Argentina

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

Washington, May 24, 1961, 10:52 p.m.

/1/Source: Department of State, Central Files, 735.5-MSP/5-2461. Confidential. Drafted by Coerr; cleared with Goodwin, O'Conner, Barall; and approved by Coerr.

1701. Following based on uncleared memorandum of conversation:/2/

/2/Not found.

Argentine Economic Minister Alemann called on President today accompanied by Ambassadors del Carril and Rubottom./3/

/3/The meeting was held from 4:28 to 4:57 p.m. at the White House. (Kennedy Library, President's Appointment Book) In the briefing memorandum to the President prepared for Alemann's call, May 22, the Department of State stressed that by receiving the new Argentine Economic Minister, President Kennedy could provide useful support of Argentina's economic stabilization and recovery program. The austerity program had won international approbation, but was very unpopular in Argentina. (Ibid., National Security Files, Countries Series, Argentina, General, 1/61-7/61)

Alemann said that Frondizi hoped to meet the President on occasion IA-ECOSOC Conference, either in Montevideo or in Buenos Aires, should President plan to stop at one or more countries en route. President said he too would most warmly welcome such a meeting although he unable at this time make decision on visiting Montevideo, in view of possibility his presence might be needed in Washington during July when Congress would probably be very active on many of the Administration's important bills.

Alemann referred with pride to hard-won economic successes Frondizi Government has already achieved. He referred also to GOA's political success in most recent local elections. He declared GOA now approaching point where Frondizi's sound economic practices will produce basic economic success and political recognition, but that GOA needs immediate help. Alemann declared he not in Washington to seek "aid package" but rather to obtain informal but firm assurance, for political purposes, of USG's intent to extend loans to GOA when requested on sound project basis. He cited specifically need to finance rehabilitation of railroads which running at deficit approximately equal to fiscal deficit.

Alemann said GOA fully understood and approved US aid to Brazil as significant contribution Brazil's economic and democratic stability which extremely important to Argentina and US and Latin America as a whole.

President mentioned USG's traditional difficulty in making long-range aid commitments. He said he understood Alemann had had useful meeting with Dillon. He asked Goodwin of White House staff to coordinate urgent study and action by State, Treasury and other interested agencies both on trade and aid matters that Alemann had raised./4/

/4/No further documentation on this prospective study has been found.

Rusk

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

Washington, September 27, 1961.

/1/Source: Department of State, Central Files, 711.11-KE/9-2761. Confidential. Drafted by Woodward, cleared by Goodwin, and approved by Woodward. Repeated to USUN.

575. 1. President Kennedy and President Frondizi talked privately on September 26 for about two hours/2/ and with their advisers for almost two hours more./3/

/2/The memorandum of the private conversation, held at the President's suite in the Hotel Carlyle, New York City, 9-10:15 a.m, is ibid. Kennedy and Frondizi were at the United Nations for the General Assembly session.

/3/The second meeting with advisers (Rusk, Woodward, Martin, and Goodwin for the United States; Foreign Minister Caraco, Ambassador del Carril, Minister of Economics Alemann, Ambassador Arnaldo Musich, and Cecilio Morales for Argentina) also took place at the Hotel Carlyle from 10:15 to 11:30 p.m. (Johnson Library, Rusk Appointment Book) The memorandum of conversation of the meeting, September 26, is in Department of State, Central Files, 611.35/9-2661.

2. Argentines submitted a long memorandum in advance requesting following loans:/4/

/4/Rusk sent President Kennedy a memorandum, dated September 26, explaining that the Argentine request totaled over $1 billion. He noted that only a small percentage of the projects had been mentioned before and "the new ones appear to have been hastily conceived and haphazardly presented--apparently for the purpose of affording us an opportunity to provide financial assistance if we are anxious to do so." Rusk recommended that Kennedy give Frondizi only a general commitment for assistance. The specific projects would have to be discussed with U.S. advisers. (Kennedy Library, President's Office Files, Countries Series, Argentina, General, 1961)

(a) $146.7 million for El Chocon-Los Colorados hydroelectric project, estimated to cost a total of $262 million;

(b) Equipment and construction to renew entire meat-packing and meat transportation system with several items totaling $220 million;

(c) Ditto for poultry raising and processing industry, totaling $15 million;

(d) Ditto for fruit storage and transportation industry, totaling $65 million;

(e) For savings and loan and other low cost housing credit institutions, $200 million;

(f) For fish storage and processing, $20 million. (Appended to memorandum were lists of other hydroelectric projects totaling $149 million, and irrigation projects totaling $187 million.)

3. President Frondizi said his Government determined to proceed with El Chocon complex and wished "political" if not financial commitment from US. President Kennedy agreed to favorable response concerning US participation this project, conditioned on favorable recom- mendations by current IDB survey./5/ Final communique/6/ also included statement of US favorable disposition toward additional assistance in low-cost housing field and manifested sympathetic attitude toward good projects in other categories, although no indication was given that assistance in agricultural processing industry could go beyond medium term credits for equipment.

/5/Not found.

/6/The text of the communiqué is in Public Papers of the Presidents of the United States: John F. Kennedy, 1961, pp. 627-629.

4. Argentines emphasized their concern for larger US markets for meat. President Kennedy assured that scientific recheck by independent scientists on basis for US quarantine on pickled and cured meats now proceeding completely objectively.

5. President Kennedy offered to talk personally with Moore of Wilson Packing Co. to determine possibilities of constructive action.

6. In response to Secretary Rusk's direct query, Foreign Minister Carcano said that he did not know enough about the bilateral aviation agreement to be able to discuss it usefully. No mention was made of possible airport loans.

7. Only passing descriptive comments were made by Argentines concerning steel production projects, and comments concerning railroad re-organization were even more casual.

8. President Frondizi emphasized his belief that multilateral action concerning Cuba should be postponed because it would be extremely difficult until practical results could be shown to the people from Alliance for Progress projects.

9. President Kennedy emphasized that striking self-help measures, such as in taxes and land reform, will be necessary if his Administration is to obtain additional large appropriations required from US Congress for assistance in economic and social development.

10. Argentines appeared to be comparatively unimpressed with documents (Deptel 561) and doubted their authenticity./7/ Department arranged to have a complete set of photostats delivered by de la Torre directly to Argentine visitors, since Cuban exiles are very anxious to release texts of the documents and this direct contact would relieve Department of responsibility for repercussions from such publication.

/7/Reference is to documents obtained by a member of the Cuban Embassy staff in Buenos Aires, who defected. The documents allegedly provided evidence of Cuban subversive activities in Argentina. (Memorandum from Goodwin to the President, undated; Kennedy Library, National Security Files, Countries Series, Argentina, General, 1/61-7/61) Telegram 561, September 25, is not printed. (Department of State, Central Files, 373.00/9-2861)

Bowles

174. Memorandum of Conversation/1/

Palm Beach, Florida, December 24, 1961.

/1/Source: Kennedy Library, National Security Files, Countries Series, Argentina, General, 8/61-12/61. Confidential. Drafted by Woodward, and approved by Bundy at the White House on December 26. Frondizi's visit to Palm Beach was an informal one.

SUBJECT
Summary of Conversation between President Kennedy and President Frondizi at Palm Beach, December 24, 1961, on subjects other than the Prospective Meeting of Consultation of Ministers of Foreign Affairs Scheduled for January 22, 1962

PARTICIPANTS
President Kennedy
President Frondizi
Argentine Foreign Minister, Dr. Miguel Angel Carcano
Argentine Ambassador to Washington, Sr. Emilio Donato del Carril
Argentine Under Secretary of Foreign Affairs, Dr. Oscar Camilion
Argentine Chief of Political Section of Foreign Office, Dr. Carlos Ortiz de Rozas
Assistant Secretary of State, Robert F. Woodward

1. President Frondizi expressed pride and satisfaction in the economic gains his Administration has made, with the result that public attention in Argentina has become focused on constructive economic developments and away from the former unproductive discussions of "nationalization" of utilities and industries and on largely theoretical and impractical discussions of social problems and labor benefits.

2. He pointed out that this had made it possible for the Argentine Government to weather a 40-day strike of railroad workers and discharge 40,000 of them who had been working absurdly short hours and were unneeded. The Argentine Government gave these workers full termination pay and would have discharged up to 40,000 more if the Government had the money to pay termination pay to them. Now the Government badly needs to show the public improvements in the railroads and wants to purchase freight cars and other equipment in the United States with a requested Eximbank loan. President Kennedy said he would speak with President Linder of the Eximbank about this, recognizing that the Eximbank has been awaiting action on the request for a World Bank loan for rehabilitation of the railways and that the World Bank has been awaiting the study of its mission in Argentina on this subject which will be completed next month.

3. President Frondizi spoke with satisfaction of the provincial elections in Santa Fe and other provinces in which his supporters won large majorities and the "Peronists" had a surprisingly small showing. Despite this showing, he thought it would be decidedly disadvantageous to the Government in the March elections if the voters were stirred up with publicity about debate on possible application of sanctions against Cuba at the Punta del Este meeting in January.

4. President Frondizi mentioned his hope for success in the efforts of the US mission going to Argentina next month to study ways in which cured and pickled meats can be prepared for shipment to the United States without any danger of foot and mouth disease. President Kennedy expressed a similar hope.

5. President Frondizi alluded to the continuing Argentine desire for financing of the El Chocon-Los Colorados hydro-electric and regional development project. President Kennedy stated, as he had in September 1961,/2/ US willingness to give the most careful and sympathetic consideration to participation in the financing when the proposal is formulated and presented and when indications of the other sources of financing are ready.

/2/See Document 173.

6. President Kennedy reviewed briefly with President Frondizi the status of the interest of the US Steel Corporation in possible establishment of a steel mill in Argentina as evidenced by a study now in process.

7. President Frondizi commented that he was pleased that a new US Ambassador in the confidence of President Kennedy is being sent to Argentina and expressed the hope that he would come soon. President Kennedy said he would come just as soon as the question of his confirmation by the Senate can be worked out with the Senate which reconvenes in about two weeks./3/

/3/Robert McClintock was appointed Ambassador to Argentina on February 6.

