1941: Argentina

Neutrality.

The reluctance of Argentina to abandon a policy of strict neutrality after the United States entered World War II may be attributed to three factors: its remoteness geographically from North America; the long-standing coolness between the United States and the Argentine Republic; and the internal political situation of the country, marked by strife and the deadlock between Acting President Ramón Castillo and the Radical-dominated Chamber of Deputies, with both willing to utilize problems of foreign policy for political ends. Although Argentina has granted the United States the status of non-belligerency, which serves the practical purpose of conferring unlimited access to Argentine ports, it has not broken off diplomatic relations with the Axis powers, and has given instructions to the press to print nothing that might disturb its friendly relations with other countries or affect its neutrality. Moreover, on the strength of the national state of siege declared Dec. 16, which suspends all constitutional guarantees for an unlimited period, the Government cancelled a mass meeting scheduled by the pro-British and pro-democratic Acción Argentina for Dec. 20. This move intensifies the suspicion that the state of siege had been declared to protect the Castillo régime from its internal enemies rather than to meet the international situation. The delegation to the Conference of Foreign Ministers in Rio de Janeiro (see BRAZIL) early in 1942, was instructed, however, to 'place joint interests of all American nations above regional considerations' and, in general, to 'support any proposal for continental defense that does not affect Argentina's sovereignty or neutrality.'

The link between internal politics and Argentina's position toward the War is seen in the policies adopted towards Nazi activities in that country. The Radical party, which controls the Chamber of Deputies, has stood for an energetic anti-Nazi campaign, as have the four leading Buenos Aires dailies; and a Radical deputy, Raúl Damonte Taborda, has led the Congressional committee investigating anti-Argentine activities which was created June 19. Anti-Nazi sentiment has also been strong among the Buenos Aires public. On the other hand, the Castillo administration has adopted a negative attitude of avoiding embarrassing disclosures, and in the summer played a waiting game until Congress might adjourn at the end of September. The precipitation of the War into the Western Hemisphere has altered somewhat this inertia, if not outright obstructionism. In contrast is the expressed opinion of ex-President Justo, a likely choice as next president, that Argentina should place itself unreservedly by the side of the United States, even to the extent of declaring war. President Ortiz has also pledged Washington his whole-hearted support. The Army has been very pro-Nazi, however, except for a minority loyal to Justo, and the abortive army 'revolt' in September was associated by Crítica and other pro-democratic journals with the Nazis. An investigation of the armed forces was ordered by the War Minister in the spring when the Commander of the Fourth Division was accused of distributing totalitarian propaganda to the Army.

The Damonte-Taborda Committee, a prototype for similar investigating committees in other Latin American countries, has presented four reports of its investigations and pushed through the Chamber of Deputies, by overwhelming majorities, the following resolutions: (1) censuring the German Ambassador, Baron Edmund von Thermann, for overstepping his diplomatic functions: (2) demanding dissolution of German 'welfare and cultural clubs' as blinds for political activities; and (3) asking that the legal registration of the German Chamber of Commerce be withdrawn. Implicit in the first was a demand for the Ambassador's expulsion; his recall to Berlin late in December saved him the indignity of being expelled. The topheavy staff of the German Embassy and its mounting expenses since 1939, as well as the discovery of a portable short-wave radio set in a German diplomatic pouch, have led to charges of the abuse of diplomatic privileges. The fourth report of the Committee dealt chiefly with the relations between Berlin and the German language schools in Argentina. The life of the Committee was extended by the Chamber of Deputies before it adjourned Sept. 30. The Government has cracked down on the pro-Nazi, Yankee-baiting sheet, El Pampero, but this action was interpreted by its opponents as a smoke screen. The Minister of Interior has also forbidden all activities of a new political party formed by the Alianza de Juventud, an allegedly Nazi group. In the fall it was outlawed and civil proceedings were instituted against its head, retired Gen. Juan Batista Molina.

Political Situation.

Argentine politics have grown increasingly tense as Acting President Ramón Castillo has lost popular support. He has indicated a growing disregard before Congress of the President, Roberto M. Ortiz, inactive because of illness, and has been so out of sympathy with the Chamber of Deputies that important legislative action has been deadlocked. His own party, the National Democratic, controls the Senate. The high-handed dissolution of the Buenos Aires Municipal Council on charges of corruption, and the administration's tactics regarding the Buenos Aires Provincial elections, scheduled for Dec. 7, have been recent major political issues. The legislative boycott adopted by the Radicals in January, causing Castillo to announce rule by executive decree and the extension to 1941 of the 1940 budget, continued throughout the legislative session, and Congress closed Sept. 30 without completing action on the 1941 and 1942 budgets, without voting approval of the $110,000,000 loans negotiated in Washington and without legislating important tax increases.

