800.6363/1220: Telegram
The Ambassador in Argentina (Armour) to the Secretary of State
[Received 11:25 p.m.]
1439. Department’s telegram 920, June 23, 11 p.m. and instruction 4457 June 18, 1943.44 These communications make it obvious that the petroleum negotiations designed to secure from Argentina all the petroleum needed by the River Plate countries and thus release the pool tankers now used in this service, are no longer of interest to the Department. It is to be regretted that this conclusion was not communicated or at least suggested to the Embassy after receipt by the Department of some of the Embassy’s telegrams which detailed in advance the steps in the negotiations contemplated by the Embassy. Particular reference is made to the Embassy’s 1078 May 21, 9 p.m.,45 1136 May 29, 6 p.m. and 1165 June 2, 6 p.m., since the Department’s decision appears to have been taken early in May.
It has been clear to the Embassy from the beginning of the negotiations telegram 920 June 23, 11 p.m. would govern the situation, and the several exchanges with the Foreign Office have always stressed the fact that the saving in tanker tonnage was the justification for the diversion of any steel from the direct war effort, and that final approval by the Department was always dependent upon the availability of the steel.
Until the installation of the new Government46 the Embassy could have withdrawn from the discussions gracefully, and without damage to any existing situation. Conditions today are very different. The [Page 396] Embassy’s telegram 1329 June 14, 6 p.m. informed the Department of Storni’s premature announcement that an agreement was about to be signed. This was instantly given favorable publicity by the press in Argentina as well as in Brazil and Uruguay and the general tenor of the comment was approval of this positive step by Argentina’s new Government toward closer Pan-American cooperation and in particular a closer approach to the United States which might lead to more important cooperative steps later.
The Embassy’s judgment of the situation was expressed in telegram 1367, June 18, 1 p.m. and it continues to be the Embassy’s recommendation that an agreement be concluded, in accordance with the terms outlined in the Embassy’s telegram 1165 June 2, 6 p.m.
At the beginning, the maximum quantity of petroleum justifiably available for export was considered by the Embassy to be that which could be imported in seagoing Argentine flag tankers not required for coastwise movement. This indicated approximately 400,000 cubic meters in 12 months. Since Uruguay and Paraguay on a rationed basis required perhaps 327,000 cubic meters this latter quantity was chosen for presentation in the Embassy’s original note in order to find out whether the matter was of interest to the Argentine Government. An unnamed additional quantity was included by Argentina for Brazil, apparently because they expected to secure some advantages thereby from the Brazilian Government. The Embassy later translated this to mean a total of 360,000 cubic meters of petroleum to be placed at the disposal of the Petroleum Supply Committee for Latin America c.i.f. Uruguayan and Paraguayan entry ports. The tankers thus saved for the pool would be the number needed to deliver that quantity of oil at Montevideo within 12 months, from present sources.
The quantity of oil industry material was considered from two angles: (1) How little Argentina would accept as a quid pro quo for the petroleum exported, and (2) how much the United States could afford to make available.
The Argentine minimum appeared to be the quantity estimated as necessary to maintain existing Argentine production, and this was established in round numbers as 36,000 tons in 12 months.
Whether or not this quantity could be spared by the United States was not for the Embassy to decide, and therefore the Department was kept fully informed in advance of each step in the negotiations. From the Department’s communications it would appear that the direct physical benefits to the United States are just about offset by the material made available to Argentina. An exact determination either way can hardly be made, because too many factors must be estimated, but in the Embassy’s opinion the potential political [Page 397] repercussions if the agreement is not made would be such as to outweigh the other considerations.
For the Department’s further consideration, the Embassy desires to point out certain features of the proposed arrangement.
The memorandum of April 3047 attached to instruction 4457 is argued principally from the mistaken premise that Argentine tankers of questionable worth are to be turned over to the pool to be operated for the general interest. Of course the plan really is that Argentina will continue to operate her ships as at present, but will also deliver c.i.f. Uruguay, Paraguay and riparian Southern Brazil 360,000 cubic meters of petroleum, which is sufficient for the rationed requirements of those areas. This will release for other Allied work the pool tankers now used in that service.
Evidently at least five tankers will thus be saved. They can be scheduled almost immediately for new duty, because with the Argentine oil just across the river, there is no need to maintain in Montevideo the reserve stock now found desirable, and existing supplies in Uruguay can bridge any gap. Requirements for Paraguay are planned to be shipped currently from Buenos Aires refineries, as was customary before the war.
The quantities contemplated will permit slightly increased consumption, which will have a beneficial effect upon the economy of the countries concerned out of all proportion to the comparatively small extra supply. It is the difference made by running passenger busses on normal schedules, and increasing freight train loadings because higher steam pressures can be held in the oil burning engines than now, when converted to wood.
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As far as concerns publicity it could be made clear that under the terms of the agreement Argentina will receive during 1943 an average of 1250 tons of petroleum industry material per month, and in return is delivering the entire rationed petroleum requirements of Uruguay, Paraguay and Southern Brazil.