MISSIONARIES OF MODERNIZATION:

THE UNITED STATES, ARGENTINA, AND THE LIBERAL INTERNATIONAL

ORDER, 1958-1963

DISSERTATION

Presented in Partial Fulfillment of the Requirements for

the Degree Doctor of Philosophy in the Graduate School of

The Ohio State University

By

Dustin Alan Walcher, B.A., M.A.

*****

The Ohio State University

2007

Dissertation Committee: Approved by

Professor Peter L. Hahn, Advisor _________________________________

Professor Kevin Boyle Advisor

Graduate Program in History
Professor Robert McMahon
 Copyright by

Dustin Alan Walcher

2007
 ABSTRACT

In 1958, Arturo Frondizi was elected president of Argentina following three

years of military rule under the Liberating Revolution. Frondizi pledged to

reintegrate the working-class Peronists into the body politic, after the previous

military leadership had pledged to exorcise the group from the national consciousness.

Above all, however, Frondizi pledged to embark on an ambitious modernization

campaign through which Argentina would emerge as an industrialized, high mass

consumption society. Over the subsequent five years, Argentine modernization was

supported extensively by public and private elites from the United States. Using U.S.

and Argentine sources, this dissertation examines the international and transnational

dimensions of Argentine developmentalism.

Between 1958 and 1963, the U.S. government, private American banks, and

supranational organizations such as the International Monetary Fund (IMF), loaned

hundreds of millions of dollars to Argentina in support of the country’s economic

development. They conditioned such support on domestic Argentine political and

economic reforms, including privatization of state-owned industry, reduced

expenditures toward the welfare state, and the liberalization of trade and capital flows.

The Frondizi government, and after March 1962 the José María Guido government,

ii
readily agreed to U.S. conditions. Those policies, however, were unpopular with the

Argentine working class which suffered under austere spending policies. They also

protested a perceived loss of national sovereignty as transnational corporations in

general, and petroleum companies in particular, became increasingly dominant within

the Argentine economy.

The modernization efforts ended in failure. U.S. officials were unwilling to

liberalize their own domestic economy to facilitate increased Argentine imports,

which contributed significantly to the constant Argentine balance-of-payments

deficits. Despite Frondizi’s promises to the contrary, his government was unable to

reintegrate the Peronists back into the body politic peacefully. Instead, Frondizi was

removed from power by a military coup in March 1962. The Arturo Illia

government’s cancellation of oil contracts held by transnational corporations on 15

November 1963 marked the end of concerted transnational modernization efforts in

Argentina. Those efforts concluded without generating the promised economic

improvement, or political and social stability.

iii
Dedicated to the memory of my grandparents, Howard and Lucy Tiedeman,
and to my mother, Pamela Tiedeman Walcher

iv
 ACKNOWLEDGMENTS

In the process of working on this project, I have accumulated numerous debts,

scholarly and otherwise. The origins of this dissertation lie in my undergraduate

education. Nicholas Maher first introduced me to Latin American history and the

“history of the Americas” when I was a college sophomore. My interest in the

interaction between the United States and the world was further nurtured at UCLA by

Amy E. Davis, Geoffrey Robinson, and Michael Salman.

I could not have hoped to find a better environment to continue my education

than that offered by the Ohio State University’s History Department. Ken Andrien

immersed me in the history of Latin America, and Donna Guy provided a detailed

introduction to Argentine history. Michael Hogan generously gave of his time while

serving as Dean and helped to introduce me to the history (and historiography) of U.S.

foreign relations. Robert McMahon added his experience and insights as this project

matured through the writing stage. Kevin Boyle was always available to answer my

questions and influenced my thinking about U.S. history more than he knows.

This dissertation would not have been possible without the assistance of

numerous archivists and librarians. In particular, I would like to thank the archival

staffs of the National Archives II in College Park, Maryland; the George Meany

v
Memorial Archives in Silver Spring, Maryland; the John F. Kennedy Presidential

Library in Boston, Massachusetts; the Lyndon Baines Johnson Presidential Library in

Austin, Texas; and the Universidad di Tella in Buenos Aires, Argentina. Librarians at

the Biblioteca Nacional, the Ministerio de las Relaciones Exteriores y Culto, and the

Ministerio de Economía, all in Buenos Aires, patiently hunted down the books,

newspapers, and articles that I asked to read. Brian Etheridge and the staff of the

American Foreign Policy Center at Louisiana Tech University made my stay in

Ruston pleasant and productive. Other scholars have added their insights and

benefited this project. In particular, I would like to thank Alan McPherson, Stephen

Rabe, Darlene Rivas, Jeremi Suri, and Robert Waters.

I was able to conduct the research necessary to complete this dissertation

thanks to the magnanimous financial support of many institutions. The Department

of History at Ohio State University supported my research in the Washington, D.C.

area during the summer and winter of 2005. The Ohio State Center for Latin

American Studies administered a Foreign Language and Area Studies grant that

allowed me to study Spanish in Buenos Aires for two months. The Mershon Center

for International Security Studies, the Tinker Foundation, and the Society for

Historians of American Foreign Relations, each supported my research in Argentina.

The John F. Kennedy Library Foundation and the Lyndon Baines Johnson Library

Foundation provided grants that offset expenses incurred while conducting research at

their facilities. Finally, the American Foreign Policy Center at Louisiana Tech

University generously funded my research in its rich microfilm collections, and

vi
provided a forum where I was able to discuss the early stages of my work. For all of

the financial support, I remain extremely grateful.

My fellow graduate students at Ohio State have made Columbus a vibrant

place to study. Steven Hyland and Melissa Guy have shared many conversations

about Latin America generally, and Argentina specifically. Melissa also kindly

showed me around Austin when I conducted research at the Johnson Library. Chapin

Rydingsward offered a helpful critique of the initial seminar paper that eventually

grew into this dissertation, and Kate Epstein did the same for an early draft of Chapter

6. My treatment of labor was aided by Ryan Irwin’s suggestions. Don Hempson and

Robert Robinson, close friends and fellow graduates of the program, have shared

conversations about our respective research projects, and just about everything else.

Since I first set foot on the Ohio State campus, Peter L. Hahn has been the

most important fixture in my academic life. He has sharpened my thinking, improved

my writing, and guided my education. Despite his increasingly busy schedule, he has

always made himself available, and I feel fortunate to have been his advisee for six

years. His influence can be seen in whatever virtues I may have as a scholar; my

flaws have certainly come from elsewhere.

Most importantly, I have been blessed with many supportive family members.

My aunt, Lynn Walcher, has been a constant source of encouragement, no matter

what goal I’ve pursued, and also provided a place to stay between conference and

research trips in Texas and Louisiana. My wife, Denise Calaba Walcher, relocated

from Los Angeles to Columbus – far from friends and family – to be with me as I

vii
worked on this project. Even if I don’t say it as often as I should, I am deeply

thankful. This dissertation is dedicated to the people who have nurtured me, and my

interest in history, for the longest period of time. Howard and Lucy Tiedeman did

more than is in the job description for grandparents. Together with my mother,

Pamela Tiedeman Walcher, they instilled in me the importance of education. Along

the way, all three encouraged a rather abnormal interest in history, especially for a

nine year old. I think of them every day.

viii
 VITA

1978 …………………………. Born – Salt Lake City, Utah

2000 ………………………..... B.A., History, University of California, Los Angeles

2003 …………………………. M.A., History, The Ohio State University

2001-present ………………… Graduate Teaching and Research Associate, The

Ohio State University

FIELDS OF STUDY

Major Field: History

Studies in: Diplomatic History

Modern U.S. History
Latin American History

ix
 TABLE OF CONTENTS

Page
Abstract ………………………………………………………………….. ii
Dedication ……………………………………………………………….. iv
Acknowledgments …………………………………………………….... v
Vita ………………………………………………………………………. ix

Chapters:

1. Introduction: Establishing Order and Spreading International

Liberalism During the Cold War Era ……………………………. 1

2. Desarrollo Defined: Arturo Frondizi, the United States, and the

Origins of Bilateral Developmentalism, 1958 …………………... 24

3. Desarrollo Enacted: Transnational Development in Argentina,

1958-January 1961 …………………………………………….... 70

4. Opportunity Lost: The Rise of the Alliance for Progress and

the Fall of Frondizi, January 1961-March 1962 ………………... 138

5. Desarrollo Endangered: Salvaging Liberal Development

during the Guido Interregnum, April 1962-July 1963 ………….. 180

6. Petroleum Pitfalls: Oil, Argentine Nationalism, and the

Demise of the Modernizers’ Moment, July-November 1963 …… 233

7. Conclusion: “Civilization and Barbarism” ………………………. 273

Bibliography ………………………………………………………….. 284

x
 CHAPTER 1

INTRODUCTION:
ESTABLISHING ORDER AND SPREADING INTERNATIONAL LIBERALISM
DURING THE COLD WAR ERA

The end of World War II marked a turning point in the history of the world’s

empires. In the years that followed, the process whereby the North Atlantic colonial

empires that had carved Southeast Asia, Africa, and Latin America began to reverse.

Decolonization was an often violent process that ultimately resulted in the

construction of new nation states and intrinsically challenged the existing structure of

global power that had been constructed on the base of imperial systems. Despite

having established sovereignty over some colonial possessions in the late nineteenth

and early twentieth centuries, U.S. elites preferred informal to formal colonial empire.

Under its informal empire, the United States did not assume official sovereignty over

a particular country, as would be the case in a formal colonial empire. Instead, those

nominally independent states were expected to remain open to U.S. trade and

investment and support U.S. political positions in international disputes. When states

within the U.S. informal empire transgressed those fundamental rules, the United

States employed force to reassert control. From the perspective of U.S. elites, this

liberal, informal empire saved the U.S. treasury from the expense of maintaining

1
formal control over a colonial system while still providing the economic and political

benefits of empire. Since Americans celebrated a revolutionary anti-colonial heritage,

maintenance of an informal empire had the added advantage of perpetuating the idea

that the United States offered a more just and moral alternative to the European

imperial systems, and that idea of American exceptionalism remained at the heart of

the popular national narrative. At the same time, informal empire established an

ordered system favorable to American political and economic power, and even

promised to spread the virtues of Anglo-American “civilization” to “savage” or

“barbarian” peoples in the Global South.1

While decolonization was supported ideologically by American culture, and

did not adversely affect U.S. power because of the predominately informal nature of

American empire, it did pose a direct challenge to Great Britain. British Prime

Minister Winston Churchill conceptualized his prosecution of World War II as a

defense of the British imperial project as well as the homeland. Imperial identity

remained a central component of British national identity. Following the devastation

1
While Spanish and Portuguese decolonization of the vast majority of Latin America was
complete by the 1820s, some European colonies remained within the Caribbean basin. An earlier
generation of foreign relations historians first defined the “informal empire,” or the “new empire,” of
the United States. See especially William Appleman Williams, The Tragedy of American Diplomacy,
3ed. (New York, 1972, first published in 1959); Walter LaFeber, The New Empire: An Interpretation
of American Expansion, 1860-1898 (Ithaca, NY, 1963). Literature of U.S. imperial history continues
to develop. Most recently see Charles S. Maier, Among Empires: American Ascendancy and its
Predecessors (Cambridge, MA, 2006); Niall Ferguson, Colossus: The Price of America’s Empire
(New York, 2004). On the motivation of American citizens to spread the perceived virtues of their
civilization into the Global South in the early-twentieth century, see Matthew Frye Jacobson,
Barbarian Virtues: The United States Encounters Foreign Peoples at Home and Abroad, 1876-1917
(New York, 2000); Emily S. Rosenberg, Spreading the American Dream: American Economic and
Cultural Expansion, 1890-1945 (New York, 1982). U.S. willingness to use military force to maintain
order ebbed and flowed. The Progressive era governments of Theodore Roosevelt, William Howard
Taft, and Woodrow Wilson regularly used force. By contrast, the Republican governments of the
1920s and the Franklin Roosevelt administration of the 1930s exhibited greater restraint.

2
of World War II, however, not even the most determined imperialist could have held

the empire together. Colonial subjects clamored for independence under self-

determination, principles that the Allies had trumpeted during the war. Postwar

pressure for independence was not unique to British subjects. The colonial empires

constructed by Europe’s great powers in Africa, Asia, and the Caribbean crumbled in

the postwar era and a multitude of new states emerged. Although decades passed

before the process of decolonization ran its course, World War II marked the

beginning of the end for classic European colonial empires.2

Even before the end of World War II – indeed even before the United States

became an active belligerent – American officials thought seriously about the best

way to order power in a postcolonial, postwar world. Emerging out of the Wilsonian

tradition, many in the Franklin Roosevelt administration concluded that American

disengagement after World War I contributed decisively to the breakdown of the

1930s international system. Like Woodrow Wilson, they opposed closed imperial

systems, preferring instead the free flow of capital and goods across borders, self-

determination of peoples, and the spread of democracy. Fundamentally, they

believed that the application of liberalism on a transnational basis was the best way to

safeguard American security, promote economic prosperity, and uphold human rights.

(I define transnational linkages as those undertaken by individuals or institutions that

freely cross or transcend nation state borders. International relations, by contrast,

2
William Roger Louis, Imperialism at Bay: The United States and the Decolonization of the
British Empire, 1941-1945 (Oxford, 1977); Elizabeth Borgwardt, A New Deal for the World:
America’s Vision for Human Rights (Cambridge, MA, 2005).

3
consist of interactions between nation states.) The American Dream, U.S. officials

believed, was universally shared. It was time for Americans to accept their

exceptional role and take leadership over the international system.3

The liberal values of American elites were rooted within the system of

corporative neo-capitalism that developed in the United States over the course of the

twentieth century. In response to the excesses of laissez faire capitalism, the

progressives of the early twentieth century searched for ways to make the capitalist

system more humane for the workers who toiled within it. Labor unions gradually

expanded their membership rolls, voluntary associations provided services for

recently-arrived working-class immigrants, and Congress approved legislation to

enhance federal oversight and regulation of big business. Progressive businessmen

recognized that for the industrial capitalist system to persevere, it must offer basic

protections and a sense of economic security to workers. During the 1920s, the

federal government promoted associationalism, whereby different corporative groups,

especially business corporations, cooperated with each other and the federal

government, both formally and informally. The state played a coordinating, non-

regulatory role in the associational system implemented most prominently by

Commerce Secretary, and later President, Herbert Hoover. The New Deal order of

the 1930s cemented and formalized the state’s role as overseer and arbiter of society’s

3
Borgwardt, A New Deal for the World. Significant literature deals with the American sense
of mission to spread the nation’s system, values, and way of life abroad. See especially Rosenberg,
Spreading the American Dream. For a useful discussion of the practice of transnational history, see C.
A. Bayly, Sven Beckert, Matthew Connelly, Isabel Hofmeyr, Wendy Kozol, and Patricia Seed, “AHR
Conversation: On Transnational History,” The American Historical Review 111:5 (December 2006),
1441-1464.

4
functional interest groups, while seeking to maintain cooperative interaction between

public and private functional elites in the service of the larger good of American

society. Fundamentally, the American system relied upon public-private cooperation

among elite leaders of functional interest groups, such as business corporations, labor

unions, trade associations, and farm groups while the state mediated between

different interest groups in the process of domestic and foreign policy formation.4

The new liberal system of corporative neo-capitalism, or privative corporatism,

was designed to harmonize the interests of society’s different interest groups.

Potentially divisive political questions were transformed into technical questions that

could be solved by experts. Representatives from different functional interest groups

served in government positions, and those not in active government service often

cooperated with the state on matters of mutual interest. Yet despite the systemic

innovations inherent within corporative neo-capitalism, the domestic evolution of the

U.S. liberal system still contained many of the facets of its previous, laissez faire

incarnation. The American system continued to stress the rule of law, the sanctity of

private property, and the open door abroad. As U.S. elites embarked to remake the

world in the image of their own country, they did so with those values firmly in mind.

4
Michael J. Hogan, The Marshall Plan: America, Britain, and the Reconstruction of Western
Europe, 1947-1952 (Cambridge, 1987), especially 1-25, surveys the postwar U.S. political economy
and system of corporative neo-capitalism. Jennifer Klein, For All These Rights: Business, Labor, and
the Shaping of America’s Public-Private Welfare State (Princeton, 2003), explores the public-private
construction of the U.S. welfare state. Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass
Consumption in Postwar America (New York, 2003), survey the importance of consumption in
American culture, as well as its importance for the continuing health of the economy. See also
Michael J. Hogan, “Corporatism,” in Explaining the History of American Foreign Relations, Eds.,
Michael J. Hogan and Thomas G. Paterson (Cambridge, MA, 1991), 162-175.

5
 To make their vision of an Americanized world a reality by providing an

ordered alternative to the old international system constructed largely within the

confines of formal colonial empires, U.S. officials hosted a global economic

conference in Bretton Woods, New Hampshire, in 1944. Participating officials

envisioned an international order based upon multilateral cooperation, the open door

and nondiscrimination for trade and investment, and exchange and monetary stability.

