Britain and Argentina

When the US abandoned neutrality after Pearl Harbor, it expected all South American countries to join it in the war. Argentina, however, remained militarily and politically neutral while economically allied with Britain: British and Argentine exchange controls and trade agreements over-valued the £ and restricted its circulation so that Argentina supplied Britain not only at low prices but also not for cash but on credit. That was insufficient for the US ("Either you are with us or against us") and so, following the military coup of June 4, 1943, the US began to antagonize Argentina, seeking a régime change there. Its policy got to the point where, on July 14, 1944, Churchill found it necessary to send Roosevelt two telegrams on the same day in protest of the damage that US policy towards Argentina did to the British war effort. Three weeks later there appeared this remarkable article in The Economist of August 5, 1944, pages 174-175:

IN recent weeks the relations between the United States and Argentina have taken a turn for the worse. Ambassadors have been recalled, and formal statements of indictment and rebuttal have been issued in Washington and Buenos Aires. There, for the moment, the official exchanges rest, but indignation is rising on both sides, and a school of thought that is strongly represented both in Washington and in the American Press is urging economic sanctions, in which Great Britain would undoubtedly be pressed to join.

Hitherto the British Government has closely followed the lead of the United States, Sir David Kelly, the British Ambassador, was recalled soon after Mr Armour. As the Prime Minister made clear on Wednesday, London deplores the political trends of the Farrell Government no less keenly than Washington. Indeed, the British have special reasons of their own for disliking the Farrell regime which, ever since its seizure of power in January, has adopted a hostile and provocative attitude towards British-owned enterprises in Argentina. On the score both of its domestic and of its international policies, the Farrell Government has made itself obnoxious. There is no cause for surprise in the fact that economic counter-measures have come up for discussion.

But the desirability of such measures cannot be judged simply by the merits or defects of General Farrell and his crew of colonels. There are a number of other reasons which should give pause. The simplest and most compelling argument is that economic measures would be far more likely to confirm the Farrell regime in power than to remove it. There is quite enough evidence already to show that overt pressure from foreign countries has given General Farrell a popularity that he would probably otherwise not enjoy. Indeed, this would be the natural reaction in any country and national pride is certainly no less in Argentina than elsewhere.

Moreover, it is very probable that economic war would, at this stage, damage the United Nations more than it would hurt Argentina. Argentine meat and leather, not to mention such minor items as quebracho and linseed, are vital for Great Britain. On the other hand, Argentina could hardly be brought to its knees by restrictions either on imports or exports. Argentine exports are admittedly, vulnerable, but there are already complaints that they are paid for only in pounds and dollars that cannot be spent. Imports are already greatly reduced ; domestic industries have been developed to meet many of the most urgent needs ; and other South American countries --- not all of which could be induced effectively to join in the embargo --- already supply more of Argentina's imports than either the British Empire or the United States. Argentina has reserves and can wait until the not too distant end of the war in Europe, when all the hungry nations of the shattered continent will look to its vast stocks of food.

Furthermore, there is the political objection that far reaching economic sanctions against Argentina would be a flagrant departure from the practice of Britain and America in their dealings with other non-belligerents. No economic war has been declared on Sweden, Switzerland, Eire, Portugal or Turkey, and only a specific one on one item, imposed for a special purpose, on Spain. The United States has only very late in the day made even a diplomatic move against Finland, which is actually at war with America's allies. If so striking a discrimination were to be made against Argentina, the nationalist reaction in favour of General Farrell would be all the stronger.

Thus on an analysis of strictly immediate considerations, any proposal for coercive measures, if it were to be made, should be rejected. But it would be idle to deny that there are more far-reaching arguments. There is no reason why anybody in Great Britain should hesitate to admit that British long-term trading interests enter into the matter. No other country in the world has freely sacrificed its commercial and financial interests on the altar of war as lavishly or as unconcernedly as Great Britain, and no commercial interests would be allowed to stand in the way of economic pressure at this stage of the war if it had any chance of success and was essential for the triumph of the common cause. But if the purpose of exerting pressure on Argentina is not only to aid the war but also to attain some other doubtless desirable, but hardly imperative, object such as "hemispheric solidarity," then the sacrifice, on top of so many others already made, may seem too great. For decades, Argentina has been one of the main suppliers of cheap food for Britain's industrial population. In return, it has been a valuable market for British goods, and a fertile ground for British capital---to the great benefit of both countries. Stable trading and investment relations are generally admitted to be an important factor in world peace. It is not in the interest of either Britain, Argentina or the larger Atlantic community that one of the most successful partnerships in economic history should be broken up, Britain is no longer one of those rich nations that can afford fits of uncalculated ill temper. The gain must be counted against the loss; and in this case there would be an enormous loss for a very questionable gain.

