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 You are in: Under Secretary for Public Diplomacy and Public Affairs > Bureau of Public Affairs > Bureau of Public Affairs: Office of the Historian > Foreign Relations of the United States > Johnson Administration > Volume XXXI
Foreign Relations, 1964-1968, Volume XXXI, South and Central America; Mexico
Released by the Office of the Historian
Documents 121-146

Argentina

121. Telegram From the Department of State to the Embassy in Argentina/1/

Washington, June 20, 1964, 3:53 p.m.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, PET 15 ARG. Confidential; Immediate. Drafted by Mann; cleared by Harriman, Ensor, and Meeker; and approved by Rusk.

1259. Following are Department’s current views on oil problem./2/ Would appreciate your comments:

/2/ On November 15, 1963, the Illia administration issued a decree annulling the contracts of foreign oil companies operating in Argentina. For documentation on the decree, and the response of the U.S. Government, see Foreign Relations, 1961-1963, vol. XII, Documents 199-202.

1. About eight months have gone by since the contracts were annulled. While we have received during this time vague generalized assurances from Illia about fair solutions Argentine Government has in fact made no concrete proposals about how companies’ contractual rights are to be restored or respected or, in the alternative, for prompt adequate and effective compensation. The alleged decision to intervene some or all of the properties on an interim or permanent basis prior to some kind of mutually satisfactory arrangement may not be decisive but it further complicates situation.

2. We have asked that Legal Adviser’s latest opinion re Hickenlooper Amendment/3/ be sent to you by separate telegram (Deptel 1257)./4/ Question remains in both legal and political terms of how much longer we will be justified in saying that the GOA has not failed for a reasonable period of time to take appropriate steps to discharge its obligations under international law, and that the GOA is in fact operating in good faith in the oil problem.

/3/ The amendment stipulated that the President suspend assistance to any country that expropriated the property of U.S. citizens or corporations without proper compensation. (76 Stat. 260)

/4/ Dated June 19. (National Archives and Records Administration, RG 59, Central Files 1964-66, PET 15 ARG)

We would assume that the answer to this question will depend on what happens hereafter and particularly on our estimate of Illia’s will and ability to overrule extremists in his government.

The fact that legal rights to claim eventual compensation have not been impaired will have little effect in preventing application of Hickenlooper Amendment if steps taken by GOA from here on out are not "appropriate".

3. Mann’s conversation with MOD Suarez here week before last/5/ gave us no ground for optimism although he was described as one of the "moderates". Suarez said in effect that annulment of the contracts was final, that "renegotiation" was a word which could not be used, and that a process of "open bidding" would be necessary.

/5/ Mann met Suárez on June 4 at a dinner hosted by Secretary of Defense McNamara. (Telegram 1208 to Buenos Aires, June 5; ibid.) The principal points made by the Argentine Minister of Defense are summarized in telegram 1267 to Buenos Aires, June 23. (Ibid.)

4. Suarez talked about returning the investments with interest as if this would be a satisfactory formula. Mann tried to disabuse him but is not sure he succeeded. The essence of our position must be, it seems to us, that if the contracts are to remain annulled then either a new arrangement must be made or the companies should be compensated for the fair value of the contractual rights which they had. Those companies which risked their capital and found little or no oil and gas might be pleased to pick up a windfall by having their money returned but we fail to see why they are entitled to it. On the other hand, those which found substantial quantities of oil are entitled to more than the mere return of investment. Without trying to decide what is fair value in a particular case, it seems to us that it is essential that we have this general principle clearly in mind because on it rests very large oil investments in Venezuela, the Near East and elsewhere.

5. This raises the question of whether there is not a danger that Argentina will settle with one or more of the unsuccessful investors on the basis of return of investment and then become politically frozen on this formula which we assume we could not accept here. Would appreciate your comments on this point.

6. This is one of the reasons we thought it would be prudent for the U.S. Government to have a general review of the situation with the Argentine Government. You could best decide with which officials the matter should be raised. But if there are no talks USG runs the risk of becoming prisoner of developments which could seriously affect our relations with Argentina and in which we did not play a role. We worry, in a word, about leaving relations entirely to discussions between private oil companies and the Argentine Government. This does not mean that we would assume authority to speak for the companies about details of particular settlements. It does mean we should be free to influence the companies to accept what we consider to be a fair settlement if one can be arrived at.

7. On the question of the application of the Hickenlooper Amendment, if worst comes to worst we are giving thought here to quietly cutting back on aid, including military aid, without a formal invocation of the Amendment. We could leave a token program or programs going as proof that we have not applied sanctions and if pushed by press justify in an off-the-record way the cut-back on the ground of failure of Argentina to take self-help measures or some other line. There would seem to be ample ground for this in current Argentine budgetary deficit, inflationary pressures, etc. Would appreciate your opinion on this assuming we can obtain support for this procedure in Congress as we think we have chance of doing. The companies Mann has talked to here seem to be fully aware of the disadvantages to them of formally applying the Amendment and the importance of keeping doors open and playing for time.

8. We are of course conscious of the political pressures on Illia and of the risk of a golpe regardless of what is done about the oil problem. Our concern is heightened by the apparent failure of the GOA to realize there is any connection between a settlement of oil problems and its avowed need for further private investment and outside financial and economic assistance. Interview with Illia appearing N.Y. Times today would seem further emphasize Illia’s lack of reality./6/ We also have in mind the possible effect on the Chilean elections of applying the Amendment to Argentina.

/6/ Reference is apparently to Illia’s comment that "the door is open to foreign investments," even though Argentina was preparing to "move into American oil field operations." (New York Times, June 20, 1964, p. 29)

Since time would appear to be of the essence you should therefore promptly convey to the Argentine Government in the way you deem most appropriate that while the USG has hoped that the Argentine Government and the companies would be able to arrive at a satisfactory agreement oil problem is not one simply between companies and Argentine Government. It involves very basic inter-governmental relations between Argentina and US. Therefore, before any final decision and action by Argentine Government on oil question USG would wish to review whole question with Argentine Government with view to working out solution under which either new agreements are negotiated or just compensation provided. In this connection, you should make very clear that any formula for returning to companies merely their investment costs plus interest could not constitute proper compensation./7/

/7/ In its reply the Embassy commented that the "adverse impact of oil actions on foreign public and private investment is not now [an] important factor in Argentine thinking." "What it comes to is US public funds." (Telegram 2064 from Buenos Aires, June 22; National Archives and Records Administration, RG 59, Central Files 1964-66, PET 15 ARG) The Department subsequently decided to withhold such public funds by refusing to sign an amendment to the Silo loan, an AID agreement to assist grain storage in Argentina. Mann initially explained that this action was taken "pending further study of questions of self-help and effect of annulment of oil contracts, particularly the former." (Telegram 1288 to Buenos Aires, June 26; ibid.) Three weeks later, however, Mann gave Rusk a different explanation: "we are delaying signature because of the oil question." (Memorandum from Mann to Rusk, July 20; ibid., POL 15-1 ARG)

Rusk

 

122. Action Memorandum From the Assistant Secretary of State for Inter-American Affairs (Mann) to Acting Secretary of State Harriman/1/

Washington, November 25, 1964.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, PET 15-2 ARG. Confidential. Drafted by Hoyt on November 23 and concurred in by Ensor and Lowenfeld.

SUBJECT
Oil Contract Problem in Argentina

I bring the oil situation in Argentina to your attention at this time because we cannot foresee a satisfactory settlement in the near future and because of the following two factors: 1) The failure to reach an agreement on the oil contract problem would probably bring the Hickenlooper Amendment into the picture again when our Congress reconvenes. As you know, we have dealt with this matter so far by slowing down or stopping our aid without the formal invocation of the Hickenlooper Amendment;/2/ we continue to believe that this is the most effective way to handle this problem. 2) Argentina may soon seek large-scale financial assistance from us, as well as from the Europeans and from the international financial institutions for an Economic Development Plan which the GOA hopes to present after the first of the year. Argentina has tried to separate the oil situation and its probable request for international financial assistance. Obviously, this cannot be done. The oil contract problem bears not only on our ability to be of any assistance (Hickenlooper Amendment) but also on Argentina’s balance of payments and budget situation and on its ability to inspire confidence in both foreign and domestic investors.

/2/ In late July, Mann drafted an action memorandum for AID Administrator Bell, justifying the "slow down" policy and outlining a plan for its execution. (Ibid., ARA/APU/A Files: Lot 69 D 87, PET 15-2, Airgrams, etc., 1964) In a July 31 letter Mann asked Martin for comment. (Ibid., ARA/LA Files: Lot 66 D 65, Argentina 1964) In response on August 15, Martin agreed questioning only certain "points of emphasis and marginal issues of pace." (Ibid., Central Files 1964-66, AID(US) ARG) After a meeting with Senator Hickenlooper on August 12, Mann expedited implementation of the policy. Congress clearly felt, he reported, that the "time has come for United States to stand up for validity of contracts and of treaties of all kinds." (Telegram 194 from Buenos Aires, August 19; ibid., AID(US) 8 ARG) In an October 5 letter to Martin, Hoyt explained that the memorandum to Bell was no longer necessary: "Tom’s telegram 194 of August 19 gave you the answer that we were going to continue with the slowdown program." (Ibid., ARA/APU/A Files: Lot 66 D 243, Correspondence-Hoyt Letters)

Although there has been little progress during the last three months toward a settlement of the oil contract problem in Argentina, it is possible that developments during the next months may again bring this question into prominence. During the past few days, there have been reports that a settlement is about to be reached with one of the Argentine companies whose contract was annulled (ASTRA) and that the GOA would then attempt to use the formula adopted in this case as a basis for settlement with some of the foreign companies. We will not know the opinion of the companies until they have actually been presented with a concrete proposal. Much would probably depend upon the amounts offered and whether the interest rate covers potential or real profits.

While an attempt may be made to reach a settlement at this time with some of the companies, we are inclined to doubt that any satisfactory solution will be reached prior to the Argentine congressional elections in March of next year and maybe not even then. We believe the GOA continues to consider this question largely on the basis of its political rather than its economic aspects and is not convinced as yet that a settlement with the foreign companies will gain any votes in the March elections. There seems to be some growing realization within the GOA that the oil question will have a direct bearing on an Argentine request for external financial assistance which the GOA is likely to request early next year. But, there is not sufficient evidence to indicate that these realists have effectively gained the upper hand within the Argentine Government over the more nationalistic group which is opposed to a settlement of the oil question.

Several of the oil companies seem to be prepared to wait for a settlement until after the March elections, feeling that time is on their side. They believe the Argentine Government needs the foreign companies in order to produce sufficient oil to maintain self-sufficiency and that pressures will grow on the GOA to reach a settlement and thus avoid the loss of foreign exchange through the importation of oil. However, the case of each company differs as does the extent of their optimism and some will find it very difficult to convince their stockholders that they should continue discussions after the end of this year.

The U.S. oil companies have become concerned over some recent indications that the Argentine Government may be counting on a more favorable attitude within the U.S. Government toward the oil contract annulments now that our own elections are over. We have informed the companies as well as some Argentines that any such fallacious reasoning is entirely unwarranted and that we continue to be just as much concerned over a settlement of this problem as we were before. Nevertheless, we can expect there will be some continued Argentine thinking along this line and perhaps some attempts to try and convince us that now we should not be concerned with the fate of the oil companies.

Recommendation

That we continue our present "slow-down" policy with respect to aid for Argentina and try through this device to avoid the formal application of the Hickenlooper Amendment while at the same time achieving its objectives.

Also, that we avoid further comment to the Argentines on the oil question. We have made clear many times our concern and the fact that failure to settle this problem affects our ability to cooperate as fully as we would like with Argentina. In my opinion, a more effective policy is to now let the Argentines learn through experience that our cooperation will be limited if the oil problem is not settled./3/

/3/ Harriman approved this recommendation.