These had long been objectives of U.S. elites. However, the Great Depression had

taught them that normal market mechanisms alone were insufficient safeguards of

economic growth, prosperity, and stability. Reflecting their progressive belief that

global economic and development problems were at their core technical problems, the

architects of Bretton Woods created new supranational organizations to mediate the

world system. The Bretton Woods institutions – the International Bank for

Reconstruction and Development (IBRD or World Bank), and the International

Monetary Fund (IMF) – were created to stabilize the global economy’s inevitable

bumps. In an effort to foster exchange convertibility, the IMF was designed to

provide stabilization loans to countries running balance-of-payments deficits as a

stopgap measure, while local officials took steps necessary to correct the deficit. The

World Bank was charged with providing reconstruction and development credits, and

was used extensively in Europe after World War II. Control of the Bretton Woods

institutions was proportioned according to level of state financial contributions,

granting the United States a preponderance of power. Also established at Bretton

Woods, the General Agreement on Tariffs and Trade (GATT) facilitated trade

6
liberalization by providing a forum for states to negotiate tariff reductions. In the

final analysis, the Bretton Woods system provided a clear legal framework based

upon the traditional U.S. objective – embodied in the Open Door Notes, Woodrow

Wilson’s Fourteen Points, and Franklin Roosevelt’s conception of the Atlantic

Charter – of a liberal international order.5

With the advent of the Cold War, and the conflict’s increasing orientation in

the Global South in the 1950s and 1960s, international liberals held out the promise

of stability and prosperity to less economically developed countries. To articulate the

virtues of liberal capitalism in response to the communist challenge – a challenge

made evermore threatening to the nascent liberal international order by the Soviet

Union’s perceived expanding influence – a group of American social scientists

advanced a liberal theory of social, political, and economic development dubbed

modernization theory. This theory posited that, contrary to communist ideology, a

liberal mass consumption society represented the ultimate stage of social

development. The universalistic theory argued that “traditional” societies, generally

located in the Global South, each possessed the ability to transition through various

stages of development into “high mass consumption” societies. From the perspective

of such thinkers, the United States embodied the liberal modernity of high mass

consumption. Before “traditional” societies could become “modern high mass

5
Detailed historical studies of the origins of the Bretton Woods system are surprisingly scarce.
See Borgwardt, A New Deal for the World; Hogan, The Marshall Plan; Francis J. Gavin, Gold, Dollars,
& Power: The Politics of International Monetary Relations, 1958-1971 (Chapel Hill, 2004), especially
1-31. Burton Kaufman, Trade and Aid: Eisenhower’s Foreign Economic Policy, 1953-1961
(Baltimore, 1982), 1, provides the succinct definition of the liberal international order used here.

7
consumption” societies, they needed to pass through a common series of stages of

growth. Modernization theory was rooted in a social scientific belief that the

ideologically divisive political and economic problem of development was really a

series of technical problems that could be solved objectively. Although rooted in

modern liberal ideology, modernization theorists saw their work as objective,

scientific, and non-ideological. Modernization theorist W. W. Rostow brought the

theory to the attention of policymakers in his capacity as an informal advisor to the

Dwight D. Eisenhower administration, and then as a high-ranking official in the John

F. Kennedy and Lyndon B. Johnson administrations. Rostow used his influence to

employ the theory based upon his belief that the structure of postwar power was

ideally constructed to help “traditional” societies in the Global South evolve into

“modern” societies. He and other elites held a quasi-religious faith in their own

ability to affect positively the livelihoods of millions of diverse people around the

world while at the same time exposing communist modernity as a false idol.

Moreover, success would achieve U.S. objectives in the Cold War.6

Soviet leaders did not sit by idly while Americans worked to spread liberal

global capitalism. Soviet policy, like that of the United States, was ideologically

geared toward expanding its own system globally. Soviet officials agreed with

6
A fast-growing literature is developing that deals with the effect of modernization theory on
U.S. foreign policy. See especially Michael E. Latham, Modernization as Ideology: American Social
Science and “Nation Building” in the Kennedy Era (Chapel Hill, 2000); David C. Engerman,
Modernization from the Other Shore: American Intellectuals and the Romance of Russian
Development (Cambridge, MA, 2003); Nils Gilman, Mandarins of the Future: Modernization Theory
in Cold War America (Baltimore, 2003). The most important work of modernization theory from a
policymaking perspective is W. W. Rostow, The Stages of Economic Growth: A Non-Communist
Manifesto (Cambridge, 1961).

8
modernization theorists that there was a universal path toward modernity. Both the

United States and the Soviet Union premised their foreign policies in part on the idea

that they had a special mission to uplift humanity. Unsurprisingly, the ideological

and expansionist foreign policies promoted by both sides also promised tangible

economic benefits for each nation’s elites. However, the Soviets parted ways with

their U.S. counterparts when they argued that communist modernity comprised a

higher stage of development than the modernity of high mass consumption. The

inherent ideological challenge that the U.S. and Soviet systems posed to one another

fundamentally threatened both powers. Consequently, public officials in both

Washington and Moscow concluded that their national security demanded the spread

of their own system abroad and the containment of the other. That dynamic fueled

the Cold War.7

Although U.S. elites shared an objective, they differed among themselves over

strategy. In particular, their opinions diverged over how much money the federal

government should spend to prosecute the Cold War. Harry S. Truman, had also

been personally committed to tight budgets, even while many members of his

administration pushed for significantly higher ceilings on defense appropriations and

the accelerated militarization of the Cold War. Truman eventually embraced the

logic of those aides, who in 1950 spelled out their more aggressive strategy to contain

7
Odd Arne Westad, The Global Cold War: Third World Interventions and the Making of Our
Times, (Cambridge, 2005), identifies the United States as representative of an “empire of liberty,” and
the Soviet Union as embodying an “empire of justice.” Soviet policy assumed pronounced ideological
dimensions during the 1950s, especially after the 1953 death of Joseph Stalin. See V. M. Zubok,
Inside the Kremlin’s Cold War: From Stalin to Khrushchev (Cambridge, MA, 1996).

9
Soviet expansion, and thus facilitate the expansion of liberalism, in National Security

Council Paper number 68 (NSC-68). U.S. defense budgets subsequently increased,

and the Cold War was further militarized.8

Dedicated to fiscal restraint, Eisenhower concentrated on containing the

spread of communism where he saw the maximum danger: principally in Europe,

parts of Asia, and eventually the Middle East. Eisenhower’s foreign policy team

believed that Latin America was securely within the U.S. orbit. While public officials

hoped that private companies would increase their presence in the region, they saw no

need to spread aggressively the American vision of modernity in a place where

communism, the principal alternative to that vision, had not demonstrated particular

vitality. In specific cases where the Eisenhower administration perceived communist

encroachment, it used the Central Intelligence Agency (CIA) to eliminate the problem,

a tactic demonstrated most notably in the 1954 Guatemalan coup that overthrew

Jacobo Arbenz Guzmán. Otherwise, the administration encouraged U.S. business in

the region, but remained disinterested in the pressing social and economic issues on

the minds of most of the region’s population.9

The violent protests that met Vice President Richard Nixon in Caracas in 1958,

combined with Fidel Castro’s challenge to the hegemony of liberal capitalism in the

8
Michael J. Hogan, A Cross of Iron: Harry S. Truman and the Origins of the National
Security State, 1945-1954 (Cambridge, 1998).
9
Piero Gleijeses, Shattered Hope: The Guatemalan Revolution and the United States, 1944-
1954 (Princeton, 1991). Stephen G. Rabe, Eisenhower and Latin America: The Foreign Policy of
Anticommunism (Chapel Hill, 1988), remains the standard account of the Eisenhower administration’s
Latin American policy.

10
Western Hemisphere, shook the Eisenhower administration and convinced officials

that U.S. economic and security interests were sufficiently endangered to justify a

positive program to spread liberal development to Latin America. The alternative,

according to American cold warriors, was to risk “losing” Latin America to the

communists. Policymakers had already been guided by modernization theory when

crafting policy toward other parts of the Global South, and they reasoned that the

model was well-suited for application in Latin America. The Eisenhower

administration, in cooperation with private bankers, business leaders, and labor union

officials, began to craft regional development programs designed simultaneously to

inhibit communist expansion and to promote political, economic, and social

development consistent with liberal values for Latin America.10

II

To pursue these themes and to analyze the application and negotiation of

power across national borders, this dissertation examines the U.S.-Argentine

relationship between 1958 and 1963. U.S. officials thought that Argentina was well-

suited to make the transition to liberal modernity because of the nation’s rich natural

resources, largely European cultural heritage, past experience with democratic

government, and comparatively high literacy rates. Perhaps even more importantly,

10
For Nixon’s perspective on his ill-fated 1958 trip to Latin America, see Richard M. Nixon,
Six Crisis (Garden City, NY, 1962), 183-234. Rabe, Eisenhower and Latin America, 100-116; Latham,
Modernization as Ideology. On postwar development in Asia, see Nick Cullather, “’Fuel for the Good
Dragon’: The United States and Industrial Policy in Taiwan, 1950-1965,” in Empire and Revolution:
The United States and the Third World since 1945, Eds., Peter L. Hahn and Mary Ann Heiss
(Columbus, 2001): 242-268.

11
during the late nineteenth and early twentieth centuries, Argentina ranked among the

world’s most prosperous countries. Oriented toward the North Atlantic, Argentina

exported large quantities of agricultural goods – primarily meats and wheat – to

Europe and other parts of Latin America. Those goods were produced and packaged

in large part by workers who arrived during an immigration wave from Italy, Spain,

and, to a lesser extent, other parts of Europe. Argentina’s elite landowners did not

reap profits from the nation’s export-oriented economy alone. British bankers and

businessmen invested in Argentine infrastructure and reaped substantial profits.

While Argentina prospered, it remained a part of Great Britain’s informal empire.11

A wide ideological arc extended through Argentine discourses of political

economy. Since Juan Perón’s 1946 election to the presidency, the Peronist, statist

corporatist model of political economy constituted the touchstone of debates. Perón

pursued an ambitious national project that envisioned the ultimate creation of a

heavily centralized, statist, corporatist order characterized by considerable state

intervention in the economy, centralized control of economic resources, and Import

Substitution Industrialization (ISI). Unlike the statist corporatism that marked

European fascist regimes, Perón adopted a populist program that for the first time

celebrated the Argentine working class. The Peronist state integrated workers into

the Confederación General del Trabajo (General Confederation of Labor, CGT),

11
For overviews of Argentine history, see Roberto Cortés Conde, “The Growth of the
Argentine Economy, c. 1870-1914”; Ezequiel Gallo, “Society and Politics, 1880-1916”; David Rock,
“Argentina in 1914: The pampas, the Interior, Buenos Aires”; and David Rock, “From the First World
War to 1930,” all in Argentina since Independence, Ed. Leslie Bethell (Cambridge, 1993), 47-172.
See also David Rock, Argentina, 1516-1987: From Spanish Colonization to Alfonsín (Berkeley, 1987).

12
which served as a pillar of the regime’s authority. Indeed, Perón was the first

president to integrate working-class Argentines into a broader conception of the

nation and peronismo subsequently enjoyed widespread popularity among their ranks.

After 1950, Perón aborted efforts to spread the Argentine system throughout the

hemisphere and even made some liberal reforms, most notably by permitting

Standard Oil of California a concession in 1955. Despite those deviations, Perón

maintained the contours of his statist corporatist system. When the Argentine

military overthrew the Perón government in the September 1955 Liberating

Revolution, military officers, the Argentine economic elite, and U.S. observers hoped

that the scourge of Peronism could be forever excised from the nation’s culture. The

Liberating Revolution was intended to minimize the influence of the working class

and restore the old landowning oligarchy to its prominent position within the

Argentine power structure. Elite hopes that the popular sectors would accept the fall

of the Peronist state submissively were unrealistic, and Peronist leaders continued to

agitate for working-class interests.12

U.S. officials planned to work with the Argentines to minimize the

nationalistic and neutralist influence of Perón, nurture a liberal economic system

receptive to American trade and investment, and sustain governments favorable to the

U.S. position in the Cold War. Success would enhance American national and

economic security by demonstrating the superiority of liberal internationalism to

12
Glenn J. Dorn, Peronistas and New Dealers: U.S.-Argentine Rivalry and the Western
Hemisphere, 1946-1950 (New Orleans, 2005); Daniel James, Resistance and Integration: Peronism
and the Argentine Working Class, 1946-1976 (Cambridge, 1988); Juan Perón, “Bill of Rights of the
Workers,” 24 February 1947, RG 98-002 Vertical Files, 3/9, Argentina, 1947-1983, GMMA.

13
communism. Argentines, U.S. officials argued, would be better off with an economy

based upon market growth designed to facilitate high mass consumption and general

prosperity. They were hopeful that economic stability would be complemented by a

stable democratic government, led by middle-class political parties that were

receptive to the principles of liberal modernization.

Despite their high aspirations, American modernizers were frustrated in their

efforts to bring political and economic liberalism to Argentina. Despite hopes that

Argentina would develop into a stable democracy, the Arturo Frondizi government

fell victim to a military coup in 1962. Like many other Latin American countries

during the 1960s, Argentina faced popular protests from the working class against

U.S.-led austerity programs that adversely affected them and failed to stabilize the

nation’s ailing economy. Additionally, the presence of U.S. petroleum companies –

which operated in Argentina after 1958 – provoked nationalist sentiment among

Argentines from a variety of socio-economic backgrounds. Consequently, Argentines

overwhelmingly supported the Arturo Illia government’s 1963 cancellation of all

foreign oil contracts with the state oil company, Yacimientos Petrolíferos Fiscales

(YPF), and called into question the sustainability of the global modernization agenda.

Although communism did not triumph in Argentina, neither did the nation become a

showcase for liberal development. After Illia cancelled the oil contracts, U.S.

modernizers began to lose faith in Argentine modernization.

III

14
 This dissertation analyzes U.S. efforts to incorporate Argentina into the liberal

international order, developing several important themes. First, it examines

transnational discourses of modernization in the context of Argentina’s

developmentalist agenda. Consensus as to the inherent desirability of Argentine

industrialization and evolution into mass consumption society existed across divisions

of class and nationality. However, fierce twentieth century ideological debates

focused upon identifying the ideal path which less developed countries could follow

toward the elusive objective of modernity. This dissertation analyzes those

transnational discourses of development that led to policy formation. By focusing on

the U.S.-Argentine relationship, I am able to explore the mechanisms of U.S.

hegemony in the liberal international order through the translation of theoretical

development concepts into policy choices. This dissertation is also able to assess the

significant role that Argentine elites played within the larger system through their

negotiations with U.S. officials, transnational business leaders, and supranational

institutions.

The construction of Argentine nationalism, often expressed as opposition to

American policies and corporations, and the reaction of U.S. elites to that nationalism,

is a second theme that this dissertation addresses. Economic nationalism, directed

primarily against Great Britain and the United States, had long resonated in Argentina.

Although the U.S. government often enjoyed a positive working relationship with

Argentine governments during the 1950s and 1960s, many Argentine citizens –

particularly among the working class – protested the austerity measures U.S. officials

15
and bankers insisted upon as a condition of new loans. They also sought to limit the

access of transnational corporations to their country. To the consternation of U.S.

elites, the large Argentine working class actively resisted the imposition of liberalism,

and demonstrated the significant influence working-class people could wield through

political pressure, work stoppages, and street protests. In place of liberalism, they

demanded the re-imposition of the Peronist state and thus added their own voices to

transnational discourses of political economy. Peronism had provided the most

significant social, political, and economic gains that the Argentine working class had

experienced in its history, and as a result retained working-class loyalty. Because it

posed a fundamental challenge to the liberal international order, and appeared to U.S.

elites to open the door to communist influence, those elites interpreted economic

nationalism as both an economic and a national security challenge and sought to

minimize its influence.

Third, this dissertation examines the corporative structure of power in both

domestic and transnational contexts. Through the political process, commercial

interests influenced policy. Congressional leaders, supported by U.S. agricultural

interests, blocked the liberalization of U.S. tariffs to permit the expansion of

agricultural imports from Argentina. The U.S. government, led by Democratic and

Republican presidents, promoted the expansion of U.S. business in Argentina.

Business leaders, labor union representatives, and government officials worked

together to promote the liberal development agenda. The U.S.-Argentine relationship

16
demonstrates the corporative construction of power and the importance of functional

interest groups to the formulation and execution of U.S. foreign relations.

Fourth, this dissertation analyzes democracy promotion within the liberal

international order. In 1962, the Argentine military overthrew a constitutionally

elected government. The U.S. government extended formal recognition to the new

regime following some internal debate, but with relatively little delay. At the same

time, U.S. officials trumpeted their support for democratic governments and

contrasted their democratic values with those of Soviet imperialism. U.S. and

Argentine elites cooperated during the 1958 and 1962 presidential elections to

proscribe Peronist candidates from the ballot, further demonstrating the lack of a full

U.S. commitment to democracy, despite both popular and official American rhetoric.

Similarly, the fate of the Peronist movement constituted the central Argentine

political question after 1955. Even non-Peronists who wanted to reintegrate Peronists

into the system feared the return of Perón to power. Yet by keeping Peronists outside

of the political system and failing to adhere fully to the principles of political

liberalism, Argentine elites and their U.S. supporters appeared hypocritical and

further antagonized the working class.

This dissertation seeks to evaluate the success of the bilateral U.S.-Argentine

relationship to the strategic objectives of both sides. While Argentina was no more

politically and economically stable in 1963 than it had been in 1958, U.S.-supported

governments contained communism and Peronism, and the Soviet Union gained little

in the Cold War. In that respect, U.S. officials could be pleased. However, U.S.

17
policies also exerted great costs among many in Argentina. The nation’s economy

remained stagnant, despite the concentrated efforts of transnational and Argentine

leaders during the late 1950s and early 1960s. Moreover, in the subsequent years

political violence claimed many lives. Ultimately U.S. policies strengthened the anti-

American thread in Argentine nationalism and confronting that nationalism remained

a long-term challenge for U.S. policymakers and business leaders.