All this should be said, and said firmly, But, admittedly, it is at this point that the Americans tend to see the cloven hoof. Argentina is one of the tenderest spots in Anglo-American relations. To put the matter bluntly, each country finds it difficult to avoid suspecting the other's motives. In American eyes, the British influence in Argentina is suspected of being reactionary and anti-democratic, and British policy of being designed to exclude American trade, not by fair competition, but by bilateral discriminations. In British eyes, American policy in Argentina is suspected of being moved less by the desire to defeat Hitler than by the desire to extend the influence of Washington from the northern half of South America to Cape Horn--in short, by a doubtless beneficent but none the less real imperialism.

These British suspicions would no doubt, and no doubt correctly, be resented and disproved in Washington. But it is no less important that the American suspicions, some outspoken and some implied, should be brought into the open and dispelled. It may be that the social contacts of the British colony in Buenos Aires have been too exclusively with the landed and conservative interests--if so, it is British trade that has probably suffered most. There is certainly no ground for suspecting any British intervention in Argentine politics, and the conservative General Farrel is assuredly no lover of Britain.

The more serious charge is that British policy forces Argentina to discriminate against American goods ; it is chiefly based on the Runciman-Roca Agreement of 1933. But the circumstances of that Agreement should be remembered. It was made at the bottom of the Great Depression, in the same year that the dollar was arbitrarily devalued and that Mr Roosevelt broke the World Economic Conference. It is to be hoped that such circumstances will not recur and that such strong-arm methods will not again be necessary. But it would be the height of illusion to ignore manifest facts such as that Argentina is dependent on the British market, that Britain cannot buy without selling, and that Argentina, if it wishes to keep its markets, must play its part in making it possible for Britain to pay. The more valid criticism of the Runciman-Roca Agreement is not that it took such steps as were necessary in those desperate times to underline this simple logic, but that it put Britain's bargaining position to unprogressive ends--for example, to the limiting of road competition with British-owned railways and to the pushing of goods without much regard to their competitive merits. It is right that the plain argument of the facts should be brought home--although, let us hope, by gentler methods; it is wrong that it should be used for the protection of inefficiency.

In any case, if the charge is discrimination, let it lie against both sides. The President of the American Import-Export Bank has explained the terms on which loans are made to South American countries in these words:

When technical assistance is required, it is a normal condition of our credits that the borrower shall first make satisfactory arrangements for the employment of American engineers or other technicians qualified to see that the work is properly carried out. Our credits also provide that all machinery and materials not available in the country of the borrower shall be purchased or leased in the United States, and that such machinery and materials shall be transported in American ships.

When Britain makes pounds available by the purchase of goods and claims a voice in the spending of those pounds, that is bilateralism and discrimination. When the United States makes dollars available by giving credits and claims a voice in the spending of those dollars, that is legitimate.

This is the heart of the matter. The British are no enemies to the Pan-American idea. On the contrary, they were midwives to the Monroe Doctrine and, until recent decades, its main material support. It is only to the exclusive perversions of the Pan-American ideal which sometimes emerge that the British--and incidentally the Argentines--object. Pan-America is, like the British Commonwealth of Nations, a co-operative association resting on consent. Within the Commonwealth, Canada resists the desire of other members to tighten the machinery of association, partly because it wishes to preserve untrammelled its special relation to the United States. Similarly, Argentina is not a complete adherent of Pan-America, partly because it wishes to preserve its special relationship with Europe and with Britain. (There is not, of course, any other parallel between the positions of Canada and Argentina.) Nobody in Great Britain would argue that the United States should be asked to put pressure on Canada in the interests of Commonwealth solidarity. Similarly, it would be unprofitable to expect Great Britain to join in compelling Argentina to take a different view of its Pan-American obligations.

Special security arrangements and regionalisms of all kinds exist, in a democratic world, only if they are voluntary. Of their nature, they cannot be exclusive and will tend to be untidy. It would be a tragedy if the "untidiness" of Argentina were to inhibit cordial Anglo-American relations, or of joint attempts to tidy up the situation were to result in Argentina's violent self-exclusion from the general community of Atlantic states or to delay its return to a democratic and liberal form of government.

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Freedom of Comment

The Economist of August 5th contained an article entitled "Britain and Argentina," in which comments were made on the policy of the United Kingdom and of the United States towards Argentina. Some of these comments were critical of American policy, and therefore distasteful to Americans. What is of relevance to the rest of the story is not whether the views expressed were correct, but that they were the honest views of The Economist, arrived at after some study and thought and reflecting (as has since become apparent) the opinions of a large section of the informed British public. Reuters cabled the article to its clients overseas, among them the newspapers of Argentina, who printed extracts from it. For this action Reuters received a protest from the American Chamber of Commerce in Buenos Aires, not on the ground that the text was inaccurate but that it was objectionable to them. And, to cap all, the Buenos Aires manager of one of the American news agencies has undertaken that his news service to Argentina shall no longer be polluted with extracts from The Economist. No further comment need be made upon this remarkable episode than to hope that it is not a typical example of what the American Congress meant by its demand (usually thought to be directed against the British) for an international guarantee of the "world-wide right of interchange of news by news-gathering and news-distributing agencies, . . . by any means, without discrimination as to sources, distribution, rates or charges."
The Economist, 21 October 1944, page 539.