62. National Intelligence Estimate 91–70, Washington, May 21, 1970.1 2

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NUMBER 91–70
(Supersedes NIE 91–67)

The Outlook for Argentina

As indicated overleaf
21 May 1970

[signed James D. Lay, Jr.] EXECUTIVE SECRETARY, USIB

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A. President Ongania and his administration, by barring “politics as usual” and inaugurating and implementing an anti-inflation and economic development program, have brought new hope that Argentina will more fully utilize the potential indicated by its human and material resources. The government’s economic measures have sharply reduced the rate of inflation, increased investment in the private sector and accelerated the rate of economic growth. Furthermore, we consider its economic plans for the future to be sound. Barring poor harvests or a repetition of the widespread public disorders which erupted in mid-1969, the government has a good chance of achieving its goal of maintaining a five percent increase in gross national product over the next two years or so.

B. Ongania has had considerably less success in dealing with Argentina’s deep social and political tensions, and particularly with discontented youth and with the continuing demands of the Argentine labor movement, still under the disruptive influence of Juan D. Peron. He lacks broad political support in the country and will face growing civilian opposition unless he can begin to show more progress on some of Argentina’s basic socioeconomic problems. Nevertheless, we think that he is now moving more aggressively to bring about social reforms and will be able sufficiently to damp down unrest, by a combination of persuasive and coercive measures. The various extremist groups undoubtedly will try to exploit discontent and have the capability to carry out terrorist activities, including kidnapping of foreigners. The Argentine security forces, however, are probably capable of handling any real threat to the stability of the Ongania administration.

C. The key to Ongania’s retention of power remains in his relations with key army leaders who, thus far, have been generally satisfied [Page 3] with his performance. Even if he were removed by natural causes or lost his military support, the military leaders would select his successor and remain the locus of political power. In any event there is very little chance that over the next two years or so the military will permit a return to an elected civilian government.

D. The Ongania government will be more concerned with the course of events among its near neighbors than with what happens in the rest of Latin America and in the rest of the world generally. At the same time, however, we judge that it will continue to seek a closer working relationship with the US.

[Omitted here are the sections: I. Background, II. The Ongania Administration and III. Foreign Policy, Part A. General.]

[Omitted here is the end of Part A.]

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B. Relations with the United States

29. From the US point of view the most significant feature of present Argentine foreign policy is the high priority that is being given to improving relations with the US. The kinds of incidents which Argentine governments traditionally exploited to titillate nationalistic sentiments have been quietly played down. Over the last year in particular, the Argentine Government has sought to be helpful in situations within the hemisphere where US interests were involved. The calm acceptance of the phasing out of the US aid program in Argentina, and the way in which Ongania has reacted to the complications involved in securing US arms, suggests that he is interested in a close bilateral relationship with the US. This is in sharp contrast to the main thrust of Argentine foreign policy earlier in the century.

30. Until the 1930s, Argentina had had a long and secure relationship with the UK. That mutually beneficial relationship, which insured Argentina ready access to British markets and capital, was disrupted by the priority claims of members of the British Commonwealth and by the economic problems confronting the UK by the end of the 1920s. As the UK-Argentine relationship deteriorated, the Argentine Government became more intransigent in hemisphere affairs, particularly as regards cooperation with the US. The close US ties with Brazil, forged during World War II, exacerbated Argentine tensions with the US, which had emerged in the late 19th century. To some Argentines, including Peron and others of his generation, Hitler’s Third Reich seemed a natural ally to play off against US-Brazilian cooperation in South American affairs.

31. Over the last decade and a half, however, there has been a gradual but marked change in the attitude of successive Argentine administrations that frequently had been only lightly-veiled hostility towards the US. There is still considerable popular distrust of the designs of US oil companies on Argentine petroleum reserves, particularly in strongly nationalist circles, but the military leaders have supported the present government’s efforts to secure renewed cooperation by US companies in developing those reserves. Similarly, there is some concern among Argentine nationalists over the dangers of competition from US companies which have been investing in Argentina in a variety of fields with few, if any, restrictions. This is particularly acute in the field of banking where there is apprehension that US interests might gain sufficient influence to secure control of local companies. Argentina also continues to be sensitive to US actions affecting its exports, e.g., PL 480 sales and restrictions on imports of Argentine meat. Nevertheless, there has been a generally steady [Page 5] increase in the areas of agreement between US and Argentine aims in the hemisphere. Argentina also perceives advantages in close relations with the US in its dealings with its main trade partners in Europe. It benefited from the Kennedy Round negotiations and it hopes that the US position on a general preference scheme for all less developed countries will prevail.

32. The recent decision by the US to sell additional military aircraft to Argentina has strengthened Ongania’s hand in dealing with those in his administration who would concentrate more heavily on European sources of military arms and supplies. He has delayed and trimmed down the requests of the armed forces for equipment from European sources to carry out long-approved modernization programs. Finally, over the last year or so the internal problems confronting the Brazilian Government, and their potential impact on US-Brazilian relations, may have further encouraged Ongania to conclude that now is the time to seek a closer and mutually more beneficial relationship with the US.

[Omitted here is Section IV, The Outlook, Part A, Economic Prospects and Part B, Political Outlook.]

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[Omitted here is the end of Section IV.]

C. Relations with the United States

40. The Ongania government will watch closely the course of events among its immediate neighbors. It will be particularly concerned with Brazilian development plans in the areas draining into the Rio de la Plata basin, with Uruguayan and Bolivian political stability, and the likelihood of a Communist-influenced--if not controlled—-government coming to power in Chile. Nevertheless, the main thrust in Argentine foreign policy is likely to continue to be towards seeking a closer working relationship with the US.

41. The present administration will continue to keep a damper on those elements—-both inside and outside the government—-that would prefer to foster and to exploit tensions and misunderstandings in US-Argentine relations, but its [Page 7] ability to do so has certain limits. For example, the problem of arms procurement is still a particularly sensitive one. Over the next year or so Ongania will be under increasing pressure from the military leaders for replacement of outdated war materiel, including some of Korean War, or earlier, vintage. In the event that Ongania, or any other Argentine President, has to choose between a deterioration in his relations with his military supporters or with the US, US-Argentine relations almost certainly would be the loser.

  1. Source: Central Intelligence Agency, OCI Files, Job 85–T00875R, NIE. Secret; Controlled Dissem. According to a note on covering sheet, the CIA and the intelligence organizations of the Departments of State and Defense and the NSA participated in the preparation of the estimate. All members of the intelligence board concurred in the estimate on February 13 except the FBI and the Atomic Energy Commission, on the grounds that the subject was outside their jurisdiction. Although the report did not predict Ongonía’s fall which occurred on June 9, Collins in a July 10 memorandum to Abbott Smith stated that the NIE was “basically sound.” (Ibid., Job 79–R0102A, Box 392, Folder 5, Outlook for Argentina. Secret)
  2. This estimate predicted future Argentine economic growth, that Onganía’s Government would continue in power for next two years, and that the nation’s deep social and political tension would persist, and efforts to work closely with the United States would continue.