Any study that engages the transnational dimensions of modernization

necessarily confronts the critique offered by dependency theory. Developed out of

Raúl Prebisch’s work as Director of the United Nations Economic Commission for

Latin America (best known by its Spanish-language acronym, CEPAL), dependency

theory argues that the world system was made up of an industrialized core and an

underdeveloped periphery. Core states pursued policies in the Global South that

enhanced their own economic security and industrial development while at the same

time keeping peripheral countries locked in a permanent state of underdevelopment in

a phenomenon sometimes called the “development of underdevelopment.” Peripheral

countries were caught in a state of dependence whereby they supplied primary

product exports to the core, but needed to import finished products and machinery

from the core at higher prices. The dependence of the periphery was not isolated to

the economic sphere. Dependency theorists argue that core countries had effective

political control over the periphery through a process of informal empire.13

13
Joseph L. Love, “The Origins of Dependency Analysis,” Journal of Latin American Studies
22:1 (February 1990): 143-168; Louis A. Pérez, “Dependency,” in Michael J. Hogan & Thomas G.
Paterson, eds., Explaining the History of American Foreign Relations (Cambridge, MA, 1991), 162-
175.

18
 Since it dominated Latin American studies during the 1970s, dependency

theory has come under sharp attack by specialists in inter-American history. Critics

complain that dependency theory oversimplifies complicated power dynamics by

reducing them into a bifurcated story of resistance and accommodation. Under

dependency theory, Latin American actors are assigned little agency and are

portrayed simply as victims of powerful foreign interests. Moreover, historians fault

dependency theory for its ahistorical methodology, observing that advocates of

dependency theory do not effectively analyze changes to the international system

over time. Similarly, some critics argue, dependistas were often more interested in

advancing their own socialist ideological agenda than in providing a carefully

nuanced understanding of the past. While still largely critical of U.S. policy toward

Latin America, recent scholarship has sought to recapture the ideas and actions of

Latin American actors. Other recent scholarship explores questions of culture and

deemphasizes the importance of economic forces as causal factors. To the extent that

transnational business and economic history are engaged, they are primarily analyzed

in relation to questions of culture.14

14
Max Paul Friedman, “Retiring the Puppets, Bringing Latin America Back In: Recent
Scholarship on United States – Latin American Relations,” Diplomatic History 27:5 (Nov., 2003): 621-
636; Darlene Rivas, Missionary Capitalist: Nelson Rockefeller in Venezuela (Chapel Hill, 2002);
Elizabeth Cobbs Hoffman, The Rich Neighbor Policy: Rockefeller and Kaiser in Brazil (New Haven,
1992); Alan L. McPherson, Yankee No!: Anti-Americanism in U.S.-Latin American Relations
(Cambridge, MA, 2003); Max Paul Friedman, Nazis and Good Neighbors: The United States
Campaign Against the Germans of Latin America in World War II (Cambridge, 2003); Gilbert M.
Joseph, et. al., eds., Close Encounters of Empire: Writing the Cultural History of U.S.-Latin American
Relations (Durham, 1998).

19
 Dependency theory’s critics have made invaluable contributions to the field,

but in their eagerness to shift paradigms they have overlooked the contributions that

dependistas made to the literature. By inserting the agency of elite and non-elite

Latin American actors into the larger historical narrative and critically engaging

questions of culture and ideology, the new scholarship has been salutary to the larger

field of inter-American history and has opened the door to important and overlooked

transnational issues. However, critical analysis of the power imbalance in U.S.-Latin

American relations has sometimes been underdeveloped in their work, and the

significance of economic issues in U.S. relations with the region has been

underemphasized in recent studies. This dissertation seeks to refocus attention on the

central issues of economic imbalance and development that dominated the attention

of U.S. elites and Argentines from all walks of life during the mid twentieth century.

At the same time, it incorporates ideological analysis and the voices of Latin

Americans into the narrative. In so doing, this dissertation seeks to incorporate the

best aspects of both dependency theory and the work of its critics. It highlights the

importance of ideas and emphasizes the agency of all actors. At the same time it

analyzes the application of political and economic power in a transnational context

and critically addresses the framework under which Argentina – in part because of

decisions made by its political leaders – was dependent upon the United States, the

strategies that many Argentines employed in their fight against that dependency, and

the changing nature of the bilateral relationship over time.

20
 Despite Argentina’s prominence within the inter-American system, the

literature on U.S.-Argentine relations remains underdeveloped. Synthetic works that

explore U.S.-Argentine relations during the nineteenth and twentieth centuries do not

offer significant depth on any given topic and – with the exception of David M. K.

Sheinin’s welcome new overview – are generally dated. Other recent monographs,

such as the books by Stephen Rabe, analyze the relationship between the Eisenhower

and Kennedy administrations with Latin America as a whole. Rabe’s scholarship,

however, does not provide sustained attention to the U.S.-Argentine relationship

specifically, is based almost entirely on official U.S. sources, and downplays the

economic and cultural aspects of the bilateral relationship.15

Relatively little has been written about the transnational aspects of Argentine

modernization during the 1950s and 1960s. Celia Szusterman contributes the most

important study of Frondizi’s development policies, and elucidates some of its global

connections. However, Szusterman does not fully develop the theme, nor does she

treat non-Argentines as central actors. María de Monserrat Llairó and Raimundo

Siepe examine Frondizi’s international political and economic policies. They present

an excellent overview of Frondizi’s policies, but pay relatively little attention to the

critical global context in which decisions were made. Juan José Cresto provides an

15
David M. K. Sheinin, Argentina and the United States: An Alliance Contained (Athens, GA,
2006; Joseph Tulchin, Argentina and the United States: A Conflicted Relationship (Boston, 1990);
Arthur P. Whitaker, The United States and the Southern Cone: Argentina, Chile, and Uruguay
(Cambridge, MA, 1976); Alberto Conil Paz and Gustavo Ferrari, Argentina’s Foreign Policy, 1930-
1962, John J. Kennedy, trans. (Notre Dame, Ind., 1966); Harold F. Peterson, Argentina and the United
States, 1810-1960 (Albany, 1962); Stephen G. Rabe, Eisenhower and Latin America: The Foreign
Policy of Anticommunism (Chapel Hill, 1988); Stephen G. Rabe, The Most Dangerous Area in the
World: John F. Kennedy Confronts Communist Revolution in Latin America (Chapel Hill, 1999).

21
overview of Frondizi’s meetings with foreign leaders. His book is most useful for its

compilation of Frondizi’s public speeches in the appendix.16

Scholars are increasingly turning their attention to critical studies of

American-led modernization and international development. For instance, recent

books by David Engerman, Nils Gilman, and Michael Latham have focused attention

on the influence of modernization theory in policy formulation during the 1950s and

1960s. This dissertation builds upon their work by giving focused attention to the

application of modernization theory in a bilateral context.17

In a larger sense, this dissertation is an effort to historicize the process of

globalization. Until very recently, historians have been largely absent from

conversations about globalization, an absence that can be explained in part by the way

scholars of the phenomenon have cast the process as temporally limited to the last

two or three decades of the twentieth century. Yet to understand the context of neo-

liberalism and the Washington consensus of the 1990s, the historical roots of those

policies must be examined. The course of U.S.-Argentine relations during the 1950s

and 1960s challenges the notion that globalization was something that simply

happened at the end of the twentieth century and thus contributes to the

historicization of the process. The ideas, institutions and polices now associated with
16
Celia Szusterman, Frondizi and the Politics of Developmentalism in Argentina, 1955-62
(Pittsburgh, 1993); María de Monserrat Llairó and Raimundo Siepe, Frondizi: Un nuevo modelo de
inserción internacional (Buenos Aires, 2003); Juan José Cresto, Presidente Frondizi: La política
internacional a través sus viajes al exterior (Buenos Aires, 2001).
17
David C. Engerman, Modernization from the Other Shore: American Intellectuals and the
Romance of Russian Development (Cambridge, MA, 2003); Nils Gilman, Mandarins of the Future:
Modernization Theory in Cold War America (Baltimore, 2003); Latham, Modernization as Ideology.
See also Westad, The Global Cold War.

22
neo-liberalism evolved out of a strategy embraced by U.S. elites in business,

government, and labor who worked to modernize Argentina in the mid-twentieth

century.18

Specifically, this dissertation contributes to the historicization of the Bretton

Woods phase of globalization and analyzes the postwar manifestation of liberal

global capitalism in the U.S.-Argentine relationship. It offers an example of how

power was negotiated on the ground, across national borders at a time when, because

of the Cold War, liberalism in Latin American appeared imperiled from the viewpoint

of Washington policymakers. Recent scholarship has demonstrated that European

empires relied upon contact points within their dominions. The new narrative that is

unfolding is not a simplistic account of domination and resistance, but rather a

multifaceted story whereby elites and non-elites engaged in a hegemonic discourse

through which power was negotiated. Like European (and American) colonizers

before them, U.S. officials used force and negotiation in pursuit of their objectives.

What follows is the story of the missionaries of modernization: liberals from both the

United States and Argentina, who in their zeal to spread the gospel of liberal

modernity in Argentina instead amplified existing domestic tensions and contributed

to social instability.

18
There are some historians who engage globalization directly. Alfred E. Eckes, Jr. and
Thomas W. Zeiler, Globalization and the American Century (Cambridge, 2003), argues that the
process of globalization has dominated the history of the entire twentieth century. Economic
liberalism has been a key component of the globalization process as it is described by Eckes and Zeiler.

23
 CHAPTER 2

DESARROLLO DEFINED:
ARTURO FRONDIZI, THE UNITED STATES, AND THE ORIGINS OF
BILATERAL DEVELOPMENTALISM, 1958

On 1 May 1958, Arturo Frondizi was inaugurated as president of Argentina.

He was the nation’s first elected president since the 1955 Liberating Revolution

removed former President Juan Perón from office. Frondizi took power amid great

domestic uncertainty. For three years a military regime had governed Argentina with

the explicit objective of ridding Peronism from the nation’s consciousness and

creating conditions whereby non-Peronists would dominate the political process.

However, the revolution’s basic objective proved to be a task beyond the capability of

its military leaders. Instead, to return Argentina to constitutional governance without

a Peronist restoration, the Pedro Aramburu government proscribed Peronist

candidates from the February 1958 ballot. Under those conditions, and with the votes

of the Peronists added to his own base, Frondizi won the presidency.

Frondizi approached his new responsibilities with great ambition. He sought

to reintegrate the Peronists into the political system, stabilize the ailing economy, and

ignite a broad new development initiative. To achieve those objectives, Frondizi

turned to the United States for assistance, despite his past criticism of transnational

24
businesses in Argentina and his past skepticism about the benefits of liberal global

economic integration. The timing of Frondizi’s change of heart coincided with a

reevaluation in Washington of U.S. policy toward Latin America. Popular threats to

U.S. hegemony in the Western Hemisphere convinced the Dwight D. Eisenhower

administration that it needed to take a more aggressive stance in defense of the liberal

international order throughout the region. The Eisenhower administration reversed its

long resistance to publicly funded economic development in Latin America and

actively supported the creation of the multilateral Inter-American Development Bank

(IDB) and Social Progress Trust Fund despite the worsening U.S. balance-of-

payments deficit. With haste, Frondizi and his newfound Washington allies set off

together to modernize Argentina.

II

The late 1950s world appeared menacing to Washington policymakers. For

more than a decade, the United States had been locked in a political, economic,

strategic, and ideological contest with the Soviet Union. As the Soviets attempted to

advance in Western Europe, the Middle East, and East Asia, they were met with firm

resistance by U.S. policymakers who were determined to “contain” the spread of

communism. Although the word containment evoked defensive connotations, the

policy as applied by the Harry S. Truman and Eisenhower administrations was

fundamentally expansive. Rather than an effort merely to stop Marxist-Leninist

ideology, containment sought to reinforce and spread economic liberalism throughout

25
the world. Those efforts were successful in Western Europe and the front lines of

ideological battle shifted to the Global South in the 1950s. With its myriad political,

economic, and military commitments, containment took its toll on the U.S. treasury

despite the Truman administration’s best efforts to enforce fiscal discipline. The

national security budget dramatically increased with the advent of the Korean War in

1950, and remained at high levels even after the fighting ended. The rationale for the

militarization of containment was outlined in National Security Council paper 68

(NSC-68), which called for expanded military budgets and a standing military

capable of meeting the communist challenge globally. Despite the fiscal

conservatism of the Truman and Eisenhower administrations, the principles

embedded in NSC-68 were adopted because U.S. elites interpreted Soviet

communism as a severe challenge to the liberal international order, and by extension

to U.S. economic and security interests.1

A moderate Republican, Eisenhower came to office in 1953 determined to

honor the nation’s vast international commitments that the previous administration

accumulated in the name of containing Soviet communism. As an army officer

advising the Truman administration at the outset of the Cold War, Eisenhower had

supported U.S. efforts to contain communist expansion in Europe and Asia. Despite

his sometimes unforgiving campaign rhetoric in 1952 that cast the Democrats as weak

on defense, Eisenhower espoused a worldview fundamentally in line with that of the

1
Michael J. Hogan, A Cross of Iron: Harry S. Truman and the Origins of the National
Security State, 1945-1954 (Cambridge, 1998); Melvyn P. Leffler, A Preponderance of Power:
National Security, the Truman Administration, and the Cold War (Stanford, 1992); Odd Arne Westad,
The Global Cold War: Third World Interventions and the Making of Our Times (Cambridge, 2005).

26
outgoing administration. However, he also believed that U.S. international

commitments excessively strained the nation’s financial resources. Consequently, the

new president searched for ways to execute the containment strategy in such a way as

to minimize fiscal outlays without compromising results. He carefully prioritized

global threats and maintained a firm grip upon foreign aid purse strings by refusing to

spend U.S. dollars in places where they were not urgently needed. Like Truman

before him, Eisenhower saw Europe, East Asia, and the Middle East as the primary

battlegrounds of the Cold War during the early 1950s and thus prioritized foreign aid

appropriations to those areas. Whenever possible, Eisenhower relied upon covert

actions and the nuclear threat in place of significant troop commitments to achieve

U.S. objectives.2

Latin America was a less pressing foreign policy concern throughout most of

Eisenhower’s first five and a half years in office. Since they did not detect strong and

coherent communist movements in the region, most policymakers believed that U.S.

hegemony was fundamentally secure, and concluded that they could safely

appropriate resources elsewhere in the world. Administration thinking crystallized

within NSC 144/1, approved 18 March 1953. That policy paper situated the

administration’s Latin American policy reactively within a Cold War framework.

Officials recognized general regional discontent and Latin American aspirations for

socio-economic improvement but offered little to nurture such hopes, and failed to

2
See Hogan, A Cross of Iron, especially 366-462. See also Robert Griffith, “Dwight D.
Eisenhower and the Corporate Commonwealth,” The American Historical Review 87:1, Supplement
(Feb., 1982): 87-122.

27
pay even lip service to the principles of the good neighbor. Central Intelligence

Agency (CIA) officials believed that Latin America was firmly within the U.S. Cold

War orbit and that any emergent challenges could be dealt with covertly at relatively

little cost. CIA support of the Guatemalan military coup of 1954 provided a useful

model of administration thinking. The answer to Latin American economic

underdevelopment, U.S. officials and business leaders argued, was a strong dose of

economic liberalism in its most orthodox form. If Latin American countries were

serious about economic development, they must embrace foreign investment capital,

privatize state-owned businesses, and fully integrate their economies into the global

market. There was little promotional role for the U.S. government in the initial “trade

not aid” policy; private American businesses were rhetorically encouraged to expand

investments in the region but only offered the incentives of the market as an

inducement.3

Such views excited little support among the majority of Latin Americans.

Brazilian President Juscelino Kubitschek spoke for many Latin Americans when he

proposed Operation Pan America to attack the “disease of underdevelopment.” Since

the end of World War II, the United States had provided substantial amounts of

3
Stephen G. Rabe, Eisenhower and Latin America: The Foreign Policy of Anticommunism
(Chapel Hill, 1988), provides the most complete treatment of Eisenhower’s general Latin American
policy and argues that the Eisenhower administration ascribed significant importance to Latin America
throughout its time in office. See also Piero Gleijeses, Shattered Hope: The Guatemalan Revolution
and the United States, 1944-1954 (Princeton, 1991). On CIA ambivalence toward the region, see
James G. Blight and Peter Kornbluh, eds., Politics of Illusion: The Bay of Pigs Invasion Reexamined
(Boulder, 1998), in which CIA Latin American specialist Jacob L. Esterline discusses CIA perceptions
that U.S. interests in Latin America were reasonably secure between World War II and the Bay of Pigs
invasion of April 1961. On the Eisenhower administration’s foreign economic policies, see Burton I.
Kaufman, Trade and Aid: Eisenhower’s Foreign Economic Policy, 1953-1961 (Baltimore, 1982).

28
money to parts of the less developed world that government officials believed were in

danger of falling to communism. Latin American leaders, who for the most part had

aligned themselves with the United States during the Second World War, complained

that they were being short-shrifted by U.S. policy. Although predominately loyal

during the war, Latin America did not receive the assistance granted to Europe under

the Marshall Plan after hostilities ended. Despite a long history of suspicion of the

“colossus of the North,” many Latin Americans argued that the United States owed

the region development assistance for its past and ongoing fidelity. Kubitschek

transformed that general sense of discontent into a concrete policy proposal that

called upon the United States to provide $40 billion in economic assistance to the

region over twenty years to support modernization and sustainable development. The

Eisenhower administration initially responded with its standard advice: Latin

American governments should liberalize their economies to encourage private

international investment and allow private businesses to take the lead in modernizing

the region.4

U.S. Vice President Richard M. Nixon had only that standard advice to offer

when he traveled to Buenos Aires to attend Frondizi’s 1 May 1958 inauguration. The

Vice President had never been enthusiastic about the trip, and expressed his

reluctance to undertake it the first time Assistant Secretary of State for Inter-

American Affairs Richard Rubottom suggested that he lead the U.S. delegation. “Of

4
“Operation Pan American,” Time, 30 June 1958; “Arabian Nights in B.A.,” Time, 11 May
1959.

