Foreign Relations of the United States, 1981–1988, Volume XIII, Conflict in the South Atlantic, 1981–1984

69. Action Memorandum From the Acting Assistant Secretary of State for European Affairs (Scanlan), the Assistant Secretary of State for Inter-American Affairs (Enders), and the Assistant Secretary of State for Economic and Business Affairs (Hormats) to Secretary of State Haig¹

Washington, April 6, 1982

SUBJECT

• UK Requests re Economic Sanctions/Logistics

ISSUES FOR DECISION

We need guidance from you on further requests we have received from the UK. These go beyond requests for political support and involve logistics/intelligence assistance not required by formal agreement,² as well as support for economic sanctions against Argentina.³ We would like to discuss these with you at today’s 10:30 meeting. You are scheduled to see Ambassador Henderson this afternoon.

Last week you approved the UK purchase of U.S.-owned fuel on Ascension because it is required by our base agreement.⁴ You also decided to put an indefinite hold on lifting the arms sales restriction on Argentina.⁵

ECONOMIC SANCTIONS

On April 6 the UK requested that the U.S. curtail export credits and guarantees to Argentina. It is seeking Allied and Commonwealth support for such a move. Currently, Eximbank exposure in Argentina totals $1.2 billion, with another $130 million in preliminary commitments outstanding.

Eximbank is likely to be cautious in further lending to Argentina. Eximbank exposure there increased $442 million in the past year when U.S. firms won a large share of the giant Yacyreta hydropower project. In addition, Eximbank staff reports that applications for new loans to Argentina have been declining because of the weak economy there.

The so-called “Chafee Amendment” in Eximbank’s statute explicitly prohibits denial of loans for other than commercial or financial reasons except “. . . in cases where the President determines that such action would clearly and importantly advance United States policy in such areas as international terrorism, nuclear proliferation, environmental protection and human rights . . .”⁶ The Chafee Amendment has only been invoked once—against Chile as a result of the Letelier-Moffitt case.⁷ That determination has since been retracted.

Eximbank Chairman Draper might be prevailed upon to stall consideration and approval of credits to Argentina for a short time, but he would have no legal basis for such action and could be subject to legal and political pressure from U.S. exporters to resume lending. The decision on when to resume lending would be entirely in Eximbank’s hands.

Options:

1. The U.S. can invoke the Chafee Amendment and halt Eximbank lending to Argentina. Such action will require a Presidential determination and, in light of its rare use, be seen as a major action.

2. You can offer to consider the UK request and to ask Eximbank to postpone consideration on Argentina loans while State considers Chafee Amendment action and continues its mediation efforts (EUR supports).

3. You can deny the request on the grounds that any action to cut off credits would compromise the U.S. ability to act as a mediator. (ARA supports).

4. You can offer to consider the request without promising any specific actions.

LOGISTICS/INTELLIGENCE-SHARING REQUESTS

The UK has made one specific request (radio loan), and there are indications of two more requests in the works. ([less than 1 line not declassified] sharing and overflight rights).⁸

—Loan of Manpack Satcom Radios: The UK MOD has requested the loan of five Manpack Satcom radios from JSOC in order to establish a radio net to back up the UK manpack system being used in the operation. Last year we loaned such radios to the UK special forces to monitor an evacuation from the Gambia.

—[less than 1 line not declassified] Assistance: Embassy London contacts at the MOD have made clear they expect to ask us for [less than 1 line not declassified] assistance (INR is working on a separate memo on the technical aspects of this).⁹

—Overflight Rights: These same contacts have indicated that we will be asked for overflight rights.

We will be under considerable pressure from the British to respond favorably. The difficulties inherent in negative decisions are well known to you. EUR believes a lack of support from the U.S. in the period ahead could threaten the life of the Thatcher Government. We should therefore proceed with logistics/intelligence support of the type requested while insisting on the greatest possible secrecy.

ARA believes we must refuse UK requests for economic sanctions against Argentina, and logistics or intelligence-sharing requests that are not clearly required by existing agreements. Our role is political, and we seek to bring about a peaceful resolution of the conflict. The UK requests, if accepted, would escalate our involvement on the side of the UK beyond the point where we could serve a mediating role. Such support would become public and would place increased strains on our relations with most other Latin American countries.¹⁰

1. Source: Department of State, Executive Secretariat, S/S Special Handling Restrictions Memos 1979–1983, Lot 96D262, ES Sensitive April 1–9 1982. Secret; Nodis. Drafted by Pendleton and John S. Monier (EB); cleared by Service, Constable, and M. Austin (PM/SAS). Pendleton initialed for Scanlan; Service initialed for Enders; Hormats did not initial the memorandum. Pendleton also initialed for Monier and Austin. A stamped notation on the first page of the memorandum indicates that Haig saw it. Hormats sent the memorandum to Haig under an April 6 note, indicating: “I support a variant of the EUR Option (Option 2). I would suspend consideration of new Exim loans for Argentina and tell the British we are doing this. I would also consider invoking the Chafee amendment, but I would not tell the British we are doing this because we may decide not to invoke it, and having informed them that we were considering it and subsequently failing to invoke it would look like a weakening of our original position.” (Ibid.)
2. See Document 65.
3. See Document 68.
4. See Document 51.
5. See Document 50.
6. Passed as Public Law 95–630 in 1978, the Chafee Amendment to the Export-Import Bank Act of 1945 was named for the measure’s sponsor, Senator John Chafee (R-Rhode Island).
7. Reference is to the 1976 assassination of expatriate former Chilean Ambassador Orlando Letelier and his U.S. assistant Ronni Moffitt in Washington. For documentation on U.S. Government action taken against Chile in response, including invocation of the Chafee Amendment, see Foreign Relations, 1977–1980, vol. XXIV, South America; Latin America Region and Foreign Relations, 1977–1980, vol. II, Human Rights and Humanitarian Affairs.
8. A point paper prepared for Burkhalter at 0250L, April 7 (1550Z April 6), indicates an additional British request to DIA: [2 lines not declassified]. (Washington National Records Center, OSD Files, FRC 330–84–0003, Argentina (Jan–15 May) 1982)
9. Not found.
10. Below this paragraph, McManaway wrote: “Discussed at meeting 10:30 4/6—Secretary gave oral guidance to ARA, EB, EUR, Eagleburger, Stoessel.” No memorandum of conversation of this meeting has been found. For a summary of the meeting, see the attachment to Document 70.