 

123. Memorandum of Conversation/1/

SecDel/MC/44 New York, December 19, 1964, 5 p.m.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, AID(US) ARG. Confidential. Drafted by Irwin on December 21 and approved in S on December 24. The meeting was held at the Waldorf Towers. The memorandum is part II of III.

SECRETARY’S DELEGATION TO THE NINETEENTH SESSION
OF THE UNITED NATIONS GENERAL ASSEMBLY

New York, December 1964

SUBJECT
Effect of Hickenlooper Amendment on Argentine Silo Loan Application

PARTICIPANTS
U.S.

The Secretary
Mr. Irwin (Reporter)
Mr. Von Reigersburg (Interpreter)

Foreign
Foreign Minister Zavala Ortiz
Ambassador Ruda

Foreign Minister Zavala launched into a long and detailed presentation of the effect of the Hickenlooper Amendment on recent Argentine applications for a $25 million loan for wheat storage silos. He said that the Argentine Minister of Economy had met Assistant Secretary Mann at the recent ECOSOC meetings in Lima./2/ The Minister stated that Mr. Mann had told the Minister of Economy that the Hickenlooper Amendment would prevent favorable action by the U.S. on the silo loan applications, and that subsequent meetings with Assistant Secretary of Agriculture Murphy confirmed Mr. Mann’s statement.

/2/ Mann met Minister of Economy Pugliese in Lima on December 8; a report on the conversation was transmitted in telegram 685 from Lima, December 8. (Ibid., AID(US)9 ARG)

Mr. Zavala said that the GOA was taken completely by surprise by this information because Ambassador Martin had been urging the GOA to complete the loan applications as quickly as possible. He said that the GOA did not understand why military aid was not similarly affected. He also referred to conversations with the Secretary and Mr. Mann at the 9th Meeting of the OAS Consultative Group [where] the silo loan had been discussed but no mention was made then of the possible applicability of the Hickenlooper Amendment. He said that the GOA understood that since the problem between the GOA and the oil companies was under study in the courts and since some companies had made out of court settlements the oil issue would not affect the silo loan. He expressed the hope that the oil cases would be settled soon.

Mr. Zavala said that had the U.S. oil companies been Argentine in nationality, they, too, would have been concerned with the wasteful exploration methods used. He said his country had lost a great fortune in gas revenues because of the companies’ actions.

The Foreign Minister said he deeply regretted this situation, and emphasized what he called the unfair, heavy press campaign against Argentina in both Europe and the U.S. and cited The Washington Post. He deplored the possibility that the companies might be able to exert undue influence on the U.S. Government saying that the U.S. should not permit its excellent relations with Argentina to be jeopardized by the opinions of private companies. He pointed out that the lack of silos would force the price of Argentine wheat to drop because the perishable product could not be held back from the market.

The Secretary thanked Foreign Minister Zavala for his observations. He said that he regretted that he was not fully informed on the details of the problem of the silos, because recently he had been so heavily preoccupied with United Nations and NATO matters. The Secretary said that it is not the desire nor the intent of the U.S. to apply any U.S. law in an arbitrary or discriminatory manner. The Secretary agreed that private firms should not have undue influence on the foreign relations of nations. He assured the Foreign Minister that Argentina had a large reservoir of friendship in the U.S., and said there is no campaign here against the Argentine Government.

The Secretary said he wished personally to study the silo issue, and offered to send an appropriate official to New York to discuss it with the Foreign Minister.

Foreign Minister Zavala regretted that he was returning to Buenos Aires December 20 directly from New York.

The Secretary replied that he wished to be able to speak constructively on the matter, and said that he would send the Foreign Minister a personal letter explaining the situation after he had made a careful review./3/ He inquired whether the Foreign Minister had had an opportunity to talk with Mr. Mann concerning the matter during the OAS meetings.

/3/ Rather than send a personal letter, the Secretary asked Martin to deliver an oral message to Zavala, indicating that the matter had been "pursued and studied" as promised. Rusk also accepted Martin’s suggestion that "basic discussions of overall economic policies be left for Minister Economics and possibly President," i.e., not the Foreign Minister. (Telegram 659 to Buenos Aires, January 8; ibid., PET 15 ARG)

Foreign Minister Zavala replied that he had been so busy with OAS matters that he had not, although he said he had referred to the subject briefly with Mr. Hoyt at the airport in Washington December 19./4/ He expressed his personal pleasure that the Secretary had not participated in the decision and said that he had told President Illia that he has great faith in the Secretary as a friend of Latin America and Argentina. The Foreign Minister said he had just concluded visits to the Central American nations where he had declared Argentina’s faith in the U.S., and told their officials that Argentina supported the U.S. in a common cause. He said he plans to make a similar visit to Africa later this year in this common interest. He said that the silo incident is embarrassing both at home and abroad, especially when the press points out that the U.S. is making large loans to Brazil and Chile. The Minister said that, as everyone knows, Argentina inherited a heavy budgetary deficit, but that this year it has been able to meet salaries, has made payments on some debts, has met its international organization dues, has not made new loans and has not sought to refinance old ones.

/4/ A memorandum of the conversation between Zavala and Hoyt is ibid., POL ARG-US.

Foreign Minister Zavala then referred briefly to trade relations and suggested that it might be time to study bilateral trade relations between the two countries. He suggested a joint committee be established without publicity.

The Secretary expressed the hope that forthcoming GATT negotiations will help ease matters. He said that we believe our efforts to lower trade barriers across the board on a most favored nation basis would be particularly advantageous to Latin America, especially to Argentina. The Secretary said he would also comment on this trade issue in his letter to the Foreign Minister. He suggested that Argentina take another look at trade opportunities in the U.S. because it might uncover some hitherto overlooked markets.

Foreign Minister Zavala concluded with the plea that the silo issue is more than a matter of dollars or law, but rather a "spiritual" issue between two friends, a matter of trust. The relations of the two countries could be seriously damaged, he said, by attitudes or actions reflecting distrust. The moral effect would be more damaging than the economic effect of not getting the silos.

 

124. National Intelligence Estimate/1/

NIE 91-65 Washington, June 9, 1965.

/1/ Source: Central Intelligence Agency, Job 79-R01012A, O/DDI Registry. Secret; Controlled Dissem. According to a note on the cover sheet this estimate was prepared in the Central Intelligence Agency with the participation of the intelligence organizations of the Departments of State and Defense and the National Security Agency. The United States Intelligence Board concurred in this estimate on June 9.

PROSPECTS FOR ARGENTINA

The Problem

To assess the situation in Argentina, and to estimate the prospects for the Illia administration through the congressional elections scheduled for the spring of 1967.

Conclusions

A. During its nearly two years in office, the Illia administration has achieved for Argentina the longest period of political stability in its recent history, but has failed to develop a strong base of popular and congressional support. During the same period the Argentine economy has experienced a recovery, but only to the level it had achieved in 1961. The Illia administration has failed to cope effectively with inflationary pressures or to make headway with the measures required to promote balanced economic growth. (Paras. 7-30)

B. The March 1965 congressional elections marked the return of the Peronists as a major legitimate political force. The trend toward a political polarization around the Illia administration and the Peronist opposition will probably develop further in the congressional and gubernatorial elections in 1967. (Paras. 12, 34)

C. To avert a Peronist landslide in the 1967 elections, President Illia will have to act more vigorously to create an attractive political alternative to Peronism. We believe it unlikely that he can do so. Alternatively, he will have to devise some way to restrict Peronist participation in the election. This would, of course, frustrate the endeavor to reintegrate the Peronists into the normal political system. The reaction of the die-hard Peronists would be violent, but could almost certainly be contained. (Paras. 34, 37)

D. The Argentine military remain the only element capable of overthrowing the government. The officers now in control of the military establishment would prefer to preserve the constitutional regime. However, the military leadership in general has been antagonized by the frustration of its desire for Argentina to play a leading role in the OAS peacekeeping force in the Dominican Republic. Some officers who have long regarded the Illia administration as weak and ineffectual are now less disposed than ever to make due allowance for its political handicaps. Whether the Argentine military will overthrow the Illia administration within the period of this estimate remains highly uncertain, depending almost entirely on their own estimate of the developing situation in Argentina. (Paras. 33, 38-40)

E. If the military should conclude that the Peronists under extremist leadership were likely to prevail in the 1967 elections, they would first urge upon the government the necessity of restricting Peronist participation in the elections. If not satisfied in that respect, they would almost certainly intervene to impose their will, or to prevent or annul the elections. (Para. 41)

F. Most Peronist leaders recognize that the movement is on probation in its resurgence into the national political arena. If, during the next year or so, the Peronist leadership, or some elements of it, should establish a reputation for reasonableness and moderation, some of the military might come to discriminate between "good" Peronists and "bad" Peronists and to tolerate the former. Thus a Peronist electoral victory under moderate leadership might precipitate a division among the military, with some calling for immediate counteraction and others seeking to preserve the constitutional regime at least until the presidential election in 1969. In such a case, a period of recurrent military crises, like that which occurred in 1962-1963, might ensue. (Paras. 32, 42)

G. The Argentine Communist Party is the largest in the Western Hemisphere (60,000-65,000 members), but is not an influential political force. The Communists and Castroists have no significant subversive potential in Argentina except insofar as they may be able to act in conjunction with a mass reaction of frustrated and embittered Peronists. (Paras. 18, 35)]

[Omitted here is the Discussion section of the estimate.]

 

125. Memorandum From the President’s Special Assistant for National Security Affairs (Bundy) to President Johnson/1/

Washington, October 19, 1965, 7 p.m.

/1/ Source: Johnson Library, National Security File, Memos to the President, McGeorge Bundy, Vol. 16. Confidential.

SUBJECT
Aircraft for Argentina

Last May, DOD, with Secretary McNamara’s approval, reached an understanding with the Argentine Ministry of Defense for the sale of 50 of our Navy A-4B aircraft to help them modernize their Air Force. Our offer to help the Argentines came after we learned that they were considering bids for very expensive French planes. We did not want French influence in the Argentine Air Force. Since the Argentines were determined to acquire fighters, we wanted to see them do it at a price more nearly commensurate with their ability to pay. (The French "Mirage" fighter costs 2 to 3 times more than the A-4B.) Another consideration was the desire to maintain standardization of Latin American military equipment with ours.

The Argentines have reached agreement with the Douglas Aircraft Corporation on cost of modification and overhaul of the aircraft and now are ready to conclude the necessary credit agreements with us.

In our 1966 Military Assistance Program for Latin America, there is an item for $2.5 million in grant assistance to Argentina for spare parts and support equipment for use in connection with the A-4B’s. Use of MAP grant funds for training and support assistance has been standard practice in the Latin American area and is designed to help the recipient government maintain and obtain maximum use of its equipment.

In view of your desire to review commitments of this nature, I wanted to obtain your authorization before Defense proceeds to formalize the transaction. I recommend that you authorize me to tell Defense that they may go ahead.

McG. B.

Proceed with the transaction/2/

/2/ The President checked this option.

Hold up for further review

 

126. Telegram From Secretary of State Rusk to the Department of State/1/

Rio de Janeiro, November 17, 1965, 0320Z.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL ARG-US. Confidential; Exdis. Rusk was in Buenos Aires, November 15-16, for meetings with the Illia administration; he then proceeded to Rio de Janeiro for the Second Special Inter-American Conference.

Secto 11. For Ball from Secretary. I am convinced after my talks with Illia, Foreign Minister, and economic team that it is time for us to begin to move forward with Argentina.

They have proceeded with oil negotiations in good faith./2/ So far as I can see the Hickenlooper amendment is not now being violated in letter or in spirit. The oil companies including PanAm are making profits and repatriating them.

