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

203. Memorandum by the Assistant Secretary of State for Inter-American Affairs (Holland)¹

Washington, December 12, 1955.

SUBJECT

• United States Policy Towards Aid to Argentina

The Argentine Government is quite clearly going to ask for rather extensive aid from the United States both in the economic field and the military field. This memorandum is concerned with aid in the economic field.

There are factors which would weigh in favor of and against our extending any substantial economic assistance to the new Argentine Government.

Those Factors Which Would Weigh Against Such Assistance

1 —Argentine agriculture is generally competitive with that of the United States and assistance from us to strengthen her agriculture could be construed as harming the interest of our own farmers. This argument does not, of course, apply to assistance to the Argentine ranching industry which is not competitive with ours.

2 —Argentina’s dollar income is traditionally far below her dollar expenses. While the pound sterling was convertible, she used sterling to cover the gap. Until sterling again becomes convertible, it will be difficult for her through her foreseeable dollar earnings to service any large dollar indebtedness.

3 —The obvious distrust between representatives of the Navy and Army in the new Argentine Government creates the possibility that the present Government may not endure and that we may soon find ourselves dealing with some successor government.

Factors Weighing in Favor of Aid to Argentina

1. Argentina is one of the strongest, most mature and economically developed countries of Latin America. She has a long tradition of aloofness and suspicion towards the United States. She now frankly asks for United States assistance and offers to cooperate closely with the United States. A generous response from the United States may well bring about a relationship between the two countries unlike anything that has ever existed before, a relationship which will strengthen the United States’ position, not only in Argentina, but throughout Latin America. Failure of the United States to respond generously will almost surely drive Argentina further into her traditional attitude referred to above.

2. The present Argentine government appears to be dominated by people who are wholeheartedly devoted to the private enterprise system and to those governmental economic principles which we support in the United States. If we strengthen this group by generous assistance we may well insure that Argentina will abandon the state interventionist theories with which she has experimented and frankly follow the private enterprise system. Such a turn of events in Argentina would exert a powerful influence on a number of other governments of South America.

3. This Government has made strong representations on Communism. It proposes to adhere to the Caracas Resolution and to follow a vigorous program to stamp out the Communist conspiracy. If it does, in fact, follow this course the importance to our hemispheric anti-Communist program will be great. Adherence to the Caracas Resolution will leave Mexico as the only Latin American state which has not subscribed to the Resolution. Such a situation may become intolerable to the Mexican Government. If the Argentines really atack Communism, the repercussions in Chile, Bolivia, Brazil, Uruguay, and Paraguay will be important. It could lead the way for a major and permanent setup to Communism in South America. The Communists recognize this danger and are attacking the United States with an intensity that I have not seen elsewhere in Latin America.

4. The present Government, while Catholic, follows a line of temperance and tolerance which if continued will probably mean a minimum of religious difficulties with Argentina in the future.

5. Argentina’s present dollar earnings will not enable her to service large dollar loans; however, her economy is one of the strongest in the hemisphere. As she reestablishes her former position of importance her ability to carry loans will inevitably improve. Likewise, when and if sterling becomes convertible, her ability to carry dollar loans will improve. Thus, it might be a mistake to judge Argentina’s dollar debt carrying capacity by her present dollar income.

6. The United States Congress and public will almost surely be strongly inclined toward a generous program of economic assistance to the new Argentine Government.

1. Source: Department of State, Central Files, 735.5–MSP/12–1255. Confidential. Copies sent to Waugh, Douglass, Harley, Atwood, Corbett, and Bernbaum.