Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

201. Despatch From the Ambassador in Argentina (Nufer) to the Department of State¹

No. 437

Buenos Aires, December 9, 1955.

SUBJECT

• Report on Holland Group Visit

[Here follow a list of the members of the Holland–Waugh party, which arrived in Argentina on November 30 after completing a brief trip to Chile, and discussion of the party’s schedule and certain protocol matters.]

Economic

The touchstone of the Holland group visit was, of course, economic, and the question of possible US financial assistance to the new Argentine Provisional Government occupied a large portion of the brief visiting time. Messrs. Holland and Waugh held two formal discussion sessions with Argentine economic officials headed by the special Economic Adviser, Dr. Raúl Prebisch, and in addition participated in informal exchanges of views with representative groups of prominent American and Argentine members of the local business community. Several specific problems in U.S.-Argentine economic relations were additionally the subject of interviews with interested businessmen and brief discussion with the Argentine authorities.

The net results of these various talks were constructive in a general and exploratory fashion. The Argentines made no specific requests beyond that for signing of the already approved Eximbank $60 million credit for the Argentine Steel Project. The possibility of some form of US financial assistance to assist Argentina in overcoming her present economic plight was of course raised in general fashion by the Argentine side, although no specific prospective figure was presented by the Argentines. It was agreed (and apparently most specifically confirmed in a final conversation between Mr. Holland, Dr. Prebisch and Finance Minister Alizon García on which the Embassy lacks full details) that the US Government would send a special representative to Buenos Aires in the near future to follow up discussions more concretely. The possibilities of technical assistance were explained upon Argentine request.

In sum, the U.S. representatives listened sympathetically, asked questions, agreed to further exploration of the Argentine financial problem, but left Buenos Aires without commitment, except for formal signature of the already approved Eximbank steel credit if the Provisional Government so desires. The U.S. official group obviously left behind them an aura of optimism for the Argentines to savor, however, and it is the Embassy’s opinion that the Aramburu Government derived the overall impression from the visit that the United States is prepared to advance as much credit for sound Argentine projects (in addition to the steel project) to improve the Argentine economic position as Argentina will be in a position to repay in dollars within a reasonable banking period.

A detailed report on the matters covered in the first and longest formal economic session during the morning of December 1 is attached (Enclosure 4).² During this meeting the Argentine financial situation and the Provisional Government’s policy for coping with it was explained. Dr. Prebisch stated that the restoration of agricultural production was the key to Argentine economic recovery, and outlined other pressing economic problems as having to do with transportation, energy, and the importation of essential machinery and equipment. The expansion of CADE’s Buenos Aires power facilities, the American & Foreign Power Company’s unresolved Argentine difficulties, U.S. sanitary restrictions on importation of Argentine meat, the possibility of Argentina’s joining the World Bank and International Monetary Fund, and current Argentine labor policy were among the topics discussed in the general give and take of ideas. Mr. Holland made a forceful restatement of official U.S. views on the role of private enterprise.

The Eximbank loan for the San Nicolas Steel Project was the principal topic for discussion at the supplementary meeting with the Argentine economic group during the morning of December 2 (Enclosure No. 5). It was agreed that the formal contract could now be signed on the basis of the existing Argentine presentation, but it was pointed out by Mr. Waugh that departure from present Argentine plans in the direction of making additional steel equipment purchases in the United States would require reexamination of the whole matter because of a change in dollar repayment ability factors. [Brigadier General Pedro Castiñeiras, President of the Argentine Mixed Steel Corporation who participated in the meeting, subsequently departed for Washington on December 5 to seek completion of contractual arrangements.]³