/2/ In a November 18 memorandum to Mann, Sayre reported that Argentina has recently settled with five American oil companies, leaving two with outstanding contracts. (Ibid., ARA/APU/A Files: Lot 69 D 87, PET 4-Agreements)

In terms of self-help the Argentines have taken significant steps to increase tax collections which have risen 74 percent over last year, they have produced a serious development plan; they have the respect of the IBRD and IAB and are actively negotiating project loans with them; they are entering a period of crucial confrontation with Peronist unions in an effort to hold wage increases to 15 percent in the next round.

They believe-and I agree-1966 may be the crucial year to demonstrate that stabilization and growth are compatible.

And I am not unmindful of the 1967 Argentine elections and the various matters in which I shall wish to have the collaboration of the Foreign Minister in the months ahead.

In all our conversations there was no whining. But they feel they have now created the basis for a new relation with us. What they want to know is what we are prepared-and what we are not prepared-to do in Argentina over the next year.

Specifically, as I understand it, there are the following issues:

1. The Ex-Im loan for the four Boeings. The domestic airlines operate at a deficit. There is a decent hope that their international flights can be made profitable if they get the Boeings. We understand that the British made yesterday an offer of UC-10’s for immediate delivery. They would be less economical than the Boeings. For quite narrow reasons of U.S. interest I am inclined to believe this loan should be urgently completed. Would you inform Linder./3/

/3/ Harold F. Linder, president and chairman of the Export-Import Bank.

2. The three loans for which funds have been committed and which simply await our action. I believe we should move in one or more of these promptly.

3. The housing loan which was held up awaiting legislation and then withdrawn. The legislation has now gone through. We should carefully consider if we cannot move in this field of considerable political and social importance.

4. Assistance in debt roll-over. I am told they will require debt and other adjustments of something like $100 million in 1966. Against the background of a favorable IMF report and U.S. support they seek a further European roll-over early in 1966. We should begin staff work now to see what can be done, if their performance continues to improve.

Neither the position of our bilateral relations nor their actual self-help performance yet justify full steam U.S. support. But would you look into the best ways to put some coal in the furnace promptly./4/

/4/ Ball replied that the Department was "in general agreement" with the Secretary’s analysis but that action on the silo and housing loans would require "special strong presentation at highest level because of potential effect on U.S. balance of payments." (Telegram Tosec 46 to Rio de Janeiro, November 18; National Archives and Records Administration, RG 59, Central Files 1964-66, POL ARG-US) Martin later complained that the Embassy had heard "noises" from Washington which were not in keeping with the Secretary’s telegram from Rio. The Deputy Chief of the AID Mission in Argentina, for example, had recently reported that the "attitude in AID/LA was quite negative on reactivating housing loan which was canceled last June." (Letter from Martin to Vaughn, December 21; ibid. AID(US) 7 ARG)

Rusk

 

127. Telegram From the Embassy in Argentina to the Department of State/1/

Buenos Aires, June 4, 1966, 1813Z.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 15 ARG. Secret; Immediate. Repeated to Lima for Gordon and passed to the White House and USIA.

1836. From Ambassador.

1. I find myself very puzzled about what might happen to Illia government. Week ago qualified local observers were noting increased tranquility and improved atmosphere for seeking political rather than military solutions to Argentina’s problems. Yesterday was generally agreed to have been most tense since Illia government took office with B.A. full of rumors of all sorts of dramatic events, all pointing in one way or another toward disappearance of Illia government, and all as of this morning unfulfilled. [less than 1 line of source text not declassified] reports also alarmist but many of them are from golpe-slanted sources.

2. During week several events took place which, added to others which have occurred over past several weeks, provide basis for this changed atmosphere, though no one of them was of major importance. This combination of disturbing developments gave ammunition to active golpistas, largely civilian, who are impatiently seeking to create situation which military will consider justifies removal of government. Long expected economic and political chaos or collapse of government has not materialized and crisis over March 67 elections may be avoided and is in any case some months away. Hence these frantic efforts to provide chaos through rumor and to pressure military into action which government cannot overlook and which might lead to confrontation in which military will be forced to use their power.

3. While some military leaders share this impatience, Ongania and to lesser extent Pistarini, will make decision. Basically I believe Ongania would prefer not to move but is profoundly unhappy about state of country twelve years after Peron was overthrown and about performance of this government. Therefore careful plans for takeover have been drawn up by military in cooperation civilian experts. He may have concluded move inevitable but if so I believe he will prefer wait for situation in which he can justify action as clearly necessary and in national interest and can avoid charge military manuevered into action by civilian golpista intrigues with their variety of good and bad motives. He is very close mouthed and I doubt if more than two or three people, if that many, know what he thinks about situation as of today. We are trying to find out but I am doubtful of success. He is well informed on U.S. Government position.

4. If military moves believe there will not be armed opposition though may be a few resignations in armed forces. Nor will there be serious civilian disorder. However, short period in power may see considerable strains as proponents of golpe, both civilian and military, have varying motivations and policy conflicts could soon become serious.

5. I am convinced that Illia will fight his removal to end. His skill at this should not be underestimated. Some of his colleagues are apt to be less cool and determined. Already there is considerable increase in activity and flexibility in economic field though no major shifts have occurred. President has held unprecedented series of long meetings over past three weeks with economic team and with ministries responsible for various areas of social and economic development. Wednesday/2/ he met for four hours with Pugliese and economic team and yesterday for another several hours. His veto action on dismissal law was strong and basically sound. Thursday Labor Minister Sola made radio speech which attacked general strike called for June 7 in stronger terms than old-timers here remember any labor minister to have used. At the same time Sola has resumed dialogue with labor confederation (CGT). Government has persuaded leaders to call off ten-day national teachers’ strike scheduled to start June 6. Currently there are rumors that President will in few days intervene Tucuman provincial government and University of B.A. Both measures military have urged.

/2/ June 1.

6. Nevertheless, situation is sufficiently fragile that it is at mercy of accidents. Our radio and newspaper contacts and trustworthy personal friends feel nothing will happen now and that there is good chance of Illia staying until can be seen whether he can satisfy military on March election issue. This will come to head in September-December period. But, without knowing directly what Ongania and Pistarini think, this must remain a guess. Parenthetically, Ongania and wife attended large buffet supper given at Residence May 26 for Philadelphia Orchestra, ate at small table with Cantilo, UCRP President of Industrial Bank, gave President Illia an abrazo, and was quite cordial with me and other Embassy acquaintances.

7. Pouched today contingency paper on which we have been working for some weeks./3/

/3/ On June 4 the Embassy forwarded a plan that considered a number of contingencies, including Situation F, in which the "present government is removed and replaced by a military junta which rules by decree." In this event, the Embassy recommended consultation with other Latin American countries on the understanding that recognition would be withheld until the new regime promises to honor its international commitments, to respect civil liberties, and to hold free elections; U.S. recognition only after a majority of the "important Latin American countries" have taken similar action; suspension of all economic and military assistance until recognition; and a public statement that the United States regrets "that a country of this hemisphere has left the constitutional path" and will "wait and see what the implications may be with respect to US-Argentine relations and Argentine cooperation in the OAS and in the Alliance for Progress." (Airgram A-950 from Buenos Aires; National Archives and Records Administration, RG 59, Central Files 1964-66, POL 1-1 ARG-US)

Martin

 

128. Telegram From the Department of State to the Embassy in Argentina/1/

Washington, June 7, 1966, 12:02 p.m.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 15 ARG. Secret; Immediate; Nodis. Drafted by Dreyfuss and Krieg on June 6 and approved by Gordon and Ball.

1363. For Ambassador from Gordon.

1. I am of course aware your strenuous efforts to make known both generally and to key Argentine figures our position of strong opposition to coup against Illia Government and our support for continuous Constitutional Government in Argentina. However, I raise question whether most if not all of those actively pushing for golpe-and perhaps key figures such as Ongania and Pistarini-may believe we are making "the expected noises" and that, after a brief hiatus, we would continue business as usual with an Argentine de facto government should the coup against Illia actually materialize.

2. Your contingency paper has not yet arrived. Meanwhile, in view of fact that as stated in your telegram 1836/2/ "the situation is sufficiently fragile that it is at the mercy of accidents," I would like to have your views on the desirability and feasibility of making absolutely clear to those likely to be key figures in future developments that we would not be able easily to cooperate with a de facto government that had ousted constitutional Illia administration. If you agree, an approach might be made to Ongania, Pistarini, Julio Alsogaray and/or such others as you may suggest along following lines:

/2/ Document 127.

A. Express concern over most recent spate coup rumors and approaches by golpistas who purport express attitude Military High Command and Ongania that coup inevitable and will be carried out.

B. Point out that we are currently engaged in planning cooperative programs with GOA-both in military and economic fields-and that we feel continuance constitutional government and political stability necessary for us move ahead with these plans. Our opposition to coup is not merely philosophical opposition to rupture constitutionality and democratic process, but also strongly based on belief that military coup would be serious setback to Argentina’s economic and political development. Moreover, congressional and public reaction in U.S. would be such as to limit severely if not make impossible U.S. cooperation.

FYI. As you know MAP is subject strong criticism encourages coups. Thus Argentine coup could lead to amendment to pending legislation forbidding military assistance to de facto governments or at most elimination MAP entirely. End FYI.

C. If it seems desirable to be more explicit, you could mention that among the significant joint projects currently under consideration are the five-year MAP/MAS Program (approx. $42 million grant and $67 million credit) and a loan for expansion Somisa facilities ($100 million approximately). Our ultimate decisions on these projects would have to be taken in light of circumstances then prevailing, including climate of congressional and public opinion in U.S. A breach of constitutionality would clearly create extremely unfavorable atmosphere. Debt rescheduling would also be prejudiced.

D. A golpe would clearly rule out B.A. as site for OAS Conference.

E. A military government offers certain superficial advantages in terms of action over present civilian administration, whose errors of omission and commission, chiefly the former, are easy to point out. However, it is our view that institutional instability constitutes a serious obstacle to foreign investment, which is in turn essential to economic development. Stability is perhaps more important in this regard than efficiency. There is considerable doubt in our minds that a military government, which would not have organized public support, would in fact be able to carry out the economic program needed to put country on its feet or that such gains as were made would not be swept away as soon as civilian government was restored. This is reenforced by possible instability flowing from fallings-out among coup leaders once constitutional structure swept away.

F. We continue to hope that coup can be avoided and that Argentina will show that degree of maturity which is expected of such a highly cultured, sophisticated country.

3. Please classify reply Nodis.

Ball

 

129. Telegram From the Embassy in Argentina to the Department of State/1/

Buenos Aires, June 8, 1966.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 15 ARG. Secret; Immediate; Nodis. No time of transmission appears on the telegram.

1866. From Ambassador for Assistant Secretary Gordon. Reftel: Deptel 1363./2/

/2/ Document 128.

1. Appreciate sense and spirit of your thoughtful message in reftel.

2. My immediate reaction is that approach you suggest likely to have only limited value for two reasons.

A. There is considerable indirect evidence that many military have convinced themselves that in removing Illia government they would be fulfilling basically identical role in Argentina that armed forces performed in Brazil in ousting Goulart. I am aware how different two situations really are and of our official view of legality of transfer of power there, but fact that new Brazilian regime harps on its revolutionary character has easily led local military to regard any differences of legal form that may be required here as only ones of form and to believe that they would be acting with identical spirit of renovation, of anti-communism, anti-corruption, anti-inefficiency and of unreserved support for pro-Western foreign policy. They have followed closely US aid to Brazil since Goulart departure and press here has publicized, perhaps excessively, enthusiasm of US investors for new regime in Brazil.

Hence indications of so different a US response are I fear being received either with considerable incredulity or as last example in long history of US favoritism toward Brazil over Argentina, already a subject of considerable current comment here. It is not easy to convince them that, so far as treatment by US would be distinct, the difference would stem from quite different situations in two countries preceding change in government.