29
all the trips I made abroad as Vice President,” Nixon wrote, “the one I least wanted to

take was my visit to South America in 1958 – not because I thought it would be

difficult but because I thought it would be relatively unimportant and uninteresting

compared to the assignments I had in Washington at the time.” U.S. midterm

elections were only six months away, and the ambitious Nixon was eager to earn

Republican goodwill ahead of his planned run in 1960 for the party’s presidential

nomination. Working toward his political future seemed to Nixon a far better use of

his time than traveling to a region that the Eisenhower administration had relegated to

secondary importance. However, what began as a request from Rubottom to

represent the United States at Frondizi’s inauguration transformed into a suggestion

from the President, the President’s brother Milton Eisenhower, Under Secretary of

State Christian Herter, and Secretary of State John Foster Dulles, to embark on an

expansive goodwill tour of Latin America. With the request emanating from the

highest level, Nixon reluctantly acceded.5

Eisenhower administration officials did not conceive of the Nixon trip as an

opportunity to showcase a new departure in U.S. policy toward the region. To the

contrary, Nixon traveled primarily as a cheerleader for U.S. business and the benefits

of private capital. William Snow, the Deputy Assistant Secretary of State for Inter-

American Affairs, observed that Nixon, “generally, expressed the desire of the United

States Government to cooperate to the maximum extent its resources will permit and
5
Richard Nixon, Six Crises (Garden City, NY, 1962), 183-185, quotation on page 183;
Harold F. Peterson, Argentina and the United States, 1810-1960 (Albany, 1962), 508-510; Milton S.
Eisenhower, The Wine is Bitter: The United States and Latin America (Garden City, NY, 1963), 209-
212.

30
has stressed the importance of private investment.” He traveled with a pledge to

maintain the status quo. Nixon had been correct; his assignment was not supposed to

be challenging at all.6

In sharp contrast to what awaited him in Venezuela, Nixon encountered only

relatively minor difficulties on the Argentine leg of his mission. After a brief stop in

Uruguay, the Vice President continued to Buenos Aires where he met with a wide

array of Argentines. Accompanied by American Federation of Labor and Congress

of Industrial Organizations (AFL-CIO) inter-American representative Serafino

Romualdi, Nixon visited members of the liberal 32 Organizations, the minority liberal

and anti-Peronist faction of Argentina’s labor confederation, the Confederación

General del Trabajo (General Confederation of Labor, CGT). Nixon hoped to reach

beyond elites and promote the U.S. vision of political economy among ordinary

people, a strategy that U.S. officials believed the Soviets had mastered. Thus the

Vice President spent an evening eating asado (barbeque) with Argentine trade

unionists representing the minority anti-Peronist 32 Organizations. The strategy

allowed the Vice President to engage prominent Argentines who were sympathetic to

U.S. objectives, and to do so without increasing the foreign aid budget. The trip’s

most significant setback came when Nixon arrived late for Frondizi’s inauguration

ceremony because his motorcade was delayed in traffic. Upon taking his seat on the

rostrum, while Frondizi was delivering his inaugural address, Nixon was greeted with

mocking hoots from the crowd. As expected, Frondizi highlighted the economic

6
Memorandum, Snow to Dulles, 9 May 1958, FRUS, 1958-1960, 5: 224-225.

31
crisis that his country faced and oriented the new government toward the difficult task

of economic development. The ambitious new president wanted to industrialize and

more aggressively exploit his nation’s energy resources. The themes were

longstanding in Argentina. For their part, U.S. officials had been apprehensive. They

feared that Frondizi was receiving countervailing pressure from Peronists and

communists, a concern enhanced by the new President’s background in populist

politics. Nevertheless, upon leaving Buenos Aires, Nixon “recommended all-out

cooperation with Frondizi and his government.” After four days in Argentina, the

Vice President left convinced that U.S. officials skeptical of Frondizi were wrong,

and that Frondizi’s views were compatible with the liberal international order.7

Nixon fulfilled the purpose of his mission and preached the gospel of liberal

capitalism while in Buenos Aires. He suggested that U.S. aid depended upon the new

government institutionalizing liberal reforms, some of which Frondizi discussed in

his inaugural address. Argentina, Nixon argued, must offer investment conditions

better than those of other countries and thus compete for scarce capital on the open

market. Moreover, the Frondizi government needed to take steps to assure

international investors that their investments would not be nationalized. There were

too many needy countries for the United States to assist all adequately. In short,

7
Nixon, Six Crisis, especially 184-191. Serafino Romualdi, Presidents and Peons:
Recollections of a Labor Ambassador in Latin America (New York, 1967), 172-179; “Frondizi Takes
Reins; Hoots Greet Nixon,” The Chicago Tribune, 2 May 1958. On fears that Frondizi was vulnerable
to pressure from communists, Peronists, and other populists, see Memorandum, Snow to Dillon, 28
February 1958, 735.11/3-458, NARA. For Frondizi’s inaugural address, see Arturo Frondizi,
Mensajes Presidenciales, 1958-1962: Tomo 1, 1 de Mayo al 29 de Diciembre de 1958 (Buenos Aires,
1978), 9-57.

32
Nixon pitched the Eisenhower administration’s existing and economically orthodox

Latin American policy; he championed private business as the means toward

economic development and social improvement and made no promises of U.S.

government assistance.8

Nixon’s South American trip would have been quickly forgotten had it not

been for the violent demonstrations that his delegation encountered, first in Lima,

Peru, and then, most menacingly, in Caracas, Venezuela. Although the people of

Latin America lived outside of the consciousness of most U.S. elites, they clamored

in increasing decibels for economic and social improvement. The masses provided

the manifestation of the discontent that Kubitschek had voiced previously.

Venezuelan protestors stoned Nixon’s motorcade and vociferously demanded the

paradoxical desires of positive attention and greater separation from the United States

to address the problem of underdevelopment. The groundswell of opposition that

greeted Nixon helped to open the eyes of U.S. elites to the hemisphere’s deep social,

political, and economic problems. The Eisenhower administration had not

understood the depth of dissatisfaction with U.S. policy in Latin America and was left

shaken by Nixon’s experience. While communist agitators were publicly blamed for

causing the disturbances, U.S. policymakers privately acknowledged that deep socio-

economic dissatisfaction fueled the anti-Americanism of many Latin Americans.9

8
“Nixon is Cautious on Argentina Aid,” The New York Times, 3 May 1958.
9
See especially Nixon, Six Crises; Rabe, Eisenhower and Latin America, 100-116.

33
 While still grappling with the meaning of Nixon’s failed goodwill trip to the

future of inter-American relations, the triumph of the populist Cuban Revolution on 1

January 1959 sent additional shockwaves through the Eisenhower administration’s

foreign policy apparatus. In the following months the revolution’s leading figure,

Fidel Castro, nationalized private property owned by U.S. citizens, signed a trade

agreement with the Soviet Union, and advocated the spread of socialist revolution

throughout the hemisphere. The combination of Nixon’s disastrous goodwill tour and

Castro’s nationalist – and ultimately socialist – revolution offered strong evidence to

policymakers that the liberal international order faced sustained challenges

throughout the hemisphere that endangered U.S. hegemony for the first time during

the Cold War era. Such a fundamental change to the inter-American environment in

turn called for new and dynamic policy solutions. Milton Eisenhower was among the

first to recognize those needs, even before the Cuban Revolution, when he endorsed a

public-private partnership toward Latin American social and economic development.

Milton Eisenhower argued that the United States should continue to emphasize the

role of private capital investment in the region while also augmenting that capital

through publicly financed loans to help spur development. His ideas found ever-

greater resonance in policymaking circles in the wake of the Cuban Revolution and

formed the basis of the policy turn that the Eisenhower administration followed in

1959 and 1960.10

10
Castro’s revolution was initially a movement inspired by populism and Cuban nationalism,
but turned to communism when it became clear that there was no hope of reaching a modus vivendi
with the Eisenhower administration. See Thomas G. Paterson, Contesting Castro: The United States
and the Triumph of the Cuban Revolution (New York, 1994). Report to the President on United

34
 Modernization theorists, most notably W. W. Rostow, gradually exerted

influence upon the Eisenhower administration’s foreign policies. As Soviet leaders

increasingly turned their attention toward expanding communist ideology in the

Global South, Eisenhower administration officials looked for ways to match those

efforts. In the late 1950s, in response to the anti-American demonstrations that Nixon

encountered and the triumph of the Cuban Revolution, the Eisenhower administration

began to reformulate its Latin American policy under the framework of

modernization theory. However, following the recommendations of modernization

theorists and assisting “traditional” Latin American countries transition into modern,

liberal states would require new aid for the region. The policy departure also called

for the U.S. government to take a more active leadership role.

Even as Eisenhower became convinced of the necessity of instituting a

dynamic development program in Latin America, the budget-conscious president

faced practical impediments. Part of Eisenhower’s continued reluctance to embrace

massive outlays of U.S. funds transcended his ideological commitment to fiscal

restraint and emanated from the growing U.S. balance-of-payments deficit during the

late 1950s. Since the advent of the Bretton Woods system in January 1946, the

United States had prospered in the international environment and had experienced

few serious problems upholding the nation’s commitments to the international

economic system. Under Bretton Woods, the United States promised to exchange

States-Latin American Relations, Milton Eisenhower, 27 December 1958, RG 59, Lot 63 D 415,
NARA.

35
dollars for gold at the fixed-rate of $35 per ounce. As a result, other countries and

global businesses could treat the dollar as a hard currency with confidence that it

would maintain its value over time. Currency exchange rates were fixed relative to

the par value of the dollar. That basic policy underpinned global finance throughout

the non-communist world. However, the economic resurgence of Western Europe

and Japan tempered the dominant U.S. economic position to the point that in 1960 the

United States faced a $3.4 billion balance-of-payments deficit. Indeed, as foreigners

freely traded their accumulated dollars for U.S. gold reserves, those gold reserves fell

from $22.857 billion in 1957 to $16.947 billion in 1961. The Eisenhower

administration saw the balance-of-payments deficit as a national crisis. To correct the

balance-of-payments deficit vis-à-vis the Federal Republic of Germany and France,

which ran balance-of-payments surpluses, the administration seriously considered

reducing or eliminating U.S. troop deployments to Europe. Other administration

voices questioned the sacrosanct U.S. commitment to the system of fixed exchange

rates, and considered replacing it completely with a system of floating currency

exchange. When situated in the context of global events, Eisenhower’s decision to

increase its commitments in Latin America represented a remarkable adjustment of

administration priorities. However, the larger economic problems also restricted the

administration’s freedom of action.11

11
Diane B. Kunz, Butter and Guns: America’s Cold War Economic Diplomacy (New York,
1997), especially 114-117; Francis J. Gavin, Gold, Dollars, and Power: The Politics of International
Monetary Relations, 1958-1971 (Chapel Hill, 2004), 1-58; Kaufman, Trade and Aid.

36
 In an effort to affect positively Latin American development, the Eisenhower

administration created new structures designed to facilitate the transplant of liberal

modernity to Latin America. Long requested by Latin American governments,

Eisenhower reversed his previous position and approved the creation of the Inter-

American Development Bank (IDB). On 8 April 1959, twenty-one nations from

across the hemisphere created the new supranational bank that would serve as a

multilateral lending institution to support economic development projects designed to

spur liberal growth. To finance its lending, the IDB was initially capitalized at $1

billion, of which the United States furnished $450 million. Although the IDB was a

multilateral institution, leadership of the bank was structured along the same rules

used at the Bretton Woods institutions, under which shares were distributed

proportional to capital contributions. As the largest capital contributor by far, the

United States effectively controlled the bank.

The Act of Bogotá, signed in July 1960, served as another manifestation of the

updated U.S. approach toward Latin America. The Act of Bogotá created a $500

million Social Progress Trust Fund designed to finance public health, education,

housing, and land reform. The Social Progress Trust Fund was premised on the ideas

that a modern infrastructure could be exported from the United States to Latin

America and that U.S. technical experts could educate Latin Americans on the best

way to use the money. It promised “multilateral cooperation for social and economic

progress.” The Trust Fund’s resources would be administered by the IDB in an effort

to harmonize regional development lending. Taken together, the IDB and Social

37
Progress Trust Fund comprised the manifestations of the Eisenhower administration’s

policy departure. The combination of the Cuban Revolution and the U.S.

modernization offensive signaled that Latin America was recognized by both sides as

an important front in the Cold War.12

Despite the important policy shift that Eisenhower undertook, the U.S.

commitment to Latin American development remained limited. For both ideological

and practical reasons the Eisenhower administration continued to insist, as it had in

NSC-144/1, that private businesses take the lead in regional development efforts,

albeit with somewhat greater state and supranational assistance than in the past. Even

the Act of Bogotá noted the importance of private sources of capital to regional

development efforts. Despite the changes, Eisenhower’s new Latin American

development policy continued to rely heavily on loans originating from private banks,

in addition to the new IDB. Significantly, the Act of Bogotá also called for other

western economic powers to lend to Latin America. Development lending was not a

give-away; loans approved needed to be repaid and the debt Latin American states

accumulated would cause later financial hardship. U.S. government lending

constituted a relatively conservative strategy to integrate Latin America into the

liberal international order and spur economic and social development. It relied upon

cooperation between the U.S. Treasury, the IDB, the IMF, and private banks, which

together crafted assistance programs for the region. However, the strategy made no

12
Act of Bogotá, undated, RG 59, Lot 65 D 188, Bogotá Conference-September 1960, NARA;
Rabe, Eisenhower and Latin America, 142-143.

38
effort to address some of the most intractable trade issues between the Global North

and the Global South. As Raúl Prebisch, head of the United Nations Economic

Commission for Latin America (CEPAL) observed, the terms of trade in primary

products continued along a long-term decline for countries in the region. Europe and

the United States continued to protect domestic agricultural production against Latin

American imports, and the balance-of-payments deficits that plagued the region

emerged out of its incorporation into the world system under unfavorable terms of

trade. Any strategy to improve Latin America’s long-term economic prospects

needed to address the inequities in global trade, but U.S. officials remained reticent.

The conservative U.S. reforms were crafted reactively, in response to the

threat of socialist revolution to liberal hegemony. Even though the policies were

framed within the proactive discourse of modernization theory, the Eisenhower

administration committed only limited resources to encourage Latin American

modernization. In light of the serious U.S. balance-of-payments deficit, Eisenhower

continued to hope that U.S. regional objectives could be achieved, and liberal

modernity could be exported, without large financial outlays. That set of

circumstances helps explain why Eisenhower did not propose more far-reaching

reforms, including U.S. tariff and trade liberalization, as such a course would have

further exacerbated the negative U.S. balance of payments during a recession and

encountered fierce congressional opposition. Nevertheless, the Eisenhower

administration’s new approach had the potential to serve as the first step toward a

program for sustainable regional development.

39
 The change in the Eisenhower administration’s thinking about the U.S. role in

inter-American development efforts coincided with changes taking place within

Argentina. The country was historically the most economically prosperous nation in

Latin America. Prior to World War I, Argentina’s integration into the world

economy as a major exporter of beef and wheat to Europe generated unprecedented

levels of economic growth and allowed the nation to develop degrees of wealth that

rivaled those of Europe’s most prosperous countries. As a result of the disruption of

global trade caused by World War I, as well as the long-term decline of primary

product prices in global markets, Argentine economic fortunes declined as the

twentieth century progressed. Nevertheless, because it possessed a literate population

and a sizeable urban middle class – critical attributes according to modernization

theory – Argentina still appeared to have been the most likely Latin American

country to navigate successfully modernization theory’s stages of growth and emerge

as a high mass consumption society in the late 1950s.

Argentina even attracted the personal interest of the U.S. President. In 1915, a

young Eisenhower contemplated moving to the Rio de la Plata to live on the fertile

pampas if denied admission to West Point. Reflecting his romanticized vision of a

traditional society, Eisenhower wrote that Argentina “resembled our West in the

1870s,” and recalled fondly the possibility that he might “carve out a career” in the

idyllic setting. It was not to be. West Point admitted Eisenhower, and an

extraordinarily successful military career facilitated his eventual rise to the U.S.

40
presidency. Ironically, Eisenhower’s second term policies sought to transform the

idyllic traditional society of his boyhood dreams into a modern industrial country.13

III

Since the 1940s, the Argentine political system had been dominated by

Peronism. After serving in the military government that took power in 1943, Perón

won election to the presidency in 1946. As president, he pursued an ambitious

national project that envisioned the ultimate creation of a heavily centralized, statist,

corporatist order characterized by considerable state intervention in the economy,

centralized control of economic resources, and Import Substitution Industrialization

(ISI). Perón’s corporate state celebrated the working class and so was distinct from

the statist corporatism that marked European fascist regimes. The Peronist state

integrated workers into the CGT, which served as a pillar of the regime’s authority.