Memoranda covering the round-table exchanges of ideas with prominent members of the American business community and with a larger representative Argentine private economic group are also attached (Enclosures No. 6 and No. 7). The most pressing specific point brought up at the U.S. Chamber of Commerce function was the alleged inequity of the Provisional Government’s intention to levy a surcharge on imports equal to the difference between the old [7.50] and new [18.00] official dollar exchange rates. A spokesman at the meeting with Argentine businessmen listed the country’s principal problems as 1) petroleum and electric power shortage, 2) transportation deficiency, and 3) need for a basic iron and steel industry. Industrial machinery import needs for modernization were stated as totalling at least $500 million. Mr. Holland referred to U.S. disposition to cooperate wherever possible in all phases of the Argentine economic reconstruction program, explaining that such cooperation could best be applied in three fields—commerce, finance, and technical assistance, and advanced U.S. views on the encouragement of private enterprise. Mr. Waugh explained the Eximbank’s functioning and expressed the hope that it could be useful to Argentina, although pointing out its policy limitations in the petroleum field.

The matter of the surcharge differential on import costs was also brought up in a special interview with Mr. Holland by officials of the Lone Star Cement Company and its Argentine subsidiary, but a subsequent discussion of this issue by Mr. Holland with Dr. Prebisch and Finance Minister Alizon García did not give promise of any relief for the American firm as among the many adversely affected by the Government’s exchange reform action (Enclosure No. 8). Other private interviews dealt with CADE’s power extension project, with Mr. Waugh (Enclosure No. 9) and with the Argentine and Uruguayan operation problems of the Swift meatpackers, with Mr. Holland (separately reported in Despatch 441, 12/9/55).⁴

The Embassy is not informed as to all the details of Mr. Holland’s discussion with Dr. Prebisch and Finance Minister Alizon García just prior to leaving on December 2.

Political and Military

Mr. Holland had the opportunity for an informal exchange of specific views with President Aramburu during the course of the reception at the Embassy Residence the first evening of the visit, November 30 (Enclosure No. 10). During the course of this talk the Argentine President indicated that his Government would adhere at the first feasible opportunity to the anti-Communist resolution passed at the Caracas Conference over Argentine abstention,⁵ stated his belief that the sometime Argentine-espoused “Third Position” was a silly fiction, and confirmed the present Government’s consideration of a law outlawing the Communist Party, which Mr. Holland applauded. The Assistant Secretary also commented on the advantages to Argentina of Ambassador Nufer’s continued assignment to Buenos Aires—in which Aramburu stated his concurrence—touched on the favorable effect of the return of La Prensa to its owners, and pointed out that the U.S. Government would necessarily move with deliberation on the matter of possible economic assistance to Argentina. The President stated his understanding of this last-cited fact.

At a private appointment on December 2 with Vice President (Rear Admiral) Rojas, made at the latter’s request, Rojas raised with Mr. Holland and Ambassador Nufer the Argentine Navy’s desire to purchase equipment from the United States, particularly an aircraft carrier, emphasizing the differences in basic outlook between the Argentine Navy and Army which argued for assistance to the former in support of the present Government. Mr. Holland pointed out the difficulties involved in the sale of a carrier, but advanced as a purely personal and tentative idea the possibility of seeking Congressional approval for the loan of carriers to friendly governments, these to be returned in case of war. Admiral Rojas agreed that this might be feasible in Argentina’s case, but only, for domestic political reasons, in the absence of any corollary commitment to enter a future conflict on the U.S. side. To allay President Aramburu’s surprise at the Rojas–Holland–Nufer meeting when these three emerged from a private hotel room to join the President for lunch, the Assistant Secretary found it advisable to refer to the general tenor of his conversation with the Vice President during the luncheon. Aramburu, who is of course an Army Major General, interrupted Mr. Holland’s explanation at the mention of an aircraft carrier to say that this was not needed, since what Argentina basically required was assistance of a financial nature. The President subsequently made the same comment with regard to equipment for a Marine regiment, stating his belief that all of these matters should be considered in connection with a general program of financial assistance (Enclosure No. 11).