B. I have met considerable comment that no foreigner can understand depth of Argentine national frustration and of desire that country get moving to catch up on 35 wasted years. Therefore they feel that regardless of effect on external opinion of actions, they must make decisions and take actions necessary to initiate this process. They refer to it as deeply felt private problems which only Argentines can understand or solve. In this sense I think they have looked longingly at successes of Castelo Branco, at Franco’s progress in Spain in recent years and at de Gaulle success in France as showing what an intelligent authoritarian regime of the sort they plan to have can accomplish.

There is evidence that belief that only Argentina can solve basic problems of Argentina, a nationalistic attitude with a considerable history, it widely shared, even outside golpe circles. We must move cautiously to insure net positive result.

3. There are two points of lesser importance to be made:

A. Belief is spreading, with considerable justification, that favorable evolution Argentine trade surplus so far this year will make refinancing avoidable, so this reference not particularly helpful point.

B. Also believe military would consider OAS meeting in BA of some importance to prestige of Illia government but of no significance to Argentine nation in finding solutions to many grave problems with which they believe it to be confronted and with which they purport to be wholly preoccupied.

4. Wish to note that in June issue of respectable Look-type magazine called Atlantida there is article on coup plans which gives some purported details about three plans. With respect to that of Army General Staff it states, "The opposition of the United States is expected and it is estimated that the opposition of the White House ‘to the new form of government will be of a duration of no less than 6 months.’ " Part in single quotes claims to be from text of plan. This and other evidence which has reached us lead us to believe that US position is not only known but understood to be more than "pro forma."

5. Given these negative factors and possible exploitation of our initiative by golpistas to arouse nationalist sentiments, I am not disposed to seek out Ongania, whom I believe to be decisive figure in implementing plans as now drawn up by military, to convey this message now but to see if occasion may arise naturally or wait until there is clearer evidence of crystallization of program for golpe action justifying taking risk of charge of interventionism. There is of course other possibility that more impatient and incautious military figures may seek or find opportunity to create situation in which he is forced to move outside contingencies now foreseen by him in order to maintain prestige and/or unity of armed forces. In this latter case our position has only remote chance of influencing course of events for potential instigators such pressure play are so emotionally committed that US representations to them would be counter productive. This position does not preclude Embassy military and other officials following line you propose, with exclusion points mentioned in paragraph 3 above in conversations where they may use it without giving appearance of taking initiative. There will, we think, be such opportunities in days ahead.

6. Suggest it might help remove any possible belief in Argentine military circles that at least Pentagon supported golpe idea that we keep running into from time to time, if senior Pentagon army officer could find occasion to make contrary clear to General Shaw who is member Ongania group./3/ Could base remarks not on intelligence reports but on public comments by you and by Embassy here, as to tension in Argentina.

/3/ General Shaw was approached on June 14 by General William P. Yarborough, the Assistant Deputy Chief of Staff for Special Operations, Department of the Army, who indicated that a coup d’état in Argentina "could affect our assistance programs, including those concerned with military." According to Yarborough’s account, Shaw "implied clearly though subtly his belief that interruption US assistance would not be great disaster for Argentina." (Telegram 1405 to Buenos Aires, June 15; National Archives and Records Administration, RG 59, Central Files 1964-66, POL 15-5 ARG)

7. Leak, attributable to legislative source, if to anyone, that consideration being given to requiring cutting off military aid to de facto governments might be of minor value in situation here though again possibly counter-productive. However, I should think such an inflexible provision would be so harmful to US interests generally that we would want to take no initiative which would appear in any way to endorse it. Therefore, I do not recommend that such leak be attempted. To best of my recollection no sanction of even as much as six months for this reason has ever been enforced.

8. Our basic line here has been that US could contribute best to maintenance legality by helping in such small ways as available to us in improving GOA’s performance record. Still believe this more likely be profitable than necessarily somewhat imprecise predictions of future consequences, though vagueness, diffusiveness, illogicality and deviation from facts characteristic of golpista rationale is most discouraging. Hard to pinpoint issues which are in fact crucial to them. Even with this qualification, however, believe we must continue do what we can on positive side. For example:

A. While IBRD decision will help, believe evidence of US willingness to consider help for Somisa also valuable because of army interest in plant and in development heavy industry. Project could not go forward without Illia’s full backing, which it now has, on domestic and foreign financing. Therefore any sign of progress helps government. However, statement by Pugliese in present political atmosphere will be heavily discounted and carry far less weight than US release. Urge reconsider.

B. Also would help if could be some evidence of action on AIFLD housing loan. With proper handling here, US approval could improve atmosphere in some circles.

C. Shortcuts to permit earlier action than would result from normal procedures on release of silo fund loans also could help. Our recommendations went to Washington in TOAID A-531 of June 7./4/

/4/ Not found.

D. We are working hard with some prospects of success to shortcut usual bureaucratic delays and secure early announcement of decrees approving new large investments by Ford and Dupont.

E. We are also feeling our way toward making recommendations to Illia government in several fields outside area of direct US interest or involvement, though political factors at moment, including within UCRP, are so fluid and complex that this is not simple./5/

/5/ Martin reported on June 15 that the Embassy had received information that the military would give the Illia administration "time to produce concrete results," possibly as late as September. The Ambassador concluded that the situation had improved enough to allow his departure the following day for a vacation in the United States. (Telegram 1908 from Buenos Aires, June 15; National Archives and Records Administration, RG 59, Central Files 1964-66, POL 23-9 ARG) The Department cabled its concurrence. (Telegram 1406 to Buenos Aires, June 16; ibid.)

Martin

 

130. Editorial Note

On June 14, 1966, Félix Elizalde, head of the Argentine National Bank, called on Special Assistant to the President Rostow to discuss the recent Argentine proposal for a summit meeting of Latin American Presidents. Elizalde delivered an oral message from President Illia in which he maintained that "Latin America appeared to be coming into a rare moment of political stability." He "wryly noted," however, "that Argentina appeared to have somewhat changed its status" since late-March, when Illia first issued his invitation for the summit. Rostow asked Elizalde "how seriously he took the military coup rumors coming from Argentina." Elizalde explained that "the problem came to rest on the elections of 1967. He thought Illia could hold the line until then but some of the military were looking for excuses to move earlier. The key task was to have non-Peronists win the elections of 1967." Rostow asked what the United States could do to help. Elizalde replied that two projects needed immediate attention, the Somisa steel mill and the El Chocón hydroelectric plant. The former-"a symbol of independence in Argentina and an important installation for the military"-required AID cooperation with the Export-Import Bank; the latter was under consideration at the World Bank. (Memorandum of conversation, June 17; National Archives and Records Administration, RG 59, Central Files 1964-66, POL 7 IA) According to a note for Rusk, June 20, President Johnson instructed the State Department to "follow through" on Elizalde’s request "to assist President Illia to keep the Argentine military in line." (Ibid.)

 

131. Telegram From the Embassy in Argentina to the Department of State/1/

Buenos Aires, June 28, 1966, 0640Z.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 23-9 ARG. Confidential; Immediate. Repeated to DIA and USCINCSO and passed to the White House, DOD, CIA, USIA, NSA, and CINCLANT for POLAD.

1981. Subj: Reported Fall of Illia Government (report number eight)./2/

/2/ In telegram 1974 from Buenos Aires, June 27, the Embassy reported that the Commander in Chief of the Army, Pascual Angel Pistarini, had ordered the arrest of Carlos Augusto Caro, Commander of the Second Army Corps. (Ibid.) The Embassy continued to follow developments, subsequently predicting the "imminent fall of Illia government." (Telegram 1980 from Buenos Aires, June 28; ibid.) For an account of events leading to the coup, see Document 134.

1. At 0200, based on many sources but not officially confirmed, commanders-in-chief of armed forces have taken over as junta or provisional government. Reports also state that Ongania will be declared provisional president at 0700.

2. Report from Army G-2 source is that President Illia’s resignation was demanded and received./3/

/3/ The Embassy later reported that Illia had not yet resigned but agreed to leave the Presidential palace, and Onganía was to be "installed as new President some time this morning." (Telegram 1983 from Buenos Aires, June 28; ibid.)

3. Troops now surround War Ministry. Troops not in evidence outside presidency. City quiet.

4. Assuming military take-over now or about to be accomplished fact, have instructed all Embassy MilGroup and U.S. agencies personnel to desist until further notice from formal contact with Argentine authorities. Military mission personnel having offices in ministries will either report at Embassy or (lower echelons) stay at home. All other personnel will report at Embassy as usual.

5. Await instructions. No further reports until 0700.

Saccio

 

132. Telegram From the Department of State to the Embassy in Argentina/1/

Washington, June 28, 1966, 9:44 a.m.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 23-9 ARG. Confidential; Flash. Repeated to USCINCSO. Drafted by Dreyfuss and Sayre; cleared by Gordon, Martin, and Andreas F. Lowenfeld (L); and approved by Ball. At 9 a.m., Gordon read the text of the telegram to Rostow and asked if President Johnson would like to clear it. (Ibid., ARA Files: Lot 68 D 93, Telephone Conversations January 1966-December 1966) There is no indication on the telegram that the President cleared it.

1451. Ref Embtel 1981./2/

/2/ Document 131.

1. Department approves your action cutting off overt and official contact with Argentine authorities by all US representatives. You should maintain this posture until further instructions. Do not take any action vis-à-vis de facto authorities that could imply recognition or continuance official relations. However, discreet informal contact with de facto authorities, their spokesmen and intelligence sources for purpose obtaining information and learning of their plans should take place at your discretion.

2. In response any press inquiries, you may state you keeping Washington fully informed, that US Government carefully studying developing situation, that you have no instructions as yet bearing on future relations between US and Argentina, and that any USG announcement on policy in new situation will be made in Washington.

3. At noon briefing today we intend state we greatly concerned over displacement democratic government and rupture constitutional processes in OAS member state, that we are following developments carefully, and we are reviewing programs now in progress or planned for Argentina in light developing situation. In keeping with international practice in such cases, diplomatic relations are suspended. We will be consulting with other OAS members in accordance Resolution XXVI of 1965 Rio Conference./3/ If you have any comment send Flash message./4/

/3/ Resolution XXVI of the Final Act of the Second Special Inter-American Conference recommended that member states consult before recognizing a de facto government, giving consideration to: whether a foreign country was involved in the overthrow of the old regime and whether the new regime promised to hold free elections, to honor its international obligations, and to respect human rights. After consultation, each country was free to decide whether to maintain diplomatic relations.

/4/ The Chargé d’Affaires ad interim, Leonard J. Saccio, responded: "I realize dilemma USG faced with but Department should take into consideration bare faced take over of constitutional democratic government by military with no justification. I recommend that some element of condemnation be indicated in Department statement through use of stronger language." Saccio also suggested that the Department announce the immediate recall of the AID mission director and the military group chief. (Telegram 1986 from Buenos Aires, June 28 (1530Z); National Archives and Records Administration, RG 59, Central Files 1964-66, POL 23-9 ARG) The official statement, delivered at the noon briefing, did not reflect the Embassy’s suggestions. (Department of State Bulletin, July 25, 1966, p. 124)

4. Further instructions will follow on AID and military assistance programs. Your immediate recommendations on these and other ongoing programs would be appreciated./5/

/5/ The Embassy recommended action in accordance with Situation F of the contingency plan (see footnote 3, Document 127), including: a) suspension of all economic and military assistance; b) immediate recall of the AID mission director and the military group chief; and c) cancellation of all official travel to Argentina. (Telegram 1988 from Buenos Aires, June 28; National Archives and Records Administration, RG 59, Central Files 1964-66, POL 23-9 ARG) Although it agreed to cancel official travel to Argentina, the Department declined to recall any members of the Country Team and would only report that "careful consideration is being given to economic and military assistance during period of nonrecognition." (Telegram 1460 to Buenos Aires, June 29; ibid.)