8. President Frondizi said that the Argentine Ambassador to Cuba, who had come to New Orleans to report to him, had asserted that there is steady economic deterioration in Cuba and that the recent Castro declarations are for the purpose of attempting to compel the Soviet Bloc to take on greater responsibility for economic support of Cuba--and also for the purpose of enabling Castro personally to compete with old-line Communist leaders who appear to be competing seriously with him within Cuba. (For example, a speech by Blas Roca two days before Castro's speech of December 1 received much more publicity in the press than Castro's.) The Argentines asserted, also, that they considered Castro's provocation of diplomatic breaks with Venezuela, Colombia and Panama--and his speech of December 1--were designed to force a vote on a "hard line" at the Meeting of Foreign Ministers which would divide the inter-American system and thus increase Cuba's chances of retaining a degree of cooperation and support from Brazil, Mexico, Chile and a few other countries.

9. President Frondizi said he did not consider the situation in Brazil to be very stable and he considered that any agitation, such as debate over sanctions against Cuba, which might precipitate movements in Brazil of the right or left, would be harmful.

10. President Frondizi asserted that there is no need for land reform in Argentina which provides for any division of present land ownership, but that increased productivity of agriculture is badly needed. He implied that he thought there might be some need for land division in countries such as Chile where the rural population is a larger percentage of total population. President Kennedy said he hoped that the "Operation Beef" technical assistance program was helping with increased productivity, and President Frondizi said appreciatively that it is.

11. President Frondizi remarked on his impression that the Japanese with whom he talked a week ago did not consider Red China a threat because they believe Red China's internal problems are so great. He said he thought Argentina might be able to sell grains, meat and wool to Red China. President Kennedy said that Red China constitutes such a great and unpredictable threat to all of us in the Western World--and will more so as it obtains nuclear weapons--that it would be very unfortunate if anything were done to help the Government in the face of even a remote chance that internal forces may be developing in opposition to the present Peking Government./4/

/4/On February 1 Frondizi sent Kennedy a long letter detailing economic progress and problems in Argentina, and requesting "in concrete terms" $50 million credit from the U.S. Treasury "without the presently required provision of total prior utilization of the $100 million contingent credit granted by the International Monetary Fund." Frondizi also requested $100 million with the program of the Alliance for Progress to finance the transfer of 200,000 public employees to "new productive occupations in national development sectors." (Kennedy Library, National Security Files, Countries Series, Argentina, General, 1/62-2/62)

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

Washington, February 10, 1962, 4 p.m.

/1/Source: Department of State, Central Files, 735.00/2-862. Secret. Drafted by Well-man, cleared by Goodwin, and approved by Rusk.

1436. Reference Embassy's telegram 1350/2/ and Department's telegram 1391./3/ Department shares Embassy's concern internal political crisis may result in destruction of balance between civil and military forces and subordination of constitutional elected executive to military. We welcome foreign policy changes brought about by internal pressures mainly from military./4/ We believe however continued and extreme military pressure upon government would be contrary to US interests.

/2/In telegram 1350 from Buenos Aires, February 8, the Embassy reported increasing tension between the Frondizi government and the Argentine military. The Embassy noted fears that either the military would demand the ouster from the government of certain Frondizi supporters, placing him in an inferior political position, or might even overthrow him. (Ibid.)

/3/In telegram 1391 to Buenos Aires, February 2, the Department noted it "would deplore overthrow by armed forces of constitutional government." (Ibid., 735.00/2-162)

/4/Reference is to the breaking of relations between Cuba and Argentina on February 8.

You have taken position with our approval that this is Argentine internal matter in which we are resolved not to intervene but that we would deplore overthrow of constitutional government by military. If consistent with this position you have opportunity in contacts with military to point out advantages of relieving pressure on Government in interest of moderate solution, now that foreign policy changes have been achieved, you are encouraged to do so./5/

/5/In telegram 1389 from Buenos Aires, February 15, the Embassy reported that it had on several occasions used U.S. officials to inform the Argentine military that overthrowing Frondizi "would indicate a regression in Argentine political affairs and could not but help affect adversely our relations." (Department of State, Central Files 735.00/2-1562)

Rusk

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

Buenos Aires, March 19, 1962, 3 p.m.

/1/Source: Department of State, Central Files, 737.00/3-1962. Top Secret; Niact; Limit Distribution. Repeated to POLAD CINCARIB.

1661. This telegram is in nature of a contingency paper and in consequence I do not wish it to be taken as a cry of alarm. Other telegrams going out from Embassy this morning will analyze results of elections, submit biographic data on Framini and company, and summarize Embassy opinion on psychological, political, and economic impact from yesterday's balloting./2/

/2/National elections were held in the federal capital and 16 provinces. Fourteen provinces elected governors along with provincial and local officials. Fifteen provinces and the federal capital elected members of the National Chamber of Deputies. Eighty-seven of the 192 seats in the National Assembly were at stake. The Peronists ran first in 11 provinces, winning 9 governorships and were second in the federal capital. Voting for seats in the National Chamber resulted in the following distribution (including hold-over members): Union Civica Radical Instransigente (UCRI), Frondizi's party, 74; Union Civica Radical del Pueblo (UCRP), 56; Peronists, 47; and 14 seats were distributed among minor parties. Documentation on the election is ibid., 735.00.

Purpose of this telegram is to point out various contingencies which may arise from an unsatisfactory situation.

1. Ironic paradox is that national elections which by every index were clean and honestly run will lead to one of three alternatives, none palatable to Argentina nor ultimately to US:

A) Election results are allowed to stand "as is" with Peronists thus gaining control of seven to nine provinces, including vitally important Buenos Aires province, as well as materially increasing their representation in Chamber of Deputies. Such control could easily prepare a way for election two years hence of a Peronist president.

B) To prevent foregoing alternative, Frondizi (as Morales told me last night--Embtel 1656)/3/ might intervene against Framini in Buenos Aires province and other Peronist Governors in remaining six provinces. This, although constitutionally "legal" since Argentina still remains in state of siege, would of itself negate democratic process as carried out by elections.

/3/Dated March 18. (Ibid., 735.00/3-1862)

C) Military, incensed at what they regard as a gigantic miscalculation by Frondizi, may use their power not merely to insist that he have recourse to intervention as outlined above, but might as well ask themselves "why not go the whole hog?" "Why not throw out Frondizi?"

2. Our own attitude toward these three alternatives initially should be one of "no comment" although here and there we could make noises about hope that constitutional procedures will be followed in one of Latin America's most politically advanced countries.

3. If, however, military do oust Frondizi they will certainly not stop short of getting rid of Frigerio at same time and will place Peronists, at least for time being, beyond the pale. Their coup d'etat will undoubtedly have window dressing to make it seem an anti-Communist, anti-Castro measure. It is perhaps early to discern whom they would entrust with power as an eventual provisional president, but it seems clear that Aramburu would most likely fill requirements of that position. If he is appointed I believe we should give him prompt recognition with stress on fact that it was he who intervened against Peron and succeeded in bringing nation to restoration of a constitutional regime. General Fraga, Secretary of War, might be another possibility.

Foregoing is responsive to last sentence Deptel 1668/4/ although drafted before receipt that telegram.

/4/The last sentence of telegram 1668 to Buenos Aires, March 19, reads: "Your evaluation election results including probable effect on position and policies GOA and US-Argentine relations eagerly awaited particularly in view Congressional interest." (Ibid.)

McClintock

177. Telegram From the Department of State to the Embassy in Spain/1/

Washington, March 21, 1962, 4:22 p.m.

/1/Source: Department of State, Central Files, 735.00/3-2062. Top Secret. Drafted by Wellman, cleared in EUR/WE, and approved by Martin. Repeated to Buenos Aires.

914. Refs urtel 1209 and Buenos Aires to Dept 1680 repeated to Madrid niact 9./2/ We appreciate considerations raised urtel 1209 and also doubt any approach to GOS would be effective. We would like to give sympathetic response to President Frondizi however and have consequently asked our Ambassador to tell him we have requested our Embassy Madrid to explore what it may be possible to do in response to his request./3/ If upon further consideration you feel that approach at appropriate level in Spanish Government might be helpful in situation described BA telegram 1680 you are authorized in your discretion to make it.

/2/In telegram 1680 from Buenos Aires, March 20, McClintock reported a conversation with Frondizi who asked the United States urgently to approach Generalissimo Franco. Frondizi wanted Franco to prevent Juan Peron, in exile in Spain, from sending instructions to Peronist militants in Argentina to incite riots, strikes, bombing incidents, or other demonstrations against the Frondizi government. In telegram 1209 from Madrid, the Embassy recommended against direct representation to Franco as it was unlikely to lead to success. Instead, the Embassy proposed to make the approach to the Foreign Office. It was not hopeful of strong Spanish cooperation. (Both ibid.)

/3/In telegram 1701 to Buenos Aires, March 21. (Ibid.)

Despite statement Foreign Office official (Embtel 1299 June 7, 1961)/4/ Peron so far had kept his word to refrain political activity, we have received reports he has remained in contact with Peronista organizations in Argentina with some Peronista leaders having visited him in Spain.

/4/Not printed. (Ibid., 735.00/6-761)

You will understand any approach to GOS should be handled so as to minimize possibility public disclosure U.S. interest.

Report your conclusions and any action you may take./5/

/5/In telegram 1246 from Madrid, March 23, the Embassy reported that it took up the "Peron problem" with Foreign Minister Fernando Maria Castiella who agreed that Peron should maintain silence, assured the Embassy that Peron had agreed to do so, and that Peron was not sending instructions to Peronists in Argentina. Castiella stated that Spain was sympathetic to Frondizi. (Ibid., 735.00/3-2362)

Ball

178. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Martin) to Acting Secretary of State Ball/1/

Washington, March 26, 1962.

/1/Source: Department of State, Central Files, 735.00/3-2662. Top Secret; Eyes Only. Drafted by Martin.

SUBJECT
Argentine Situation

For Frondizi (not in order of priority)

1. Essentially accepts our domestic economic objectives.
2. Is legally President.
3. No good alternative visible.
4. Replacement by military apt to loose Peronista violence.
5. Military coup bad example for Latin America.
6. He has courage, at least as far as staying in office is concerned.

Against Frondizi

1. In foreign and domestic political matters it seems sometimes difficult to know what he really believes.
2. Has made deals with Peron.
3. Has no important supporting group in country which will help him govern and solve future urgent problems; if he stays it will be because of principle of constitutionality only.

On balance, and especially looking beyond the next few weeks, it is a close thing and our instructions have been accordingly restrained. The FYI on Friday's cable/2/ was FYI. Its positive clause was a negative instruction against any encouragement to military to take over. It did not revoke our earlier instructions/3/ or my telephone conversation of Tuesday night with Ambassador/4/ when we agreed he should personally stay out of crisis and only pass views through [less than 1 line of source text not declassified]. It only changed previous endorsement of constitutional processes to an FYI expression of our support for Frondizi because by Friday two seemed to have merged and success of Frondizi seemed only way to prevent military coup. But this was a statement of our views and not an authorization to move to open and active support.