Following a luncheon given for General Douglass⁶ on December 1 by the three Armed Services Ministers, General Douglass participated in an informal meeting with the Argentine Air Minister, Brigadier (Brig. Gen.) Ramon A. Abrahin, at the latter’s request, at which were present Commodore Julio C. Krause, Deputy Air Minister, and Brigadier Mayor (Maj. Gen.) Gustavo Hermansson, Commander-in-Chief of the Argentine Air Force and two other high ranking Air Force officers. General Abrahin and his colleagues pointed out to General Douglass that Argentina was desperately in need of equipment, particularly planes, necessary to carry out obligations under the Rio Pact⁷ and adequately perform its mission of assisting and maintaining internal order. Emphasis was placed upon transport aircraft and jet replacements, at reduced prices which Argentina could afford to pay. Mention was also made of the desirability of obtaining training opportunities in the United States for Argentine pilots and technicians. General Hermansson made the direct suggestion that the return of the U.S. Air Force Mission, whose contract was not renewed upon its termination in 1951, might be desirable for Argentina. General Douglass suggested that the Argentines pursue their requests through formal channels, and offered his assistance in securing their speedy consideration in Washington. (Enclosure 12)

Press and Public Relations

Mr. Holland held a press conference shortly after arrival (Enclosure No. 13) and subsequently taped an interview for use on the USIS program “Panaorama de America” on Radio Splendid (Enclosure No. 14). He also gave brief interviews as requested to Time-Life and UP correspondents. News and editorial coverage of the Holland group mission, both pre- and post-visit, was substantial and has been reported separately by USIS (USIS Despatch No. 74, 12/5/55).⁸ As was to have been expected, constructive coverage was paralleled by some unfriendly comment in general and political organs reflecting the Intransigent Radical, the Socialist, and of course the Communist viewpoints. Mr. Holland was the target of Communist leaflet and wall-slogan activities, and of a small one-man demonstration outside the USIS following his first-day press conference (Enclosure No. 15).

Embassy Matters

Limitations of time precluded any detailed discussion of Embassy operational problems with Mr. Holland and his associates, but several of the more important were taken up briefly as the opportunity presented.

Comment: As the Embassy has already reported (Weeka No. 47, 12/7/55),⁹ it considers the visit of the Holland group to Buenos Aires to have been a substantial success from both the US and Argentine points of view. Follow-up results in the various fields of US-Argentine cooperation explored in brief during the visit will, of course, determine the long-range weight to be assigned it by each country.

For the Ambassador:

James F. O’Connor, Jr.
Second Secretary of Embassy

1. Source: Department of State, Central Files, 033.1120/12–955. Secret. Drafted by James F. O’Connor, Jr., Second Secretary of the Embassy.
2. None of the 15 enclosures to this despatch is printed.
3. These and following brackets are in the source text.
4. Not printed. (Department of State, Central Files, 835.311/12–955)
5. A reference to Resolution XCIII, “Declaration of Solidarity for the Preservation of the Political Integrity of the American States Against the Intervention of International Communism,” approved on March 28, at the Tenth Inter-American Conference which met at Caracas, March 1–28, 1954. For text, see Tenth Inter-American Conference: Report of the Delegation of the United States of America with Related Decuments (Department of State Publication 5692, Washington, 1955), pp. 156–158. For documentation on the Conference, see Foreign Relations, 1952–1954, vol. iv, pp. 264 ff.
6. Major General Robert Douglass, Jr., Chairman of the U.S. Delegation, Inter-American Defense Board.
7. A reference to the Inter-American Treaty of Reciprocal Assistance, commonly called the Rio Pact, signed at Rio de Janeiro on September 2, 1947, by the representatives of the United States and 18 Latin American countries. It was ratified by President Harry S. Truman on December 12, 1947, and entered into force on December 3, 1948. For text, see 62 Stat. 1681.
8. Not printed.
9. Not printed. (Department of State, Central Files, 735.00(W)/12–755)