Indeed, Perón was the first president to integrate working-class Argentines fully into

the Argentine nation, and peronismo subsequently enjoyed widespread popularity

among the working class. Disturbed by the rise of the working class under the

Peronist state, and enraged by the assault on its economic profits under an ISI system

designed to siphon the profits of the agricultural export sector into industry and the

welfare state, the nation’s traditional elite despised Perón.14

13
Dwight D. Eisenhower, Waging Peace, 1956-1961 (Garden City, NY, 1965), 514.
14
Daniel James, Resistance and Integration: Peronism and the Argentine Working Class,
1946-1976 (Cambridge, 1988) offers the most complete exploration of Argentine labor history during
the Peronist and post-Peronist period.

41
 Opposition to Perón’s rule crystallized in 1955 as Argentina’s economic

problems became pronounced. Agricultural exports had steadily declined under

Perón’s institutional neglect, and the expanded welfare state further strained the

national treasury. In 1954, Perón antagonized the powerful Catholic Church by

legalizing divorce and bringing parochial schools under state control, transgressions

that led to his excommunication. Opposition among the middle class, the military,

and the traditional elite fused, and on 16 September 1955, the military deposed Perón

and established a government under its own authority. The former president escaped

into exile and a new government declared the beginning of the Liberating Revolution.

The Liberating Revolution was intended to minimize the influence of the working

class and restore the old landowning oligarchy to its prominent position within the

Argentine power structure. Its leaders sought to break Peronist power in the CGT and

destroy Peronism as a viable political and economic ideology in Argentina. The

Revolution was a reaction to Peronism and promised only to reintroduce the old order

that excluded the working class from full acceptance in the national community. It

was not a viable means to integrate all class interests into the larger national project.15

Frondizi opposed both the Peronist state and the Liberating Revolution. He

agreed with Perón that in order to return the nation to greatness, Argentina needed to

augment its agricultural exports with industrialization. Indeed, communism,

liberalism, and Peronism each postulated a teleological hierarchy of progress, despite

15
For a critique of Perón’s economic policies, see Carlos F. Díaz Alejandro, Essays on the
Economic History of the Argentine Republic (New Haven, CT, 1970).

42
their differences as to the path toward that modernity, and Frondizi was fully

integrated intellectually into those tropes. Looking back in 1966, Frondizi wrote that

his times coincided with “a revolution of machines and a revolution of people”

leading to “global integration.” However, before becoming president, Frondizi had

not expressed great confidence in the results of global economic integration. In 1955,

the future president published La lucha antiimperialista: Etapa fundamental del

proceso democrático en América Latina (The Anti-imperialist Struggle: The

Fundamental Stage in the Latin American Democratic Process). It was indicative of

his personal experience in nationalist politics. Frondizi began his political career as a

member of the Unión Civíca Radical (Radical Civic Union, sometimes referred to as

the Radical Party, UCR). A middle-class party that came to power under Hipólito

Yrigoyen in 1916, the Radicals soon challenged the laissez faire consensus of the

Argentine economic elites who had governed the country since the 1880s. The

Argentine economy had been based upon primary product exports, largely to Europe,

and built with international (primarily British) capital investment. The upstart

Radicals slowly began to articulate a nationalistic vision that was critical of the

nation’s dependence upon British business and investments.16

UCR nationalism expressed itself most fervently in the energy sector. From its

outset, the UCR advocated Argentine industrialization as a means to capture and hold

national greatness. The modern industrial system was fueled by hydrocarbons,

16
Arturo Frondizi, El mundo del futuro (Buenos Aires, 1966), quotation on page 25; Arturo
Frondizi, La lucha antiimperialista: Etapa fundamental del proceso democrática en América Latina
(Buenos Aires, 1955).

43
primarily coal and oil. Until the early twentieth century, Argentina imported almost

all of both critical commodities. The promise of change came on 13 December 1907,

when Argentine geologists accidentally discovered oil while digging an exploratory

water-well in the arid Patagonian town of Comodoro Rivadavia. Subsequently, coal

deposits were uncovered in the Andean provinces. The newfound petroleum and coal

reserves offered the promise of Argentine energy independence, provided that

policymakers carefully guarded the newly discovered resources. The Radicals feared

that one of the constituent parts of U.S. petroleum giant Standard Oil would swoop

down and take control of the nation’s oil resources. Although the U.S. Supreme

Court ordered the oil monopoly broken up in 1911, the companies constructed out of

that anti-trust action still commanded great power globally and harbored the trust’s

reputation for ruthlessness. While Argentina’s old-guard, liberal politicians did not

fear the specter of Standard Oil, the Radicals slowly moved toward nationalization of

petroleum resources. That process culminated in 1928 – during the second Yrigoyen

presidency – with the founding of Yacimientos Petrolíferos Fiscales (YPF), the first

state-owned oil company outside of the Soviet Union. In the process, the Radicals

solidified their reputation as champions of economic nationalism.17

Frondizi adhered to the Radical’s nationalist tradition throughout his early

political career. He worked his way up through the party ranks, starting under

Yrigoyen in the 1920s. Argentine economic liberals looked upon Frondizi skeptically,

17
Carl E. Solberg, Oil and Nationalism in Argentina: A History (Stanford, 1979); Daniel
Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York, 1991), provides a detailed
overview of the history of Standard Oil, but notably does not offer a treatment of Argentine oil.

44
wary of his fierce economic nationalism. Under the Liberating Revolution, the UCR

came apart under the weight of the internal strife. In part because of differences

between strong leading personalities, and in part over support for the Liberating

Revolution, the UCR split into two constituent parts: the Unión Cívica Radical

Intransigente (The Intransigent Radical Civic Union, UCRI) and the Unión Cívica

Radical del Pueblo (The People’s Radical Civic Union, UCRP). Headed by Frondizi,

the UCRI was comprised of the more nationalistic Radicals who stood strongly

against the Liberating Revolution despite their opposition to Peronism. The UCRP

was made up of Radicals more hostile to Peronists, and its members had generally

supported the Liberating Revolution. Perhaps the most important difference between

the two factions, UCRI members believed that Peronists should be reintegrated

politically while UCRP members agreed with the leaders of the Liberating Revolution

that Peronism must be destroyed.18

Peronism remained a vibrant political ideology throughout the Liberating

Revolution, despite the military leadership’s best efforts. Although Argentine elites

had hoped that Peronism would fizzle as a coherent political ideology after they

deposed its leading figure and namesake, it remained a formidable portion of the

nation’s political landscape. Since Peronism enjoyed support from social groups

traditionally sympathetic to socialist and communist political movements, those

18
On Frondizi’s petroleum nationalism, see especially Arturo Frondizi, Petróleo y política:
Contribución al estudio de la historia económica Argentina y de las relaciones entre el imperialismo y
la vida política nacional (Buenos Aires, 1956). Celia Szusterman, Frondizi and the Politics of
Developmentalism in Argentina, 1955-1962 (Pittsburgh, 1993); Solberg, Oil and Nationalism,
especially 32-53.

45
parties enjoyed little support in Argentina. The Peronist movement, even in its

disorganized and outlawed state, continued to command the loyal following of the

nation’s popular groups. When the military authorized new presidential elections in

1958, it specifically proscribed Peronist candidates from the ballot to ensure that

Peronists would not return to power.

The fractured Argentine political environment facilitated the emergence of

other parties and movements. Most notably, the political spectrum included a

Christian Democratic Party (Partido Demócrata Cristiano, PDC), although it lacked

the support of the Radicals and the Peronists and was unable to mount a serious

challenge for the presidency. Other political organizations emerged in various

elections either to support a prominent individual or a particular cause. In addition to

the political parties, the military acted as an important agent in the political process.

Situated above the parties, the military saw itself as the ultimate guarantor of the

Argentine nation. If military leaders believed that Argentina’s civilian leaders acted

contrary to the nation’s best interests, they considered it their duty to remove the

offending civilians from power. The military’s role in the political system

complicated the calculations of civilian politicians who were forced to consider the

military leadership’s views on both foreign and domestic issues or risk falling victim

to a coup.

Although the military was willing to intervene directly in the political process

when its leaders believed that the national interest was imperiled, most officers

preferred to remain in their barracks rather than run the country from the Casa Rosada.

46
Through their 1955 political intervention, the Aramburu government had hoped to

excise forever the demons of Peronism from the body politic and return the country to

constitutional government. After two and a half years, Aramburu’s crackdown on the

Peronists had only served to revitalize the popular sector, which had steadily lost its

radical edge in the early 1950s as workers were incorporated formally into the

Peronist state. After Perón’s fall, the popular classes were denied the opportunity to

voice their protest of the Aramburu government’s assault on the welfare state and

working-class interests through a political process. Denied an electoral voice, they

took to the streets and used mass demonstrations and work stoppages to protest the

Liberating Revolution.

By 1958, it was clear that Peronism would not be destroyed by the Liberating

Revolution. Despite having failed to accomplish his revolution’s central objective,

Aramburu prepared to vacate the presidency in favor of a popularly elected president

in an effort to return the country to a normal political footing. He insisted on

important conditions. Most important among them, Peronist candidates were banned

from the ballot. Hoping to take advantage of this proscription, Frondizi made a secret

agreement with Perón, whereby the former President instructed his supporters to cast

their votes for Frondizi rather than turn in blank ballots in protest. In exchange,

Frondizi agreed to reintegrate Peronism into the formal political process once elected.

The deal, subsequently downplayed by Frondizi who suggested that it was not

intended as a binding arrangement, provided the UCRI with the support of another

populist segment of the population already sympathetic to the party’s nationalist

47
positions. Under those political conditions, Frondizi hoped that once in power he

would be able to co-opt working-class support permanently into the UCRI.19

The strategy proved successful in the short term. Frondizi’s UCRI base,

combined with the support of the Peronists, gave him 4 million votes and propelled

him to victory in the February 1958 election. Balbín, the UCRP candidate, finished a

distant second with approximately 2.5 million votes. Over the long-term, however,

the deal with Perón complicated Frondizi’s domestic political position. The military,

which had favored Balbín’s candidacy, was faced with a president-elect who had won

with the help of the hated Perón. It was an unforgivable transgression that military

leaders remembered. However, given the significant economic problems that

Argentina faced in 1958, neither civilian nor military leaders were interested in

igniting a new political crisis. Military leaders were prepared to give Frondizi the

opportunity to succeed, although they would keep him on a short leash.

IV

The severe economic crisis that greeted Frondizi upon his assumption of the

presidency created a sense of urgency that forced him to make quick decisions. The

postwar Argentine economy was in continual crisis and possessed serious, structural

deficiencies. Inflation was high, productivity was low, and the balance of payments

was in deficit. Exports, which primarily consisted of agricultural goods, were

19
Felix Luna, Diálogos con Frondizi (Buenos Aires, 1963), 40-41; Szusterman, Frondizi and
the Politics of Developmentalism, 71-73; “Debt to the Dictator,” Time, 10 March 1958
(http://www.time.com/time/magazine/article/0,9171,863069,00.html?promoid=googlep).

48
stagnant and the rate of inflation was approximately 32 percent in 1958. Argentina’s

balance-of-payments crisis dwarfed that confronted by the United States. When

Perón came to power in 1946, Argentine reserves stood at $1.7 billion. By September

1958, they had dwindled to a meager $200 million. Moreover, Argentine officials

estimated their 1958 deficit at $300 million and U.S. officials estimated total long-

term external Argentine indebtedness at $1 billion. There were multiple reasons for

Argentina’s poor economic position. The nation’s negative balance-of-trade

contributed significantly to the balance-of-payments deficit. Low economic growth, a

stagnant agricultural sector, inadequate capital investment, and the lack of

technological innovation in both the agricultural and industrial sectors worked

together to contribute to the nation’s deep economic crisis. Significantly, each

component of the economic crisis contained a prominent transnational dimension.20

The effect of international trade relations upon Argentine dollar reserves

posed an acute problem for the Frondizi government and also had strong

reverberations upon the U.S.-Argentine relationship. In 1957, Argentina imported

goods worth $279.4 million from the United States, excluding military equipment.

However, Argentine exports to the United States comprised only $129.3 million,

resulting in a $150.1 million bilateral trade deficit. Despite renewed efforts to

address the imbalance between January and June 1958, the trade deficit failed to

20
David Rock, Argentina, 1516-1982: From Spanish Colonization to the Falklands War
(Berkeley, 1985), 321-331 overviews Argentine economic history for this period. Carlos F. Díaz
Alejandro, Essays on the Economic History of the Argentine Republic (New Haven, 1970), 351-360,
528, especially for information on the balance-of-trade deficit and inflation. U.S. observers agreed that
economic instability bred political instability in Argentina. See Memorandum, Vaky to Bernbaum, 22
August 1958, 735.00/8-22 58, NARA.

49
improve. During that period, Argentina reduced its imports from the United States to

goods worth $103.1 million. However, since export levels also fell to $62.9 million,

a trade deficit still existed. Because it negatively affected the balance-of-payments

deficit, the trade deficit demanded a radical adjustment of trade policy, especially vis-

à-vis the United States. Given the U.S. dollar’s privileged position in global finance

under Bretton Woods, the trade deficit with the United States constituted a major

problem for Argentina. Unlike their Argentine counterparts, U.S. officials did not see

U.S. trade policy as part of the problem. Instead they bristled at what they regarded

as the excessive regulation of the Argentine economy, a legacy of the Peronist state

that the interim government had not fully eliminated. U.S. officials also argued

against attempts to balance trade on a bilateral basis, postulating that bilateral trade

deficits and surpluses were a normal aspect of the system. Instead, they encouraged

Argentina to balance its trade on a multilateral basis, presumably in a manner that

would not demand any revision of U.S. trade policy.21

Finance problems were far from Argentina’s only economic challenges.

Despite domestic petroleum reserves, Argentines relied on oil imports for sixty

percent of their petroleum energy needs. YPF lacked the technical and financial

capacity to exploit effectively the nation’s oil reserves, prompting debate about the

merits of international private oil access to conduct exploration and drilling

operations in the country. Prior to his election, Frondizi was best known as a fierce
21
Letter, Herter to Harold D. Donohue, 14 November 1958, Dulles/Herter CCS,
Chronological File, AFPC; Report, “Argentine Restrictions on Dollar Trade,” unsigned, undated
[November 1958], Dulles/Herter CCS, Chronological File, AFPC; Memorandum, Vaky to Bernbaum,
22 August 1958, 735.00/8-22 58, NARA.

50
nationalist on the petroleum question. As the leader of the Radical opposition, he

vehemently attacked Perón’s 1955 decision to sign contracts with Standard Oil of

California, and suggested that petroleum nationalism was a key reason for the success

of the 1955 coup. Once in power, Frondizi faced the same problems with domestic

oil production that Perón had confronted three years earlier.22

Global restrictions on trade also confronted Frondizi. While the Bretton

Woods system had been designed to help facilitate global exchange by tearing down

barriers to trade, significant obstacles remained. The European Economic

Community (EEC) protected domestic agricultural producers against international

competition, a tactic also followed by the U.S. Congress. Both employed tariff and

quota restrictions on the global trade of primary products to inhibit imports from the

Global South that would have competed with domestic producers. Europe and the

United States also offered direct subsidies to domestic agricultural producers, while at

the same time advising the Argentines to eliminate state financial support for the

industrial sector.23

Confronted by the multifaceted economic crisis – with its interconnected

domestic and transnational aspects – Frondizi and his close economic advisor, Rogilio

Frigerio, set out to reframe the Argentine political economy. Both Frondizi and

Frigerio came of age in leftist intellectual circles. Like Soviet communists and

22
See especially Arturo Frondizi, Petróleo y política: Contribución al estudio de la historia
económica y de las relaciones entre el imperialismo y la vida política nacional (Buenos Aires, 1956).
Szusterman, Frondizi and the Politics of Developmentalism, 103-107.
23
On Argentine grievances, see Letter, Beaulac to Kearns, 8 September 1959, RG 59,
033.1135/9-859, NARA.

51
American modernization theorists, Frondizi and Frigerio believed that progress was

fundamentally a scientific and technical problem that lent itself to quantifiable

analysis. They believed that economic growth occurred in stages, industrialization

was a sign of progress and modernity, and national economic integration was critical.

They were fully integrated into the mid-twentieth century’s global ideological debates

of political economy between liberal capitalism and communism. The gulf between

liberal capitalism and communism did not center upon the ideologies’ shared belief in

the inherent and universal importance of industrialization for modern societies.

Rather, the two ideologies debated the structural integration of functional interest

groups into society, and by extension the overall structure of a modern society.

Liberals believed in free markets to maximize economic efficiency and were not

troubled by systemic class stratification, although unlike their laissez faire

forerunners and neo-liberal heirs, mid-twentieth century liberals employed the state to

shield non-elites from the worst effects of the market’s severe swings. Communist

ideology, by contrast, prioritized social justice and posited a classless society. It

provided for a strong state role in economic planning, believing that central planning

authorities were better suited to the task than market forces. While liberalism

highlighted the opportunities that the system provided for each individual,

communism emphasized a collective good in which all could share.24

24
Westad, The Global Cold War, 8-72, argues that the United States pursued an “empire of
liberty” and that the Soviet Union pursued an “empire of justice.”

52
 Domestic and transnational discourses of development coalesced in Argentina.

The question of development and modernity had long preoccupied Argentines.