/2/Reference is to telegram 1738 to Buenos Aires, March 23. An FYI message in the cable reads: "It is our strong desire and policy that Frondizi not be forced to resign by military and nothing should be done that might in any way encourage the military to take such action." (Ibid., 735.00/3-2362)

/3/Apparent reference to telegram 1668 to Buenos Aires, March 19, in which the Department stated that the United States must "avoid any intervention in Arg internal affairs, and this is particularly advisable in view uncertainty regard game Frondizi is playing vis-a-vis Peronists and others. (Ibid., 735.00/3-1862)

/4/No other record of this telephone conversation, March 20, has been found.

His initial reported response was not wholly inappropriate relay of US views through [less than 1 line of source text not declassified]. Action on Frigerio was first open intervention and while good advice to Frondizi, could put us in bad spot in future with Frigerio group; and ploy along this line through McCloud to military was bad tactics also in relations with Frondizi. On Sunday he openly stepped in with authority to Frondizi to quote FYI US view to Navy and in his own meeting with Navy. Subsequently he met with Air Force and General Aramburo and revealed to Frondizi the General's personal plans to replace Frondizi.

I do not now feel able to pass judgment on actions of man on spot in crisis of this urgency.

This report in No. 1779/5/ on Sunday's activities also underlines that even with the title of President, Frondizi will not have the support necessary to govern. The large Peronista vote makes it even more important than would normally be the case that there be a firm government in Argentina with a clear policy which it is able to carry out.

/5/In telegram 1779, March 25, McClintock reported that Frondizi told him that he was under heavy pressure from the Argentine Navy to resign. Frondizi asked McClintock to talk with the admirals. McClintock reported that Chief of Naval Operations Admiral Penas and Navy Chief of Staff Rear Admiral Palma informed him that unless Frondizi resigned, there would be a coup in 48 hours. McClintock encouraged the admirals to work with Frondizi in reorganizing the government. McClintock saw Frondizi again that afternoon and agreed to speak to key members of the Argentine Army and Air Force. After these meetings, McClintock met General Aramburu who was firmly in favor of Frondizi's voluntary departure to avoid a coup. McClintock reported to Washington that he had discharged his "moral obligation" to aid Frondizi, had discouraged an outright coup d'etat, and that Frondizi was a spent force. McClintock recommended that the United States sit tight and "let the Argentines work out their own salvation." (Ibid., 635.00/3-2562)

Recommendations:/6/

/6/There is no indication on the source text whether Ball approved or disapproved these recommendations but in telegram 1767 to Buenos Aires, March 26 at 8:49 p.m., the Department told McClintock that it concurred that the "best course of action is to let events take their course," and that the prohibition against the United States "not intervening in open fashion still stands." The Department reminded McClintock that other initiatives should not be taken without instructions from Washington. The cable also suggested that once the situation stabilized, the United States should try to help secure a government with sufficient support to govern effectively and to meet the challenge of the Peronists vote. (Ibid.) According to an attached note, Ball did not see this memorandum until after telegram 1767 was sent.

1. That we concur in Ambassador McClintock's recommendation in the second section of No. 1779 that he take no further action but let events take their course for the immediate future.

2. That we should turn our attention to the need for a government in Argentina which can govern effectively and vigorously and with some degree of popular support, particularly to deal with the issues raised by the Peronista vote. What the US can do to promote this objective will require very careful examination.

179. Memorandum From the President's Special Assistant (Schlesinger) to President Kennedy/1/

Washington, March 30, 1962.

/1/Source: Kennedy Library, National Security Files, Countries Series, Argentina, General, 3/16/62-3/31/62. No classification marking.

SUBJECT
Attitude Toward the Argentine Situation/2/

/2/On March 29 Argentine military forces removed President Frondizi from power claiming that he had reduced Argentina to a critical state by his errors and justifying their actions by the need to protect the constitution and the aims of the revolution which overthrew Peron in 1955. For the immediate U.S. reaction, see Document 182.

Problem. Should the State Department or the White House issue a statement disapproving of the action of the Argentine military in interrupting constitutional processes in Argentina (without, of course, closing the door to eventual relations with the new government)?

Arguments Pro. The failure to do this will lead the military in other countries to suppose that they have a green light to stage coups of their own. Loeb in Peru, Stewart in Venezuela, Bernbaum in Ecuador and now John Martin in the Dominican Republic have all reported ominous stirrings in their local military establishments. Betancourt, who is obviously greatly alarmed, has pulled most of his people out of Buenos Aires and, according to radio reports, has sent a telegram to you and other Latin American Presidents concerning the Argentine situation. (We are checking, but the Betancourt message apparently has not yet arrived, the radio report did not describe its contents.)/3/

/3/See footnote 2, Document 185.

Great concern is reported throughout Latin America from the particular friends of the Alliance for Progress.

It is further contended that making such a statement, far from prejudicing future relations with the new Argentine government, may have a sobering and salutary effect (as similar statements may have had in the case of South Korea).

Arguments Con. We do not yet know enough about the situation to take a public attitude of disapproval; and, if we do so, it may make it more difficult for us to influence the direction of the new government. We should deal with the situations in Peru, Venezuela, Ecuador and the Dominican Republic by specific means adapted to each country rather than by comment on the Argentine situation. In some cases (El Salvador in the past, perhaps Cuba in the future), we have welcomed military coups. Given the uncertainty of the situation, it would be safer to move with caution, let our disapproval be made evident by delaying formal relations with the new government and refrain at this point from going out on the limb./4/

/4/At the daily White House Staff meeting, the coup in Argentina was discussed. According to Ewell's memorandum for the record, March 30, the discussion was as follows:" Arthur Schlesinger brought up the fact that we had not reacted yet to the Argentine situation. The President evidently decided that we would say nothing yesterday (Thursday), but had issued no guidance as to today or subsequently. Schlesinger's primary interest is for us to tell the other Latin American countries that we are opposed to military take-over. Bundy is in the middle as he sees no need for unnecessarily antagonizing the new Government. It was accepted by all that we would sooner or later recognize the new Government." (National Defense University, Taylor Papers, Daily Staff Meetings, January-April 1962)

Arthur Schlesinger, jr./5/

/5/Printed from a copy that bears this typed signature.

180. Circular Telegram From the Department of State to Posts in the American Republics/1/

Washington, March 31, 1962, 9:33 p.m.

/1/Source: Department of State, Central Files, 735.00/3-3162. Secret; Priority. Drafted by Wellman and approved by Martin. Repeated to Buenos Aires, London, USUN, Madrid, and POLAD CINCARIB.

1657. Relations with new Argentine Government.

1) Particularly in view repercussions Argentine developments throughout Hemisphere and interest already expressed by certain governments in US position we wish to exchange information and views with Government to which you are accredited. You are requested to confer with Government at high level promptly for this purpose.

2) Following is summary of current governmental situation in Argentina based on reports from our Embassy which should be conveyed to Foreign Office:

Constitutionally elected President Frondizi removed from office on March 29 by Argentine military forces after he had persistently resisted strong military and civilian pressures to resign. Jose Maria Guido, President of Senate, took oath office as President on March 29. He reaffirmed assumption office in public ceremony March 30 before Supreme Court in presence Members of Congress and military leaders. New government claims right legal succession under Article 75 Argentine Constitution as implemented by Law of Congress 1868. This provides that 1) in event Republic without a head due to lack of a president in certain contingencies (in this case absence from capital) and Vice President (resigned) executive power shall be vested in President of Senate, and 2) new President shall within thirty days call for new election of President and Vice President.

Reportedly Senate President was at first reluctant to serve but took Presidential office at personal sacrifice to himself with consent or perhaps even request Frondizi and at urging of leaders UCRI (Frondizi's) party in order to avoid installation of military government. UCRP (which was principal opposition party in Congress) has reportedly announced support for him. Military commanders accepted Guido after initial reluctance and some leading military have reportedly asked to be retired.

Cabinet not yet formed. Guido is civilian and although military will probably have much to say about composition of Cabinet, it seems likely to be largely non-military in character. Congress will probably be called into session within next few days to enact electoral and other urgent legislation.

3) You are requested to state that it will always be source of regret and concern for USG when a democratically elected government which is cooperating in the OAS and with the Alliance for Progress is replaced at insistence of military forces. We hope however that a civilian government will be established in Argentina which will command support from the Congress, democratic political parties and majority populace, as well as military forces, that this Government will operate within democratic constitution and that it will observe its international and inter-American obligations including those under Alliance for Progress. If a government of substantially this character is organized by Guido, it should be in the interest of all states with the interests of Argentine people at heart to assist it in strengthening democratic institutions in Argentina and resuming the social and economic programs called for by our mutual commitments under Alliance.

4) You should state that USG therefore intends to watch developments in Argentina very closely over next several days, and in particular will be interested in composition new Cabinet when formed, congression-al support of new government, plans for new election pursuant to constitution and other indications of policies it will follow. In this connection USG will be pleased to receive such information and views as foreign government may have on Argentine situation.

5) Report promptly Government's reactions together with any comments you may have./2/

/2/The responses are ibid., 735.00.

Rusk

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

Washington March 31, 1962, 9:33 p.m.

/1/Source: Department of State, Central Files, 735.00/3-3062. Secret; Niact; Limit Distribution. Drafted by Wellman; cleared by Walter L. Cutler (Rusk's Staff Assistant), Rusk, and the White House (paragraph 3 only); and approved by Martin.

1866. Ref BA Embtel 1902./2/

/2/In telegram 1902 from Buenos Aires, March 30, the Embassy described secret negotiations between Guido and the military to enact measures to control the Per#nists, modify labor union legislation, and enact a bill for proportional representation in future elections. In this telegram the Embassy recommended that the United States continue relations with the Guido government. (Ibid.)

1. We would like to study Argentine situation further before making decision on relations with new government and in particular on question of timing. We would like first to have your report and evaluation of new Cabinet when selected by provisional President. We are also interested in reaction to new government in special session of Congress proposed to be called almost immediately, which should provide evidence degree of Congressional support, as well as an indication from new Government of its plans, including those for new elections. In other words we wish to be sure new government is in effective control and to consider degree to which it is able to act along constitutional lines. We also need to exchange information and views with other Latin American Governments. Cirtel for this purpose being repeated to you./3/

/3/Document 180.

