Foreign Relations of the United States, 1969–1976, Volume E–10, Documents on American Republics, 1969–1972

59. Study Prepared by the National Security Council Interdepartmental Group for Inter-American Affairs¹ ²

Washington, October 9, 1969

FY 1971 COUNTRY ANALYSIS AND STRATEGY PAPER (CASP)—ARGENTINA

1. Statement of Rationale and Basic Strategy

A. Rationale

Judged by any yardstick, Argentina must be regarded as a key country in our hemispheric planning. Our relationship with Argentina will have significant consequences far beyond the area of our bilateral concerns.

Already influential to a significant degree in hemisphere affairs, Argentina has the potential to play a major leadership role in the hemisphere and to have an important voice in world councils. Argentina is a leader of the Latin American bloc on which we rely so heavily at the United Nations and, as such, has played an effective, responsible role to our great benefit.

Argentina is essentially a conservative, status quo, “have” nation. Its leaders and its people generally desire the same kind of world order we do. Its government is strongly anti-communist without being rabidly so and without making false use of the issue. It shares our concern for hemispheric security and integrity. Its military forces enjoy high quality leadership and morale and are among the top two or three forces in Latin America in terms of professionalism and capability.

Judged by such economic and social criteria as per capita income, class structure, literacy, longevity, and degree of urbanization and industrialization, Argentina is already the most advanced nation in Latin America. It is also probably closer to achieving sustained development over the long haul than any other Latin American country. Over the past two years it has been an outstanding example of Latin American economic “self-help” efforts and until the outbreak of civil disorders in May 1969 Argentina enjoyed greater domestic tranquility and stability than most other Latin American countries. These disorders reflected economic, social, and political grievances that may portend increasing political tensions.

With over $1 billion of U.S. investment, Argentina ranks with Brazil and Mexico in total U.S. investment in Latin America. It is an important trading partner of the United States with which we enjoy a consistently favorable trade balance.

Once almost on a par with Canada and Australia in economic development, Argentina’s progress has been interrupted since the World Depression by social and political conflicts. Under President Ongania the GOA has drastically cut the inflation rate and is making a serious, determined effort to straighten out the economy and spur development. Thus, with its impressive potential to play a constructive economic and political role in the continent, it is beginning to emerge from its deep troubles.

It is in our national interest to enable Argentina to ascend to a position of constructive leadership in the hemisphere as a whole. It is headed for leadership in any case. Whether it is constructive or disruptive to our own interests depends on the kind of relationship we develop with her. Argentina’s will and capacity to exert leadership, her long tradition of resisting and obstructing U.S. leadership in the Inter-American system, and her sense that the U.S. is largely indifferent to Argentina when not actively unfriendly, pose a constant threat that Argentine leaders will see active opposition to the U.S. as the most natural route to hemispheric eminence. To avoid this negative outlet for Argentine energies and abilities, we must convince the Argentines that they can exercise positive leadership with suitable rewards of dignity and prestige while working in close collaboration with us. This can only be done by demonstrating through deeds that we value their views and counsel, rely upon their responsibility, and are prepared to support their taking the lead in some of our common endeavors.

United States interests in Argentina are:

1. Accelerated Argentine economic and social development as the basis for a key, constructive role in hemispheric affairs.

2. Promotion of Argentine collaboration with the U.S. in regard to bilateral, sub-regional, hemispheric, and worldwide matters. This relates to gaining Argentine cooperation:

(1) in the OAS and other hemispheric organizations; (2) in the United Nations and its specialized agencies; and (3) with regard to bilateral scientific and military projects of interest to us.

3. Promotion of U.S. trade and investment interests in Argentina. Our trade and investment position and Argentine collaboration with us in international affairs will improve to the extent Argentine development proceeds successfully. In addition, Argentine ability and willingness to buy from us will depend to a large extent on her ability to increase exports to the U.S.

B. Strategy

Our basic strategy should be to collaborate with the GOA in developing Argentina as a strong partner in Latin America. To achieve this, we must treat Argentina as an equal, consult continuously, and be prepared to take advice as well as give it. We must support her national development program in ways that do not require bilateral AID funding. We must reduce frictions in the military equipment area and keep uppermost our central aim of building up Argentina as a strong partner to help us promote Latin American stability and development.