5. Department appreciates Embassy’s alert reporting of last night’s activities and events and looks forward to continued up-to-the minute reports of developments.

Ball

 

133. Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

Washington, June 28, 1966, 11 a.m.

/1/ Source: Johnson Library, National Security File, Country File, Argentina, Vol. II, 9/64-2/67. Confidential. A copy was sent to Moyers. Another copy indicates that the President saw the memorandum. (Ibid., Memos to the President, Walt W. Rostow, Vol. 7)

SUBJECT
Argentine Situation

The latest reports from Buenos Aires indicate that the Army has arrested President Illia and removed him from the Presidential Palace.

Where he will be taken is not known at this juncture. There are three likely possibilities:

1. detained on Martin Garcia island in the River Plate estuary.
2. put across the border in Uruguay.
3. sent to the United States to join his wife who is hospitalized in Houston.

This unjustified military coup is a serious setback to our efforts to promote constitutional government and representative democracy in the hemisphere. It will be necessary to re-examine our whole policy toward Argentina./2/ This process will be carried out through the IRG-SIG mechanism starting at noon today. The OAS may also have to shift the site of the Foreign Ministers Meeting on OAS Charter amendment scheduled to open on August 29 in Buenos Aires.

/2/ Rostow inserted the following handwritten comment at this point in the margin: "Mr. President: This is Bill Bowdler. I wish to add a word of caution when you have a moment." According to the President’s Daily Diary Johnson called Rostow at 11:42 a.m. (Johnson Library) No substantive record of the conversation has been found.

State this morning sent the attached cable to our Embassy in Buenos Aires with guidance on official contacts and dealings with the press./3/ In paragraph 3 it gives the press line which State is going to follow on the coup. The line is the correct one for the time being.

/3/ Document 132.

Walt

 

134. Telegram From the Department of State to Secretary of State Rusk in Australia/1/

Washington, June 28, 1966, 3:18 p.m.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 23-9 ARG. Confidential; Immediate. Repeated to DOD, USCINCSO, CINCLANT, and all ARA posts except Kingston, Port-of-Spain, and Georgetown. Drafted by Dreyfuss, cleared by Krieg, and approved by Sayre. Rusk was in Canberra June 25-July 2 to attend meetings of the SEATO and ANZUS Councils.

Tosec 60. Argentine Sitrep No. 1.

1. Argentina’s military forces, headed by Army Commander-in-Chief Pascual Pistarini, ousted President Arturo Illia in a sudden move last night. Retired CINC Juan Carlos Ongania, who is highly respected by diverse civilian groups as well as in military circles, is likely to be called upon by a junta composed of commanders of three services to head new provisional government. There has been no violence.

2. Early in June there had been a spate of rumors of this possible move by the military in association with various civilian groups, who accused the Illia Administration of indecisiveness in the face of the nation’s economic and social problems and of being incapable of averting a Peronist victory in congressional and gubernatorial elections scheduled for early 1967. Statements by Illia over the past two weeks promising to take steps to assuage the military’s discontent had appeared to calm the situation and buy the President some breathing space.

3. The spark that ignited the coup was a dinner held last week at which Secretary of War Eduardo Castro Sanchez and II Corp Commander Carlos Augusto Caro, both strongly constitutionalist and pro-Illia, met with several Peronist leaders. Pistarini yesterday relieved Caro of his command, accusing him of endangering the unity of the armed forces by dabbling in politics outside approved channels. He also said Castro Sanchez was unacceptable to the army and demanded his resignation, as well as that of the rest of the Cabinet. Illia countered by attempting to remove Pistarini from his position, bringing on the sudden confrontation that resulted in Illia’s ouster.

4. The coup, as it developed, does not appear to be what most military and civilian coup planners had hoped for, as they had intended eventually to lead a "national revolution," to save the country from the "inept" Illia regime. The current move, however, has the earmarks of an old fashioned military power play and will not attract the popular support the military leaders had hoped for, although there is little likelihood of concerted violent popular opposition.

5. Foregoing is for your background information.

Ball

 

135. Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

Washington, June 29, 1966, 7 p.m.

/1/ Source: Johnson Library, National Security File, Country File, Argentina, Vol. II, 9/64-2/67. Secret.

SUBJECT
Our Policy Toward Argentina

Linc Gordon, through the IRG/ARA mechanism, has done a careful analysis of our political, military, economic and cultural relations with Argentina and come up with specific recommendations for continuing or suspending elements of on-going programs until diplomatic relations are resumed. The attached memorandum from George Ball contains these recommendations./2/ It is a first-class job, which, incidentally, shows that the IRG/SIG mechanism can be made to work promptly and effectively.

/2/ Attached but not printed.

What the memorandum proposes is a delicately balanced package which permits as much of our present programs to continue consistent with the automatic break in diplomatic relations. The dividing line is essentially official contacts: what can be carried forward without dealing officially with the new military government should proceed and what requires official contact should be held in abeyance. This puts us in a correct posture with respect to the other OAS countries while we consult on recognition without antagonizing the new Argentine government.

With respect to recognition, this must await formation of the new government, a definition of the policies it intends to pursue, a request for recognition and consultation with the other OAS governments. This may take 2-3 weeks. As George Ball suggests, we should seek the usual assurances regarding acceptance of international obligations, as well as respect for civil liberties and an early return to constitutional government, before recognizing. But we should not take too rigid a position on the scheduling of elections which might preclude recognition if we did not get the commitment.

I recommend your approval.

William Bowdler/3/

/3/ Bowdler signed for Rostow.

Approve/4/
Disapprove
Speak to me

/4/ The President checked this option.

 

136. Telegram From the Embassy in Argentina to the Department of State/1/

Buenos Aires, June 30, 1966, 2341Z.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 15 ARG. Secret; Immediate; Limdis. Received in the Department on June 30 at 9:17 p.m.

2027. For Assistant Secretary Gordon. Subject: Private Conversation with General Alsogaray.

1. Conversation took place in office of Alvaro Alsogaray under conditions outlined in Embtel 2019./2/ No one else present. Statement in three parts: 1. Why the golpe took place, 2. What the new government proposes to do, 3. The structure of the new government.

/2/ Telegram 2019 from Buenos Aires, June 30 (1507Z), reported that the head of the military household, General Julio Alsogaray, had indirectly requested a private meeting with the Chargé d’Affaires. Saccio proposed to accept the invitation on the condition that he "need only listen and make no comment." (Ibid., DEF 9 ARG) The Department cabled its concurrence. (Telegram 1465 to Buenos Aires, June 30, 12:27 p.m.; ibid.)

2. Stated that he and others had been working on the matter for some months. Illia government had been great hope that problems of the country would be solved. However it began to make mistakes. The first was the cancellation of the oil contracts which not only hurt investors but the country; communism, the lack of order, the severe worsening of the economy, political maneuverings, corruption, all caused great concern. Every attempt was made to get the government to meet these problems, however, nothing was done, suggestions were made. All that happened was a calling of cabinet meetings out of which issued nothing of constructive nature. The opening of dialogue with all sectors, calling on the cardinal, these are things that should have been done as a matter of course. No date had been fixed for the golpe. It had been generally agreed that action would have to be taken in October or December because of oncoming March elections unless of course the government took affirmative and satisfactory action to solve the problems of the country. It was obvious that the military had to work clandestinely; the press picked this up; the government reacted; the vicious circle was started. The military was forced to act because its integrity was being challenged-(the activities of General Caro and Secretary of War Castro Sanchez).

3. What the new government proposes to do. The eventual goal to create a democratic system of three or four parties. This could be accomplished only sometime in the future after the basic problems of the country are solved. (He did not say how long this would take or use the term "years", but clearly indicated that such a development was well in the future.) In the past, under the political system in effect there were but two choices, the bad and the worse, the Radicales or the Peronistas. The experience of the country proved that democratic political system could not successfully solve the problems of the country. It is not going to be easy to solve the economic problems of the country. He expected that the economy would continue to go down in the near future then hopefully, once the new government was able to restore confidence, Argentine investors would withdraw their funds from the Swiss and American banks and investments and foreign interests would begin to invest. The new government will strive to establish a modern economy of free enterprise taking full account of social obligations. It would not be a 19th century free enterprise type, but akin to that which exists as example, in Western Germany. The constitution still reigns; liberties will be guaranteed; free press will be allowed to continue. However if, for example, former government officials attempt to attack present government, measures will have to be taken. A full social security system will be established assuring pension, unemployment benefits, benefits to mothers, the whole gamut. The labor unions will be regulated; employer-employee relations determined, but political activity by unions will be prohibited. Outrageous demands on the part of labor, such as in the case of the longshoremen, who get six times regular pay for working at night-Buenos Aires is the most expensive port in the world-will not be tolerated. State enterprises will be put on paying basis.

4. Peronism. Peronism as a political movement will not be permitted. All political activity will be prohibited, Peronism included. The belief in Peronism is deep in the people but this will be taken into account through proper labor and social welfare provisions to satisfy legitimate needs.

5. Foreign Relations. Argentina is a member of the Western world. It is so by nature not by convenience. The U.S. is a friend; this too is by nature and not by convenience. Great Britain is an old client and an important market. With Spain, Argentina has special ties of origin. (No mention was made of USSR, satellite countries or ChiCom.) As to the countries immediately bordering Argentina, the border matters with Chile will have to be settled. The establishment of a special relationship with Uruguay, Paraguay and Bolivia, because of Argentina’s size and potential, would be the "rector" of these three countries. (Alsogaray repeated the word "rector" searching for something better to express his meaning. It was clear that he considered these three countries would be within the sphere of influence of Argentina.)

6. I asked Alsogaray to repeat what he said about Chile. It was clear that he was not comfortable in doing so. Obvious that there is a question in his mind propriety of the present solution. I persisted and asked whether the settlement of this problem would be along present lines. He ducked the question again. In this exchange he mentioned England and the Islands (Malvinas).

7. He returned to the question of the economy again describing it as a modern economy of free enterprise with full regard to social obligations. He mentioned no specific measures that the new government would undertake, however he said it was clear that it would need assistance from outside sources. No mention was made of military assistance.

8. Structure of Government. There will be five ministries: Interior, Economy and Labor, Defense, Justice, and Foreign Relations. Fifteen secretariats will operate under the five ministries. Most of these will be under Economy and Labor with Interior having charge of Education as well as its usual functions. The three services will be under defense. The five ministries with the president will constitute the executive cabinet, the national cabinet will include the ministries and the secretariats.

9. Except for the exchange on Chile, Alsogaray’s statement was frank and open. Because of the nature of the meeting I did not ask many questions except to bring him out on the subject of the guaranty of liberties, the program in the field of labor and of course, Chile.

Saccio

 

137. Telegram From the Embassy in Argentina to the Department of State/1/

Buenos Aires, June 30, 1966, 1720Z.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 16 ARG. Secret; Priority; Limdis. Received in the Department on July 1 at 11:10 a.m. Passed to the White House, DOD, CIA, USIA, NSA, and CINCLANT for POLAD.

2020. Subject: Recognition of Ongania Government.

1. Embassy realizes others have experienced, as Country Team has here, feelings of repugnance over military overthrow of constitutional government of Illia.

A) There was no real justification for move, and pretext was flimsy.

B) It was a long premediated power play which left in its wake no semblance of constitutionality.

C) Alliance for Progress received serious blow.

D) Effect on public opinion in US, Latin America and elsewhere is bound to blacken Argentina’s image abroad.

2. Cool analysis, however, results in recognition of following.

A) Illia government not only unpopular but object of attack by all sectors and even within own party.

B) There is no turning back.

C) Ongania, of all Argentine military, is most prestigious, respected, and capable.

