800.6363/1208: Telegram
The Ambassador in Argentina (Armour) to the Secretary of State
[Received 5:54 p.m.]
1367. Department’s 878, June 16, 4 p.m. It is my feeling that the Embassy will be placed in a position very detrimental to the success of our other negotiations with the Argentine Government if the Minister for Foreign Affairs is informed that the Department has not considered the petroleum proposal a satisfactory one from the [Page 391] moment it was submitted on June 2.41 The proposal was submitted in draft form to the Foreign Office and agreed to in principle by them before it was referred to the Department. The proposal as such cannot be described to the Foreign Minister as unsatisfactory to the Department without admitting by direct inference that the Embassy has been conducting unauthorized negotiations and has offered an arrangement without even having an approval in principle from Washington. It would be only natural for the Argentine Government to question my authority to negotiate on other subjects.
To be asked to tell the Foreign Minister that the United States wishes to conclude an agreement mutually satisfactory but under which a smaller quantity of material is to be made available leaves me at a loss to know just what is desired by the Department, in view of the instructions previously received. Particular reference is made to the following:
- a.
- Department’s telegram number 377, March 15, 8 p.m., which stated that 12,962 tons of steel were available for the Argentine petroleum industry in the third quarter and that probably an approximately equivalent amount would be available in the fourth. Note: The third quarter, steel allotment received from the Department list $2,905,627 worth of material for Petroleum Company programs.
- b.
- Embassy’s telegram 666, March 27, 6 p.m.,42 which outlined the terms of a proposed agreement, similar to the final proposal except that 64,000 tons of material and 390,000 cubic meters of oil were stated. Note: This quantity of steel is needed for a complete program.
- c.
- Department’s telegram 628, April 30, 9 p.m., from the Under Secretary for the Ambassador which instructed that a separate agreement regarding tankers be proposed and submitted to the Department and independent negotiations be continued with the aim of developing increased oil production by both YPF and the United States companies using material furnished by the United States in addition to that to be made available in accordance with the petroleum export agreement. Note: This appeared to make it certain that material was available.
- d.
- Embassy’s telegram 1136, May 29, 6 p.m., indicating that probably the expected quantity of material would be reduced to 36,000 tons, in exchange for the delivery of 320,000 cubic meters of petroleum delivered to neighboring countries. Note: The quantity of petroleum was that estimated to cover the rationed needs of Uruguay and Paraguay. The final agreement was expected to include an additional 10,000 cubic meters for Uruguay; and 30,000 for Southern Brazil, total 360,000. The quantity of oil industry material was estimated to be just sufficient to maintain Argentine production and refine it.
Since no intimation was received from the Department after receipt of Embassy’s telegram 1136 that this reduced quantity of material would not be made available by our Government, and furthermore [Page 392] that the quantity of petroleum to be exported by Argentina was considered inadequate, I felt secure in making this proposal to the Foreign Office subject as always to final decision by the Department that the material could be made available.
In regard to this agreement giving more favorable treatment to Argentina than to the other American Republics which entered freely into the supply pool arrangement, please consider that the petroleum importing republics entered into the supply pool in order to receive more petroleum than they could secure through their own resources if outside of the pool. Argentina’s entrance would have deprived her of facilities to her decided detriment and therefore her remaining outside was dictated by the same self-interest which actuated the others and cannot fairly be considered as political non-cooperation. There is apparently genuine belief here that the Argentine tankers would have been sunk by now if at the disposal of the pool managers. The proposed agreement in effect gives four or five tankers to the pool and in so doing Argentina gives up about 10% of her petroleum production in the face of an existing 35% shortage which is a very real contribution to the general Pan American interest even though Argentina feels repaid through the making available to her of petroleum industry material. Even though 36,000 tons of material over the next 12 months may be more than another South American country receives, Argentina’s contribution to the petroleum supply pool is also greater. Moreover since April 1942, almost no petroleum industry material has been received here and therefore the quantity expected over 12 months may be compared with what other countries will have received over the 27 months ending with June 1944.
. . . . . . . . . . . . . .
It is my considered opinion that while conclusion of the petroleum agreement in accordance with the terms proposed will not necessarily ensure further successful negotiations in other fields, withdrawal of the proposal will unquestionably create such suspicion regarding sincerity of our intentions as to discourage present Government from cooperating further in perhaps even more important aspects of continental solidarity and defense.