Support of an economic program along the lines initiated by reform-minded former Economy Minister Krieger Vasena, and being continued by his successor Dagnino Pastore, is especially important. This program is Argentina’s most serious attempt to place its house in order in this generation. It has achieved impressive results in gaining monetary stability, but the even harder and more basic structural problems are related to gaining sustained economic growth, and significantly involving the disaffected labor movement in support of such growth. This means motivating the farm sector to use new techniques and expand production; it means rationalizing a “hothouse” industrial sector, and it means effective labor identification with, and participation in, the economic program. Even a relatively strong government such as President Ongania’s will find this a difficult task; a political party system probably would find it impossible. In the time frame of this paper, Ongania’s task may well be complicated by the increasing demands of the restive civilian sectors. Despite the difficulties, we should urge the Argentine Government to face these basic structural problems and should stand ready to provide what assistance we can.

To gain our policy objectives in Argentina, we do not need an input of large sums of money; we do need, however, to be more forthcoming with regard to trade, science and technology, and consultation on matters of mutual interest. The Argentines are determined to develop their country. They look to international lending institutions and world money markets for most of their foreign loan funds. They look to us for support in the international lending institutions. We should support sound Argentine projects before the international lending agencies. Priority attention should also be given to efforts to expand and improve the private sector. Greater cooperation in the scientific, and technological areas, such as encouraging U.S. firms to do more basic research in and stimulating visits by leading U.S. scientists to Argentina, is also an important tool.

In the military field we must recognize that Argentina is going to modernize its Armed Forces no matter what U.S. policy is; that in the FY–71 to 73 period some “sophisticated” weapons systems will be purchased; and that competitive European producers are going to be active in this market. The principal factors which have turned the Argentine Armed Forces to these markets have been frustration and exasperation over their inability to obtain U.S. military equipment and attractive credit terms offered by European competitors to break into this almost exclusively U.S. market.

Given the end of our program of military grant aid to Argentina (except for training), our ability to retain some influence over Argentine arms purchases and a reasonable share of the arms market depends on continuing, even at a reduced rate, our Military Sales program.

The object of our military policy in Argentina should be to assist the modernization of the Argentine Armed Forces at so moderate a rate as not to interfere with economic development or provoke a regional arms race.

As opportunity is presented, we should encourage the GOA to become a progressive, non-repressive regime that is making a constructive attempt to resolve the country’s problems, is concerned with social welfare, and is preparing the way to a return to democratic rule. We should quietly continue to encourage the protection of democratic institutions, e.g., an independent judiciary and a free press, but we think it wise to refrain from pushing the GOA toward a hasty return to democratic forms the society is not demanding.

Without jeopardizing communications with the Government we should maintain contact with all non-extremist political groups, especially including those in the opposition, as an expression of our hope for the ultimate achievement of the goal of stable, democratic government.

[Omitted here is Section II.—Assessment of Situation and Near-Term Prospects.]

III. Objectives: FY–71–73

A. The Objectives

• 1. An economically stronger Argentina.
• 2. Close cooperation between the United States and Argentina.
• 3. More effective Argentine support for regional and sub-regional economic integration.
• 4. Argentine acceptance of a more democratic rather than authoritarian system.
• 5. Assist the Argentine Armed Forces in meeting with FMS cash/credit sales those modernization requirements consistent with U.S. policies and objectives and within limits of Latin America ceilings.
• 6. Willingness and ability to contribute to combined hemispheric efforts to deal with security threats to OAS members.
• 7. A better market for U.S. exports.
• 8. Continued Argentine interest in attracting foreign investment.

[Omitted here is Section III subsection B, in which operational strategies for each of the objectives in subsection A are listed.]

IV. Options

Central to our relations with Argentina is the fact that relatively few options are or have been open to us. Our levels of assistance (loans, grants, military grant aid) have been small and declining. The decline in our resource allocations is well shown by the shortfall in our expenditures in comparison with approved CASP recommendations (described in an annex to Buenos Aires A–228).