D) If there were plebiscite Ongania would probably win, even over Peron.

E) There has been no counter-action to golpe. Public mood has been one of apathy toward events and expectancy and wishfulness toward future.

F) Ongania regime would probably not only meet all conditions for recognition (except assurance of early elections), but be firm anti-Communist partner of free world in OAS, UN, and other international bodies.

G) Argentina still plays important role in achievement US objectives such as projects Clear Sky and Skin Diver/2/ and in OAS and UN.

/2/ In telegram 1472 to Buenos Aires, June 30, the Department instructed the Embassy to discontinue negotiations for Clear Sky, a project to monitor Soviet compliance with the Limited Test Ban Treaty of August 1963, until the restoration of diplomatic relations. (Ibid.) The Department determined, however, that Skin Diver, a "military scientific flight operation" could continue. (Telegram 1460 to Buenos Aires, June 29; ibid., POL 23-9 ARG)

H) Other members of hemisphere will undoubtedly be recognizing Ongania government in short order.

3. Embassy’s recommendation is that, after decent interval during which US consults with fellow members of OAS, we recognize Ongania government. We should, however, be neither first nor last./3/

/3/ In telegram 1186 to Buenos Aires, July 2, the Department forwarded the text of the administration’s recognition policy as contained in the IRG paper (see Document 135). The Department also instructed the Embassy to convey the message that diplomatic relations would be restored if the Onganía administration issued a public statement testifying to its commitment to democracy and civil liberties. (National Archives and Records Administration, RG 59, Central Files 1964-66, POL ARG-US)

Saccio

 

138. Telegram From the Embassy in Argentina to the Department of State/1/

Buenos Aires, July 5, 1966, 2333Z.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 23-9 ARG. Secret; Immediate; Limdis. Passed to the White House, DOD, CIA, USIA, NSA, and CINCLANT for POLAD.

64. Subj: Private Conversation With Alvaro Alsogaray. Ref: Buenos Aires 44./2/

/2/ Telegram 44 from Buenos Aires, July 5, reported the upcoming "talk" with Alvaro, brother of General Julio Alsogaray. (Ibid.) The Department suggested that Saccio explain the U.S. position on recognition, particularly with regard to democracy and human rights. The Department provided the following guidance: "You should not imply that we will refuse recognition if these points not covered but stress that public commitments along these lines would be most helpful with respect public and congressional opinion in this country." (Telegram 1713 to Buenos Aires, July 5; ibid., POL 16 ARG)

1. Civil and Human Rights. Alsogaray stated that it had been the intention from the very beginning (in the planning stage) that none of the civil rights be infringed except as absolutely necessary in the political field. The constitution is still in effect and will continue in effect. The top level of the court system had to be changed for political reasons as well as for corruption but the courts remain intact and will continue as before. Though the provincial intervenors have the power to remove individual members of the highest court in the provinces, very few have been removed. No ad hoc committees of investigation have been established. There have been no political arrests. The unions stand as they were before. Where there had been arrests as in the case of Ricardo Illia and Mayor Rabanal, the others have been immediately turned over to the courts for adjudication. Unless there is an attack against the revolution, there will be no change in the rights of the people. The press will continue to be free. All that the revolution planned to do is to make minimum changes necessary to resolve the political situation. In a democracy people have the right to change by voting against the administration in power. In Argentina this meant Peronists as the only [garble-alternative?]. This could not be permitted. Even the Peronistas knew this as proven by their acceptance of the revolution. Alsogaray referred to the Peronist labor leaders acceptance of invitation to Ongania’s swearing in.

2. Elections in the Future. The plan of revolution and the present intention is to solve the basic problems of the country so that it can operate eventually as a viable democracy. It is hoped that in time there will be created a democratic system of a limited number of parties instead of the hundreds that existed before. However, the government does not intend to fix a date or commit itself to a time as to when elections will be held. This was mistake that was made before since once a time is fixed the government cannot accomplish anything; everybody becomes a politician. Besides problems in the economic area are extremely difficult to resolve in a democracy. However, there is no question about the intent of this government to work for a democratic system. In fact, outside of the political, none of the basic institutions of the country will be modified.

3. International Economic Policy. It is the intention of the government to move toward a free enterprise system. (Instead of elaborating on this, Alsogaray referred to our conversation in March, stating that I was fully cognizant with his theories and that these would all obtain in the new government.) The oil contracts problem will be resolved; Argentina will sign investment guarantee agreement. The exchange rate will be freed but not immediately. Ongania determined to proceed carefully. This was not a problem that could be resolved today. Many factors had to be taken into consideration. He, Alsogaray, will be given the job of coordinating all international economic relations, working with the Minister of Economy and the Foreign Ministry. He has already had conferences with the new Minister of Economy and after similar conferences with the Foreign Minister and President, he will take off on a quick review of the situation in Western Europe and the U.S. Come September he will start the negotiations on behalf of his government.

4. International Relations. Argentina will be a close partner of the U.S. on all questions involving free world and hemisphere. There will be no hesitance on part of Argentina in joining the U.S. in the solution of hemispheric problems. There will be no holding back as in the case of the Dominican Republic. However, as to Vietnam, Argentina will not send troops to assist the South Vietnamese. If there is any action in this sphere by the UN or other international body, Argentina will support the U.S.

5. In outlining these policies Alsogaray made clear that though he was speaking with intimate knowledge of the previous plans of the revolution and the present thinking, he could not make any authoritative statements. He did say that the government would be issuing public statements on these matters and that they would be coming out probably next week or the week after. I asked him specifically about whether a statement would be made on the subject of future elections. He wasn’t sure of this but he assured me that he was reporting correctly the thinking of the new government. On foreign policy, para 4 above, he referred to his conversation with Ongania yesterday as authority for his statements. One reason he gives for the delay in making public statements on policy was that the revolution was planned for later in the year. With a smile he said that they had to respond to the counter golpe of the government.

6. I do not intend to pursue suggested talk with FonMin Costa Mendez unless he persists, knowing that I have already talked to the Alsogarays. Regardless of their views, I believe latter have been frank and sincere. Do not think it wise to appear to be checking their statements unless Department feels it would be valuable to get a more "official" statement on future elections. Not likely that I will be successful or that it will be useful in view of the nature of their justification./3/

/3/ After this meeting Saccio recommended recognition of the new government by July 9, the national holiday and sesquicentennial of Argentina’s independence. "Delay beyond July 9," he explained, "runs risk of damaging long-term U.S. interests with respect to Argentina, since it starts to build up incomprehension and resentment." (Telegram 62 from Buenos Aires, July 5, 2331Z; ibid.) The Department replied that recognition by July 9 would be impossible without a declaration of the regime’s democratic intentions. A public statement by an authorized spokesman that was similar to the private assurances of Alvaro Alsogaray could provide the basis for immediate consultation, possibly resulting in recognition by July 9. (Telegram 1872 to Buenos Aires, July 6; ibid.)

Saccio

 

139. Telegram From the President’s Special Assistant (Rostow) to President Johnson in Texas/1/

Washington, July 7, 1966, 5:48 p.m.

/1/ Source: Johnson Library, National Security File, Country File, Argentina, Vol. II, 9/64-3/67. Secret. According to an attached note, the telegram was originally a memorandum drafted by Bowdler and revised by Bromley Smith. President Johnson was at his ranch in Texas June 30-July 11. (Johnson Library, President’s Daily Diary)

CAP 66481. Subject: Argentine Recognition. Acting Secretary Ball requests standby authorization to recognize the Ongania government./2/

/2/ Reference is to a memorandum from Ball to the President, July 7, attached but not printed.

The classical criteria for recognition (i.e., general control of the country and pledge to honor international obligations) have been met. We are still awaiting public affirmation of the OAS criteria: respect for human rights, peaceful settlement of disputes, and eventual return to constitutional government.

Secretary Ball would use the standby authorization this way:

1. If the government makes a public statement on the OAS criteria prior to July 9, we would recognize promptly.

2. If the statement is not forthcoming, we would delay recognition for several more days after July 9.

Our Embassy in Buenos Aires is now in contact with the new Foreign Minister through a trusted intermediary./3/ We relayed our desire for an affirmative public statement on the OAS criteria. He replied that he personally has no difficulty with the criteria, except for the election criterion which he believes can be handled by appropriate wording. (We would not stick on the establishment of an early date for elections.) He is trying to get President Ongania to make the statement before July 9.

/3/ The Embassy reported on the initial use of this channel in telegrams 79 and 80 from Buenos Aires, July 6. (National Archives and Records Administration, RG 59, Central Files 1964-66, POL ARG-US)

Through the Chileans, Colombians, Peruvians, and Uruguayans we are seeking to bring additional pressure on Ongania for an early statement.

I recommend that you grant the standby authorization in the understanding that I will call you before recognition is extended to:

A. Report on the nature of the Argentine statement.

B. Obtain your approval of our announcement of recognition./4/

/4/ There is no indication on the telegram that the President approved this recommendation.

 

140. Information Memorandum From the President’s Special Assistant (Rostow) to President Johnson/1/

Washington, July 9, 1966.

/1/ Source: Johnson Library, National Security File, Country File, Argentina, Vol. II, 9/64-3/67. Confidential. A copy was sent to Bill Moyers. The memorandum was "sent by wire" to the LBJ Ranch.

SUBJECT
Argentine Situation

The Ongania Government is not expected to make a helpful public statement over the weekend on respect for human rights, peaceful settlement of border disputes and eventual elections.

The Argentine Foreign Minister late yesterday sent word to the Embassy that

-the question of elections is difficult and requires careful study and precise definition.

-there is no problem on human rights and peaceful settlement and this will be made clear "in forthcoming actions and statements" (no time indicated).

-he fully understands that the U.S. is not laying down conditions for recognition.

-he regrets that our suggestion for a public statement now could not be adopted./2/

/2/ As reported in telegram 125 from Buenos Aires, July 8. (National Archives and Records Administration, RG 59, Central Files 1964-66, POL 15 ARG)

In the balance of a public statement, we will put off recognition until sometime next week. More than half of the Latin American countries are with us in holding up on recognition. Those who have recognized are: Bolivia, Brazil, Chile, Mexico, Paraguay, Peru and Uruguay.

WGB/3/

/3/ Bowdler initialed the memorandum for Rostow.

 

141. Memorandum From Secretary of State Rusk to President Johnson/1/

Washington, July 12, 1966.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 16 ARG. Confidential. Drafted by Sayre and cleared by Krieg. Original forwarded as an attachment to a memorandum from Rostow to the President, July 13. (Johnson Library, National Security File, Country File, Argentina, Vol. II, 9/64-2/67)

SUBJECT
Recognition of the Argentine Government

Recommendations:

1. That you approve the enclosed telegram which would authorize our Chargé in Buenos Aires to deliver a note to the Argentine Government at noon on July 14, which would constitute an act of recognition./2/

/2/ Attached but not printed. The instructions were eventually sent as telegram 2885 to Buenos Aires, July 14. (National Archives and Records Administration, RG 59, Central Files 1964-66, POL 16 ARG)

2. That you also approve the text of a proposed press release, herewith enclosed./3/

/3/ Attached but not printed. For text of the press release, see Department of State Bulletin, August 1, 1966, p. 184. The President approved both recommendations. A note attached to this memorandum explains, however, that recognition had to be rescheduled due to an apparent delay in the bureaucratic process. The Department subsequently authorized delivery of the official note of recognition for July 15 at noon. (Telegram 7529 to Buenos Aires, July 14; National Archives and Records Administration, RG 59, Central Files 1964-66, POL 16 ARG)

Background:

The Argentine military overthrew the Illia Government on June 28. Subsequently, General Juan Carlos Onganía, former Commander-in-Chief of the Argentine Army, was sworn in as President.

