Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

179. Telegram From the Ambassador in Argentina (Nufer) to the Department of State¹

Buenos Aires, January 25, 1955—5 p.m.

411. Embassy fully agrees Deptel 453 January 25.²

Am seeking appointment with Peron for Thursday, 27th. Will outline reasons disappointment Decree 637 along lines reference Deptel; reiterate Holland’s arguments to Peron including political pressure at time for more liberal treatment old US investors; and urge action enabling all US companies, otherwise qualifying under law 14222, to benefit.

In approaching Peron it must, I believe, be borne in mind that other problems, including petroleum, American Foreign Power, et cetera, are at a point where Argentine attitude thereto will be affected importantly by our own actions. (In regard to petroleum, information contained Deptel 454³ should prove helpful.) Since outcome of these questions could seriously affect US-Argentine relations, and in order contribute to atmosphere favorable their solution, as well as to solution problem profit remittances, Embassy believes prompt and substantial gesture by US now required.

In this context it is Embassy belief that we must not allow profit remittances problem to obscure broader objectives here which involve hemisphere security and problem of international communism. If impasse reached on EXIM Bank credits,⁴ as result of profit remittances problem, the substantial and gratifying progress we have made in last 18 months (including number of steps taken by Argentina beneficial to US interests) could be jeopardized.

The Embassy, therefore, believes and strongly recommends that granting of EXIM Bank credit should not be further delayed because of limitations of Decree 637. In my talk with Peron I will not, unless otherwise instructed, relate question of credits to the satisfactory treatment on remittances. I realize this procedure involves risk Argentina may not broaden rules for remittances and that Department and Embassy would probably be subject criticism should credits be announced without prior additional relief for old investors. I believe, however, that suggested course is best psychological approach to Peron and offer most reasonable prospect of eliciting favorable action. Insistence on complete advance quid pro quo might well prove counter-productive and seriously detrimental our overall objectives here.

Niact comment by end of day Wednesday required if to be used for probable appointment Peron early Thursday.⁵

Nufer

1. Source: Department of State, Central Files, 811.05135/1–2555. Confidential; Niact.
2. In telegram 453 the Department informed the Embassy that it was doubtful that the United States would have a strong point in complaining that the decree applied only to manufacturing and mining since those categories were specifically stated in Law 14222. “Believe you would be on stronger ground”, the Department suggested, “by placing main force of argument on disappointing aspects of provision that all past remittances exceeding five per cent will count as repatriated original capital. This element seems new and inconsistent with our understanding and possibility that some companies might be deprived any capital base whatsoever particularly objectionable.” It advised the Embassy, furthermore, that Perón’s decree placed the Department in an embarrassing situation since on the basis of his assertions the Department had reported as fact that the provisions of Law 14222 would be extended to old investments without change and without any added burdens on old investors. In deciding whether to talk with Perón, the Department pointed out that the Embassy would of course weigh carefully whether the American & Foreign Power Company (A&FP) would be included and if so whether or not that circumstance might make it less desirable to take a strong stand against the terms of Decree 637. (Ibid., 811.05135/1–2155) The latter reference was to the pending negotiation of a settlement covering the expropriation in 1951 of American & Foreign Power’s utility properties in Argentina by the Argentine Government.
3. In telegram 454, January 24, the Department reported on the state of the negotiations between the Argentine Government and the Standard Oil Company of California over a petroleum concession. The principal obstacle to an agreement, the Department pointed out, was Argentina’s insistence that the company agree to turn over upon demand its entire production to supply the Argentine domestic market. (Ibid., 835.2553/1–2155)
4. On December 22, 1954, the National Advisory Council on International Monetary and Financial Problems (NAC) met to discuss, among other matters, a request from Argentina for an Export-Import Bank loan to help finance an integrated steel mill. At the meeting, the NAC approved the extension of assistance in principle and authorized the Bank to give continued consideration to the matter, but it decided to request additional information from the Argentines, in order to provide an opportunity to assess such steps as the Argentines might take toward improvement of the situation for U.S. business interests in Argentina. (Ibid., NAC Files: Lot 60 D 137, Minutes)

5. Telegram 462 to Buenos Aires, January 26, reads in part as follows: “Department concurs fully observations Embassy’s 411 and agree question credits should not be related remittance problem in Peron talk.” Ibid., Central Files, 811.05135/1–2555)

   In telegram 419 from Buenos Aires, January 27, Ambassador Nufer reported as follows:

   “In discussing decree 637 with Peron today I said it appeared to afford relief to only a limited number of companies because of capital base provisions and that many US firms here consequently felt discouraged. I had hoped decree’s provisions could have been more liberal.

   “Gomez Morales, who was present, said decree’s scope necessarily limited because of foreign exchange lack but that Argentine Government intended liberalize its provisions when conditions permitted and hoped eventually establish free exchange market. He asked whether it would be helpful if decree were amended to permit companies to add profits of up to 8 percent annually to original investment instead of only 5 percent. I said it was difficult for me off hand to gauge effect such change which would obviously be step in right direction but it would be highly desirable if, in addition thereto Argentine Government could issue categoric statement that decree only temporary measure and that its provisions would be liberalized as soon as possible. Both Peron and Gomez Morales expressed agreement.” (Ibid., 811.05135/1–2755) Alfredo Gómez Morales was the Argentine Secretary for Economic Affairs.