The tax bills introduced by the administration would have raised the income tax rates, which are the lowest of any of the principal nations of the world, and would have increased the excess profits taxes and death duties. Without these revenue increases the Government is faced with a cash deficit of P. 274,343,000, following an actual 1940 deficit of comparable size. The sum needed for purchase of this year's corn crop adds a heavy financial burden. If this cannot be met out of the dollar loan from the United States it will greatly increase the debt already owed the Banco de la Nación for previous grain operations.

Trade Problems.

Disposition of agricultural surpluses (wheat, corn and linseed) constitutes a government problem of major importance. Meat presents no problem since Argentina consumes 75 per cent of its output; the rest goes principally to Great Britain. Normally, however, the country exports 68 per cent of its wheat crop and 90 per cent of its corn. The United States, which, in many respects, has been making up for the loss of the European market — in 1941, for the first time, replacing Great Britain as Argentina's best customer — is never likely to be a substantial market for the Republic's cereals. This remains a depressing factor in the nation's trade outlook. Wheat exports for the first six months of 1941 were 43 per cent below shipments in the corresponding period of 1940. The corn situation was even less encouraging. The government must, therefore, buy the grain surpluses but cannot market them, and the purchased crops rot in granaries. The net loss on Federal crop financing runs as high as P. 400,000,000. With the new surplus which the government will have to carry the nation's total indebtedness on grain purchases will exceed 1,000,000,000 pesos. A parley of the 'big four' wheat producers — Argentina, Australia, Canada and the United States — and Great Britain, in the summer, drafted an international wheat agreement to establish an 'Ever-Normal Granary' and to deal with the disposition of surplus stocks which, at the end of July, not counting the 1941 crop surplus, amounted to about two normal years needs. A pool of relief wheat to war-devastated countries was also discussed.

Trade with the United States increased markedly in 1941. In the first six months the United States took 35 per cent of Argentina's exports as against 17.5 per cent in 1940 and an average of only 12.6 per cent in the five-year period 1936-40. The change is due chiefly to increased purchases of certain critical materials: wool, hides and skins, quebracho extract. Argentina has had the best wool year in over a decade and the year showed a radical shift in the destination of wool shipments from Great Britain to the United States, which accounted for 82 per cent of them. Expansion of the armed forces explains the great increase in United States' wool requirements. The decision of the Roosevelt administration to permit the sale of Argentine canned beef to the United States Army improved United States-Argentine relations, as it not only provided Argentina with dollar exchange but indicated that a prejudice against Argentine meat had been overcome.

Hemisphere solidarity and the cause of Argentine cooperation with the United States were furthered by the conclusion of a reciprocal trade agreement in October. The unique features of this pact are (1) an escape-clause protecting the North American farmer; (2) the provision that United States concessions on Argentine products not normally supplied by that country (e.g. wines and cheeses) may be terminated after the end of the War on six months' notice; and (3) the denial to the United States of benefits from any special concessions granted to American neighbors.

Steps in the direction of a regional customs union (see URUGUAY for River Plate Regional Conference) were taken by Argentina and Brazil in concluding two trade agreements, one on April 9, the other on Nov. 21. Their immediate objective was to put the foreign trade of the two countries on a sounder basis by extending trade in Latin American markets. Eventually the new treaties are expected to promote the industrial development of South America by creating a unified market for the manufactured products of both nations. Politically, they might be expected to deepen the friendship of the two countries and, in the words of the Brazilian Foreign Minister, Oswaldo Aranha, 'suppress frontiers and bring nations closer together.' The two countries also mutually undertake the construction of an international bridge over the Uruguay River, thus connecting Entre Ríos Province with the State of Rio Grande do Sul.

Other hemisphere trade pacts signed by Argentina during 1941 include agreements with Canada, Bolivia and Cuba. Negotiations are under way for treaties with Chile, Paraguay and Uruguay.

In November, Argentina signed a contract putting its entire tungsten output for the next three years, up to 3,000 tons annually, at the disposal of the United States. As the hardening agent in steel, this strategic material is indispensable for defense production. The inaccessibility of the Chinese supply is now somewhat offset for the United States by Japan's loss of the Argentine source, for recently Japan has been taking nearly half the Argentine output. Attention is also being centered on other strategic exports from Argentina, chiefly beryllium, which is valuable as an alloy. In order to encourage increased production of nonferrous metals, the Banco de la Nación is authorized to grant credits to small producers of tungsten, beryllium, antimony, tin, lead and copper. See also PAN-AMERICAN AFFAIRS.