We have been consulting with the Latin Americans since the overthrow of the Illia Government under Resolution XXVI which was approved at the Rio Conference in November 1965. We also indicated informally to the Argentine authorities that public statements on the points contained in Resolution XXVI, plus a commitment on peaceful settlement of disputes, would facilitate recognition by the United States. We added the point on peaceful settlement after the Chileans expressed concern to us over Argentine statements which the Chileans interpreted as forecasting trouble between Argentina and Chile on their boundary disputes.

In the note from the Argentines requesting recognition they explicitly stated their intention to respect their international obligations. A speech by General Onganía on July 9/4/ has statements in it which apparently were intended to respond to our concern about respect for human rights (Paragraph 2b of Resolution XXVI) and about pacific settlement of disputes. Chile had recognized the Onganía Government on July 8.

/4/ Attached but not printed. The Embassy also forwarded excerpts of the speech in telegram 143 from Buenos Aires, July 11. (Ibid., POL 15 ARG)

The significant omission is any statement on elections. Argentine authorities have indicated to the Brazilians and us that it would be very difficult at this time to make any definite statement on return to constitutional democracy. However, Martinez Paz, the new Minister of the Interior, told the press on July 9 that the Government would stay in power as long as necessary to create a climate conducive to the exercise of representative democracy.

Mr. Gordon discussed the recognition problem on July 8 with Senators Fulbright and Morse. The former felt we should be in no hurry to recognize; the latter made no comment but his public statement on the Military Assistance Program bill suggests that he will again charge the Administration with "walking out on democracy" if we do recognize. Mr. Sayre has discussed it with Senator Hickenlooper and Congressman Selden. He also briefed Boyd Crawford, Chief of the House Foreign Affairs Committee Staff, who stated he would inform Dr. Morgan. All three felt that we had no other choice but to recognize the new government. With the exception of Senator Morse all of them expressed reservations on resumption of economic and military assistance. Senator Hickenlooper went further and questioned whether we should carry out any commitments we have made on economic and military assistance to Argentina until Argentina fulfills its contractual obligations; for example, the oil problem.

Eight Latin American countries have already recognized the Argentine Government (Bolivia, Brazil, Chile, Haiti, Mexico, Paraguay, Peru and Uruguay). With the exception of Venezuela and, just possibly, Colombia, the other Latin American countries are awaiting our decision and will probably recognize at about the same time. Japan, Spain and all of the NATO countries have recognized.

We have traditionally tried to maintain diplomatic relations with all of the members of the OAS. We also give considerable weight to the views of the Latins. In addition, the United States has important interests in Argentina and Argentina is one of the major countries in the OAS system. We cannot exercise any significant influence in Argentina unless we maintain relations with the authorities.

Dean Rusk

 

142. Telegram From the Department of State to the Embassy in Argentina/1/

Washington, July 21, 1966, 7:12 p.m.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL ARG-US. Confidential. Repeated to USCINCSO. Drafted by Krieg; cleared by Pringle, Sternfeld, Salans, Gaud, Lang, and Sayre; and approved by Gordon.

12800. Ref: Buenos Aires 219./2/

/2/ The Embassy submitted its recommendations for U.S. policy once diplomatic relations were restored in telegram 100 from Buenos Aires, July 8. Telegram 219 from Buenos Aires, July 18, requested the Department’s comments. (Both ibid.)

1. U.S. policy toward Argentina for balance of 1966 will be to observe plans, policies, and executive skill of new government with view to developing longer range policy early in 1967 in light of experience accumulated in interim period.

2. Attitude toward GOA should be friendly but reserved. We wish Argentine people well and want to further economic and social development in line with principles of Alliance for Progress, but are not yet certain to what extent policies of new government will make our collaboration possible or what form new GOA may want assistance to take. We expect new authorities may need some time to familiarize themselves with their work and develop own ideas regarding our existing programs.

3. U.S. will observe its commitments to Argentina, in accordance normal international practice and international law. Commitments made with Argentina prior to the change of government must still be considered in effect, unless Congress approves amendments now pending to Foreign Assistance Act which would require termination of assistance./3/

/3/ Reference is to several proposals to modify the Foreign Assistance Act of 1966, in particular, an amendment offered by Senator Jacob K. Javits (R-New York), that would suspend assistance to any member of the OAS that "came into power by the unconstitutional overthrow of a freely elected, constitutional, democratic government." (Telegram 6406 to Buenos Aires, July 13; ibid., POL 16 ARG) Although the administration eventually defeated the proposal, Congress adopted an amendment sponsored by Senator J. William Fulbright (D-Arkansas) that set a ceiling of $85 million per fiscal year for military assistance and sales to Latin America, not including support for military training or the Inter-American Peace Force in the Dominican Republic. (80 Stat. 803)

A. Economic Assistance

4. AID projects which are already under way pursuant to existing agreements should be continued unless the new authorities object. If in any instance Embassy/USAID believes any programs we have agreed to carry out should be suspended, reduced or altered, Department should be notified promptly with reasons.

5. Initiation of new projects during interim period is not contemplated. Department does not desire to encourage discussion of possible new projects during the interim period and suggests that any proposals from the GOA be heard without commitment.

6. In an intermediate area between firm commitments and new undertakings lie those projects which have been under intensive discussion during recent months but which have either lapsed or on which agreements have not been perfected. Grain storage project and Central Housing Bank project fall in this category. In these cases, Embassy/USAID should await Argentine initiatives and report them with recommendations to Department-AID/W.

B. Military Assistance

7. Deliveries where there are contractual obligations will be observed. Until Congress acts on foreign aid legislation, we plan to hold deliveries on approved and funded grant program even though Argentines may have already been informed of them. Our present disposition (assuming satisfactory outcome on foreign aid legislation) would be to proceed with items such as spare parts, but continue withhold delivery on major end items such as armored personnel carriers until we can (a) assess fully US Congressional and public opinion on military assistance and (b) review five-year grant credit program. Country Team members should not convey foregoing policy to Argentine authorities but limit their comments on requests for military assistance to stating (a) Congress is now considering foreign aid legislation, and (b) requests will be referred to Washington for consideration and decision.

8. Training programs including MMTs and normal MILGP personnel movements should proceed according to plan.

9. Visits of General or Flag rank officers not assigned to Argentina should be deferred if possible. Suggest prior referral to State/Defense for decision in each case.

10. Department is aware foregoing does not cover all contingencies but desires supply requested interim guidance. Washington agencies studying assistance programs further and would appreciate your raising such additional policy questions as you deem pertinent.

11. DOD implementing instructions re training and rotation MILGP personnel to be issued promptly. Will be followed shortly by instructions on contractual obligations.

Rusk

 

143. Memorandum of Conversation/1/

Washington, July 30, 1966, 10:30 a.m.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL ARG-US. Confidential. Drafted by VanReigersberg and approved in S on August 4. The time of the meeting is from the Secretary’s Appointment Book. (Johnson Library) A brief account of the meeting was forwarded to the Embassy on August 1 in telegram 19146. (National Archives and Records Administration, RG 59, Central Files 1964-66, POL ARG)

PARTICIPANTS
The Secretary
Dr. Alvaro Alsogaray, Ambassador-at-Large of Argentina
Mr. Carlos A. Quesada Zapiola, Argentine Chargé d’Affaires
Mr. Angel R. Caram, Argentine Financial Counselor
ARA-Assistant Secretary Gordon
LS-Mr. F. A. VanReigersberg

Mr. Alsogaray opened the meeting by repeating the reasons for the recent Argentine revolution which he had already given to Mr. Gordon in a previous meeting,/2/ stressing that the two immediate causes were the rapid deterioration of the Argentine economy and its move towards socialism as well as the imminent threat of a Peronista victory at the polls. He added that while no one had wanted the revolution, it had become inevitable since the Argentine people are as afraid of a Peronista return as the German people would be of a return of Hitler. He then explained the objectives of the revolution, which in the political field would be to re-establish the bases for representative democracy (although the date for a "return to democracy" could not yet be announced in order to avoid renewed plotting on the part of politicians) and the transformation of the present "semi-collective system" into a free enterprise system. The Argentine revolution is only beginning its work but its leaders are optimistic as to its future because Argentine labor and even the Peronistas have not come out against it yet. Nevertheless, the Ongania Administration expects to face some difficulties in the future as stern economic measures and anti-inflationary policies are adopted. He described the external debt situation as good and pointed to the internal budgetary deficit as one of the main economic problems which the new administration wants to tackle from the outset. The scandalous situation of the national railroads will be the first item of business which the Government will face since "100,000 men cannot be allowed to paralyze a country of 22 million." In the field of petroleum, the Government will allow both domestic and foreign companies to explore the Argentine subsoil although no general law will be passed to cover all such companies and the activities of each foreign company will be regulated on a case by case basis. Furthermore, the new administration is prepared to go ahead with the last stages of the negotiations leading up to an investment guaranty agreement with the United States which should attract foreign investors.

/2/ Gordon met Alsogaray on July 28; a memorandum of the conversation is ibid., POL 23-9 ARG.

The Secretary stated that he was well aware of the importance of Argentina in the world today and what happened in Argentina had a bearing on every other country in this hemisphere. He indicated that the U.S. Government regretted the steps that had to be taken in Argentina a few weeks ago since it had hoped that the Argentine military and civilian authorities would have been able to work out their differences without the necessity of a coup. Nevertheless, it was important to look towards the future and not allow this disappointment to color relations between the countries. He noted that one positive element resulting from the coup was the respect for General Ongania’s personal qualities in most of the Latin American countries and the United States, and he could only express the hope that the General would act on the basis of those qualities and that his colleagues would permit him to do so. He stated that Ambassador Martin would return to Buenos Aires in two weeks and that he would keep in close touch with the Argentine Government, trying to repair some of the damage that had been done and to work constructively with a view toward the future. With regard to the philosophy of private enterprise, the Secretary indicated that while the United States firmly believes in it, he hoped that Argentina would fully consider the changing role of private enterprise both in this country and in Western Europe. He deplored the fact that in a number of countries private enterprise had not caught up with the 20th Century, noting that in the United States, for instance, the "robber barons" of the 19th Century had been superceded by the socially aware businessmen of the 20th Century with a strong sense of public responsibility. He expressed the hope that Argentina would move in the direction of modern capitalism. The Secretary also noted that American businessmen are constantly being told that the U.S. Government expects them to uphold the same standards of public responsibility abroad as in this country.

Mr. Alsogaray stated that he was well aware of the need for a greater sense of public responsibility on the part of Argentine businessmen and indicated that the present Argentine administration wants to model the country’s economy on the basis of the European version of enlightened capitalism, which he described as a "socially aware market economy."

The Secretary stated that recent events in Argentina have affected the lives of every country in this hemisphere. He stated that the United States therefore has a problem now which it did not have two months ago and that a number of Senators and U.S. organizations had attacked the U.S. Government because of its recognition of the Ongania administration. He expressed the hope that Argentina would keep in mind that other hemispheric countries have problems of their own and that it would follow a policy of moderation and restraint, especially in the OAS. He added that the next MFM had become a "problem" although the United States would have preferred that it had not become a problem and that now it was up to Argentina to show understanding for the position of its sister republics. The Secretary stated that Argentina could adopt one of two alternatives with regard to the next MFM. Firstly, it could decide that the site of the meeting was a non-negotiable issue and therefore disregard the wishes of other countries, or else it could take the initiative and by so doing increase the prestige of its government all over the hemisphere by indicating that it is willing to accept a solution that would receive the backing of the majority of the hemispheric countries.