2. We appreciate and share your interest in supporting a civilian government and forestalling outright military dictatorship. On other hand too prompt action might reassure military that they can act as they choose in future without fear of US disapproval. We trust procedures outlined above will not result in undue risk on this score.

3. You have noted repercussions of Argentine situation in other Latin American countries particularly those where democratic governments have only recently succeeded military regimes. In order reassure democratic elements in Latin America and to discourage military adventures the President is considering a public statement in general terms on role of military in government, perhaps in connection with a further decision on our relations with Argentine Government.

4. We hope you can find early opportunity to explain privately to responsible military elements supporting new government that we are concerned over possible adverse effects of reports on Argentine developments upon political stability of democratic and constitutional regimes elsewhere in Hemisphere. This may require US to make public statement this subject. It would not be directed primarily at Argentine situation, where civilian government under a democratic constitution is now in office, but designed to influence situation in certain other American countries where continuance any form of democratic regime may be endangered if military elements not warned. We hope they will understand Hemisphere conditions which seem to call for some such statement by us. FYI only. We have in mind for example at present time DR, Venezuela, Peru and Ecuador. End FYI.

5. We shall appreciate further information when available on following: a) composition of Cabinet and competence and reputation new Ministers; b) extent support new government outside Peronists and communists; c) plan for convening special session Congress; d) intention re new elections; e) effect of proposed proscription totalitarian parties on 1) recent elections to Chamber of Deputies and 2) continuance and extension of interventions of provincial governments; f) nature and effect of proposed modification of basic labor law; g) probable reaction of Peronists to new Government and proscription totalitarian parties, and ability new Government to cope with them; h) reliability of reports Frondizi approved Guido acceptance Presidency.

Rusk

182. Editorial Note

At the White House daily staff meeting on April 2, 1962, presided over by the Deputy Assistant for National Security Affairs, Carl Kaysen, Argentina was the last topic of conversation. According to an April 2 memorandum for the record by Colonel Julian J. Ewell of General Maxwell Taylor's staff, the discussion was as follows:

"Schlesinger reported that our policy on Argentina is still up in the air. Secretary Rusk and the Country Desk, as well as the Ambassador, are for recognition, the Assistant Secretary and Schlesinger are against. There was mention of a reputed message from Betancourt which proposed that no one recognize a military government put in place by a coup. No one has seen this message as yet. Bromley Smith will make inquiries to see if it was delayed in transmission. Schlesinger philosophized a little bit on the possibility that the Peronista element might not be as bad as has been painted. He pointed out that the International Monetary Fund has had a complete lack of success in stabilizing economies in Latin America without the Government falling from power. He inferred that perhaps we needed a different approach, that such harsh economic medicine resulted in killing the patient. I asked Schlesinger if he was saying that we shouldn't have economists in Government, and he said he had always been against it. This was after Kaysen had left the room." (National Defense University, Taylor Papers, Daily Staff Meetings, Jan-April 1962)

Regarding President Betancourt's message, March 29, see footnote 2, Document 185.

183. Memorandum From the Director of the Agency for International Development (Hamilton) to President Kennedy/1/

Washington, April 6, 1962.

/1/Source: Kennedy Library, National Security Files, Countries Series, Argentina, General, 4/62. Confidential.

SUBJECT
Effect of Alliance for Progress on Argentine Election Results; NSAM No. 141, March 27, 1962/2/

/2/NSAM 141, entitled "Analysis of Frondizi's Political Reverses," is in Department of State, NSAM Files: Lot 72 D 316, NSAM 141. The NSAM is paraphrased in the first paragraph of section 1 below.

1. You requested an analysis be made of the extent to which President Frondizi's recent political reverses were due to (a) exploitation by his opponents of the fact that he arranged to accept United States aid, or (b) exploitation by his opponents of reforms undertaken or promised by him and associated with the Alliance for Progress. After consulting our Embassy in Argentina, we believe the answers are as follows:

President Frondizi's opponents did not attempt to exploit Argentine acceptance of United States aid and his political reverses were not ascribable to such acceptance. An emissary from President Frondizi emphasized, quite to the contrary, that Frondizi's defeat would have been of almost catastrophic proportion if announcement of the $150 million Alliance for Progress loan had not come when it did./3/

/3/On February 25 the White House announced that the United States was making a loan of $150 million to Argentina for its economic development under the Alliance for Progress. The money was for specific development projects and balance of payments assistance. (White House press release, February 25; Department of State Bulletin, March 19, 1962, p. 470)

President Frondizi's election opponents did not openly seek to exploit the reforms he had initiated or promised to initiate in connection with the Alliance for Progress. Frondizi's austerity program designed to bring about the financial stability necessary for sound economic development, which the United States supported, was a factor in the elections, however. An important reason for Frondizi's defeat was that his reforms and development program had not gone far enough or deep enough to reach the common man as yet.

As the Embassy observed,/4/ the persistent favorable after-image of Peron in the public mind was a fundamental factor in the election.

/4/The Embassy made this observation in telegram 1699 from Buenos Aires, March 21, in its assessment of the significance of the March elections. (Department of State, Central Files, 735.00/3-2162)

2. You asked the question as to whether it is advisable to channel more Alliance aid through the Inter-American agencies. Until we have obtained more experience with these agencies, I do not believe it advisable to increase the amounts above our current plans for the Inter-American Development Bank and the Organization of American States programs. Under our current plans, these two organizations, in FY 1962, will have utilized slightly more than one-half of the $400 million portion of the $500 million appropriation provided by the Congress last year with the remainder available in FY 1963.

Our experience to date with the Inter-American agencies has been rather limited and produced equally both good and bad results. In a number of cases, the agency has been most useful and successful in dealing with the local government to bring about reforms. In other instances, we have found that because of the newness of the task the Inter-American agency's performance has not been adequate in the implementation of projects and in assisting countries to develop sound programs and plans.

Walter L. Lingle/5/

/5/Lingle signed for Hamilton above Hamilton's typewritten signature.

184. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Martin) to Secretary of State Rusk/1/

Washington, April 13, 1962.

/1/Source: Department of State, Central Files, 611.35/4-1362. Secret. Drafted by Well-man on April 12 and cleared by Whiteman.

SUBJECT
Recommendations for Regularizing Official Relations with Argentina

Discussion

I. The following considerations favor regularizing official relations with the Guido Government without substantial further delay.

1. It has effective control of the machinery of government in accordance with the Argentine Constitution.

Upon Frondizi's arrest and removal by the military, Guido as President of the Senate assumed office of President as next in line under Argentine Constitution. He was sworn in before the Supreme Court with members of Congress present, and the Supreme Court later reaffirmed the constitutionality of the succession. Frondizi also approved his succession after-the-fact. Guido has constituted a cabinet of civilians (except three armed forces secretaries) who are of conservative-bent but generally respected. He has convened a special session of Congress to meet between April 12 and 25 to reform the law of succession to provide for the calling within 180 days (rather than 30 days) of a new presidential election at a future date deemed advisable under the circumstances.

2. It is in office with general acquiescence if not support.

All political groups except the Peronistas and Communists support or acquiesce in government, although differing on the desirability of honoring recent congressional elections and other major policy questions. UCRI (Frondizi's party) deputies and provincial governors demanding the return of Frondizi do so largely for the record, as political maneuvering with eye toward future electoral prospects, in our Embassy's opinion. Indications are that the Peronistas would prefer civilian government to military dictatorship though of course outlawing this party or too reactionary economic measures might force them into more active opposition. Moderate military leaders who are in majority in armed forces accept and support government.

3. Any considerable further delay by U.S. Government in regularizing relations would increase substantially the risk of a military dictatorship.

The moderate military leaders now appear to be in the ascendancy in the armed forces. Extreme military leaders who were influential in bringing about Frondizi's removal distrust the civilian government and would prefer a military dictatorship. The danger of a further military coup increases if through delayed U.S. action the Guido government should lose public confidence and support.

4. Clarification of major policy issues involving elections, Congress and Peronists is not likely in near future.

The special session of Congress called for some time between April 12-25 is limited to considering reform of the constitutional succession (see above). It is probable new presidential elections will be held in 1963 at the earliest. To avoid having to choose between seating the elected Peronist Congressmen (which the military would resist) or nullifying the recent election (which major democratic parties oppose) the government will probably not convene Congress on May 1 or soon thereafter. It will not likely soon terminate the intervention of the five important provinces which elected Peronist governors, in particular Buenos Aires province. It may seek to work out a compromise acceptable to the Peronists and the military for some limited participation by the Peronists in electoral matters in lieu of the proscription of the neo-Peronist parties, e.g. accession to provincial governships not intervened, and right to vote in new presidential election.

5. The Guido government provides the best and the only present possibility for gradual return of Argentina to democratic processes.

Guido is ostensibly a constitutional president. Frondizi's return is not a real possibility; the military would not accept him, and he has lost the confidence of important civilian elements of the nation. The only alternative appears to be a military dictatorship possibly accompanied by disorders and even civil war. The best hope for return to democratic constitutionality is through action of the present government, supported by moderates, taking a center course between extremes, and seeking by negotiation to extract concessions from both the Peronists and the military.

6. Argentina is facing an incipient financial crisis, which a new political crisis would precipitate and worsen.

7. Other western governments, including some in Latin America, have moved to continue relations, and others are considering doing so.

The following governments are among those which have continued relations: Colombia, Haiti, Honduras and El Salvador from Latin America; and UK, France, Netherlands, Belgium, Italy, Spain, Switzerland and China.

8. The Guido government has indicated it intends to pursue the economic stabilization program of the Frondizi government, a program which had our support. It is now negotiating a new stabilization agreement with IMF, is prepared by new import surcharges and freeing of the peso to reduce the balance of payments deficit, and by increased taxes to reduce the budget deficit.

II. The following considerations indicate caution and favor further delay.

1. The future support of or opposition to the government will be affected by its policy on certain difficult and unresolved political issues of which the most important appear to be the following:

a) whether Congress will be convened or the government will rule by decree.

b) whether Congressional elections will be honored or nullified in law, or in fact by not convening the Congress.

c) whether the provincial interventions will be maintained and other provinces intervened where Peronists won governorships.

d) whether the Peronist parties will be proscribed.

e) whether the labor law will be amended to terminate the monopoly of national labor confederation which Peronists effectively control, in labor representation.

