Foreign Relations of the United States, 1961–1963, Volume XII, American Republics

196. Memorandum of Conversation¹

Washington, January 22, 1963, 10-11 a.m.

SUBJECT

• Call of Argentine Foreign Minister on President Kennedy

PARTICIPANTS

• The President
• Argentine Foreign Minister Carlos Manuel Muniz
• Argentine Ambassador Roberto T. Alemann
• Mr. Ralph Dungan
• Assistant Secretary Martin
• Ambassador McClintock

The Argentine Foreign Minister called by appointment on President Kennedy at 11 a.m., January 22, 1963, and had an interview lasting one hour.² He presented Mrs. Kennedy with a painting by a well-known Argentine modern artist and gave the President a very finely woven vicuna poncho, receiving in turn the President’s autographed portrait.

The President commenced the conversation by expressing appreciation for the prompt participation of Argentina in the Cuban quarantine. This had been particularly helpful because it prevented propaganda images being portrayed of the United States ganging up against a small Latin American nation which stood alone against a great power. The Argentine participation encouraged other Latin American countries to come in and thus gave convincing proof that the nations of the Western Hemisphere were united in preventing communist infiltration and aggression.

The Foreign Minister responded that Argentina had clearly seen the hemispheric danger and that his Government’s prompt action was supported fully by an overwhelming majority of the Argentine people.

The President then asked the Foreign Minister to give him a description of the present situation in Argentina and if possible an indication of what the situation might be in neighboring countries such as Brazil and Chile.

The Foreign Minister then launched into a very lengthy description of the political and economic situation in which Argentina finds itself. He emphasized that the present Government is trying to re-establish a republican constitutional regime. He likened the existing Cabinet to a sort of New Frontier of Argentina.

Elections have now been called for on June 23 for a new president, vice president, provincial governors and legislators. It is the earnest hope of the Argentine Government that there will be a peaceful return to constitutional government supported by the military.

However, Argentina is currently in a period of deep crisis. The working masses had been waiting eight years since the revolt of 1955 which overthrew Peron. Although the costs of living have gone up wages have not kept pace during the past year, and in many cases salaries have not been paid. It is nothing short of a miracle that the working class had remained calm in the face of increasing adversity. The masses still believed in democracy but there was a limit to their patience.

The Foreign Minister then said he had a personal message for President Kennedy from President Guido. It was as follows: The team of economic ministers who had been in office now for a month and a half and who worked earnestly to maintain a free enterprise economic system are presently in a state of desperation and alarm. They and President Guido are under increasing pressure for a change in the present free enterprise economy with its insistence on orthodox finance, to change to a directed economy with exchange controls and all the other indices of a controlled economy. Such a change in Manuel’ view would be disastrous. He hoped it would not affect the holding of elections. If some form of aid were not received promptly the present economic team would be forced to resign and the consequences would be grave. This was a transitory problem but an emergency one. Objectively the Argentines themselves had the principal responsibility for meeting the crisis. But they needed help to find a solution in order to give a feeling of alleviation to the masses. Already in Argentine public opinion the example of Brazil was being cited and the man in the street was beginning to wonder if a directed economy like that in Brazil would not lead to a better life for him and his family.

Here the Foreign Minister digressed to speak of the effect on neighboring countries of what happened in Argentina. He cited the depend-ence of Paraguayan economy on that of his own country and the instantaneous effect on Uruguay and Bolivia of what took place in Argentina.

Manuel went on to estimate that the current budgetary deficit of Argentina is in the neighborhood of 30 billion pesos or 238 million dollars. This deficit was exactly equivalent to last year’s loss of the state railways to say nothing of other losses by the YPF, the state petroleum monopoly. The Argentina Minister of Economic Affairs was now confronted by a demand by the IMF for the immediate reduction of 15 billion pesos in this year’s budget and an increase of taxes by the same amount. However, just how the Minister of Finance could chop the budget to the extent of 15 billion pesos and discover new sources of revenue totalling 15 billion pesos was a mystery.

Furthermore, said Manuel, Argentina had had four years of consecutive drought in Buenos Aires Province and to some extent in the province of La Pampa. There was thus an immediate need for aid in these drought-stricken areas. Again the Minister reiterated that Argentina needs aid, perhaps modest in amount and limited in terms of the time a credit would be extended, but above all, immediate in its impact.

At this point the Minister handed President Kennedy a letter signed by President Guido together with an English translation but did not divulge its contents. Subsequently Manuel made available a copy of the English translation which is appended herewith.³ The letter is couched in very general terms and is not to be confused with the oral message which Manuel conveyed to President Kennedy as coming from President Guido.

President Kennedy then asked what kind of assistance would the Foreign Minister have in mind. The President recalled the dangers of inflation and the need for controls to see that, if aid were forthcoming, it would go to the people who really needed it. What for example was the status for negotiations with the IMF?

The Foreign Minister replied that reforms of the state railways and the YPF had almost been achieved. The appointment of new and able administrators had been announced to the IMF team now in Buenos Aires. However, when it came to cutting the budget by 15 billion pesos and increasing taxes by an equal sum this was almost beyond the realm of possibility, given the current economic crisis in Argentina. Nevertheless, the Government had followed a stern policy. The salaries of public employees had not been raised despite the increase in the cost of living and Government salaries were still weeks, if not months, in arrears. The tax moratorium decreed by a recent government had been rescinded. However, none of these measures was sufficient to meet the immediate problem. Somehow the economy, the Government and the people had to survive until the elections took place.

