Foreign Relations of the United States, 1949, The United Nations; The Western Hemisphere, Volume II

835.50/12–3049

The Ambassador in Argentina (Griffis)¹ to the Secretary of State

confidential

Buenos Aires, December 30, 1949.

No. 1040

It is clear that the work of the US-Argentine Committee for Economic Studies has laid an opportune and necessary basis for the solution of outstanding economic problems existing between the two countries. It is also clear that the work of the Committee is a first step only and that a great deal will have to be done by the Argentine government and a substantial amount of help be given by the American Government to reach a happy and productive conclusion. As Ambassador Remorino phrased it during a discussion which I had with him on December 27, he had “brought back the violin and the music, but someone would have to play them”. Realizing that the major burden is upon Argentina, realizing that a suitable atmosphere must exist in the United States as well, and in a desire to terminate some of the most pressing of our current problems, I am endeavoring to arrange at least partial settlement of the situations confronting the American packing companies in Argentina, crude oil supplies for American affiliates and the free import of motion pictures.

These three matters were chosen, after considerable deliberation, as being those whose settlement could create favorable publicity in the United States, or at least cause a cessation of unfavorable publicity and—tactically—being those problems which involved no expenditure of Argentine dollar exchange, currently the Sacred Cow.

To this end quiet discussions were held with a close friend of President Perón in the knowledge that the general approach would rapidly reach his ears. Following the arrival of Ambassador Remorino I took up the three problems mentioned, laying some stress on the need for an improved climate in the United States, and pointing out that settlement of the three matters required no foreign exchange and required only some long-overdue bureaucratic decision. Ambassador Remorino expressed himself as being fully in accord with this approach and stated that he had already discussed two of the questions with the Economic Council and planned to discuss the third in the very near future. He pointed out the difficulties under which he has been laboring in trying to inform and convince Argentine authorities of the repercussions which arise from unwise Argentine activities or lack of activity both in the economic and political fields. He promised to use his best efforts towards getting an early solution of these three matters and requested memoranda covering motion pictures and petroleum, stating that with respect to the audit of the books of the packers he was fully conversant.

An Aide-Mémoire, enclosing the desired memoranda, was prepared and delivered to Ambassador Remorino on December 28 in Spanish translation. A copy in English is enclosed.

It appeared that this first discussion with Ambassador Remorino was the most appropriate occasion on which to sound out matters with reference to petroleum as directed in the Department’s telegraphic instruction No. 785 of December 22.² Following my general discussion with him it appeared wise not to take up the substance of the note which it had been proposed to send to the Argentine government and which the Department in its telegram under reference instructed this Embassy to deliver. Because of this, and further developments of last evening, the Embassy plans not to deliver the note at this time. The memorandum concerning petroleum which was given to Ambassador Remorino was prepared after consultation with representatives of both Standard and Ultramar. It will be noted that supplies of crude oil only are mentioned. The matter was thus limited because of the possibility of importing crude oil for sterling. I wished to raise no other issues such as supplies, equipment, tetraethyl lead, etc. which would inevitably involve the question of dollars. These matters will, of course, have to be dealt with in due course.

Last evening, December 28, I had a private showing of the new movie “Samson and Delilah” for President and Mrs. Perón. Following dinner with them, occasion was taken to have a discussion with the President on these same matters. The good work of the Committee was referred to, and hope expressed that we could move rapidly towards a solution of over-all economic problems. I told him I was prompted as a friend and as a well wisher of Argentina to point out that the scene was not yet set to best stage the play. Mention was made of the favorable publicity and the better climate which would ensue by settlement of some problems which required no use of dollar exchange, and which I thought he could accomplish very readily. I outlined these three matters, and requested that he take direct action in their settlement rather than to allow them to languor in the hands of the Economic Council. I gave him a copy of the Aide-Mémoire and of the memoranda in Spanish. The President promised me that he would study the memo and would at once take up consideration of these matters. I found his attitude to be one of sincere interest, and helpful. His action on them should furnish a proof of good faith. Should he move rapidly and effectively towards their accomplishment. I would hold strong hopes for adequate settlement of a whole range of problems. Should, on the other hand, action be delayed and the matters become the subject of further delaying tactics among the ministers of the cabinet, I would [hold?] out no high hopes that the groundwork of the Committee will result in a fruitful end.

The Department will be informed of developments.

Stanton Griffis

[Enclosure]

Aide-Mémoire

The Joint Argentine-U.S. Commission, which has been in the United States for some months, has done a magnificent work under the direction of Ambassador Remorino and Assistant Secretary Miller. Its work has been completed and the reports covering its conclusions are now in the hands of both governments for study. I believe that it has laid a firm foundation for solving the many financial and trade problems which have arisen between the two countries following the great war.

These problems, however, are great and varied. They cannot be solved over night, and a solution can only be reached with good will on both sides and with careful negotiations. In the meantime, continued attacks in the Argentine press against the United States and strong criticism of Argentina in the American press have created an atmosphere which is far from favorable for the solution of delicate financial problems. In the Argentine are represented many large and powerful American business firms working under great difficulties on account of the existing exchange problems. Their difficulties, too, constantly offset public opinion in the United States.

However, it is my firm belief that without in any way complicating or touching such exchange problems, the entire atmosphere existing in the United States might be greatly cleared and the stage set for thoughtful and constructive negotiation if Argentina would take three simple actions, none of which involve dollar exchange and all of which need only be assured for a limited period until we have further time to solve, or attempt to solve, the commercial and other problems which exist between the two Governments. All of these problems have been discussed many times and in almost all cases the attitude of the Argentine Government has been expressed as favorable but has not been implemented.