Action by the government or even its failure to take action on these issues will create internal conflicts.

2. The extent of the support by the democratic political parties might be more clearly indicated at the special session of Congress to be convened between April 12 and 25.

3. Depending on the policies of the government and the reaction of the Peronists, the latter may incite disorders in which the Communists would join and other labor elements might participate. Although the military forces are disposed to maintain order and could probably do so, it would be at the expense of democratic liberties and return to democratic processes would be retarded.

4. The government though civilian in form will be subject to strong military influence, which could become dominant depending upon how the situation develops.

5. The government is conservative and in the economic field tends to be orthodox. There is no indication it will give adequate attention to social reform and immediate improvement of the economic and social conditions of the lower classes. It will probably be less inclined than the previous government to reach an accommodation with the Peronists and to seek to integrate them into the democratic framework, especially because Frondizi's unsuccessful attempt to do this brought about his deposition by the military. Yet the Peronists cast 35% of the total vote in the recent Congressional elections.

6. Of the Latin American governments which have not continued relations with the Argentine government, most are following our policy of watchful waiting and would follow our lead if we should decide to continue relations. Brazil, however, is inclined to withhold action until it is able to ascertain what action GOA will take on seating Peronist governors-elect, and what Argentine public reaction will be. Venezuela, while sympathetic to action by U.S. Government to continue relations, intends to adhere firmly to its policy not to recognize a government resulting from overthrow by military of constitutionally elected regime.

III. On balance it is believed in United States interest to take action to confirm continuance of relations with the Argentine government without any considerable further delay.

Recommendations/2/

/2/Rusk approved recommendations A-D on April 14 on the condition that the press statement in recommendation B would be softened.

A. That the United States Government continue official relations with Argentina on the basis that the Argentine government has effective control in accordance with the Argentine Constitution of the machinery of government and Argentine territory with general acquiescence of the Argentine people, provided important Latin American countries (i.e. Brazil, Chile, Uruguay) also decide to do so simultaneously or in coordination with us. (Failure of any such important Latin American countries to agree to this would not preclude a subsequent U.S. decision to continue official relations if the U.S. so desired.)

B. That following this action, with view to helping the situation in those Latin American countries where civilian democratically elected governments may feel weakened by the example of military intervention in Argentina, an official U.S. spokesman make a statement to the press, preferably in reply to a press question, along lines of expressing regret at the interruption of the democratic processes in Argentina and encouragement to the Argentine people and government to maintain and strengthen democratic institutions in order that Argentina may resume and intensify the social and economic programs called for by the Alliance for Progress.

C. That with reference to the special situation of Venezuela, a letter be sent to President Betancourt by the President in reply to the former's letter, along the lines suggested and approved by our Ambassador in Caracas. A proposed form of letter is attached./3/

/3/Attached to this memorandum, but not printed, are a proposed reply from President Kennedy to President Betancourt's March 29 message on the ramifications of the change of government in Argentina, a memorandum of a conversation between Martin and Foreign Minister Dantas of Brazil on the same issue, and an advance copy of telegram 2063 from Buenos Aires, April 13, in which McClintock argued that the only way to keep Argentina from outright military dictatorship was to recognize the Guido government, the "least objectionable of alternatives in the limited choice we have."

D. That following announcement of continuance of relations, the United States upon request from Argentina for the economic assistance it will continue to need, announce its willingness to provide aid under the $150 million aid package of March 1962, subject to (1) Argentina's carrying out the self-help and reform measures (railway reforms, financial stabilization and national development planning) accepted at that time by the Argentine government, which would be publicized, and (2) increasing attention by the Argentine government to the aspirations of the average man in Argentina for social justice, social reform and improved living standards.

185. Memorandum From the Executive Secretary of the Department of State (Battle) to the President's Special Assistant for National Security Affairs (Bundy)/1/

Washington, April 14, 1962.

/1/Source: Department of State, Central Files, 735.00/4-1462. No classification marking. Drafted by Martin and Wellman on April 14.

SUBJECT
Reply to President Betancourt's telegram on Argentina's situation

On March 29, President Betancourt sent to the President and various other Chiefs of American states telegrams in which he strongly criticized the overthrow of the legal Government of Argentina and stated Venezuela would not grant recognition to the new Argentine Government. (Tab B)/2/ The Venezuelan Government ordered all the personnel in its Embassy in Buenos Aires to return to Caracas. In subsequent consultations with our Ambassador in Caracas, President Betancourt has indicated that although he would view sympathetically our continuance of relations with the Argentine Government, Venezuela would adhere to its position of nonrecognition in view of its plan to propose at the next Inter-American conference that there be prior consultation before recognition of de facto regimes in this hemisphere. This policy has strong backing in Venezuela.

/2/Attached, but not printed. Sent via commercial channels.

The Venezuelan Government is especially sensitive to removal of a civilian President by the military forces as took place in Argentina. After three years it has held office longer than any previous elected government in Venezuelan history. Extremes on both left and right threaten to overthrow it by subversive activities and plots. It will endure as long as the military forces continue their support of constitutional government. It is understandably anxious therefore that nothing encourage military elements to think that they could move against the government with impunity. We have sought to make clear we support Betancourt, would deplore his overthrow and would have to review our policies toward Venezuela if he were overthrown.

Our Embassy has recommended that a reply to the Betancourt letter to the President would be desirable before we take any step toward regularizing relations with Argentina.

We agree that it would be helpful to Betancourt and to US-Venezuelan relations for the President to reply to his letter in advance of our continuance of relations with the Argentine Government. The attached proposed reply (Tab A)/3/ for your approval would assure President Betancourt we appreciate his position, share his concern that constitutional and democratic processes be observed and are considering the matter of relations with the Argentine Government in the light of what we can do to help strengthen democratic institutions there. If after our continuance of relations with Argentina, Betancourt should wish to release the text of the President's message, we believe we should agree.

/3/Not attached, but sent as telegram 1104 to Caracas, April 17. (Department of State Central Files, 735.00/4-1762)

The Secretary believes this reply should be dispatched now. Events of the past week have led the Department to the conclusion that the present confused political situation in Argentina is not apt to be cleared up for several weeks. Nevertheless, there is a civilian government in power which has called the legislature into session. There are also disturbing reports of dissatisfaction among some elements of the military and of plotting to overthrow Dr. Guido. If recognition by us can strengthen civilian authority, it seems best to act promptly.

We have delayed long enough to make clear our disapproval of the military pressures which forced Frondizi from office. Some 34 governments, including Colombia, have acted to continue relations.

Earlier in the week we informed key governments in Latin America that we thought the time might be approaching for us to regularize relations. We received no protests and almost a sympathetic response from Betancourt.

Assistant Secretary Martin discussed the possibility with Brazilian Foreign Minister Dantas Thursday might. The latter was doubtful if Brazil would move yet but did not protest our acting. He requested time to consult President Goulart. Mr. Martin assured him we would wish President Goulart's views. We are sending a message to Ambassador Gordon to follow up with Minister Dantas.

We are now also seeking a reaction to a definite proposal to move from Uruguay, Chile and Peru, and are also asking them whether or not they would wish to coordinate the timing of any action on their part with that by us.

We hope that on April 17 we may be in a position to decide what to do.

A. E. Breisky/4/

/4/Breisky signed for Battle above Battle's typed signature.

186. Memorandum From the President's Special Assistant (Dungan) to President Kennedy/1/

Washington, April 17, 1962.

/1/Source: Kennedy Library, President's Office Files, Countries Series, Argentina, General, 1962.

SUBJECT
Resumption of Relations with Argentina

As I told you last night,/2/ most of the European countries have already resumed normal relations with Argentina.

/2/According to an April 17 memorandum from Martin to Rusk, President Kennedy told Dungan on the night of April 16 that "he was reluctant to move until one of the big countries, like Brazil or Mexico, had moved. He was also unwilling to have the letter to Betancourt go out, even though it did not commit us, until we decided to move." (Department of State, Central Files, 611.35/4-1762)

Of the Latin American countries, Mexico will not make any formal reply to the Argentine note because their procedures permit resumption of relations without any formal notification. Chile will resume relations at 6 P.M. this evening; Peru is ready to announce concurrent with our announcement, if it comes. Peru requires 4 hours notice. Gordon has already talked to the Foreign Office in Rio and will be seeing Dantas later this afternoon./3/ It is unlikely that Brazil will take any action until after the Lower House of the Argentine Legislature acts on the Succession Bill. The Lower House of the Argentine Legislature will meet this afternoon and refer the Bill to a committee, thus deferring action until after the Easter holiday. It appears unlikely that the UCRI (Frondizi) will oppose the measure in the Argentine Legislature.

/3/Ambassador Lincoln Gordon in Brazil.

The Secretary will probably call you this afternoon suggesting that we move ahead promptly and reply to the Argentine note,/4/ thereby resuming normal relations with the Guido government. I think that there is no need to rush into this and that we would not want to complete this action before your press conference tomorrow morning./5/ The announcement could be delayed until next week without any damage./6/ I think you already know that all of the Latin American governments have been put on notice that we will probably move to resume normal relations with Argentina. I might say all have either indicated no opposition or approval. In every case, there was an expression of satisfaction that we have consulted with them on this matter.

/4/In the note of March 30, the Argentine Government informed the Embassy that the office of the President was vacant and that Guido had taken the oath of office before the Supreme Court and had assumed the Presidency of the Republic. (Telegram 2037 to Buenos Aires, April 17; Department of State, Central Files, 735.11/4-1762)

/5/Reference is to the President's press conference of April 18, in which Argentina was not discussed; for text, see Public Papers of the Presidents of the United States: John F. Kennedy, 1962, pp. 331-339.

/6/According to Press Release No. 257, April 18, Ambassador McClintock that day acknowledged receipt of the Argentine note of March 30, thus continuing relations with the Government of Argentina.

RAD

187. Memorandum From the Director of the Bureau of Intelligence and Research (Hilsman) to Secretary of State Rusk/1/

Washington, April 27, 1962.

/1/Source: Kennedy Library, National Security Files, Countries Series, Argentina, General, 4/62. Confidential. Copies were sent to Schlesinger, Dungan, and Thomas Parrot of CIA.

INTELLIGENCE NOTE
Prospects for Argentina--Political Repression and Military Rule

Argentina will probably be ruled by the military until May 1964. Annulment of the March 18 election results and federal intervention in all Provinces leaves the country without an effective Parliament and with government completely in the hands of the central Executive, installed and controlled by the military. Since the remnant which remains in the Chamber of Deputies will barely exceed a constitutional quorum, even token dissent will prevent legislative action, and the expectation is that Argentina will be ruled by decree for the next 24 months.

