840.51 Frozen Credits 35/136: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received November 6—7:10 a.m.]
7710. Bliss, high official of MEW16 asked Spiegel of EWD17 to see him respecting the proposed freezing of Argentine funds. He stated MEW had been approached for its opinion respecting joint British and United States action in freezing Argentine balances. MEW conferred with the Treasury and Foreign Office and it was decided that the United Kingdom could not join the United States and freeze Argentine sterling balances.
The position of British officials, according to Bliss, is that the special account arrangement is satisfactory from the British point of view and accomplishes everything which the British feel is necessary. Bliss mentioned in this connection that Argentine sterling balances are in the vicinity of 50 million pounds. It is felt in MEW that should the United Kingdom take steps to freeze sterling balances the repercussions might be unfortunate because the United Kingdom is now more than ever dependent upon Argentina for certain vital supplies, notably meat. This position has evidently been communicated to the British Embassy in Washington. Bliss stated that the effectiveness of the whole proposal has probably been lessened by the leak in the American press respecting the proposed freezing action. London papers copied the American story on this matter.
Bliss indicated that balances of the Banco de la Provincia and of the Banco de la Nación have recently been blocked by the U. S. Treasury on an ad hoc basis. He suggested that the United Kingdom could not block the sterling funds of Argentine banks in this manner because [Page 507] of the necessity of financing most shipments from Argentina to the United Kingdom.
MEW had evidently also received an inquiry from the British Embassy in Washington concerning the attitude of MEW to unilateral freezing action by the United States. At this point Bliss indicated that this may ultimately turn out to be an issue over which the United States and British Governments may differ, with the result that each will follow its own policy. He wished to state, however, that in his opinion American freezing of Argentine dollar balances without accompanying British freezing of sterling balances might be exploited in Argentina as indicating a split among the United Nations over this issue, with the result that the freezing action of the United States might not have the desired political effect in Argentina.
Bliss added that a second more important reason for questioning the desirability of unilateral freezing by the United States was the possibility that Argentina might be driven in retaliation to create difficulties over meat supplies for the United Kingdom. He pointed out that this would affect supplies for American Army personnel stationed in the British Isles as well as purely British civilian arid military supplies.
Bliss stated that he was making this known on a purely unofficial and informal basis, but intimated that it might be helpful if this opinion could be brought to the notice of the appropriate American officials through appropriate channels.
Spiegel made no observations on the foregoing and confined himself to stating he would transmit the information to the appropriate authorities. If the Department desires any reply to be made, please instruct.