1942: Argentina

Question of Neutrality.

Argentina's continued neutrality — that nation and Chile being the only countries in the Western Hemisphere to take no action against the Axis powers — has been the primary issue in internal politics as well as a limiting factor in the way of economic aid from the United States. A good portion of the Argentine public has pro-democratic leanings and would doubtless support a break with the Axis, but it is too loosely organized to combat the conservative elements in the Government and the articulate Fascist groups. Between these the Castillo administration pursues a middle course of 'prudent neutrality,' having taken no more positive step regarding the war than to grant the United States non-belligerent status. To a strong native isolationism as a consideration favoring non-involvement in the war must be added the continental European roots of Argentine culture, the traditional trade ties with Europe, the persistent suspicion and dislike of the United States, and, to a slight extent, the Italian and German elements in the population. The 'Peace Plebiscite,' an attempt of isolationists to round up signatures of the supporters of President Castillo's foreign policy, was laid aside in early summer, following the anti-Nazi sentiment aroused by the sinking of the Rio Tercero by German submarines: but, after Brazil's entry into the war, it was revived and presented to the President with over 2,000,000 signatures for 'peace and neutrality.' On Sept. 30 the Chamber of Deputies voted, 67-64, for a break in diplomatic relations with the Axis, but no action was taken by the Senate, which overwhelmingly favors the President's policy. Since Congress will be in recess until May 1943, and since President Castillo considers foreign affairs his prerogative, it is unlikely that any immediate change will occur in the Republic's neutrality status. The British Government made it clear on Dec. 31 that it deplored the policy of Argentina in continuing diplomatic relations with 'the enemies of humanity.' The Argentine Government was so disturbed and angered by this protest that it forbade newspapers to print any reference to it.

Illegal Axis Activities.

Political feeling continues to run high on the neutrality issue, however, as is indicated by the sharp reactions to the speech of Under-Secretary Sumner Welles made on Oct. 8 charging wide-spread Axis activity in the country (see CHILE). The state of siege instituted in mid-December 1941, police regulations forbidding newspaper comment on foreign policy, and other repressive measures of the Castillo administration have effectively muzzled the press and the expression of public opinion. Protest has been registered, nevertheless, against the official recognition of the German Federation of Cultural and Welfare Societies, successor to the illegal Argentine Nazi party, and the Federation of German Trade Unions, which continues the activities of the disbanded German Labor Front, with the result that the former was dissolved on Sept. 14. The Committee of the Chamber of Deputies investigating Nazi activities, which is now headed by the Socialist, Juan Solari, its original chairman, Raúl Damonte-Taborda, having resigned, has continued to function, and in September reported proof of extensive Nazi propaganda in the northern territory of Misiones.

The attack on Waldo Frank, North American writer and lecturer, following the Government's declaration of him as persona non grata for his criticisms of Argentina's isolationism, which attack has become something of a cause célèbre, has been attributed, whether rightly or not, to the Alianza de Jurentud Nacionalista, leading Fascist organization. On the basis of three memoranda on illegal activities of Axis agents in Argentina, resulting in German espionage on a large scale, which were delivered to the Foreign Ministry in November by the United States Ambassador, the Argentine Government has rounded up 38 Axis spies, some of them connected with the German Embassy, and will bring them to trial. Discriminatory action against the Axis was also taken in December when restrictions were imposed on the use of the wireless for code messages, since, unlike the Allied nations, Axis embassies can communicate with their governments only by wireless. On the other hand, two newspapers, the Critics and the Argentina Libre, which have ardently espoused the United Nations' cause, were suspended on Dec. 29 for violating the state of siege ban on public discussion of international affairs. The Chamber of Deputies voted on Sept. 20, 77-56, for immediate suspension of the state of siege but again found itself hampered by the Senate.

Politics.