Little hope is seen for the liberalization of the present military regime. Violence and repression are likely if Peronists and other labor groups strike against the economic austerity program which has already substantially increased the cost of living. The Peronists might well extend strikes and demonstrations to protest against cancellation of their election victories, the probable proscription of Peronist parties, and restrictions on labor union activities. However, military forces appear to be strong enough to control the country, although there will likely be some deaths and many arrests. The economy will be slowed by strikes and a loss of business confidence at least in the short run.

In Italy and France at the close of World War II as large a part of the electorate supported Communism as now supports Peronism in Argentina. However, the Communists in Italy and France were not proscribed from political participation and thus were not limited to strikes, demonstrations, and terror for political expression. Instead the existence of the Communist group in Parliament and in the electorate encouraged the non-Communist forces, which were divided on many issues, to work together. Frondizi was pursuing such a course in Argentina, before the military reversed the trend on March 29.

The hard-line military group now in control have no constructive plan for the political future of Argentina. Some military probably hope to break the Peronist movement by suppression; but this tactic did not work between 1955 and 1958. Others assume the military will proscribe the Peronists in the 1963 election and guarantee the election of their candidate. However, in any free election in which the Peronists are proscribed from presenting their own candidate they hold the balance of power in choosing among the major candidates. The ability of the Peronist organization to direct about two million voters was demonstrated in 1957, 1958, 1960 and 1962. Thus in the 1963 elections the military might well be confronted, as they were in 1958, by a situation in which the leading candidates appeal for Peronist support despite military objection.

Implications for U.S. Policy. The United States can have little effect on immediate developments in Argentina. However, the nature of our relations with the government will be an important factor in determining the strength of those forces which want a rapid return to fully democratic government. Such forces are already considerable in the political parties, in apolitical groups, and even in the military. Considerations for U.S. policy are:

1) the nature of official U.S. contact with members of the present government, especially with the Argentine military;

2) the extent of our contacts with the political parties, including the Peronists;

3) whether to disburse or withhold the announced $150 million in Alliance for Progress aid; and

4) if aid funds are released, whether to channel them through the government or directly into projects which immediately benefit the people.

188. Letter From the Ambassador to Argentina (McClintock) to the Assistant Secretary of State for Inter-American Affairs (Martin)/1/

Buenos Aires, May 31, 1962.

/1/Source: Kennedy Library, National Security Files, William Brubeck Series, Argentina, '61-'62. Secret.

Dear Ed: In response to your letter of May 8,/2/ may I say how welcome it is to know that you have set up informal working groups in ARA closely to study the trend of recent events in Argentina, to draw conclusions therefrom, and to advocate a line of policy which may make it possible for us to achieve our objectives in relation to Argentina. I also note that you share the views expressed in our telegram No. 2233,/3/ that our policy and endeavor should center on economic measures to palliate the crisis and give hope of social reform, and on political measures designed to speed the transition between democracy in word and democracy in deed. You will recall that I ended that telegram with the statement that although the price of victory would be high, the cost of defeat would be even greater.

/2/Not found.

/3/Dated May 4. (Department of State, Central Files, 735.00/5-462)

We have accepted your suggestion that our recommendations on possible new courses of action should be cast in the format of a revision of the Department's Guidelines paper on Argentina dated March 1962./4/ With the full collaboration of the entire Country Team, we have prepared such a revision and enclose it herewith./5/ For the convenience of the various elements in the Department who will study the paper I am likewise sending the original hectograph mat to facilitate reproduction. We have sought to stay as close to the March issue of the Guidelines paper as possible but have not hesitated to depart where necessary from its language. We have also been happy to draw here and there on phraseology from the first draft of the Strategic Studies Group on Argentina prepared in S/P./6/ I shall, however, wish on a separate occasion to comment on that valuable paper and in particular some of its suggested courses of action with which I do not agree.

/4/This paper, prepared in consultation with interested Departments and Agencies, was issued under the authority of the Department of State for guidance of all concerned in the conduct of foreign policy. (Ibid., 611.35/3-3162)

/5/Not found attached.

/6/This draft study, April 14, is 85 pages long. (Department of State, S/P Files: Lot 69 D 121, Argentina)

Within the Procrustean bed of a bureaucratic policy paper it is difficult to impart the flavor of the present situation in Argentina.

As I pointed out in Embassy telegram No. 1977,/7/ the revolution which overthrew Frondizi was the result of, and also the explanation of, a number of paradoxes. Fair and free elections supervised by the military returned a Peronist vote which many construed as the threat of a return to Peronist dictatorship. Even in advance of any request from the military that he negate the results of the elections, President Frondizi intervened the provincial governments where the Peronists had won on March 18, 1962; yet despite his zeal in this direction, he was thrown out by the military. Although Frondizi was physically deposed, the Supreme Court piously declared that his successor, Guido, was in fact constitutional President. The military themselves, although they could easily have reached for overt power and still in the background exercise the negative power of veto, undertook their revolution in the firm conviction that they were acting in the name and spirit of democracy. However, as I have pointed out, we are in the case of Argentina using the same vocabulary but different dictionaries.

/7/Dated April 6. (Ibid., Central Files, 735.00/4-662)

Fundamentally the recent crisis in Argentina was an emergency in morality. It was the inability of President Frondizi to move for any length of time on a straight course and his inability to follow a consistent policy of telling the truth which aroused many elements of the population against him and particularly the military who thought that he was either a front man for Peronism or, worse, a Judas who would eventually betray the country to Communism. Their suspicions of Frondizi were deepened by the utterly amoral, and frequently immoral, activities of Frondizi's eminence grise, Frigerio, who thought that every man had his price and who himself had his own price, frequently a high one. This crisis of morals in the political leadership, the absence of morals in that part of the economic community which paid bribes to Frigerio, and the cynical apathy of the people which will be noted below, caused a moral bankruptcy which was the basic cause of the recent coup d'etat. Whatever remedies we seek to apply must in essence begin on a moral basis.

In what I sometimes ironically refer to as "the constitutional revolution", I have also remarked to Argentine friends that the nation is suffering from a political disease called acefalía. This is a word taken from the 1868 Law of Presidential Succession aptly termed la ley de acefalía, or headlessness. This ultimate paradox finds us with a tacit dictatorship lacking a dictator. In effect, a committee of three high military officers, the Secretaries of War, Navy and Air, act as a triumvirate with power of veto and suggestion over the civilian government headed by President Guido. (This they also exercised from time to time over the government of Frondizi.) However, within the civilian Cabinet there are men of ability and power who have a wide range of liberty of action and are a more positive counterpoise to the military. Principal of these is Alsogaray, the decisive, imaginative and bold Minister of Economic Affairs. Second to him is Del Carril, the Minister of Foreign Affairs, whose sense of historical perspective and whose ability to write have given him an increasing ascendancy with the somewhat illiterate military. A third figure yet to be tried, but who impresses me favorably, is Cantilo, the civilian Minister of Defense. This hybrid government, a camelopard of many spots, also operates without two of the hallmarks of dictatorship: both the judiciary and the press of Argentina are free.

Yet all of these elements, both civilian and military, seem to be suffering from this political disease of acefalia or headlessness. The disease extends likewise to the leadership in the political parties. Although officially placed in an "estado de asamblea", an Argentine legalism for suspension of activities, the various party leaders and the members of Congress whose sessions have been suspended by decree, still vociferate and grumble at their impotence. I do not discern in the congressional leadership nor in the political parties as now constituted any real emergent chief. In consequence, some of the easy recommendations for us to encourage a fusion of the two Radical Parties, or to bring about the creation of a Labor Party utilizing sanatized Peronist strength, seem in the shape of wishful thinking. In politics, as in the government itself, the disease of acefalía is rampant.

I have frequently pointed out that Argentina at present exhibits a perilous political vacuum. In the absence of leadership there is a terrible apathy in the Argentine public which in reality is not a true apathy of "I don't care", but the more dangerous apathy born of an absolute cynicism. The Argentine people, and particularly the inhabitants of Buenos Aires, inherit the anti-government sentiments of their Spanish and Italian progenitors plus the "me first, the devil take the hindmost" attitude of the Italian immigrants who came to Argentina for the sole purpose of making money. After a generation of military rule in one form or another, their natural distrust and disgust of government has reached the point of utter cynicism not yet tinctured by utter despair.

With this aching void in a mass of people who have yet not reached the point of suffering where they will take great personal risk, the time will inevitably come when new leadership will emerge. The danger is that the new leader will be an adventurer masked in the old Argentine tradition of the caudillo. Whether he comes mounted on a horse or a tank is a matter of detail.

However, there are certain assets on which one can build. In their halting and groping way most of the Argentine military are sincere in their patriotism and in their desire to make way for a truly democratic state. They are also, mark you , friendly to the United States at the present time and find it difficult to understand why we should look down our noses at the military who are as fervently anti-Communist as we. The Argentine military, in my judgment, should be regarded as an asset by the United States (if rightly used) and not as a liability as some people in Washington seem to believe. In this connection, see the nuclear contingency I added to the Guidelines paper on Argentina.

The Argentine military in the background and the Ministers of the civilian government in the foreground need help in trying to rebuild the political machinery of the state. If some manner could be devised to divest Argentina of its self-serving present politicians and to replace them with younger and more enlightened elements, I see no reason why a new democratic political era should not dawn in Argentina. Much will depend upon who emerges as the next President and upon the degree of enlightenment coupled with leadership he will show. It is clear to me, however, that at the present time the key vote in Argentina is the Peronist vote, that this bloc of voters has by far the best discipline, and that it should not be beyond the range of ingenuity to canalize this element into new courses which will lead to a new and effective party with which we could get along. I am less confident, unless the present leadership is removed, of the ability of anyone to get the two warring factions of the Radical Party to get together.

All of these contingencies in the political field are deeply affected by the current economic crisis. Unless measures can be taken to increase productivity, to bring the national economy more into balance, to make possible markets for Argentine agriculture and to alleviate the pang of the rising cost of living on the workers, the chances of achieving political democracy will be correspondingly diminished. In the economic field we probably have more practical resources at hand to guide the course of events than in the political field. However, I do not despair of the resources of personal diplomacy nor of the ability of this Embassy to influence the course of political events.