We should not seek a finding that the Conte amendment applies to Argentina or proceed to invoke it. Rather, we should undertake to phase out the aid program in orderly fashion with the GOA told that its progress and our lack of funds make Argentina a country no longer a candidate for assistance. We should continue to support Argentine applications for loans from the International lending institutions. This option in effect cuts our losses to minimize the adverse reaction we could expect from the GOA with the application of the amendment.

We discard the option of a sizeable aid program, deducting Conte penalties as they become operative. Such a tactic, rather than protecting minimum U.S. interests, would only create deep resentment and be counter-productive.

The variables in our military policy are the degree of cooperation we can extend through FMS, U.S. commercial bank financing, and the facilitation of purchases financed by Argentine sources. To regain influence with the military, action in all these areas is desirable; anything less reduces significantly our ability to counter “Plan Europa.”

The dilemma we face in helping Argentina to encourage close relations, a goal we rate high among U.S. priorities in Latin America, is that without modest aid and military supply programs we have no meaningful resource inputs to obtain our objectives. Trade concessions are one of the most meaningful tools we could use in this country. Yet the price we would pay by providing significant concessions would be very high and have an impact well beyond Argentina, so that we are not likely to have much flexibility in this area. A useful tool is encouraging scientific and technical exchanges at all levels. Additionally, we should seek to expand consultation on bilateral, sub-regional, hemispheric, and world matters to develop an atmosphere of frank and earnest cooperation.

An alternative to maintaining military sales programs in Argentina would be to remove the Milgroup and revert to purchasing committees to handle such purchases as are made in the United States. However, we should attempt to keep a minimum military advisory presence in Argentina to salvage what influence we can retain, but recognizing that this presence will be almost fully neutralized by GOA contacts with European missions. Even training opportunities at U.S. military schools will be less attractive to Argentines turning to Europe for their arms.

Should pressure from the military and/or political groups cause President Ongania to assert significantly more dictatorial power, severely curbing civil liberties, the options open to the U.S. would be limited and bear more on our posture in the hemisphere than on our influence in Argentina. Our policy in this instance, perforce, should be one of indicating disapproval of the change, relating—to the extent we still can—the reduction of our cooperative programs, our cooperation through multilateral loan agencies, and our consideration of trade concessions to the gravity with which we view the repressive measures taken by the GOA.

Should the present Argentine economic program falter and more nationalistic or developmentalist elements assume direction of that policy, it would behoove us to exert our best efforts toward encouraging the maintenance of harmonious relations. Maintaining a “foot in the door”—to encourage constructive developments—would require consideration of trade concessions, military sales, and, if possible, the encouragement of private investment. This might be difficult, as the economic policies followed by nationalists or developmentalists would be likely to be inflationary and would probably conflict with requirements of the international lending agencies. As possible, we should encourage these agencies to maintain their activities in Argentina, as the government would be more favorably disposed to multilateral programs.

Should additional U.S. resources become available during the period, the area of greatest desirable impact would be in the trade field—helping Argentina resolve problems in marketing such products as meat and wheat and developing new markets and new products. Our main goals would be furthering Argentine economic development and insuring a cooperative climate of support for U.S. programs and interests.

[Omitted here is Attachment A, a summary table of costs associated with each of the objectives, broken down by U.S. Government agency and program type.]

1. Source: National Archives, RG 59, NSC/IG/ARA Files: Lot 72 D 96, Country Analysis and Strategy Paper (CASP) Argentina 1970. Secret. According to an attached NSC–IG/ARA Decision Memorandum #45, October 9, CASPs were an official statement of U.S. Government policy subject to change as events and circumstances warranted. So long as the general conditions set forth in the CASP prevailed, CASPs served as the policy frame for the annual program budget submissions for State, AID, DOD, USIA, and for activities of all other U.S. Government agencies with respect to this country. A CASP is subject to modification at any time by subsequent IG decisions. CASPs were written yearly for Argentina, and country team submissions and supporting documentation for the 1969–1972 are primarily in National Archives, RG 59, Central Files 1970–73, POL 1 ARG–US.
2. This Country Analysis and Strategy Paper served as an official statement of U.S. Government policy towards Argentina.