Foreign Relations of the United States, 1969–1976, Volume E–11, Part 2, Documents on South America, 1973–1976

12. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon¹

Washington, January 29, 1974.

SUBJECT

• Argentina and Our Cuban Denial Policy

Last year the Argentine Government reestablished diplomatic relations with Cuba and extended to Cuba a $200 million credit for the purchase of Argentine industrial products. US subsidiaries operating in Argentina are now caught in a squeeze between the Argentine Government’s insistence that they sell Argentine-made products to Cuba and our Cuban denial regulations. A Cuban purchasing mission visited Argentina and requested price and availability data from at least six US firms. Cuba has subsequently made Chrysler a firm purchase order for 3,000 automobiles per year for three years. If the US firms refuse to sell to Cuba, they may be declared in contravention of Argentine laws and face serious acts of retaliation by the Argentine government that could put them out of business. If, however, the companies agree to sell to Cuba, they will violate our Cuban control regulations.

The Cuban-Argentine agreement provides that goods purchased will be transported by both Cuban and Argentine vessels on a cargo-sharing arrangement. Under provisions of the US Foreign Assistance Act, the participation of Argentine vessels in the trade with Cuba would make Argentina ineligible to receive grant military training (about $500,000 yearly) as well as future housing guaranty loans. You have the authority to waive this ineligibility but no such waiver has been exercised in the past. In addition, Argentine ships trading with Cuba could not bunker in the US or carry US Government cargoes.

To trade with Cuba, US companies must obtain a license from the Treasury Department. Very few licenses have been given in the past—none in Argentina. Chrysler, in order to accept the Cuban order, has applied to Treasury. We therefore need to decide very soon how to treat this issue in Argentina.

Our options are:

1. Make no exceptions to our Cuban denial policy—possibly subjecting US companies to strong Argentine retaliatory measures and straining US-Argentine relations.

2. Make full exceptions for Argentina by granting a Presidential Waiver on military and economic assistance and by licensing Argentine ships and US companies in Argentina engaged in the Argentine-Cuban trade. This would undermine the effectiveness of our Cuban denial policy and possibly encourage other members of the Organization of American States to increase efforts to end the multilateral restrictions toward Cuba.

3. Grant no waivers on military and economic assistance but issue licenses to US firms in Argentina on a case-by-case basis if they can demonstrate they face serious Argentine retaliation or possible closure from failure to sell to Cuba.

4. Modify or ease our entire Cuban denial policy in its multilateral-OAS aspects and thereby automatically remove the problem with Argentina.

I believe the third option best serves our overall interests. It would hold firm on the broad range of Cuban denial measures with modification only in the granting of a few licenses to US companies which can clearly demonstrate that failure to follow Argentine requirements to sell to Cuba would expose them to serious retaliatory action. We would continue to reaffirm our Cuba policy and to maintain pressure on US companies and other governments to hold the present line with us. Treasury and Commerce, who have responsibility for administering the Cuban denial measures, agree that Option 3 is the wisest course.

Recommendation

That you approve Option 3 (grant no waivers of the provisions of our Cuban denial policy on military and economic assistance for Argentina but approve issuing licenses to US firms in Argentina on a case-by-case basis if they can demonstrate they face serious Argentine retaliation if they refuse to sell to Cuba).

1. Summary: Kissinger informed the President that U.S. companies operating in Argentina were facing increasing pressure from the Argentine Government to sell goods to Cuba, despite U.S. sanctions policy. Kissinger recommended that sales to Cuba by U.S. firms in Argentina be authorized on a case-by-case basis.

   Source: National Archives, Nixon Presidential Materials, NSC Files, Box 1338, Unfiled Material, 1974. Confidential. Sent for action. Shultz and Flanigan concurred. Nixon approved the recommendation. A typed notation next to the “Disapprove” option reads: “PREFER.” On a March 14 memorandum from Kissinger and Shultz to Nixon, the President disapproved a recommendation that a license be granted to allow a Canadian subsidiary of a U.S. company to export locomotives to Cuba. ( Foreign Relations, 1969–1976, vol. E–11, Part 1, Documents on Mexico, Cuba, and the Caribbean, 1973–1976, Document 279)