740.35112A/296: Telegram
The Ambassador in Argentina (Armour) to the Secretary of State
[Received 11:15 p.m.]
2483. Reference Department’s telegram No. 1586 October 12, 10 p.m.96 The Embassy does not believe that Proclaimed List or ad hoc blocking action against Banco de la Nación or Banco de la Provincia would serve any useful purpose. It would be a disturbing, ineffective, and unwise step. The real question is whether or not the time has arrived to consider the general blocking of Argentina.
More than enough evidence to justify this step is contained in the draft statement on the financial position of German firms in Argentina and the aid extended to them by the Argentine Government submitted as an enclosure to despatch No. 12448 of October 1996 which was forwarded by courier on the same date. However, any contemplated action must be carefully considered on a broader basis than economic warfare. The Secretary’s letter of August 30,97 together with other events, has brought about bitter opposition to the present Argentine administration from important and influential sectors of the Argentine public, including elements in the armed services. Any further action on the part of the American Government must help to increase this opposition rather than dispel it through creating a “my country right or wrong” reaction.
The Embassy’s thoughts with respect to procedure were fully described in despatch 12436, October 19,96 but events are moving so rapidly that action may be advisable, even before the despatches alluded to arrive in Washington.
If Prebisch98 is forced out of the Central Bank, as appears to be inevitable, this occurrence plus the resignations of the principal officials of the Ministry of Finance would more than justify action on our part since we could have no further confidence with respect to the implementation of such control measures as not [now] exist in Argentina. The Embassy believes that blocking would be interpreted in Argentina as directed against the Government and not against the people and would be generally understood. It is therefore recommended that if Prebisch is forced to resign or the bank is intervened that Argentina be blocked and the Treasury Department issue the following statement, [Page 494]
“The Treasury Department announced today that in view of recent financial developments in Argentina and for reasons of continental security, Executive Order No. 838999 as amended, had been further amended to include Argentina as a foreign country designated in such order, effective as of October, 1943.”
The reference to continental solidarity [security] is included for the express purpose of affording the Argentine Government the opportunity of requesting reasons of the American Government and this request, in turn, could allow the use of the material contained in despatch 12448 of October 19, in much the same manner as the Secretary’s letter of August 30. The material forwarded under cover of that despatch fully substantiates the information given in despatch 1226 [12262] of October 5.1
The Department’s immediate consideration is requested as developments in the Central Bank case may be expected within the next 48 hours and also action, is [as?] recommended herein, to be properly timed, should be taken immediately following advice from the Embassy that adverse changes in the Central Bank have occurred. It is respectfully urged that no action be taken until the Embassy further advises the Department.