177. Letter From the Ambassador in Argentina (Beaulac) to the Assistant Secretary of State for Inter-American Affairs (Rubottom)1
Dear Dick: A number of communications2 I have had from Jim O’Connor indicates a certain amount of annoyance and displeasure over the action of the Argentine military in upping their figure for military credits after the Department had obtained approval, in principle, of a credit of $10 million. There has even been a suggestion that the Argentines may not have been acting in good faith.
I do not think that good faith is involved here. I think it is more likely a case of clumsy handling and of lack of coordination among the Armed Forces. This Government, as you know, is not a highly institutionalized government and perfect coordination does not exist. Furthermore, the Armed Forces, at least some of their representatives, may not have known that we had frozen our position at a $10-million level while the Argentines were still considering what their needs are.
I agree that Argentina has very heavy foreign exchange needs at the present time and few means to meet them immediately, and it is therefore desirable that no unnecessary foreign exchange obligations be incurred. At the same time, I think we should bear in mind that the Argentine Government is taking the steps needed to solve its foreign exchange problem and that if the Government continues on the present road that problem will be solved in a few years.
Meanwhile, support of this program by the Armed Forces is essential, and happily the Armed Forces are giving the program their support. At the same time, the enemies of the regime are always on the lookout for ways of turning the Armed Forces against the regime.
I think we should bear in mind, at the same time, that the Armed Forces do have legitimate needs which can only be met through the expenditure of foreign exchange and it occurs to us down here that $15 million at this time is not too high a percentage of total Government obligations.
In this connection, we are informed by a reliable source that President Frondizi, a month or so ago, in response to Armed Forces’ petitions for pay increases and funds for acquiring matériel, said that he would consider pay increases after six months and approved the expenditure of 1 billion pesos for matériel. At the then rate this was approximately $15 million; it is now closer to $13 million. If the 1 [Page 557] billion pesos represents substantially the total of military expenditures at this time, it is evident that all would be spent in the United States and our purposes of standardization would be satisfied.
Apropos of all this, I am sure you will be encouraged to hear that the American packers, who were in the Embassy this morning, predict that if Argentina continues along the present road it can increase its exports of meat and meat products by 100 percent within five years, which should mean an additional foreign exchange income of $500 million a year. If, at the same time, Argentina should eliminate its petroleum imports, and I think there is a good chance it will do this, these two factors (modified up and down by other considerations, of course) would mean a $750 million annual difference in its foreign exchange balance.
Perhaps you would like me to talk to the President about this. In that event, I think our Government should keep an open mind on possibly increasing the level of military assistance from $10 million to, say, $15 million.
With best personal regards,
Sincerely yours,
- Source: Department of State, ARA/EST Files: Lot 61 D 386, Military Cooperation 1959. Secret; Official-Informal. No drafting information appears on the source text.↩
- On April 10, for example, O’Connor wrote to Beaulac outlining the problem with the Argentine military. (ibid., Sale of Arms & Munitions January–June 1959)↩
- Printed from a copy that bears this typed signature.↩