador could assure the Foreign Minister of our active desire to meet this request.

1. Source: Department of State, Central Files, POL ARG-US. Confidential. Drafted by Lancaster and approved in Harriman’s office on December 4.
2. Dated December 2; attached, but not printed.
3. The memorandum of conversation of that meeting, November 28, was drafted by Harriman. According to Harriman, Perette “spoke of opportunities for future relations with oil companies as contractors, possibly on a competitive bidding basis.” (Department of State, Central Files, POL ARG-US)
4. The Hickenlooper amendment to the Foreign Assistance Act of 1963 required the President to suspend assistance to any country that nationalized or expropriated U.S.-owned property without compensation. (P.L. 88-205, enacted December 16, 1963; 77 Stat. 386)