159. Memorandum of a Conversation Between the Ambassador in Argentina (Beaulac) and President Frondizi, Buenos Aires, October 18, 19581
I had a conversation with President Frondizi on Saturday, October 18. The President said that I would have noted that the Congress had completed approval of the CADE settlement. As soon as the shouting had died down he would announce the ANSEC settlement. He recalled laughingly that one opposition Deputy had said that if the [Page 517] President of the Supreme Court had been named arbitrator in the CADE case it would have been all right (the President of the Supreme Court is arbitrator under the proposed ANSEC settlement).
The President said that he is no longer a politician but a governor (mandatario). The country is going to economic freedom. He is preparing his speech now. The prices of seven or eight basic consumption articles will be frozen, but not meat. Meat will cost more, but more will be produced and more exported for foreign currencies. The Argentines must eat less meat.
The permit system must be given up. It is no longer tolerable that some Ministry official should be able to dictate who imports and who doesn’t import and what they import.
The budget deficit must be overcome. State agencies must be put on a self-supporting basis. They are “eating the vitals” of the country (comiendo las entrañas).
I asked him whether he planned to free exchange. He said he did—perhaps not all at once but certainly that is the Government’s aim. Much will depend on the luck which Del Carril has in Washington. The Central Bank needs a “mass of dollars”, as he had pointed out to me the other day. If prices and exchange are freed, prices will go up and there will be great demand for exchange, at least temporarily. Argentina must have a cushion.
I asked him whether his Government was prepared to reduce the payroll in State enterprises. He said it was, but gradually. An improved economy would be able to absorb workers who might be dropped. (I am told there already is a shortage of trained mechanics and white collar workers, and in some cases of common labor.) He was counting on petroleum and other new foreign investment to accomplish a good deal of this.
I asked him whether his Ministers were in accord with his freedom program. He said he didn’t know yet. He had not revealed to them all he was thinking. He had asked each one to submit a report on the effect of freedom in his field, but no one had been given a complete plan. He cannot expect complete support from his Ministers. The Ministers advised him up to the last minute not to make his speech on petroleum, but he made it just the same.
I asked the President whether any of the steps he contemplates would require Congressional approval. He said none would require such approval.
I said I assumed that he would not make the speech until after public announcement of the solution of the ANSEC problem. He said that that was the case.
[Page 518]I asked him whether freedom was the solution he intended to give to the meatpackers’ problem. He said it was. I asked him whether he had in mind total freedom. He said he had in mind practically that. Perhaps not all at once, but at least substantial freedom right away.
- Source: Department of State, Central Files, 835.10/10–2158. Confidential. Drafted by Beaulac. Transmitted in despatch 624 from Buenos Aires, October 21.↩