Because of Peronism, the local ideological landscape was even more cluttered than it

was elsewhere in Latin America. Changing the touchstone of Argentine discourses of

development required relegating Peronism to the backburner, a feat that the

Liberating Revolution had failed to accomplish. Since its rise, Peronism provided the

touchstone for domestic debates about economic development by promising growth

with equity. It was often difficult for outside observers to understand or define

Peronism. U.S. elites sometimes conflated Peronism with communism, as they had

equated Peronism with fascism during World War II. In part, the phenomenon

reflected the tendency of U.S. elites to lump movements together that appeared to

possess similar features. Frondizi and Frigerio were determined to alter the nature of

the debate, and in the process craft a new ideological model capable of garnering a

broad domestic consensus around economic development that positively utilized

private business from the liberal international bloc. At the same time, they hoped that

despite the hardships that would initially be imposed upon the working class, liberal

growth would ultimately occur equitably.25

25
The significance of Peronism in postwar Argentine history is well documented in the
literature. See Szusterman, Frondizi and the Politics of Developmentalism in Argentina; Daniel James,
Resistance and Integration: Peronism and the Argentine Working Class, 1946-1976 (Cambridge,
1988); Donald C. Hodges, Argentina, 1943-1987: The National Revolution and Resistance
(Albuquerque, 1988). On U.S. conflation of Peronism and fascism during World War II, see U.S.
Department of State, Blue Book on Argentina: Consultation Among the American Republics with
Respect for the Argentine Situation: Memorandum of the United States Government (New York, 1946).

53
 From the beginning of his administration, Frondizi focused on the economic

question. His inaugural address attempted to bring the country together to address the

problem of underdevelopment through political and economic liberalism. The new

president first declared that “today the Argentine nation begins a new constitutional

period,” and proudly pointed out that governmental officials held power on the basis

of the will of the people, a source of greater legitimacy than the previous rule by

armed force. However, Frondizi recognized that the nation’s failing economy

represented the most urgent task before the country, and that his success in handling

the crisis would ultimately define his presidency. To address the crisis, Frondizi

affirmed his commitment to the international flow of investment capital, emphasized

the importance of private property, and called for a more limited state role in

economic affairs. He argued that the state should coordinate economic activity to

promote efficiency and industrialization as a partner with private enterprise, rather

than as a substitute. The basic model appeared similar to the structure of the U.S.

political economy, although the Frondizi government would continue to guide

economic development initiatives to a greater degree than did U.S. governments.

Nonetheless, it was strikingly different from the nationalistic positions that Frondizi

had been best known for and it reflected his pragmatic assessment of his nation’s

economic crisis and the international environment.26

26
Frondizi, Mensajes Presidenciales, 9-57. Memorandum, Vaky to Snow and Sanders, 9
May 1958, RG 59, 735.11/5-958, NARA, contains an analysis of Frondizi’s inaugural address as well
as the State Department’s English translation of the speech. One reader of the State Department memo
that summarized Frondizi’s speech was impressed that Frondizi used such “unambiguous” language
when addressing the military and underlined that word several times.

54
 Together, Frondizi and Frigerio fleshed out the contours of their economic

policy throughout the remainder of 1958. The strategy that they crafted became

known in Argentina simply as desarrollismo (developmentalism), and was designed

to marshal all available resources domestically and internationally toward the

objective of domestic modernization. Desarrollo contained two key features:

industrialization and national integration. Frondizi first wanted to expand the nation’s

industrial output for the domestic market, particularly in the nascent steel and

automobile industries. The new government further sought to integrate the domestic

economy by directing scarce capital resources to regions that promised to make an

immediate contribution to the national economy. To that end, Buenos Aires and

Córdoba were prized as industrial hubs. The Patagonian provinces, in addition to

Mendoza, Salta, and Santa Fe, were valued for their concentration of oil and coal.

Together, they emerged as the favored regions that stood to gain under desarrollismo.

Frondizi and Frigerio believed that by diversifying its economy through the

construction of modern industry, Argentina would become more self-sufficient and

prosperous. Reflecting the scientific nature of developmentalist thinking, Frigerio

posited a simple equation that would “develop integrated production through the

transformation of the existing productive structure”: “oil + meat = steel.” Domestic

oil production and agricultural exports, he argued, would drive the construction of a

domestic steel industry and launch Argentina into modernity. Through desarrollo,

Argentina could reclaim its past greatness on the international stage.27

27
Szusterman, Frondizi and the Politics of Developmentalism, provides the most thorough

55
 Unsurprisingly, Frondizi’s foreign economic policies were designed to serve

his larger modernization strategy. The linkage between Frondizi’s domestic and

international visions was illustrated by his efforts to diversity Argentine exports,

facilitate market-driven national industrialization, and escape the confines of export-

oriented dependency while simultaneously expanding export earnings.

Fundamentally, Frondizi and Frigerio attempted to finance a new ISI strategy with

foreign capital so that Argentina could become self-sufficient in manufacturing and to

correct the nation’s structurally negative balance of payments. Under Perón’s

leadership, Argentina had employed an ISI strategy that utilized agricultural profits to

underwrite the costs of industrialization with devastating consequences for the under-

funded agricultural sector. Perón’s program had contributed to the polarization of the

traditional agricultural elite from the working class. Frondizi sought to avoid that

mistake by using international capital to finance desarrollo. He argued that

Argentina would only be able to break free of crippling underdevelopment with U.S.

capital, technical assistance, and loan support. As a result, it became a strategic

imperative for the Frondizi government to work closely with the United States and

the U.S.-dominated supranational agencies, in particular the IMF and IDB. Although

by using the state to direct resources to critical areas was inherently questionable to

international liberals, Frondizi’s eagerness to work cooperatively with private

enterprise was consistent with the framework of the liberal international order. By

scholarly account of Desarrollismo. Rogelio Frigerio, “Rogelio Frigerio,” in Argentina, 1946-83: The
Economic Ministers Speak (New York, 1990), 48; Álvaro Alsogaray, Experiencias: De 50 años de
política y economía Argentina (Buenos Aires, 1993), 41-57.

56
adopting a liberal development strategy, Frondizi would open the door to foreign

private investment and international loans for both economic development and

balance-of-payments stabilization. Given the nation’s deep economic problems, it

was a powerful incentive for Frondizi to work with the Eisenhower administration.28

In order to salvage his own credibility, Frondizi needed to reframe discussions

of nationalism in such a way that conceptually linked desarrollismo with nationalism.

Since Argentines had long associated industrialization with modernity and progress,

there was reason for Frondizi to believe that he might be successful. Having

concluded that foreign investment capital and transnational corporations were

necessary to help Argentina modernize, Frondizi and Frigerio publicly argued that

Argentine nationalism demanded that the country take advantage of all available

resources, regardless of their origin. In his inaugural address, Frondizi suggested that

domestic capital was “inefficient” to the task of modernization and proposed to

substitute foreign capital in key sectors. He essentially argued that because Argentine

industrialization depended upon the participation of transnational elites, any true

nationalist would favor desarrollo. He went on to argue that “foreign capital is

neither colonialist nor reactionary by its origin.” Frigerio built upon this argument

and drew a distinction between “good and bad” foreign capital. “Bad” foreign capital,
28
Carlos Florit, “Perfil internacional de un mundo en cambio, 1958-1962,” in La política
exterior argentina y sus protagonistas, 1880-1995, ed. Silva Ruth Jalabe (Buenos Aires, 1996),
especially 141; Felix Luna, Dialogos con Frondizi, 77. Frigerio was prolific in his writings on
economic development. On the importance of the United States, see especially Rogerlio Frigerio, El
desarrollo Argentino y la comunidad Americana (Buenos Aires, 1959). Published upon Frigerio’s
forced removal from Frondizi’s government by his opponents in the military, the essay constitutes a
forceful defense of his developmentalism agenda generally, and close ties to the United States
specifically. See also Frigerio, “Rogelio Frigerio,” in Argentina, 1946-83, Eds., di Tella and
Rodríguez Braun, 47-59.

57
he argued, was directed strictly toward export-oriented enterprises that did not help in

the modernization process and that was exploitative. On the other hand, “good”

foreign capital financed an industrial infrastructure critical to advancement through

the stages of growth. While bad foreign capital would lead to neo-colonialism, good

foreign capital would facilitate independent development and progress. Furthermore,

Frigerio argued that by using foreign investment to construct a domestic

manufacturing sector, the long-term “systematic transfer of wealth to foreign markets,

which hampers national accumulation and so perpetrates underdevelopment,” would

be arrested. By making the case for the utility of foreign capital directed toward

industrialization, Frondizi and Frigerio hoped to re-appropriate the mantle of

nationalism for desarrollo.29

In their efforts, Frondizi and Frigerio confronted a fundamental paradox. On

the one hand, international liberalism broke down national borders by eliminating

barriers to trade and capital flows. It imposed international law over the will of

domestic legislatures in select matters and opened critical sectors of the domestic

economy to transnational elites. On the other hand, both Frondizi and the architects

of liberal internationalism advocated liberalism on the grounds that it offered the best

pathway toward national development. Liberalism promised to serve the ends of the

29
For the best example of this argument, see Frondizi, “La batalla del petroleo,” 24 July 1958,
in Frondizi, Mensajes Presidenciales, 133-149. Frondizi, “Mensaje inaugural,” in Frondizi, Mensajes
presidenciales, 9-57; Frondizi, quoted in Andrés Cisneros y Cortes Escudé, Historial general de las
relaciones exteriores de la Republica Argentina, Tomo 11: Las relaciones exteriores de la Argentina
Subordinada, 1943-1989 (Buenos Aires, 1999), 66; Szusterman, Frondizi and the Politics of
Development, 126-129. Frigerio, “Rogelio Frigerio,” in Argentina, 1946-83, Eds., di Tella and
Rodríguez Braun, 49.

58
Argentine national project through transnational linkages. The liberalism-nationalism

balance was precarious. Economic nationalists did not believe that national

sovereignty could be preserved in the liberal international order. They believed that

by allowing transnational corporations and capital investment access to Argentina,

national sovereignty would be compromised. The question of whether liberalism

could serve as a vehicle for modernization without sacrificing sovereignty was at the

heart of transnational developmentalist discourses.

The scholar Geir Lundestad famously characterized the postwar U.S.

encounter with Europe as an “empire by invitation,” whereby Western European

governments actively encouraged, and benefited from, U.S. hegemony. Beginning in

1958, Frondizi followed a similar path. Having made economic development the

centerpiece of his presidency, Frondizi judged the benefits of alignment with the

United States worth whatever flexibility surrendered in the process. Not all

Argentines agreed. The working class in particular objected to partnership with the

United States and characterized the arrangement as a sellout of Argentine national

sovereignty. Although Frondizi invited U.S. hegemony, he did so against the wishes

of a majority of Argentines. Consequently, U.S. modernizers could claim to work in

partnership with the Argentine government that extended an invitation, but did not

feel welcomed by the larger population.30

30
Geir Lundestad, “Empire by Invitation?: The United States and Western Europe, 1945-
1952,” Journal of Peace Research 23:3 (Sep., 1986): 263-277.

59
 Indeed, Frondizi was forced to walk a political tightrope throughout his time

in office. Because of its informal political role, Frondizi needed to keep the military

placated in order to govern effectively. Consequently, he could not move

dramatically to fulfill his campaign pledge to reintegrate the Peronists. Yet the

existence of that pledge provoked concern among Argentine military and economic

elites. At the same time, domestic nationalists felt betrayed by Frondizi’s economic

agenda because it did not stress working-class interests. While there were hints of

ideological change during the campaign, the scope of Frondizi’s ideological

reorientation remained unclear until he began to govern. Frondizi’s ideological

reversals further fueled suspicions about his true principles. By instituting liberal

economic reforms and aligning with the United States, Frondizi antagonized the

working class that had supported his 1958 presidential campaign. Having also

alienated the nation’s traditional elites and military leaders by forging the electoral

deal with Perón, Frondizi was unable to make up for the working-class supporters he

lost. In light of his background and the composition of the Argentine electorate,

Frondizi staked out an exceedingly tenuous political position. He needed to

demonstrate clear signs of progress quickly to keep the country together.31

31
Robert A. Potash, The Army and Politics in Argentina, 1945-1962: Perón to Frondizi
(Stanford, 1980). The U.S. Embassy observed and reported upon many challenges to the Frondizi
government by the armed forces throughout its time in office. The records are available in RG 59,
735.00, NARA.

60
 Despite the inherent difficulty of his political position, Frondizi immediately

set out to enact his reformist agenda. Significantly, Frondizi and Frigerio began by

liberalizing the petroleum industry. The Argentine constitution stipulated that all

subsoil resources constituted state-owned property regardless of any private rights to

the surface. The concept was rooted in Spanish legal tradition and was employed in

the defense of national sovereignty over the oil fields. However, YPF was inefficient

and lacked the capability to exploit the nation’s critical petroleum resources.

Although Argentina’s estimated 500 million cubic meter petroleum reserves paled in

comparison to those of Mexico, Ecuador, and Venezuela, they were capable of

meeting domestic demand. Moreover, Frondizi believed it likely that additional

reserves could be found once a more systematic exploration campaign was initiated.

The cost of inaction in petroleum was great. YPF administrator Arturo Sábato

estimated that total oil imports between 1951 and 1958 had cost $1.7 billion.

Historian Carl Solberg observes that Sábato’s estimate was greater than the nation’s

total balance-of-payments deficit during those years.32

Frondizi described Argentina’s need to import oil as “the principal obstacle to

the advance of the country,” and launched his “battle of petroleum” on 24 July 1958.

The new President sought to reinvigorate exploration and drilling operations and

proposed new pipelines to transport petroleum to the nation’s industrial hubs to

underpin his comprehensive development strategy. To end the nation’s dependence

32
Frondizi, “La batalla del petróleo,” 24 July 1958, in Frondizi, Mensajes Presidenciales,
1958-1962, Tomo 1, 133-149; Carl E. Solberg, Oil and Nationalism in Argentina: A History (Stanford,
1979), 167-68.

61
on foreign oil and stabilize the balance of payments, Frondizi authorized YPF to sign

exploration and drilling contracts with transnational oil companies. Frondizi’s newly

liberalized oil policy was the most dramatic evidence of his turn away from

traditional nationalist politics, and came within two months of his inauguration.

When Perón granted a similar concession to Standard Oil of California in 1955,

Frondizi used oil nationalism to his political advantage and predicted that “foreign

capitalists would become the economic masters of Argentina.” In light of his

experience, Frondizi was acutely aware that the oil question was highly sensitive. As

a result, he took pains to point out that the new policy did not privatize the oil fields.

Title and ultimate control over subsoil resources remained vested with YPF. Private

companies were legally authorized only to sign service contracts – not subject to

subsequent congressional approval – with YPF. Those private companies would

facilitate energy independence and help stabilize the balance of payments. The

Frondizi government argued that they would provide the “good” foreign capital that

Frigerio had called for.33

To implement the new petroleum policy, the Frondizi government accepted

international help in oil development from a variety of unlikely partners. In 1958,

Frondizi signed a loan whereby the Soviet Union provided $100 million to be used

for the purchase of Soviet oil exploration and drilling equipment. The terms of the

loan were generous, and included a low 2 percent annual interest rate with the

33
Frondizi, “La batalla del petróleo,” 24 July 1958, in Frondizi, Mensajes Presidenciales,
1958-1962, Tomo 1, 133-149; Solberg, Oil and Nationalism in Argentina, 165. See also Felix Luna,
Diálogos con Frondizi (Buenos Aires, 1963), 56-57.

62
principal amortized over seven years. Frondizi’s agreement with the Soviet Union

illustrated the central importance of desarrollismo. From Frondizi’s perspective,

partnership with the United States was a means to an end. When opportunities arose

whereby the Soviets could help him reach those ends under circumstances that did not

endanger the Argentine-U.S. relationship, Frondizi took advantage of them. While

U.S. officials were never pleased when the Soviet Union signed such agreements with

non-communist countries, they continued to expand their own contacts with the

Frondizi government. So did private oil corporations. Nine transnational oil

companies – predominately based in the United States – invested more than $200

million between 1958 and 1963, more than companies from any other country. They

explored for new oil reserves, drilled in existing fields, constructed new pipelines,

and in most cases became profitable. The presence of the companies drove a wedge

between nationalists and the Frondizi government and would be a part of the political

discourse in the country throughout the Frondizi era. A significant portion of the

population did not accept Frondizi’s contention that liberalization buttressed

Argentine nationalism.34

U.S. officials were pleased with Frondizi’s new oil policy. NSC-5613/1,

dated 21 May 1958, identified Argentine resistance to the introduction of private

capital in petroleum as an “important problem,” on the grounds that Argentines “had

neither the capital nor the know-how to develop their petroleum resources at a rate

which would keep pace with their increasing needs for petroleum products.” Upon

34
César Vacs, Discreet Partners, 18; Solberg, Oil and Nationalism in Argentina, 168-169.

63
the change in policy, U.S. officials observed that it was now possible to direct

additional public development money to Argentina. The new policy conformed to the

U.S. objective of promoting opportunity for transnational business and was a

welcome development.35

Also of great importance to Eisenhower administration officials, Frondizi

sought solutions to past disputes with transnational businesses. To that end, he re-

opened settlement talks with U.S. and other foreign-owned steel, electrical, and

petroleum companies from which the Perón regime had expropriated property. The

Argentine government’s most prominent outstanding dispute was with the American

and Foreign Power Company (AFPC), a U.S.-based transnational energy corporation

that operated throughout Latin America. Since the rise of the Liberating Revolution,

U.S. officials had negotiated with their Argentine counterparts in an effort to secure

appropriate compensation for the company’s seized assets. It had been a thorn in the

side of the bilateral relationship that defied easy solution, primarily because the

Argentines could scarcely afford either the financial or political cost of compensation.