Forgive the length of this letter. It was merely that I wished to give a certain sense of perspective and an intimation of direction that seemed easier of expression by this means than in the more stilted phrases of a policy paper. We have an exceedingly difficult task ahead but we are not bereft of assets and we are dealing with a proud and intelligent people. In fact, as I have said in my telegrams, I think the present crisis in Argentina affords us a unique opportunity for showing that the principles of the Alliance for Progress can be made to work and produce tangible results.

In consequence, let me conclude on a note of confidence. Over the long range I am bullish on Argentina. With the exercise of diligence, the use of our heads, and that essential ingredient of diplomacy, "a little bit of luck", I think we can succeed.

Cheers,

RM

189. Plan of Action for Argentina/1/

Washington, undated.

/1/Source: Kennedy Library, National Security Files, Countries Series, Argentina, General, 7/62. Secret. Transmitted by Brubeck to McGeorge Bundy under cover of a July 4 memorandum which indicated that it was for his approval. According to Brubeck the plan was based on the decisions of the Latin American Policy Committee at its June 21 meeting. Bundy wrote the following note on the covering memorandum: "Ralph: I doubt if we want to 'approve' anything as detailed as this. We might simply note it & leave responsibility in Dept.--unless you want to disapprove. McGB." Bundy sent Brubeck a memorandum on July 17, noting that he had reviewed the plan, that it did not require Presidential approval, and that the NSC staff should not undertake to give formal approval or disapproval to Department of State documents. He also noted that Dungan had comments on some of the points and would communicate directly with relevant officers at the Department; see footnotes 1, 3, and 4 below. (Ibid.)

SUBJECT
Argentina--Plan of Action Over Period From Present to April 1964

A. Objectives

1. Maintenance of the present civilian regime to the end of its declared tenure: April 30, 1964 at the latest.

2. Strengthening of the prospects for continued democratic civilian government through early elections held without undue military pressure or dictation.

3. The election and installation in office of an administration that

a. holds promise of a social outlook and program sufficient in scope and appeal to permit a gradual weaning of the Peronists and other dissidents from adherence to extremist solutions to national problems.

b. is basically committed to wise use of foreign or domestic economic resources for national development, the maintenance and expansion of a favorable environment for private enterprise and friendly cooperation with the U.S.

4. Seek to assist the Argentine Government in its efforts to reverse the trend and mitigate the consequences of the presently adverse economic situation.

C. [sic] Plan of Action

I. Intelligence

1. Strengthening [less than 1 line of source text not declassified] intelligence collection on activities of the far left.

a. Determine the extent of Communist involvement with Peronism and its reaction to the movement by Peronist leaders to the left.

b. Clarify importance in Peronist movement of leaders John Cooke (in Cuba) and Americo Barrios (in Montevideo) and their links with Peron despite his reported disavowal of them.

c. Determine if Castro followers have increased activities since March, 1962 . . . and to what immediate ends.

d. Provide additional information concerning Peron's quasi-Communist stance and whether he is promoting a coalition for elections or for an attempt on the government.

e. Follow activities of Frigerio group and especially watch for possibility of its organization of a combination with civilian and military elements of extreme left.

2. Increase capacity and efforts of service attaches [less than 1 line of source text not declassified] to gather intelligence on political activities of the military as their highest priority task.

a. Identify leaders of hard line military group.

b. Determine the specific issues between Guido Government and this group and particularly those measures against the Peronists and Communists it would have the government take.

3. Evaluate the support, program and intentions of the National Social Front. Specifically seek to ascertain

a. judgment of suitable Church authorities on likelihood of participation by members of the hierarchy.

b. whether Christian and anti-Communist tendencies and present divisions in the Peronist parties may have induced Peronists like Framini to adhere to the National Social Front.

c. if any "62 Bloc" Peronist union leaders look with favor on the National Social Front idea or are more likely to adhere to a Peronist-left popular front.

d. if National Social Front has support of so-called "Nasserite" army group.

e. whether the National Social Front has produced a program indicating the extent to which its objectives coincide or conflict with those of the U.S.

f. whether the front would be permitted to operate as a political party for the coming elections.

II. Political and Military

1. Cooperate with and support the Guido Government in all feasible ways in order to strengthen it vis-a-vis the military.

a. Continue quietly but firmly to indicate to key personalities in and behind the Guido Government that the U.S. would find it extremely difficult to cooperate with any government installed as the result of a new military coup.

b. Communicate the foregoing sentiment . . . very discreetly . . . to Peronist leadership to forestall any extremist Peronist link with military "Nasserites."

2. Avoid any association with policies or action by the government, military or political parties which might in the popular mind identify us with anti-popular elements. Our deep interest in and commitment to assuaging social discontent should be promoted on every feasible occasion through personal diplomacy, our public statements and our aid program.

3. Explore quietly and judiciously with non-extremist political groups the possibility of the formation of the middle groups in Argentina into a broad if loosely organized political movement or voting coalition and the manner in which Proportional Representation might benefit or adversely affect electoral prospects for such an amalgamation.

a. Seek out those factions of the UCRI and the UCRP most closely identified in the past with doctrines generally sympathetic to U.S. objectives and most disposed to carry their party name and/or followers into a "Center Front." These leaders or factions are most likely to be acceptable to the government and the military and without them prospects for a broad center alignment would founder.

b. Identify moderate political groups not conspicuously linked to Old Line Parties which might be persuaded to take the initiative in forging a center coalition.

c. Urge upon the target party leaders a search for an Argentine of large stature as a presidential candidate, possibly a man of letters or an educator of the mold (if not the substance) of a Sarmiento not previously identified firmly with a given party or partisan faction.

d. Analyze relations between Peronist voters and leaders and identify issues on which working class might be brought into center or center-left grouping.

4. Explore the advantages and disadvantages as they bear on our policy objectives, of the early release of former President Frondizi bearing in mind his possible return to politics in Argentina; communicate our conclusions to the Guido Government should we conclude a greater degree of freedom . . . including residence abroad . . . for Frondizi is desirable.

5. Refrain from supporting or promoting the candidacy during the foreseeable future of any of the incipient presidential candidates now on the scene (i.e., Alsogaray, Aramburu, del Carril, Alende, etc.). Wait for younger leaders to emerge.

6. Determine whether the Guido Government or its moderate military backers will seek to shape and control a political movement or party and the names of those individuals it would in those circumstances support as Presidential and Vice Presidential candidates.

7. Maintain a "correct" attitude in our relations with the military and do nothing which is likely to accentuate the deep divisions among them. Insure when possible that our actions, whether in the field of military cooperation or in our desired contacts in the political-labor arena, will not contribute to further divisions among the military or a hardening of the resolve of any of its factions to overthrow the civilian government.

8. Encourage within the possibilities of the Argentine situation civic action by the Argentine military forces.

9. Examine the wisdom, should threat of a military coup prove imminent, of covert and pointed indication to hard line military leaders of U.S. concern with a view to forestalling the adventure and fortifying the resolve of the moderate military to prevent it.

III. Labor

1. Urge upon Guido Government that it take on sweeping action against Peronist unions or leaders which would penalize pro-democratic unions and leaders or drive the latter into full cooperation with militant Peronists.

2. Consult discreetly with democratic labor leaders to obtain their judgment regarding formation of a democratic labor party which might in present circumstances attract softcore Peronist support.

a. Approach Church authorities to find if there might be Church interest in supporting creation of a democratic labor party.

b. Assess the likelihood of such a party's participation in a center coalition.

3. Give priority to greatly increasing our contacts with labor but not without assessing the possibility of adverse military or government reaction./2/

/2/In a July 12 memorandum to McGeorge Bundy, Dungan commented on this recommendation: "I do not believe we should be inhibited in making contact with labor groups in Argentina or elsewhere by excessive anxiety about disturbing the government's power or elements within it. If it is important for us to maintain substantial and good contacts with labor or any other group we should go ahead and do it even if it has to be done on a covert basis." (Ibid.)

a. Improve and enlarge our labor exchange programs, seminars, round-tables and informational activities.

b. Enlist support of Department of Labor and U.S. trade unions to enlarge measurably the scope and depth of the latter's contacts with Argentine labor including its Peronist elements. Specifically seek to encourage expansion of leader exchange, attention to worker education and provision of technical assistance in union administrative activities.

IV. Informational and Youth

1. Augment our efforts to work with and influence youthful members and potential leaders in the Peronist formations.

2. Increase efforts of U.S.I.S. and the Embassy's political and economic sections to extend contacts with student and youth organizations.

3. Greater participation by political and economic officers in the selection of information and exchange program target groups and of exchange candidates.

4. Insure greater attention as target groups to professional organizations receiving large numbers of university graduates.

5. Rapid action in the book translation and publication program.

6. Promote with the Guido Government the rapid creation of an Argentine Peace Corps for domestic purposes, to focus the energy and social consciousness of youth into constructive channels, providing them a sense of participation in the solution of the country's pressing needs. Our Peace Corps might provide administrative assistance.

7. Expand assistance to Argentine educational institutions and encourage similar assistance by private U.S. educational and philanthropic organizations.

V. Economic--(The following general statements complement the AID/LAPC paper.)/3/

/3/Not found.

1. Express to Guido Government our general satisfaction with self-help measures it has undertaken but continue to press upon it that more remains to be done./4/

/4/In the July 17 memorandum to Bundy, Dungan commented that "we should direct State-AID to conduct as quickly as possible an examination of the Argentine budget, analyze its present monetary policies and come up with a specific list of so-called self-help measures which we think to be in their interest and consistent with our objectives under the Alliance. Unless we have this basic analysis we have no way of knowing whether it is prudent for us to advance dollars to create local currency for public works or other types of projects or whether it is possible to fund some of the local currency costs themselves." (Kennedy Library, National Security Files, Countries Series, Argentina, General, 7/62)

2. Press for arrangement for private professional U.S. assistance to National Development Council and to continue USG efforts through A.I.D. to assist with special studies, statistical services and other appropriate technical aid.

3. Recognize the possibility that the GOA may not find it possible to remain within the credit expansion ceilings established by the June, 1962 IMF Standby Agreement. Be prepared to provide sympathetic consideration to requests for revision by the Guido Government and a parallel extension of the U.S. Treasury Agreement.

4. Impress upon Minister of Economy Alsogaray the rapid need for undertaking negotiations with the Europeans to reschedule short-term financial obligations.

5. Seek to secure a cut-back in Argentine military expenditures, and discourage particularly expenditures for large items.

6. Encourage the Guido regime to consult with labor groups before undertaking specific wage-price decisions of national import.

