840.51 Frozen Credits 35/7–2944: Telegram
The Chargé in Argentina (Reed) to the Secretary of State
[Received 6:55 p.m.]
1978. Reference Department’s 1196, July 27, 7 p.m.38 All information available to Embassy indicates Central Bank enforcing provisions of decrees prohibiting financial transactions with Axis countries and countries dominated by Axis. However, there is a loophole as indicated by numerous intercepts which show lack of local check preventing transfers to European neutrals from ultimately reaching Axis countries.
Central Bank circular number 350 and decree of January 27, 1944 being administered so as to eliminate all direct financial intercourse with enemy territory, except for representative and subsistence allowances provided by circular 350. It is not believed that bona fides of remittances are sufficiently checked. Due to lack of contract [contact] with Central Bank Embassy has been unable to ascertain size of subsistence and representational remittances.
Terms of current servicing obligations of Argentine Government not known to Embassy, but intercepts reveal that Argentine Government obligations being serviced through Credit Suisse Zurich. No information available to indicate that any payments being made on [Page 284] Dresdener Bank notes, except under blocking provisions formerly reported.
Answering paragraph 2, Argentine funds of real and juridical persons residing in Axis territory are blocked subject to the exceptions described in circular 351 of February 9, 1944. Central Bank interprets that exception to mean that local companies holding Axis funds are bound to block such funds in their own books, and are precluded from transferring such funds to another name or remitting abroad. Therefore this exception in effect allows local Axis to use funds of their parent organization in their own business in Argentina.
Embassy will endeavor to forward speedily a more detailed report but wishes to stress fact that an accurate analysis is precluded by its lack of contract [contact] with Central Bank. Our information is therefore based on intercepts, third party reports and hearsay.
- Not printed.↩