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

69. Memorandum From the President’s Deputy Assistant for National Security Affairs (Haig) to President Nixon¹ ²

Washington, July 14, 1971

SUBJECT:

• Request for Financial Assistance from Argentine President Lanusse

You will recall that you received a message from Argentine President Lanusse requesting $500 million to $1 billion to help support the Argentine peso (Dr. Kissinger’s memo of June 29 at Tab C). President Lanusse hopes to stem the deteriorating economic situation in the country in order to permit him to pursue his political objective of returning the government to civilian control. However, he believes he cannot undertake the devaluation and the economic controls necessary to restore economic order without jeopardizing political stability. He feels it is in the U.S. interest to support his political objective, and hence has asked us for massive financial aid to restore confidence in the Argentine economy while he carries out his political program.

In the memo at Tab A, Secretary Rogers indicates that while he is sympathetic to Lanusse’s political objective, we should not respond favorably to his request because:

• —The magnitude of the help requested is well beyond our capability.
• —In the absence of sound economic policies, the assistance would be dissipated in capital flight because of an over-valued exchange rate.
• —Argentina’s economic problems are best dealt with by a combination of the international lending agencies, principally the IMF. (Argentina has an IMF quota of $440 million and the IBRD could provide program loan assistance.)

Secretary Rogers, therefore, recommends that you authorize our Embassy to tell President Lanusse that while we wish to be helpful, we are unable by ourselves to provide funds in the magnitude he has requested. He also recommends that we advise Lanusse to invite an IMF mission to come to Buenos Aires to help devise a workable economic program which could stimulate continuing funding from international sources. (Ambassador Lodge has already made this suggestion to the Foreign Minister.) Secretary Rogers suggests that we also indicate to Lanusse that we would be prepared to talk with the New York banks about being forthcoming with Argentina.

Ambassador Lodge’s position (Tab B) is similar to the State/Treasury recommendation, but he would be a bit more forthcoming by telling Lanusse that we would be prepared to participate with the international agencies in an assistance package if a corrective program can be worked out.

I recommend that we adopt Ambassador Lodge’s approach. While we certainly cannot unilaterally bail out Lanusse, given the importance of our relations with Argentina we should attempt to be as forthcoming as possible consistent with sound economic policy. If Lanusse does work out a sound corrective program with the international agencies, we should be prepared to support it in an appropriate way. We do not need to commit ourselves at this time to any particular form or level of support, but a positive indication of a willingness to be helpful later might offset some of the disappointment Lanusse will undoubtedly feel when his request is turned down. Treasury, OMB and Pete Peterson concur.

RECOMMENDATION:

That you approve the Secretary of State’s recommendation that we tell President Lanusse we are unable to meet his request, but with an added indication that we would be prepared to participate with the international agencies in a sound economic program if one can be worked out.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 768, Country Files, Latin America, Argentina 1969–71. Secret; Sensitive. Sent for action. A stamped notation on the memorandum indicates that the President saw it. Nixon approved the recommendation. Attached but not published at Tab A is a July 3 memorandum from Rogers to Nixon. Tab B, a June 30 cable from Lodge to Meyer is published as Document 67. Attached but not published at Tab C is a June 29 memorandum from Kissinger to Nixon, with a June 24 attachment from Lanusse to Nixon.
2. Haig recommended that President Nixon go along with Secretary of State Rogers’ idea that the U.S. Government could not meet his request. However, the U.S. Government would be willing to work with Argentine President Alejandro Lanusse and international agencies to come up with a sound economic program for the South American nation.