Nevertheless, when the Frondizi government took office, the completion of a

settlement took on a new urgency. Having developed its liberal credentials with the

significant departure in oil policy, the Frondizi government sought to reassure still

jittery foreign investors of Argentina’s commitment to the protection of private

property. Coming to terms with AFPC promised to send such a positive message

35
NSC 5613/1, 21 May 1958, FRUS, 1958-60, 5: 2-19; Special Report on NSC 5613/1, 26
November 1958, FRUS, 1958-60, 5: 36-60.

64
throughout the liberal international order. Agreement came relatively quickly. On 25

September 1958, the Argentine government and AFPC signed a new contract that

provided for compensation for the companies’ seized assets and provided more

evidence of Argentine liberalization.36

Frondizi moved equally quickly to stabilize the peso as part of his larger

efforts to stabilize the balance of payments and attack rising inflation. In December

1958, he eliminated currency controls that had been in place since Perón presidency.

Perón had manipulated exchange rates as part of an ISI program that redirected

agricultural profits to the industrial sector. The policy contributed to the depression

of the agricultural sector and Frondizi hoped that floating the peso would help

stabilize the agricultural export sector, and in so doing, reduce the balance-of-

payments deficit. Other determinants of Argentina’s exchange position were beyond

Frondizi’s control. Argentine exports to Europe far exceeded those to the dollar bloc.

However, European exchange controls prevented Argentines from easily converting

European currencies into dollars, even as Argentina continued to run a significant

dollar deficit as a result of its negative trade balance with the United States. While

the Bretton Woods system was designed to liberalize international currency exchange

through a series of fixed exchange rates, it did not always facilitate easy currency

exchange in practice. The effect of European currency policies on Argentina was

disastrous. Moreover, the continental European powers – most notably West

36
For background information, see 1957 American & Foreign Power Company, Lot 59 D 73,
NARA; 1958 American & Foreign Power Company, Lot 60 D 553, NARA. Memorandum of
Conversation, 13 October 1958, FRUS, 1958-1960, 5: 513-516, see footnote 4, page 513, on the 25
September agreement.

65
Germany and France – ran tremendous balance-of-payments surpluses during the late

1950s and could have afforded to liberalize their exchange controls. The balance-of-

payments deficit comprised a serious obstacle in and of itself to Argentine

development efforts, and correction of the problem was as dependent on decisions

made outside of Argentina as it was on domestic policies.37

As its bearing on the balance-of-payments crisis suggests, stagnant

agricultural production inhibited Argentine modernization efforts through

underperformance in income. As in other parts of Latin America, agricultural elites

obstructed Argentine development efforts. The export of meat, especially beef, on

the global market was historically vital to the Argentine economy. Marginalized by

Perón, the landed elite had been among the most vociferous supporters of the

Liberating Revolution. Frondizi was not supportive of the Argentine landholders,

who he characterized as “enemies of development” and the modernization of the

countryside. The landed elite was the precise oligarchic group that had profited the

most from the old export-oriented economic system during the heyday of Argentine

international economic success in the late-nineteenth century. Indeed, Frondizi

believed that those groups, “for economic, political, and strategic reasons” allied

themselves with “reactionary groups in the United States.” Frondizi’s

37
Bilateral concern with balance-of-payments stabilization can be followed in FRUS. See,
Memorandum, Adair to Mann, 24 September 1958, FRUS, 1958-1960, 5: 510-512; Memorandum of
Conversation, 13 October 1958, FRUS, 1958-1960, 5: 513-516; Memorandum of Conversation, 18
October 1958, FRUS, 1958-1960, 5: 516-518; Memorandum, Bernbaum to Rubottom, 9 December
1958, FRUS, 1958-1960, 5: 521-522. On the peso, see Report, undated, Eisenhower Office Files, Part
II International Series, Argentina-Goodwill Tour, February 1960/1, AFPC.

66
characterization of the old oligarchy’s U.S. allies again illustrated his government’s

distinction between “good” and “bad” foreign capital.38

Nevertheless, Frondizi directed attention at the meat industry. The president

sought to stabilize the declining size of cattle herds by reinstituting price incentives

for production. Meat producers had reduced the size of their herds as a result of

Perón’s policies that siphoned profits into industry. An increase in the size of herds,

and by extension the volume of exports, would boost revenues and thereby contribute

to the eradication of the trade and balance-of-payments deficits. State proposals to

change the nature of its market intervention resulted in higher domestic beef prices

and domestic consumers in the heavily urbanized country scoffed at the resulting

increase in the price of a dietary staple during a time of economic crisis. In one of his

frequent conversations with U.S. Ambassador Willard L. Beaulac, Frondizi insisted

that “Argentines must eat less meat,” a realistic but politically deaf statement given

the central role of beef in the Argentine diet. While an increase in agricultural prices

promised to help stabilize the balance of payments, it would not contribute positively

to the already high inflation rate. Already 32 percent in 1958, inflation exceeded 100

percent in 1959.39

38
Felix Luna, Dialogos con Frondizi (Buenos Aires, 1963), 38-39. On the economic
significance of the meat industry, see Peter H. Smith, Politics and Beef in Argentina: Patterns of
Conflict and Change (New York, 1969); Memorandum of Conversation, 18 October 1958, FRUS,
1958-1960, 5: 516-518.
39
Memorandum of Conversation, 18 October 1958, FRUS, 1958-1961, 5: 516-518; Díaz
Alejandro, Essays on the Economic History of the Argentine Republic, 528.

67
 By moving quickly to institute liberal reforms throughout the Argentine

political economy, Frondizi hoped to demonstrate concretely his liberal credentials.

The strategy would be important to convince transnational business to invest in

national industrialization and to secure aid and stabilization loans from the United

States and IMF. Frondizi created a record of accomplishment that he could showcase

during a planned trip to Washington, and in conversations with IMF officials. The

reforms that the Frondizi government launched in 1958 established the foundation

upon which it would seek to build until removed from power.

VI

While the Eisenhower administration reoriented its Latin America policy,

Argentina returned to constitutional governance under Frondizi. Frondizi’s

conception of desarrollo, under which he hoped to secure international loans and

investment capital, placed Argentina firmly on the road toward liberal development.

Frondizi underwent a remarkable personal transformation from a populist supported

by nationalists, to Argentina’s foremost liberal internationalist. As a result of the

reforms Frondizi initiated in 1958, the Eisenhower administration came to identify

Argentina as a country worthy of serious attention in the quest for economic

development.

Despite the initial caution of the official U.S.-Argentine diplomatic contacts,

the long-beleaguered relationship between the two countries was on the cusp of a new

beginning that both sides hoped would usher in a new era of opportunity. Although

68
the reform to the inter-American system that the Eisenhower administration proposed,

and that the Frondizi government endorsed, was relatively conservative, the new tone

of transnational discourses held forth the possibility of a massive restructuring of the

inter-American system. Inaugurated on May Day because of the support of the

working class and Argentine nationalists, Frondizi quickly adopted austere economic

policies at home, fostered policies friendly to transnational business, and secured the

confidence of the United States. That confidence would soon pay dividends.

69
 CHAPTER 3

DESARROLLO ENACTED:
TRANSNATIONAL DEVELOPMENT IN ARGENTINA,
1958-JANUARY 1961

With the 1958 convergence of interests between U.S. and Argentine elites, an

opportunity existed to change permanently international economic structures in order

to foster Argentine development. In response to the challenges of communism and

other varieties of populism to liberal hegemony in the hemisphere, the Eisenhower

administration reoriented its focus southward and promised a substantial program for

Latin American economic and social development. Argentines were well aware that

they inhabited Latin America’s most prosperous country historically, and Arturo

Frondizi promised to move it beyond the instability that had characterized the nation

since 1930. Argentina was ideally suited to capitalize on the emerging U.S.

commitment to regional economic development, and Frondizi quickly instituted a

wide-ranging liberal reform agenda, conducive to U.S. interests, to transform his

dream into reality.

Having begun the complicated process of reforming the structures of the

domestic political economy, Argentine officials sought assistance from international

lending institutions to finance balance-of-payments stabilization and development.

70
Throughout its time in office, the Frondizi government aggressively pursued liberal

economic objectives in partnership with transnational elites. Frondizi sought, and

ultimately received, stabilization assistance from the International Monetary Fund

(IMF), as well as economic development loans from the U.S. Treasury, the Inter-

American Development Bank (IDB), and private banks. He reduced the size of the

Argentine bureaucracy and created a welcoming environment for international capital.

Transnational cooperation in trade, investment, and stabilization was central to

Frondizi’s development strategy and met with a positive response from public and

private U.S. elites. U.S. and Argentine elites worked to make the liberal international

order’s mechanisms for distributing investment capital and regulating international

trade deliver a noticeable increase in the standard of living of ordinary Argentines in a

short period of time, thereby buttressing Frondizi’s domestic political position and

allowing him to complete the reforms. The task was daunting, but entered into

fervently by both U.S. and Argentine modernizers.

II

Following Frondizi’s election, U.S.-Argentine engagement began cautiously.

Historically, the U.S.-Argentine relationship did not have a tradition of close relations,

particularly since World War II, and this legacy complicated the task of

rapprochement and amplified suspicion on both sides. For his part, Frondizi

promised only frankness. U.S. Ambassador Willard Beaulac reported that “when he

says ‘yes’, he will mean ‘yes’, and when he says ‘no’, he will mean ‘no’.” Building

71
upon the themes that he outlined in his inaugural address, Frondizi observed in a 4

June 1958 letter to Eisenhower that “many of the ills that affect our world today have

their origin in economic dislocations and maladjustments.” While Eisenhower could

not deny that the world was replete with economic inequality, it remained unclear

precisely what path the Frondizi government intended to follow in its quest to rectify

the maladjustments. Frondizi had sent mixed signals, having established a reputation

as a staunch economic nationalist only to hint at a liberal departure once in power.

Reflecting the Eisenhower administration’s uncertainty and caution, U.S. intelligence

analysts clearly recognized the anti-liberal elements embedded in Frondizi’s electoral

campaign, but also pointed out that his “present cabinet is drawn largely from the

more moderate wing of [the Radical Party] and suggests that he will follow a course

only slightly left-of-center.”1

Like most Argentine military leaders, State Department officials harbored

skepticism about Frondizi on a personal level. Assistant Secretary of State for Inter-

American Affairs Roy Rubottom believed that Frondizi’s presidential campaign had

1
For a survey of the U.S.-Argentine relationship, see Joseph S. Tulchin, Argentina and the
United States: A Conflicted Relationship (Boston, 1990). On Argentina’s role in the world, with a
good deal of attention focused upon its relationship with the United States, see Mario Rapoport, El
laberinto Argentino: Política internacional en un mundo conflictive (Buenos Aires, 1997); Mario
Rapoport, Tiempos de crisis, vientos de cambio: Argentina y el poder global (Buenos Aires, 2002). On
U.S.-Argentine conflict, and then strategic rapprochement, during the Perón era, see Glenn J. Dorn,
Peronistas and New Dealers: U.S.-Argentine Rivalry and the Western Hemisphere, 1946-1950 (New
Orleans, 2005). For the view that “the history of U.S.-Argentine relations is one of cooperative
interaction based on generally strong and improving commercial and financial ties, shared strategic
interests, and strong cultural contacts,” see David M. K. Sheinin, Argentina and the United States: An
Alliance Contained (Athens, GA, 2006), quotation on page 4. Memorandum of Conversation, 6 March
1958, FRUS, 1958-1960, 5: 468-472; Public Papers of the Presidents of the United States: Dwight D.
Eisenhower 1958 (Washington, D.C., 1959), 537-538; National Intelligence Estimate (NIE) 91-58,
“The Outlook for Argentina,” 5 August 1958, FRUS, 1958-1960, 5: 488-496.

72
been “opportunistic” because “he tried to win a variety of voters by being all things to

all men.” He further complained that Frondizi’s “real attitudes” remained unclear.

After all, the new President would be “subject to nationalistic, traditional and other

counter-pressures.” Most menacing, Rubottom worried that the Soviet Union “may

seek to use the economic stress [in Argentina] to her own advantage.” Writing in the

aftermath of the election, he concluded that it was “perhaps no exaggeration to say

that Argentina will be at a cross-roads when Frondizi is inaugurated on May 1.”

Frondizi clarified his path with haste. Minister-Counselor of the U.S. embassy in

Buenos Aires Clare Hayes Timberlake reported that Frondizi’s emissaries approached

him eager to work together to encourage transnational investment in Argentina. They

hoped to appropriate the United States as a partner in Frondizi’s signature issue:

development.2

Although U.S. officials quickly recognized the seriousness of the Argentine

economic crisis and supported liberal development, they followed a conservative

approach to aid policies. Consistent with the tenets of modernization theory, which

emphasized the importance of the private sector in sustained economic development,

the Eisenhower administration would only commit U.S. resources toward Argentine

development after Frondizi began to institute liberal reforms. Director of the Office

of International Financial and Development Affairs Charles Adair noted that U.S.

foreign economic policy was to make “balance-of-payments and stabilization

2
Memorandum, Rubottom to Dulles, 26 February 1958, FRUS, 1958-1960, 5: 465-466;
Telegram, Timberlake to Dulles, 26 February 1958, FRUS, 1958-1960, 5: 467.

73
assistance dependent on adequate financial programs worked out with the

International Monetary Fund (IMF).” Significantly, despite the administration’s new

concern with Latin American development, it continued to rely on old and restrictive

policies before approving new aid. The IMF dispatched field teams to countries that

requested balance-of-payments assistance. Those field teams in turn mandated

specific domestic reforms that must be instituted prior to the dispersal of IMF

assistance. Since U.S. aid policy was to follow IMF recommendations, the result of

the field team’s study was of paramount importance. Despite their declarations, U.S.

officials had sometimes looked the other way when countries failed to adhere rigidly

to liberal orthodoxy. As historian Nick Cullather demonstrates in his study of

Taiwanese development efforts, U.S. officials were most successful when they

adopted ideologically flexible policies and turned a blind eye when aid recipients did

not adhere strictly to IMF guidelines. The Eisenhower administration, however,

insisted upon a high degree of liberal orthodoxy from Argentina as a precondition of

assistance, and the structures of global power facilitated the administration’s demands.

Less economically developed countries, which increasingly depended upon the World

Bank and IMF for development assistance and standby loans, were not well-

integrated into the governing structures of those organizations. Instead, the IMF

provided a mechanism whereby less developed countries seeking assistance could

secure the endorsement of developed countries that they possessed liberal

credentials.3

3
Memorandum, Adair to Mann, 24 September 1958, FRUS, 1958-1961, 5: 510-512; Nick

74
 Frondizi’s liberal reform agenda succeeded in reassuring U.S. officials.

Beaulac explained that U.S. officials “admired how [Frondizi] was solving problems

one by one,” and told Frondizi that the Eisenhower administration was “impressed by

reports of progress in Argentina, particularly in the economic field.” It was clear that

the administration understood the intended linkage between Frondizi’s domestic

reforms and his desire for international aid. Consequently, Beaulac grew increasingly

optimistic about the prospects for U.S. investments in Argentina, despite the

country’s once inhospitable climate. For instance, in the petroleum field he noted

hopefully that “seven or eight countries [were] working here, and a considerable

amount of United States investment in other fields is coming in also.” Beaulac

concluded that the improved climate for transnational businesses emerged “because

the Argentine Government (and we hope the people) wants them [emphasis in

original].” At the same time, the Ambassador cautioned against giving the

Argentines the perception that the U.S. government was responsible for promoting

investments for fear of inflaming Argentine nationalism and threatening existing

American investments in the country. The Ambassador’s note of caution was

confined to the realm of public relations, and not meant to suggest strict limits on the

promotion of U.S. business as a matter of official policy. He was aware of the

embassy’s long-standing role as a promoter of free enterprise generally – and U.S.

business participation in Argentina specifically. However, Beaulac did not want to

Cullather, “’Fuel for the Good Dragon’: The United States and Industrial Policy in Taiwan, 1950-
1965,” in Empire and Revolution: The United States and the Third World since 1945, Eds., Peter L.
Hahn and Mary Ann Heiss (Columbus, 2001): 242-268.

75
advertise his role in such a way that would contribute negatively to the overall

mission by stoking Argentine nationalism, a certain outcome if it were widely

perceived that real power in Argentina was embedded in the U.S. embassy. The

balancing act between helping the Frondizi government financially and laying down

policy guidelines as a condition of aid on the one hand, and not appearing as an

overbearing imperial master on the other, promised to challenge the Ambassador.

Nevertheless, in conversations with Frondizi, Beaulac observed that “the [Argentine]

Central Bank needs dollars,” and pledged that the United States “can be helpful in

that regard.” The Frondizi government’s strategy of instituting liberal reform at home

to secure capital from abroad appeared to be off to a promising start.4

In response to the structural economic reforms that the Frondizi government

initiated, and because they desired to support the nascent reforms as they took hold in

Argentina, U.S. officials worked with their Argentine counterparts to craft a much-

needed economic assistance package. All parties recognized that the package would

be the product of cooperation between public and private elites. While the infusion of

public U.S. funds was important, the Eisenhower administration held to its cherished

ideals that privileged private capital in development efforts. Indeed, U.S. officials

provided public support specifically to facilitate the development of a vibrant private

enterprise system.5

4
On Frondizi’s reforms, see Chapter 2. Memorandum of Conversation, 13 October 1958,
FRUS, 1958-1961, 5: 513-516. On U.S. investment, see Letter, Beaulac to Kearns, 8 September 1959,
RG 59, 033.1135/9-859, NARA.
5
Memorandum of Conversation, 13 October 1958, FRUS, 1958-1961, 5: 513-516.