Following are the three suggestions:

(1) That Argentina permit the two American oil companies to receive, through sterling purchases if necessary, sufficient crude oil and/or supplies which will permit them to operate for a period of one year on a comparable basis with the crude supplies obtained by YPF.

(2) That Argentina permit for one year the unlimited import of American motion pictures without any dollar payment whatever but with the complete understanding that Argentina is already entirely able through existing laws to control the extent of the exhibition of these pictures in its theaters.

(3) That Argentina promptly implement its promises to the frigorificos to make a complete audit of their books up to December 31, 1949, so that the financial relationship between the Government and the frigorificos may be definitely determined.

Referring to the above first paragraph relating to crude oil, and the second paragraph referring to motion pictures, brief memorandums are attached. As to the third paragraph above, referring to the audit of the books of the frigorificos, a memorandum covering this matter was presented to the Economic Council within the past week.³

None of these problems which I have pointed out, in any way touch dollar exchange difficulties. Their solution would clarify and at least temporarily solve a very large percentage of the problems of American business here. All of them in former presentations have been received sympathetically by Argentina but no action has resulted. If these three great basic problems could be solved for the moment, we could, in a far happier climate, turn our efforts here and the efforts of the Department of State to solving the great basic financial questions.

Buenos Aires, December 28, 1949.

[Subenclosure 1]

Memorandum

The American Petroleum Industry in Argentina

The two Argentine affiliates of the North American oil industry (Standard and Ultramar) have for years been actively engaged in producing, importing, refining, transporting and marketing crude oil or petroleum products. These affiliates have been dependent upon imported crude oil for the bulk of their refining requirements and during recent years imported crude comprised 90% of refining throughput.

Although those companies had been able in the past to obtain import permits and dollar exchange for all of their imported crude oil requirements, these imports were stopped at the beginning of 1949 because of the dollar shortage. Following the signing of the Anglo-Argentine Trade Agreement, whereby Argentina was to receive stipulated amounts of crude oil and petroleum products from sterling sources, the affiliates formally requested YPF for permission to import their normal crude oil requirements from sterling suppliers. This request was denied on the ground that the full crude oil quota under the trade agreement had already been contracted for by YPF. Although the companies’ request was made before YPF could have legally signed such a contract, the companies’ subsequent protests have been to no avail.

Unable to import crude oil directly, the companies have been dependent upon YPF for whatever crude oil this government entity has been disposed to sell locally. The companies’ objections to this system of purchase, in contrast to direct importation of crude oil by the companies are many and serious:

1. The cost to the companies is at least 20% greater because of YPF’s higher billing price.

2. Additional local transportation and handling charges frequently increase the laid-down cost to the companies by another 10 to 15%.

3. One of the companies is required to accept certain amounts of “reduced crude” from which YPF has already skimmed the normal gasoline and kerosene content.

4. Unscheduled and sporadic deliveries, sometimes interrupted for weeks at a time have resulted in frequent shut-downs which make for excessively costly refinery operation.

5. The strain on refinery equipment caused by these shut-downs and start-ups is particularly serious, because of the difficulty in obtaining spare parts and repair materials under present circumstances, and is impairing the value of the companies’ refinery investment.

6. As a result of YPF’s declared inability to supply suitable crude, one of the companies (Ultramar) will be forced to suspend all refining activities within two weeks.

7. Apart from the foregoing practical considerations the companies are being arbitrarily deprived of their constitutional right to carry on, without discrimination, a legitimate and useful operation.

When the companies are again allowed to import their crude oil requirements directly, they will not only be able to schedule deliveries in more orderly fashion, but will avoid the serious pecuniary losses involved in the YPF price mark-up and unnecessary handling costs.

Buenos Aires, December 28, 1949.

[Subenclosure 2]

Memorandum

American Motion Picture Industry in Argentina

During the past eight months no import permits into Argentina have been granted for American motion pictures and the industry has now completely used up stocks on hand.

Existing laws in Argentina restrict the exhibition of foreign pictures in favor of the national product and Decree No. 21344–44 (Law 12999, Compulsory Exhibition of Motion Pictures) places all motion picture exhibition under the strict control of the “Dirección Espectáculos Públicos” for all the cines of the country. Accordirigly not only the market itself but national law rigidly controls the exhibition in Argentina of American pictures.

However, Argentina is the only country in Latin America which does not permit the free importation of pictures, and in other countries pictures enjoy the same privileges as other artistic or cultural manifestations which are not subjected to restrictions. Should the American industry accept a quota of imports, as has been suggested, a precedent would be established which, if followed by other countries, would affect not only pictures produced in the United States, but also Argentine pictures, which would thus find their field of exploitation curtailed.

Thus the interests of both countries are parallel. The motion picture theaters of Argentina are suffering and will continue to suffer severe losses if the import of American pictures is not permitted, and the nation will, as pointed out above, create a principle of restriction which will in itself be detrimental in the long run to Argentina.

With the full knowledge, therefore, that existing laws per se control the showing of American pictures in Argentina, and that the American companies are willing to send in the product without even requesting dollar exchange for their actual print costs, it is respectfully submitted that it is to the interest of Argentina to accept the principle of free and unlimited import of American pictures.

Finally, may it be pointed out that substantially no other medium influences good will between nations as does the showing of motion pictures, and that in the United States the influence of the motion picture companies on public opinion is substantially equal to that of the press.

1. Ambassador James Bruce had left Buenos Aires in August and was succeeded as Ambassador by Stanton Griffis.
2. Not printed.
3. Not printed.