The Congressional elections held in March, under conditions of fraud and duress, resulted in a plurality in the Chamber for the Concordancia, a coalition supporting the President. With the Socialists holding the balance of power, the anti-Castillo forces have a slight majority in that body, but President Castillo controls the Senate. With the resignation in June and the subsequent death (July 15) of President Roberto M. Ortiz, Ramón Castillo, who has been acting President since June 1940, became President, to serve until February 1944. Presidential elections will be held in 1943, and Gen. Agustín P. Justo, President in the early '30s and veteran politician, but one without a party, is becoming more and more the logical candidate. His election might very possibly alter Argentina's stand on the war as he has been outspoken in his support of the United Nations. In fact President Castillo, though once a follower of General Justo, broke with him over the isolationist issue. General Justo already controls three portfolios in the Castillo Cabinet. The Foreign Minister, Ruiz Guiñazu, on the other hand, has stubbornly advocated neutrality, has been outspokenly unfriendly to the United States, and has repeatedly been accused of pro-Nazi sympathies and behavior.

Economic Relations.

In spite of the attempt of the Rio Conference to secure unanimous action on the question of severing economic relations with the Axis (see BRAZIL) this has been handled by Argentina with the same ambiguity that has characterized its general attitude towards the Axis powers and their agents. Axis-controlled firms have been little hampered or Axis funds little affected. On the other hand, Government control over the importation and exportation of United States dollars was decreed in July, in accordance with a United States Treasury order designed to prevent United States currency from falling into Axis hands. Argentina has, on the whole, been more concerned with building up an economic bloc in South America, an attempt launched at the River Plate Conference last year but sidetracked by the war. This is evidenced by treaties, with Bolivia over transportation facilities to the latter's oil fields with Chile over the exchange of wheat, sugar and scrap iron for Chilean coal, steel, nitrates and copper, and other pacts with Brazil, Peru, Colombia and Venezuela. The similar neutrality policies of Chile and Argentina have tended to create a rapprochement between the two Republics.

Trade and Finance.

A barter trade agreement with Spain, newest in a series running over a 13 month period, was announced in March, by which $40,000,000 worth of cereals, hides, meats and milk products would be exchanged for Spanish manufactures, machinery and chemicals. In this way Argentina hoped to unload troublesome surpluses of wheat and corn. Figures for the first seven months of 1942 indicated a 12 per cent increase in Argentine exports. Therefore, in spite of shipping difficulties and the country's strict neutrality position, as in Latin America generally, the year shows a higher export balance, increased customs collections, and a further gain in gold and foreign exchange holdings of the Central Bank. Ordinary budget deficits and special expenditures for public works and national defense have considerably increased the Federal debt, however. Irreconcilable division in the Congress has meant unsanctioned budgets for several years, with the result that the 1939 budget, in modified form, still serves. A thorough reorganization of fiscal policies is needed especially in the direction of increased taxes, since income taxes provide less than 15 per cent of Argentina's total cash revenue. Important tax reforms are proposed in connection with the 1943 budget, which provides 1,243,000,000 pesos for ordinary expenditures and anticipates a deficit of 179,000,000 pesos, to which must be added a 45,000,000 peso war budget. As the shipping shortage increases, the national revenues, which are too heavily dependent on import duties, are likely to be seriously crippled.

According to a list published late in 1941 in the Diario de Sesiones of the Chamber of Deputies, foreign investments in Argentina total 9,056,573,000 paper pesos. Great Britain holds the largest stake (60 per cent), invested chiefly in transportation. The United States' share is just under 20 per cent, principally in Government bonds; the Belgian investment is 11 per cent of the total. Germany's total of 35,500,000 pesos, half in banking, half in commerce and industry, represents only 4/10 of 1 per cent of the entire foreign investment.

An International Wheat Agreement, signed in Washington on June 27 by Argentina, Australia, Canada and the United States as leading exporters and by Great Britain as an important consumer, set up a relief pool of 100,000,000 bushels for distribution to war-stricken areas. Its postwar significance lies in the provisions to stabilize production and prices, create basic export quotas and regulate maximum reserve stocks. The export quotas were divided into the following ratios: Argentina, 25; Australia, 19; Canada, 40; the United States, 16. It has been urged in some quarters that Argentine wheat and corn be used to feed the areas recovered from the Axis by United Nations' forces, a move which would solve the problem of the Republic's grain and corn surplus, which has been unofficially placed at 4,000,000 to 5,000,000 metric tons and 7,000,000 tons respectively as of October 25.