740.00112 E.W./2–345: Telegram

The Acting Secretary of State to the Chargé in Argentina ( Reed )

141. For the Embassy Only. The Department has given careful consideration to the Embassy’s reports and interpretation of economic arrangements adopted by this Government in its relation to the Argentine. Consideration has been given likewise to reports from the American Embassy London describing the relationship of British trade and plans to the economics of our Argentine policy. As a result the following paper describing a modification in economic policy toward Argentina has been fully approved in the Department and by the President.

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Introduction Any effective economic policy of the United States toward Argentina should be designed to achieve two primary objectives:

1.
Full and complete support of the war effort.
2.
Effective implementation of our political policy toward Argentina, consistent with the successful prosecution of the war.

The policy, therefore, should be both workable and consistent.

In the light of the above criteria, it is recommended that our economic policy toward Argentina be materially changed to provide for more adequate supplies of essential materials for the war effort from Argentine sources and to regain a realistic economic base for our political policy toward Argentina. It is important that any change of economic policy, whether formally announced or not, be predicated upon the requirements of the United States and the United Nations for speedy victory. This is consistent with all prior statements by the President and the Secretary of State on the Argentine problem.

Import Policy I. The United States should permit the importation from the Argentine of commodities that are needed for the prosecution of the war and for the maintenance of the civilian war economy.

II. Other requirements of the United Nations for direct military purposes or the civilian war economy, or for liberated areas should be supplied as needed from Argentina as well as from other available world sources.

III. The purchase of Argentine materials not essential for the war effort or for the maintenance of civilian war economy should be discouraged to the extent feasible.

Export Policy I. Export of capital goods should be kept at present minimums.

It is essential not to permit the expansion of Argentine heavy industry.…

II. Maintenance, repair and operating supplies, fuel, supplies for the maintenance of public health and safety, and goods not essential to Argentine basic industry, should be permitted export to Argentina within the limits of the supply situation.

Such goods should, in particular, be of categories similar to those now obtainable by Argentina from British, European neutral, and Latin American sources, it being borne in mind that despite curtailment of United States exports, Argentine overall imports have not appreciably declined.

Export of such goods should be in amounts sufficient to attract the Argentine vessels of the Flota and Dodero Companies40 needed for the importation of essential materials to the United States and Canada.

III. Goods necessary for increased production of essential materials needed in the war effort should be exported on a quid pro quo basis.

As an illustration, it may become necessary to permit increased exports of petroleum to attract necessary vegetable oils and Argentine tankers for their transport.

IV. Our export policy should insure full utilization of Argentine vessels for transport of priority cargoes to the United States and Canada.

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This is largely contingent upon the provision of profitable southbound cargoes which would be forthcoming under recommendation II above.”

It is realized that the political implications of adopting this policy are both delicate and possibly serious. This change has been approved even though it is realized that action taken under it will sooner or later lead to its being known in the Argentine and that this new economic policy may carry with it the implication of a change in our political policy, which we do not wish to revise.

Part of the difficulties may be overcome by care in putting a new economic policy into effect. We hope to be able to modify the present arrangements by a gradual relaxation rather than take action so suddenly as to become unnecessarily conspicuous.

During the next month and prior to the termination of the Mexico City conference,41 it is hoped that no modification in export policy need be made at all, but it may be necessary to approve certain marginal and troublesome licenses that have been pending for a long time in order to assure sufficient southbound revenue-producing freight to keep the Flota fully occupied in moving priority cargoes north. It may not be feasible to refer all such marginal cases to the Embassy for its recommendation. For the time being you are requested to continue the processing of certificates of necessity according to the September 9th policy.42

The Department has approved an extension of our procurement activities in the Argentine in withdrawing objections to an allocation of fats and oils on behalf of United Nations and to the procurement of lead and leather. Additionally, objections have been withdrawn from the proposal to make additional fuel oil available to the Argentine, provided that arrangements can be made to obtain appropriate compensatory quantities of linseed for use by the United Nations.

The Department has advised FEA43 confidentially of the pending change of policy. The present message is sent for the information of the Embassy only.

Grew
  1. Flota Mercante del Estado and Compania Argentina de Navegación Dodero, respectively.
  2. The Inter-American Conference on Problems of War and Peace, February–March, 1945; for documentation concerning this conference, see pp. 1 ff.
  3. For a statement of this policy, see telegram 1378, September 4, 1944, 7 p.m., to Buenos Aires, Foreign Relations, 1944. vol. vii, p. 420.
  4. Foreign Economic Administration.