7. Devote highest priority to plans for low-cost housing in Argentina by both U.S. Government and international lending agencies./5/

/5/In the July 17 memorandum to Bundy, Dungan queried, "On what basis have we decided to place our highest priority on low-cost housing in Argentina?" (Ibid.)

a. Accelerate our investigations (A.I.D.) of the methods by which assistance may be provided labor union and other cooperative organizations for the financing of low-cost housing without direct Argentine Government participation.

8. Explore with the Export-Import Bank the manner in which its $50 million segment of the $150 million February, 1962 loan package should be used, particularly whether any portion might be devoted to infra-structure or impact project purposes.

9. Establish a government-wide consensus regarding the extent to which the U.S. wishes to encourage increases in both production and productivity of Argentine agriculture given its largely competitive role with U.S. plant and animal products.

a. Arrive at this decision with particular reference to the meat import problem.

10. Reach policy conclusion regarding the timing and scope of personnel reforms of the Argentine national railways, bearing in mind the severe repercussions ill-advised or rash action might have on the stability of the regime.

11. Explore the possibility of A.I.D. providing technical assistance in the field of labor-management relations.

190. Memorandum of Conversation/1/

Washington, July 19, 1962, 4:03 p.m.

/1/Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Lancaster and approved by Swank in S on July 31. The time of the meeting, which lasted until approximately 5 p.m., is from Rusk's Appointment Book. (Johnson Library)

SUBJECT
Argentine Economic Situation/2/

/2/At the White House daily staff meeting, July 19, Kaysen briefed the staff on Argentina: "Kaysen reports that a crisis is momentarily expected in Argentina, probably in the form of an outright military takeover. The immediate problem is that the Argentine finance minister is in town and the US has to take some firm position, or lack thereof, in regard to the Argentine financial crisis." (Memorandum by Ewell, July 19; National Defense University, Taylor Papers, Daily Staff Meetings, May-Sept. '62)

PARTICIPANTS
Argentine Minister of Economy--Alvaro Alsogaray
Vice President, Argentine National Development Council--Admiral Francisco Castro
Argentine Ambassador--Roberto T. Alemann
The Secretary
The Under Secretary
Assistant Secretary--Edwin M. Martin
Deputy Coordinator--Alliance for Progress--Graham Martin
Deputy Assistant Secretary--Herbert K. May
Chief, Latin American Division, Treasury Department--Henry Costanzo
Officer in Charge, Argentine Affairs--Bruce M. Lancaster
Department of State Interpreter--Donald Barnes

After he had been welcomed by the Secretary, Minister Alsogaray gave a detailed review of the current Argentine situation and his plans to bolster the Argentine economy. He stated that under his Government's newly announced political plan, elections would be held next June and a new President and Congress inaugurated in October 1963. In the meantime, the present Government would have considerable freedom of action to work on economic problems and he hoped that the economy of Argentina could be brought to a state where elections would take place under favorable circumstances.

The Minister stated that in his opinion the announcement of the Alliance for Progress had ushered in a period in which the Argentine people took a particularly favorable attitude toward the U.S. It was his hope that the Alliance would be able to offer the right aid at the right time. A long range development program for Argentina was very necessary, but his Government needed immediate support for projects which had already been undertaken and which could not be completed because of budgetary difficulties. If the U.S. could help with these projects within the terms of the $150 million aid package there would be three desirable consequences: necessary projects could be completed, Argentina's own efforts to reduce its federal budget would be buttressed and financial stability could be maintained. Many of the projects which he had in mind were as much as 80 per cent complete, with the entire cost to date having been borne from Argentine funds. A memorandum regarding such projects would be ready in several days.

The Minister added that he was not seeking assistance from the U.S. which would be designed for or publicized as emergency aid, but as part of a continuing program of cooperation under the Alliance for Progress. He mentioned the need for housing to replace Buenos Aires slum districts as of particular importance.

(In concluding his remarks, Minister Alsogaray referred to several miscellaneous subjects, including the possibility of P.L. 480 aid in providing forage for cattle producers in drought areas, the desirability of completing the investment guarantee agreement between the U.S. and Argentina and the highly favorable reaction in his country to the U.S. arrangement for providing a sugar quota for Argentina.)

The Secretary asked what the political atmosphere might be like in Argentina during the year preceding the elections. Would people take a wait-and-see attitude or would there be active cooperation with the present Government? Minister Alsogaray replied that at present the Argentine public was much more preoccupied with economic than political problems. The man-in-the-street in Argentina knew about and was very interested in the present financial negotiations with the U.S. He believed that his Government could maintain a mutually agreed truce with rank and file union members. Even though union leaders, many of whom were actively involved in politics, could be expected to attempt to stir up trouble, he did not expect to have acute political difficulties with the unions. Indeed he believed that, considering the economic difficulties which most Argentines had had to cope with in the past few months, labor had been remarkably restrained.

The Secretary then asked if there had been recent capital flight from Argentina and whether Argentine capital could be mobilized for the development of the country. In response the Minister stated that capital flight had been a problem after Frondizi was deposed. The peso had gone as high as 137, but capital flight had now largely stopped and he believed that the peso could be stabilized at around 114. The attitude of the Argentine public during the next few weeks would be crucial. A favorable aid arrangement with the U.S. would evoke a very good reaction.

The Secretary commented that he hoped that Alsogaray's discussions with the IMF would proceed to a successful conclusion. An agreement with the IMF would generate confidence abroad which would be transmitted back to Argentina and thus increase the confidence of the Argentine people in their own economy.

(At this point the Secretary and the Under Secretary withdrew to keep other appointments.)

At the suggestion of Mr. Edwin Martin, Mr. Graham Martin commented on the Minister's interest in AID support for uncompleted projects, stating that his agency would want to examine details before expressing its views. Mr. May referred to the $50 million portion of the aid package which was an Eximbank commitment, stating that these funds could only be used to cover purchases in the U.S.

Minister Alsogaray agreed that this was the case. He said that he was interested additionally in talking to the Eximbank about a loan for highway construction equipment which had been granted some time ago. A good portion of this loan had not been used and he was hopeful that it could be released for other purposes. [An Eximbank official stated later that only $20 million of this $40 million loan had been drawn to date.]/3/

/3/Brackets in the source text.

Mr. Edwin Martin stressed the U.S. view that Argentina should reschedule its debts with the Europeans as soon as possible. He asked whether these debts were to be extended by their present holders or whether they would be refinanced by European financial institutions. Minister Alsogaray replied that his Government would be talking to the Europeans very soon about extensions of the debts of the Government of Argentina as well as those of Government-owned enterprises. He still did not know the extent of private indebtedness to the Europeans or to U.S. banks. He believed that some private debtors who had undertaken excessive obligations would have to learn a lesson. Mr. May said that he believed that the Europeans were very receptive to the idea of rescheduling Argentina's debts and might perhaps even provide new money. He was sure that the Argentine Government did not want to get into a position where private debtors (including even those who had incurred unwise obligations) would place a heavy burden on Argentina's foreign exchange reserves by rushing in to purchase foreign currencies.

Mr. Edwin Martin said that in the process of straightening out the Argentine economy prior to the elections, it appeared highly important to avoid any sort of inflation which would place an undue burden on the wage earner. Minister Alsogaray agreed, and stated that U.S. help with a low-cost housing program would be particularly helpful in meeting the desires of labor.

Minister Alsogaray concluded by stating that Argentine financial experts were arriving Sunday/4/ who would provide the IMF with detailed information and proposals on credit stabilization during the early part of the coming week. He hoped to be able to complete negotiations with the IMF by Wednesday./5/ Mr. Edwin Martin said that, after the Argentine position with the IMF had been clarified, he and senior officers of the Alliance for Progress and Eximbank would like to sit down with the Argentine group and review U.S. programs.

/4/July 22.

/5/July 25.

Mr. Martin then added that he understood that Minister Alsogaray was interested in calling on the President before he left. The Minister stated that he was indeed anxious to do so and hoped that this might be arranged for the latter part of the coming week. Mr. Martin said that the President had an extremely tight schedule but that the State Department would see what it could do./6/

/6/See Document 191.

191. Memorandum of Conversation/1/

Washington, July 27, 1962, 9:30-9:48 a.m.

/1/Source: Kennedy Library, National Security Files, Countries Series, Argentina, General, 8/62. Confidential. Drafted by Martin. The time of the meeting is taken from the President's Appointment Book. (Ibid.)

SUBJECT
Minister Alsogaray's Appointment with President Kennedy

PARTICIPANTS
President Kennedy
Mr. Ralph Dungan, Special Assistant to the President
Mr. Edwin M. Martin, Assistant Secretary of State for Inter-American Affairs
Minister Alvaro Alsogaray, Argentine Minister of Economy
Ambassador Roberto Alemann, Argentine Ambassador to the United States

Minister Alsogaray opened the discussion by making three points. First, he explained the history of Frondizi's attempt to maintain himself in power by favoring first one group and then another with the eventual result that he was distrusted by all. Next, he described briefly the electoral situation which had been the final straw in securing the deposal of Frondizi and his replacement by a civilian government, headed by the next in line of succession. Lastly, he stressed the importance of dealing with the Peronistas as individuals but not dealing with their leaders who were just like Fascists or Nazis.

He then gave a brief summary of the broad economic policies of his regime, stressing its encouragement of private enterprise and freedom from government intervention and activity. He also described his recent discussions to try to reduce the burdensome debt in Argentina resulting from a too rapid expansion. He said they had been entirely successful, resulting in making available some $500 million from public and private sources, none of it new money.

The President expressed his happiness at having a chance to talk to him. He emphasized the importance of the Government's showing an interest in the welfare of all the people and not maintaining too much of a hands off attitude. He expressed some concern that a too conservative and cautious and deflationary policy would meet the interests and desires of the privileged groups and the bankers but not serve the needs of all the people. A program, which would seem to the people to be meeting their needs was essential, he thought, politically as well as economically.

Minister Alsogaray said he agreed entirely and the Government has its own program for controlling economic developments. It was working closely with unions and was anxious to develop a big housing program to help the masses of people. He was stressing the attitude toward private enterprise of the new Government only in contrast to that under Peron.

192. Memorandum From the Director of the Bureau of Intelligence and Research (Hilsman) to Secretary of State Rusk/1/

Washington, August 15, 1962.

/1/Source: Kennedy Library, National Security Files, Countries Series, Argentina, General, 8/62. Confidenti