Ambassador Alsogaray stated that in his meeting with Mr. Gordon he had discussed this problem at length and that he was well aware of domestic problems both in the U.S. and in other hemispheric countries. He said that he would get in touch with his Foreign Minister and with General Ongania right away and that he would explain the situation to them and advise them to refrain from adopting a tough line on hemispheric matters. He insisted, however, that it would not be easy for the Government to explain any softening of its attitude to the Argentine people. Ambassador Alsogaray then referred to the matter of economic relations and stated that a number of organizations in Washington were awaiting instructions from the State Department to go ahead with their studies of assistance programs for Argentina which had been paralyzed for some time. He asked the Secretary to intercede on his country’s behalf so that even though decisions might not be taken, the examination and study of these problems might continue in order to avoid any delays or slow-downs.

The Secretary stated that Mr. Gordon would look into the matter. In response to a question from Mr. Gordon, Ambassador Alsogaray stated that Argentina was in favor of stepping up the process of Latin American economic integration although the present administration had not devised any new policies on the matter. He knew that General Ongania and Economics Minister Salimei supported integration, both on a hemispheric and on a bilateral basis, especially with Brazil and Chile, and that they were also interested in reducing tariffs.

The Secretary stated that there was one additional item he wanted to bring up to which increasing attention will have to be given in the next months and that was the matter of the worldwide food situation in the next 10 years. He stated that all food-producing countries will be facing growing markets over the next decade and that purchasing countries will face increasing difficulties both in increasing their domestic production and in paying for food imports. Therefore there is a great need for increasing efficiency on the part of the producing countries and for offering food to potential buyers under terms which they can meet. He added that Argentina, the United States, Canada and Western Europe may also have to find a way to set up food and fertilizer reserves in the case of future emergencies. He indicated that in spite of an increasing production of wheat in the United States, our present reserves were somewhat below what was considered a prudent level. Therefore the matter would have to be given increased international attention in the next months and years and there might be a need for looking at the situation both on a worldwide and on a hemispheric level.

 

144. Information Memorandum From the Assistant Secretary of State for Inter-American Affairs (Gordon) to Secretary of State Rusk/1/

Washington, February 6, 1967.

/1/ Source: National Archives and Records Administration, RG 59, ARA Files, 1967: Lot 70 D 150, Argentina, 1967. Confidential. No drafting information appears on the memorandum. Also sent to Katzenbach. A notation indicates that Rusk saw the memorandum.

SUBJECT
Military Assistance to Argentina

When the United States resumed relations with the Argentine Government on July 15, 1966, it was decided that the United States would carry out existing commitments. We resumed disbursements on existing AID loans, but have entered into no new ones.

We are applying the same standards on loans through the Eximbank, IBRD, and IDB as we would on any other Latin American countries.

We have not as yet resumed military assistance. It was decided in June 1966 that we would not do so for at least six months, and then only after a full review of our relations. As you know, Ambassador Martin was here in January and Defense and State reviewed the military assistance issue in detail./2/

/2/ Memoranda to Gordon from Dungan, Martin, and Sayre, January 12, 12, and 19, respectively, debating whether to resume military assistance to Argentina, are ibid.

In summary we agreed:

1. The FY 1966 grant program should be carried out as it had been agreed with Argentina before the coup. The program includes armored personnel carriers.

2. The FY 1967 grant program should be carried out but with a substantial reduction which is more than proportional to the cut taken by most other Latin American countries. Controversial items such as armored personnel carriers were shifted from grant to sale. Other major items of a non-controversial nature such as C-130 cargo aircraft would be provided on a credit or cash basis.

3. Tanks which Argentina sought to purchase before the coup would not be provided on any basis.

4. Two destroyers authorized by the Congress would be loaned or sold to Argentina./3/

/3/ In telegram 134762 to Buenos Aires, February 10, the Department informed the Embassy of these decisions. (National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 19-8 US-ARG) According to a note attached to this memorandum, Rusk approved the telegram without reading it.

I have consulted with the House Foreign Affairs Subcommittee on Latin America which raised no significant objections to the proposed course of action. I talked to Senator Javits who said he understood our position, but could not modify his own position as reflected in the Javits Amendment. Mr. Sayre and I have talked to Carl Marcy and Pat Holt,/4/ respectively, but my several efforts to agree on a time for consultation with the Morse Subcommittee/5/ have been unsuccessful. Pat Holt informs me that it would not be possible to arrange for consultation before the end of February given the absence of Committee members in Mexico until February 15 and my absence at the Buenos Aires meetings. I believe that we should now proceed on the FY 1966 and FY 1967 programs.

/4/ Carl Marcy, chief of staff, and Pat Holt, staff member, of the Senate Committee on Foreign Relations.

/5/ Senator Wayne Morse (D-Oregon), was chairman of the Subcommittee on American Republics Affairs of the Senate Committee on Foreign Relations.

As you are aware, our future policy on military assistance to Argentina and Latin America in general is under review.

 

145. Telegram From the Department of State to the Embassy in Argentina/1/

Washington, April 28, 1967, 11:46 a.m.

/1/ Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL 15-1 US/Johnson. Confidential; Priority. Drafted by Barnes and Dreyfuss on April 18, cleared by Solomon and Rostow, and approved by Sayre.

184026. 1. Following is Memorandum of Conversation between Presidents Johnson and Onganía, at the San Rafael Hotel, Punta del Este, April 13, 1967 at 6:30 p.m. Present at the meeting were: President Johnson, Mr. Walt W. Rostow, and Assistant Secretary Solomon for the United States; and President Onganía, Foreign Minister Costa Mendez and two unidentified persons for Argentina./2/

/2/ According to the President’s Daily Diary the meeting lasted from 6 to 7 p.m.; one of the "unidentified" participants was the Minister of Trade and Industry, Angel A. Solá. (Johnson Library)

2. Argentina’s Political Situation

President Onganía apologized for monopolizing the conversation, but said that it was important for President Johnson to get a panoramic view of Argentina’s situation from the lips of the Argentine President.

3. President Onganía said that after the experience of two decades of difficulties, it had become necessary for his country to undertake what he called the "Argentine Revolution". The Argentine Revolution called for the elimination of political parties, within the framework of a democratic system. As proof of the existence of a democratic system in Argentina, he could mention freedom of the press and freedom for the individual. For example, there was a better application of justice at the present time than before June 28, 1966. In addition, there was no state of siege, and there had been nothing but peace and tranquility in his country during the ten months of his government.

4. President Onganía went on to say that the main problem that Argentina faced was the existence of an archaic governmental structure which has the task of governing a modern country. This archaic governmental structure had proved to be unable to utilize the human resources of the country as they should be used. In his conception, the function of the government was to provide guidance and supervision to the individual and to private enterprise so that the latter could go about the process of developing the country. He added that he was convinced that Argentina’s main problem is political and not economic.

5. President Onganía went on to say that in the first stage of the Argentine revolution it would be necessary to systematize the government’s machinery. The second stage called for a reorganization of the entire community, including its material, spiritual, and intellectual values, so that Argentina could become what it should be.

6. Argentina’s Economic Situation

President Onganía said that his government had taken a series of important steps in the economic field, with a view to reducing inflation, which was growing at a 30% per year rate. These steps required the business and labor sectors to contain their aspirations, but were necessary to reduce the rate of inflation which was strangling the nation’s economy.

7. President Onganía said that his government, by making adjustments in the current budget, had reduced the projected deficit from $1 billion to $400 million. One of the items that had been taking up a large share of the budget was government-owned enterprises, especially railroads. His government planned to establish a higher degree of rationality in the management of these enterprises, and eventually to shift surplus personnel to more productive sectors. This same process would be applied to government personnel.

8. President Onganía said that there is one area in which the economy as a whole could be reactivated, and that is housing, as there was a deficit of 1,500,000 units in his country. In this endeavor, Argentina would need outside assistance.

9. President Onganía also said that Argentina wants to increase its exports, especially in non-traditional goods. He added that this does not mean neglect of beef exports, since his country had built up its reserves of beef cattle, and is now ready to go into the world market again. In that connection, Argentina is worried about the lack of progress on a world meat agreement in the Kennedy Round, although it had been assured of the support of the United States in this connection. President Johnson at this point observed that the Kennedy Round meat group discussions were not promising.

10. President Onganía said that his country is putting to good use the IDB loan for agriculture, and that he is convinced of the need of bringing the benefits of technology, specifically electricity, to the rural areas.

11. Of equal importance to the problem of housing is the need to begin the Chocon-Cerro Colorado project, which is a multi-faceted development effort.

12. President Johnson said that he and his government were impressed with the economic steps that had been taken in Argentina under President Onganía’s direction and that he was a great supporter of rural electrification.

13. Arms

President Johnson said that it is important that the Latin American countries not embark on an arms race, and that he hoped that President Onganía would provide leadership to the rest of Latin America in this matter.

14. President Onganía replied that his country does not aspire to have large weapons, rockets, or anything like that, but that at the present time the Argentine Armed Forces do not even have a minimum level of equipment. He said that it is important that the military vocation of the Latin American countries not be twisted, and that the Armed Forces of the Latin countries should not become mere national police forces.

15. Summit Conference

President Johnson said that he hoped that President Onganía would make a clear statement on the success of the Summit Conference, to counterbalance the effect that the statements of the Ecuadorean President might have on the American public and Congress./3/

/3/ See Document 51.

Rusk

 

146. National Intelligence Estimate/1/

NIE 91-67 Washington, December 7, 1967.

/1/ Source: Central Intelligence Agency, Job 79-R01012A, O/DDI Registry. Secret; Controlled Dissem. According to a note on the cover sheet this estimate was prepared in the Central Intelligence Agency with the participation of the intelligence organizations of the Departments of State and Defense and the National Security Agency. The United States Intelligence Board concurred in this estimate on December 7.

ARGENTINA

The Problem

To consider the nature of Argentina’s basic problems, the character and actions of the Onganía administration, and the prospects for significant economic and political progress over the next four or five years.

Conclusions

A. President Onganía is bent on retaining power as long as necessary to revive the country’s economy and, when that is accomplished, to tackle its political maladies. The government has given priority to a sustained attack on the most serious economic aberrations; it has meanwhile suspended politics as usual, ordered all the political parties dissolved, and put off indefinitely any attempt to come to grips with the country’s most divisive political problem-Peronism.

B. Onganía’s administration has, for the most part, avoided repressive actions, and, in the conduct of its business, it appears more civilian than military. Most Argentines, though not enthusiastic about him, seem quite willing to wait and see how his government performs. We believe that Onganía will continue to hold power over the next year or so.

C. The administration has initiated a complex economic program designed to achieve both financial stabilization and economic development. It has sharply reduced the power of organized labor and has taken positive action to reduce budget deficits, increase production, and control inflation. These measures have attracted considerable official and private financial and technical support from abroad. Over the next year or two we look for additional progress in budgetary reforms, in stabilization measures, and in some aspects of development.

D. Over the longer run-the next four or five years-we doubt that the regime can continue to keep Argentine political problems on the shelf. We think Onganía will have great difficulty in holding cohesive civilian support behind his program, and as time passes his military backing is likely to become less solid. These factors will complicate any attempts by Onganía to come to grips with the Peronist problem. Further, we do not believe that even over this longer period of time Argentina will establish a representative system of government capable of reaching a consensus on policies and tactics for dealing with its social and economic problems.

E. We believe, nonetheless, that the government will make considerable progress in reducing the impact of fluctuating harvests and commodity prices on annual growth rates. Broader economic success, however, will depend on the government’s ability to maintain continuity in its policies and to retain public confidence in their durability over a number of years. We believe that the government’s chances of remaining in power over this longer run are considerably better than even, but we are less confident that it will be able to adhere firmly to a successful economic policy.

F. Onganía’s anti-Communist leanings will continue to be a force for close cooperation with the US. Among the issues which could adversely affect US-Argentine relations would be a refusal by the US to carry out what the Argentine military establishment regards as a commitment to assist in the modernization of its armed forces.

[Omitted here is the Discussion section of the estimate.]

 


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