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

226. Memorandum of a Conversation, Department of State, Washington, September 13, 1956¹

Washington, September 13, 1956

SUBJECT

• United States-Argentine Loan Negotiations

PARTICIPANTS

• The Secretary
• Señor Dr. Don Adolfo A. Vicchi, Ambassador of Argentina
• Maurice M. Bernbaum, Director for South American Affairs

Ambassador Vicchi stated that he wished to consult with the Secretary regarding some of the problems which had arisen in connection with the loan negotiations of the Argentine Financial Mission with the Export-Import Bank. He wanted first to express to the Secretary his appreciation and that of the Financial Mission for the invaluable assistance and understanding displayed by the Department of State in the discussions. He also wanted to reaffirm the desire of his Government for the closest possible relations with the U.S. and the belief that this attitude was reciprocated here.

Ambassador Vicchi stated that his Government had instructed him to express to the Secretary its disappointment over what was considered to be the limited results achieved by the Argentine Financial Mission. The $100 million loan decided upon by the Export-Import Bank fell far short of the minimum requirements set forth in the negotiations which were looked upon by the Argentine Government as essential to meet the first and urgent stage of its program of economic recovery. He stated that the expectations of his Government had been much higher owing to: (1) The belief that the financial credit and ability of the Argentine Government to repay a much higher volume of loans had been demonstrated during the negotiations; (2) repeated indications of the desire of the U.S. Government to enter into close political and economic relations with the Argentine Government; and (3) a comparison with the financial assistance rendered other countries (he was thinking of Brazil).

The Ambassador then stated that despite the disappointment in the outcome of the negotiations, the next step was to make the best of the existing situation. He felt in this regard that the division of the $100 million into $85 million for transportation and $15 million for private enterprise represented an undue restriction on the amount to be allocated to the most urgent field of transportation. He, therefore, requested the Secretary’s assistance in having the whole amount authorized for transportation. The Ambassador added that it would be even better if it were found possible to raise the allocation for transportation to $112 million, which represented the latest estimate of his Government regarding absolute minimum requirements in transportation to permit the marketing of the increased crops projected for the economic recovery program. His Government would, in such case, welcome an additional amount for urgent projects in the private field but would be content to postpone such projects if it were decided that additional funds could not be made available at this time. Ambassador Vicchi asked also for the Secretary’s assistance in having included in the public announcement of the loan a statement to the effect that the Argentine and U.S. Governments were to continue discussing projects involving Argentina’s economic recovery program.

The Secretary stated that although familiar with the overall aspects of the problem, he was not acquainted with some of the details raised by the Ambassador. He was aware that the final decision involved an overall loan of $100 million, of which up to $85 million would be allocated to urgent projects in the public field and $15 million for private enterprise in industry and agriculture. His initial impression, upon learning of the $100 million loan, was that it far exceeded his earlier expectations when it appeared that the pattern of Argentine trade would limit its ability to repay dollar loans. He turned to Mr. Bernbaum at this point, recalling a meeting held in his office when the matter was discussed and ways and means were being sought to get out of the dilemma thereby presented.² Under the circumstances, and taking into consideration the normal procedures of the Export-Import Bank, he could not help feeling that the $100 million line of credit represented a distinct achievement for the Argentine Financial Mission.

With regard to the specific requests made by Ambassador Vicchi, the Secretary expressed the opinion that it would not be feasible to increase the amount of the line of credit. He thought that this amount was the result of lengthy discussions between representatives of the various U.S. agencies concerned and that there was no reason to believe that a change could be effected. Although not aware of the factors leading to the division of the $85 million for transportation and $15 million for private enterprise, he expressed his readiness to consult on the matter with a view to seeing what could be done. He turned at this point to Mr. Bernbaum to inquire whether he knew of the reason for the division. Mr. Bernbaum stated that the division was due to the belief that some part of a loan of this magnitude should be devoted to private enterprise and not concentrated wholly in the public sector. The Secretary also expressed his readiness to look into the possibility of having included in the public announcement a statement to the effect that the two Governments would continue their joint discussions regarding the Argentine economic program.

Ambassador Vicchi expressed his appreciation in departing for the Secretary’s interest in the matter.³

1. Source: Department of State, Central Files, 835.10/9–1356. Limited Official Use. Drafted by Bernbaum.
2. Apparently a reference to the meeting of July 16; see Document 216.
3. In a letter to Ambassador Beaulac, September 14, Vaky summarized recent developments regarding the question of financial assistance to Argentina. He informed Beaulac of Dulles’ conversation with Vicchi on September 14. He also summarized a conversation, along the same lines, which Vicchi had with Under Secretary of the Treasury Burgess on September 14 as well as several “long chats” between Vicchi and Brand. “By and large,” Vaky concluded, “the outcome is fairly good. It was certainly much more than we had thought we could get when this whole affair first started. (Dulles told Vicchi as much.) Also the facts of the case are that the Bank may well allocate the full $100 million to transportation. Likewise, the Bank is quite prepared to consider additional financing. In a very real sense, therefore, this credit represents only the initiation of a period of cooperation of a nature that has never taken place with Argentina.” (Department of State, ARA Files: Lot 59 D 509, Argentine Financial Mission)