800.6363/1220: Telegram
The Secretary of State to the Ambassador in Argentina (Armour)
988. Your 1439, June 26, 8 p.m. The Department has given careful study to the considerations advanced by you in support of the proposed petroleum agreement outlined in your 1165, June 2, 6 p.m., [Page 398] but continues to consider it unacceptable from the viewpoint of this Government.
If you have not already done so, you should consequently inform the Foreign Minister at once that this Government regrets that it cannot approve the proposal, explaining the reasons in accordance with the instructions contained in the Department’s 920, June 23, 11 p.m. You should state that this Government will prepare a counter-proposal and submit it through you in due course. It should be made clear in your conversations with the Foreign Minister that we are searching for an equitable agreement and will be glad to receive any modified suggestions his Government may care to make.
The need for promptly informing the Argentine Government of this Government’s position is stressed by the receipt by the Argentine Ambassador here of a telegram from his Foreign Office indicating that, while it has not yet received a reply from you in regard to the petroleum proposal, it anticipates a favorable reply. In this connection he was requested on behalf of the War Ministry to undertake immediate discussions with the Department looking toward obtaining a quantity of ethyl fluid.
As has been pointed out to you before, the figure of 36,000 tons of material which has been proposed is far out of line with the amounts which have proven necessary to maintain production in other situations comparable to the Argentine one and the Department believes it to be excessive. It therefore desires that Clover make a thorough independent survey of the bare essential Argentine needs to keep Argentine production on the 1942 level to substitute for the list of materials submitted by the YPF and forwarded under cover of your despatch 9421 of March 20. This list should be detailed and supported by full explanations. It should give the tonnage of steel and other controlled materials and the approximate dollar value of fabricated materials instead of being purely on a tonnage basis in order that it may be fitted into the allocation system and furnish a better comparison with amounts made available to other countries under similar conditions. If Clover desires technical assistance in preparing the study we will endeavor to obtain the temporary services of a qualified engineer if you will indicate his needs in this regard. The Department also desires fuller information covering the amount of Argentine tanker shipping which would be used in transporting petroleum to neighboring countries under the proposal summarized in your 1165 and the total tonnage of Argentine tankers which would be utilized for other purposes and details as to how this would be used. With this information in hand, the Department will be in a position to prepare a counter-proposal meeting so far as possible the original objective of the petroleum negotiations, namely to obtain the equivalent of full Argentine participation in the tanker pool in return for the allocation [Page 399] of material which would maintain Argentine production of crude at recent levels.
With regard to the request for ethyl fluid, a separate telegram is being prepared.