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

60. Action Memorandum From the Assistant Secretary of State for Inter-American Affairs (Meyer) to the Under Secretary of State (Richardson)¹ ²

Washington, December 9, 1969

SUBJECT:

• Termination of the AID Program in Argentina

Discussion

On April 18, the Interdepartmental Group, during its review of the FY 1971 CASP for Argentina, recommended that the AID assistance program in Argentina should be terminated. AID, during its regular review of the Country Field Submission in September, made the same recommendation.

The recommendation is based on four considerations: (1) the prima facie evidence of Argentine purchases of sophisticated armaments which logically would require the application of the Conte-Long Amendment to Argentina (if and when applied, the Amendment would require a deduction in aid of such a magnitude that the remaining small grant technical assistance program would be eliminated); (2) Argentina’s good economic position and the favorable prospects for sustained growth and stability; (3) the anticipated shortage of AID funds for the Hemisphere; and (4) the desirability of developing a new relationship with Argentina to help it become a technical assistance donor, rather than a recipient, under the Alliance for Progress. (For more detailed presentation, see the AA/LA memorandum to the AID Administrator in Tab A.)

The overriding consideration for terminating at this time is the Conte-Long problem. Section 617 permits an orderly phasing out of the on-going technical assistance projects and minimizes the prospects of frictions with the GOA. However, if the Congress modifies Conte-Long to permit AID to provide bilateral technical assistance under circumstances such as in the present case, then AID is prepared to reconsider its decision—especially in light of the President’s partnership concepts and the Argentine potential for becoming a technical assistance donor.

In the past three years, Argentina increasingly has been helpful to the USG in Hemisphere development efforts; and the Argentine Foreign and Economy Ministers during their recent visits to Washington advised us of GOA interest in playing an even greater role. This experience, coupled with greater GOA cooperation in political (the new Bolivian Government, IPC in Peru, and the El Salvador-Honduras war) and trade (meat inspection and sales of US apples and pears to Brazil) matters, makes it desirable to evolve a constructive solution to the problem posed.

If the recommended phase-out and termination of the small bilateral AID program is approved, the form and substance of the message advising the GOA take on special importance. It is our desire, under the President’s policy of partnership with Latin America to lay the groundwork for extensive Argentine cooperation in Hemisphere development. Hence, the Argentines should not be made to feel that the termination in any way jeopardizes the importance of our current warm bilateral relationship. It must be made clear to them that the benefits of IDB, IBRD and Eximbank loans, AID housing and other investment guaranties and AID regional project assistance remain open to them.

The scenario and instructions to Ambassador Lodge have been worked out to minimize the possibilities of unfavorably affecting Argentine-US relations (see Tab B). The Ambassador will explain that the termination is not the result of applying the Conte-Long Amendment, since Argentine officials may take strong exception to any inference that their military purchases put them in violation of the Conte-Long Amendment. However, in light of possible congressional discussion of Conte-Long and Argentina, mention will be made of its consideration in our decision-making and the possibility of reconsidering this decision if it is modified.

RECOMMENDATIONS

1. That you hereby determine to terminate the AID program in Argentina, recognizing that present law permits sufficient funding to accomplish an orderly phase-out of the program.

2. That you authorize the Ambassador and Country Director to so inform the GOA in accordance with the attached scenario (Tab B).

1. Source: National Archives, RG 59, ARA Files: Lot 73 D 115, Argentina 1970. Secret. Sent through AID Administrator Hannah. Drafted on November 20 by Tragen and cleared by Gawf. Richardson, who approved both recommendations on February 2, 1970, penciled in an asterisk for Tab B and then penned at the bottom of the page, “*subject to updating as may be required.” Attached but not published are Tabs A and B. Tab A is a December 8 memorandum from Fowler (AID AA/LA) to Hannah, which elaborated on the nature of the weaponry and Tab B is “Scenario,” a strategy for notifying Argentina of the termination of the AID program. Additional documentation on the termination of the AID program is ibid., Central Files 1967–69, AID (US) ARG. The Conte-Long Amendment to the Foreign Assistance and Related Appropriations Act of 1968, adopted January 2, 1968, directed the President to withhold economic assistance in an amount equivalent to the amount spent by any underdeveloped country for the purchase of sophisticated weapons systems. (PL 90–249; 81 Stat. 936)
2. The Inter-Agency Group called for terminating AID’s program for Argentina, largely because the nation’s purchases of arms from the United States would, under the Conte-Long Amendment, require such a severe cutback in assistance that AID’s program could not be sustained.