The President asked what the Government proposed to do with the Peronist vote. Manuel replied that in the eight years since Peron had been overthrown changes had taken place in the Peronist movement. He knew of conversations which were going on between the Peronist leaders and the heads of other political parties. It seemed probable that the Peronists would give their vote to various parties. He had been told recently by a prominent Peronist leader (and this corroborated the information of the Minister of Interior) that the Peronists would refrain from putting up their own candidate for president, vice president and various other provincial governorships. (He did not add what Interior Minister Martinez has informed the American Ambassador, which is that the Peronists will, however, endeavor to return a sizable bloc of their supporters to both houses of Congress.) Despite their dislike of Peronism, said Manuel, the armed forces were agreed on the necessity to back civil authorities and return to constitutional government through elections.

The Minister then reverted to the oral message he had been instructed to convey from President Guido. He quoted the President as saying that the existing Cabinet has been given a deadline of 15 days either to improve the economic situation or else give over to a new team which would install a directed economy with exchange controls. Manuel admitted that this was an ultimatum from the military chiefs. (Later Manuel confided to Ambassador McClintock that the ultimatum had come from Secretary of War Rattenbach and Army Commander-in-Chief Ongania. Furthermore the time limit was not 15 days as stated by the Minister but until the end of the present month.) Manuel continued to say he hoped the present system of free enterprise could be continued but many people would not understand economic and financial problems and the wave of disillusionment was spreading.

President Kennedy pointed out that the United States, despite its great resources, would not have sufficient aid funds to bail out every country in Latin America or for that matter, the world. Even if we could find funds to help Argentina they might be devoured by inflation or leak away in payments to European or other creditors. Certainly the United States would not be able to find means to help Argentina unless it could make arrangements with its European creditors, with the United States banks, and also take steps to guard against inflation.

The Foreign Minister said that his Government would not need much but it needed help now. An IMF renewal of the standby agreement would permit a roll-over of the European debt and there was the further possibility of renewing the 75 million dollar composite bank credit which recently had been repaid to 55 European banks in eight different countries plus a number of other banks in the United States. Furthermore, he hoped that Argentina could arrive at an Investment Guaranty Agreement with the United States against expropriation and war risk. However, these measures, while useful, would not serve to meet the immediate crisis (the 15 day ultimatum) which had come up so quickly that it had transpired even after the departure of the American Ambassador from Buenos Aires for Washington.

Assistant Secretary Martin asked Manuel just what is needed in the next fifteen days.

The Foreign Minister replied that first renewal of the IMF standby was essential. Second, aid was needed for the drought areas on an emergency basis. Third, and basic, was the need to help the public Treasury which was empty. Asked as to what amount he thought was needed, Manuel said he was not a financier or economist but he guessed the amount requested was not more than between 50 and 70 million dollars. However, he could not specify as to what uses this sum would be put other than that it would go into the public Treasury.

The President said that a reply would be forthcoming to the letter from President Guido and as to other matters that had been discussed, he would have to talk to his advisers and also find out the attitude of the IMF. The Secretary of State would be in touch later with the Minister.⁴

As the interview was closing the Foreign Minister said he would like to inform the President of the readiness of Argentina to provide assistance under the Alliance for Progress and within the framework of the OAS in the field of Latin American education. Argentina might have deficits in the budget but at least it had a surplus of teachers. There were ten thousand extra teachers that might be available elsewhere in Latin America. Likewise Argentina had good normal schools and could offer ten thousand places to Latin American students seeking education as teachers. Argentina was also an important source of text books in Spanish. The Minister handed the President a portfolio apparently containing a summary of Argentine export educational resources.

As a final gesture the Foreign Minister handed the President the text of a decree signed by President Guido conveying to the United States a plot of ground in Buenos Aires near our Embassy residence for use in the eventual construction of an Embassy Chancery. The President expressed his thanks as well as his general pleasure in having had such a lengthy and candid interview with the Foreign Minister.

1. Source: Kennedy Library, National Security Files, Countries Series, Argentina, General, 1/63. Secret. Drafted by McClintock and approved in the White House on January 26. The meeting was held at the White House. The time and place of the meeting are taken from the President’s Appointment Book. (Ibid.)
2. Manuel met with Department of State and AID officials on January 21, at 3:40 p.m., with Assistant Secretary Martin on January 23, at 11:30 a.m., and with Secretary Rusk on January 23, at 2:30 p.m. At the three meetings the Argentine economy was the main topic of conversation. (Department of State, Central Files, 611.35/1-2163, 611.35/1-2363, and 611.35/1-2363, respectively)
3. Attached, but not printed.
4. On March 28 the Department of State announced that the United States was extending an additional 4 months to its outstanding exchange agreement with Argentina, thus providing Argentina with an additional $25 million through October 6, 1963. The IMF was making available to Argentina $50 million through October 1963. Subject to completion of Argentine bilateral accords with European governments for refunding agreements, the Export-Import Bank would refinance $92 million of Argentine debt owed to it and other U.S. creditors. (Department of State Press Release 154, March 28; Department of State Bulletin, April 22, 1963, pp. 617-618)