76
 There were two aid areas where U.S. elites and officials of the IMF believed

they could further Argentine modernization by offering low-interest loans. First, the

Argentine balance-of-payments deficit could be reduced with a stabilization loan.

The IMF was created explicitly to grant loans to economically liberal countries

experiencing short-term balance-of-payments disequilibrium. Argentina’s deficit was

longer-term, but within the liberal international order, IMF assistance, combined with

additional stabilization credits from the U.S. Treasury, constituted the only available

course to correct the problem. Moreover, the balance-of-payments deficit was a

fundamental problem that needed to be corrected immediately. The deficit threatened

what little remained of Argentina’s hard currency and gold deposits and inhibited

further development efforts.

In addition to stabilization assistance, Frondizi hoped to secure development

assistance to help construct industrial infrastructure. Specifically, he asked for U.S.

assistance to develop a domestic steel industry. Frondizi’s decision to prioritize the

steel was not arrived upon by chance. The industrial development of the United

States had been punctuated by the late nineteenth century emergence of a dynamic

steel industry centered in the upper Midwest. As an age of big business emerged in

the United States during the late-nineteenth century, the steel industry surfaced as one

of the largest and most important enterprises. Steel remained the masonry of

modernity into the mid-twentieth century. With steel, a seemingly endless assortment

of products could be manufactured, ranging from skyscrapers to cars to home

appliances. Consequently, modernization theorists viewed the introduction of a

77
domestic steel industry as a bellwether for industrial development. Moreover, there

was precedent for U.S. assistance for Latin American steel development. The

Franklin Roosevelt administration provided assistance to Brazil to subsidize the

construction of a domestic steel industry. More recently, the Eisenhower

administration provided Export-Import Bank financing to Colombia for steel plant

construction. Because the introduction of a national steel industry was widely viewed

as a necessary precondition for the take-off into modernity, and because there was a

successful track record of other nations securing international assistance, Frondizi

hoped that he would be able to secure funds from the United States. His attention to

past U.S. policies was rewarded, and steel development was included as the larger aid

package moved forward.

Frondizi’s request for assistance in steel development also exposed subtle

differences between the Bretton Woods liberal international order and the liberal

orthodoxy of the late nineteenth century. Frondizi requested public funds to support a

partnership between the Argentine government and private enterprise to enhance

Argentine steel production. Rather than dismiss the request out-of-hand on the

grounds that it violated the principle of comparative advantage – as traditional

nineteenth century liberals would have done – Bretton Woods liberals quietly helped

to finance a limited Import Substitution Industrialization (ISI) strategy. Such an

arrangement was precisely what Frondizi imagined when he argued that liberalism

could serve as a component of Argentine nationalism because it provided a means to

78
finance modernization efforts that most Argentines deemed critical to the success of

the national project.6

Both U.S. and Argentine elites were eager to complete the comprehensive

stabilization and development package. The final agreement conformed to the public-

private cooperative framework that was the hallmark of U.S. foreign economic policy.

Public U.S. officials and private U.S. bankers worked with the Frondizi government

to craft a series of loan agreements that supported balance-of-payments stabilization

and the modernization of Argentine industry and infrastructure. Finally, on 29

December 1958, the Eisenhower administration, eleven private banks, and the IMF

agreed upon an economic assistance package that totaled $329 million. Credits

included $54 million from the eleven banks, $125 million from the Export-Import

Bank, $25 million from the Development Loan Fund, and $50 million from the U.S.

Treasury. To support the agreement, members of the Paris Club agreed to allow

Argentina to convert freely European currencies into dollars. Indeed, the agreement

allowed Argentina to devalue the peso and float it freely on the exchange market. As

Argentine negotiator Roberto Alemann noted, the agreement did “away with every

restriction on foreign exchange transactions.” Frondizi announced the plan via a

national radio broadcast that trumpeted his vision for liberal national development.

The Argentine package – among the first overseen by the IMF in the Global South –

aligned with Eisenhower’s core principles as it ascribed a prominent role to private

6
On Frondizi’s vision of his program, see Felix Luna, Diálogos con Frondizi (Buenos Aires,
1963), especially 67-80.

79
enterprise. It also provided a crucial example of the form that the administration’s

new policy of limited state support for Latin American modernization would take.

Money was loaned, not granted, to the Argentines, and the Frondizi government was

expected to meet all of its preexisting international commitments even as it attempted

to expand radically its infrastructure. However limited, it was nevertheless an

initiative that offered significant public U.S. support for Argentine development, and

in a larger sense, for the Argentine national project.7

Frondizi envisioned the initial aid agreement only as the beginning of

transnational support for desarrollismo. Having successfully worked out the

stabilization and steel development package, and having begun the process of

liberalizing the petroleum industry, Frondizi turned his attention to transportation and

agriculture. He again deemed U.S. assistance a critical precondition of successful

development. The Frondizi government also understood that liberal reform

constituted the sine qua non for U.S.-directed assistance. As a result, Argentine

officials took pains to point out the progress that they had already made in the hopes

of securing future credits. Timberlake reported that Frondizi’s special assistant,

Rogelio Frigerio, believed that the “Frondizi Government [was] firmly convinced

[that]Argentina should align itself publicly and squarely with [the] US and free world

in political and economic policy. [He] believes [the] Government has shown faith in

7
Memorandum of Conversation, 11 July 1958, FRUS, 1958-1960, 5: 486-487; Memorandum,
Bernbaum to Rubottom, 9 December 1958, FRUS, 1958-1960, 5: 521-523; Szusterman, Frondizi and
the Politics of Developmentalism, 120-123; Roberto T. Alemann, “Roberto T. Alemann,” in Argentina,
1946-83: The Economic Ministers Speak, Eds. Guido di Tella and Carlos Rodríguez Braun (New York,
1990), 66-67; Arturo Frondizi, “Programa de estabilización para afirmar el plan de expansion de la
economía Argentina,” 29 December 1958, Frondizi, Mensajes Presidenciales, Tomo 1, 227-253.

80
[the] democratic process by acts already on record.” The Frondizi government firmly

declared its political and economic alignment with the United States. Frigerio hoped

that the government’s avowed commitment would translate into additional

development credits.8

He would not be disappointed. As a reward for “following a cooperative

policy toward the United States,” and for having taken “a courageous stand in seeking

to obtain private capital participation in all development,” Under Secretary of State

Christian Herter advised Eisenhower to invite Frondizi to the United States on a state

visit. Eisenhower had initially extended Frondizi an invitation to visit Washington

shortly after his election, but the Argentine President had been unable to accept given

the demands of forming a government. Secretary of State John Foster Dulles noted

that Frondizi’s austerity program “added up to a courageous but difficult political

policy for him,” and wanted to demonstrate the U.S. commitment to a friendly

Argentina but “did not want to indicate that [Frondizi] was in any sense ‘captive’ to

U.S. capital as his enemies were charging.” U.S. policymakers hoped that a Frondizi

visit would cement close ties between the two countries, strengthen U.S. hegemony in

the hemisphere, and reinforce Argentina’s emerging ascent within the liberal

international order.9

8
Telegram, Timberlake to Dulles, 22 December 1958, FRUS, 1958-1960, 5: 525-527.
9
Memorandum, Herter to Eisenhower, 19 August 1958, Dulles/Herter CCS, Chronological
File; Memorandum of Conversation with the President, Dulles, 20 January 1959, Dulles/Herter CCS,
Chronological File, AFPC.

81
 In January 1959, Frondizi became the first sitting Argentine head of state to

visit the United States. His trip included several meetings with American

businessmen in Chicago, Detroit, and New York, to whom Frondizi explained the

difficulties in the Argentine economy and his program to correct them. He boasted of

the revitalization of Argentine agriculture and the expansion of electrical generators,

all of which would provide a foundation for mass production and consumption. In

short, Frondizi trumpeted the infrastructure of liberal modernity. Frondizi’s agenda

also included more traditional summit meetings with Eisenhower and Dulles. There,

he again highlighted his government’s economic accomplishments and requested

additional aid for hydroelectric and steel development. The Argentine balance-of-

payments deficit placed a strain on domestic resources and necessitated the

acquisition of as much foreign capital as could be obtained. Moreover, the tactic was

in line with Frondizi’s larger strategy that subsumed nearly all matters of state to

advancing the cause of desarrollo. If his plans were properly implemented and aided

by the international community, Frondizi predicted that the Argentine economy

would be “over the hump” in two years.10

Frondizi’s most important request may have been for a relatively modest

military assistance package under which the United States would facilitate Argentine

10
Juan José Cresto, Presidente Frondizi: La política internacional a través de sus viajes
exterior (Buenos Aires, 2001), 129-141; Arturo Frondizi, “En la empresa ‘International Packers’ de
Chicago,” 26 January 1959, in José Cresto, Presidente Frondizi, 288-290; Arturo Frondizi, “En
agasajo ofrecido por el Alcalde de Chicago,” 26 January 1959, in José Cresto, Presidente Frondizi,
290; Arturo Frondizi, “Ante los representantes de instituciones bancarias en Nueva York,” 28 January
1959, in José Cresto, Presidente Frondizi, 291-292. Memorandum of Conversation, 21 January 1959,
FRUS, 1958-1960, 5: 531-533; Memorandum of Conversation, 22 January 1958, FRUS, 1958-1960, 5:
533-535.

82
purchases of a submarine and an unspecified number of jet planes. Ostensibly, the

equipment was requested to enhance the country’s ability to protect itself against

internal subversion. U.S. military planners did not envision the Argentine armed

forces as a significant force in the case of outright war against the Soviet Union.

Consequently, U.S. officials had difficulty understanding how a submarine would

significantly contribute to their objective. In fact, Argentine military leaders sought

the hardware principally to enhance their own prestige. Given the skepticism that the

military’s leadership harbored toward Frondizi, and the active role that they had

played in national politics since 1930, Frondizi recognized the necessity of placating

their interests. Consequently, he pressed his Washington counterparts to accede to

the request.11

Eisenhower administration officials immediately recognized the linkage

between Argentine economic liberalization and the military assistance request. In

identifying reasons why the United States should support the package, Beaulac

observed that “support of this [economic] program by the Armed Forces is essential,

and happily the Armed Forces are giving the program their support. At the same time,

enemies of the regime are always on the lookout for ways of turning the Armed

Forces against the regime.” If the Argentine military perceived anything less than full

U.S. support, it was possible that it could turn against the liberal international order.

Administration officials did not endorse the military assistance request because they
11
Memorandum of Conversation, 21 January 1959, FRUS, 1958-1960, 5: 531-533;
Memorandum of Conversation, 22 January 1958, FRUS, 1958-1960, 5: 533-535; Memorandum,
Rubottom to Dillon, 4 February 1958, FRUS, 1958-1960, 5: 537-540; Memorandum, O’Connor to
Rubottom, 6 April 1959, FRUS, 1958-1960, 5: 548-551.

83
believed the additional equipment would enhance the abilities or the efficiency of the

Argentine armed forces. To the contrary, they could not identify any appreciable way

in which the new equipment would augment the Argentine military’s ability to

execute successfully campaigns against internal subversion or against an outside

threat. Instead, military aid functioned as an officially-sanctioned bribe that was

designed to win the support of a powerful Argentine constituency for larger political

and economic objectives. Rubottom put the point succinctly in his recommendation

that Washington accede to the request, noting that “the Frondizi Government has

shown a large measure of political courage in taking bold steps which coincide with

U.S. foreign economic objectives.” Under Secretary of State Douglas Dillon agreed,

as did officials in the Treasury and Defense Departments. Each of the disparate

bureaucracies concurred that it was in the U.S. national interest to cultivate Argentine

military elites.12

Despite its modest size and significant institutional support, the aid request

still had to overcome the fiscal limits of American power. The Eisenhower

administration’s dedication to fiscal conservatism made it difficult to fit even the

limited Argentine request into the foreign military assistance budget. Further

complicating matters, the size of the request was misunderstood, in part because it

was first made outside of regular diplomatic channels. Initially, U.S. officials thought

that they were being asked for $10 million and indicated general agreement, but came

12
Ibid. Letter, Beaulac to Rubottom, 17 April 1959, FRUS, 1958-1960, 5: 556-557 (includes
Beaulac quotation); Letter, Dillon to Irwin, 6 March 1959, FRUS, 1958-1960, 5: 542-543; Letter,
Leffingwell to Dillon, 15 April 1959, FRUS, 1958-1960, 5: 555.

84
to discover that the Argentines understood the request to have been for $13 million.

Argentine military officials expected the full $13 million, erroneously believing that

Washington had made a firm commitment. Nevertheless, in late April 1959 U.S.

officials approved the $13 million request, and offset the $3 million supplement

through a reduction in the budget for Western Hemisphere defense. The deal’s

completion was important to administration officials charged with overseeing inter-

American relations. With a flair for the dramatic, Rubottom observed that

“[c]ontinued support of Frondizi by the Argentine military services is vital to the

carrying through of his economic program in the face of expectable public restiveness

and frontal opposition by Peronist-dominated labor with an assist by the

Communists.” The Assistant Secretary identified Frondizi’s political peril as the

“determining factor in our support of special credit terms.” Ultimately, the deal was

completed at the enhanced level because of its perceived importance to furthering U.S.

political and economic objectives. After the first four months of 1959, the U.S.-

Argentine partnership could lay claim to significant accomplishments.13

III

Despite the developing patterns of cooperation within the official U.S.-

Argentine relationship – a relationship stronger than it had been than at any time since

the mid nineteenth century – serious challenges remained. One of the most difficult

bilateral disputes emerged in May 1959 when the Eisenhower administration banned

13
Ibid. Memorandum, Rubottom to Dillon, 23 April 1959, FRUS, 1958-1960, 5: 557-559.

85
cured meat imports from Argentina after some Argentine cattle tested positive for

hoof-and-mouth disease. Hoof-and-mouth disease almost never infected humans, but

could be devastating to cows and other cloven-hoofed animals. Consequently, U.S.

Department of Agriculture experts were determined to keep American herds free of

the disease. U.S. officials instituted the ban without prior consultation with their

Argentine counterparts, who complained that the action was taken solely on the basis

of an unconfirmed laboratory test. Argentine Ambassador to the United States César

Barros Hurtado questioned whether the American action was designed to exclude

competition from the U.S. meat market under the subterfuge of a health-related ban.

Argentine officials and cattle producers protested that not all Argentine cattle posed a

danger and requested that the United States liberalize meat imports from Tierra del

Fuego and Patagonia, regions that had never experienced a hoof-and-mouth disease

outbreak. Despite the efforts of Argentine negotiators, U.S. officials maintained the

ban on all Argentine cured meats. Lack of access to the American market further

curtailed Argentina’s ability to rectify its balance-of-payments deficit. Argentine

officials estimated that the ban cost the nation’s producers $30 million per year, a

significant sum for the dollar-starved economy.14

The historically important role of meat as a driver of the Argentine export

economy further inflamed the situation. Like the rest of Latin America, Argentina

had been incorporated into the global economy as an exporter of primary products
14
Memorandum of Conversation, 20 May 1959, FRUS, 1958-1960, 5: 564-567;
Memorandum, Rubottom to Herter, 2 December 1960, RG 59, 033.1135/12-260, NARA; Airgram,
Rubottom to Herter, 28July 1961, RG 59 033.3511/7-2861, NARA; Memorandum of Conversation, 25
July 1961, RG 59, 033.3511/7-2861, NARA.

86
during the nineteenth century. In Argentina’s case, meat and wheat exports

constituted the primary source of the nation’s foreign exchange earnings. Externally

imposed constraints upon Argentina’s ability to participate in the global beef market

after 1959 inhibited the nation’s efforts to increase its hard currency reserves,

exacerbated the balance-of-payments deficit, and further limited the financial

resources available for industrial development. U.S. officials recognized that by

curtailing Argentine meat imports they hamstrung Argentina’s ability to repay its

outstanding development loans and had a chilling affect on the bilateral relationship.

However, the U.S. import ban did not fully account for Argentina’s export problems.

Indeed, European markets – traditionally far more important to the Argentine beef

trade – were increasingly difficult for Argentines to penetrate because of European

protectionist legislation. High rates of domestic beef consumption and inadequate

processing capacity also constrained the expansion of exports.15

Nevertheless, the timing of the ban could scarcely have been worse for the

Frondizi government. Barros characterized Frondizi as “the most unpopular man in

Argentina” because of the harmful effects of his austerity program on the nation’s

population. Frondizi had wedded his prestige to a constructive economic relationship

with the United States and the hard U.S. position on the meat question served to

“discredit” his cooperative policies. The politics of beef was treacherous for

Argentine politicians to navigate. On the one hand, they recognized the nation’s

15
Memorandum of Conversation, 20 May 1959, FRUS, 1958-1960, 5: 564-567; Peter H.
Smith, Politics and Beef in Argentina: Politics of Conflict and Change (New York, 1969).

87
desperate need to expand exports and earn foreign exchange reserves. With that in

mind, Frondizi restricted the amount of beef sold on the domestic market in an effort

to rebuild herds and stabilize exports. On the other hand, Argentine officials

understood that any proposal that resulted in higher domestic beef prices and limited

domestic consumption was sure to provoke popular discontent. Indeed, Frondizi’s

policies caused outrage among his constituents. Already suffering under the strains

of the austerity program, increasing the cost of beef – a dietary staple –compounded

the nation’s declining standard of living. The political choices were not easy.

Consequently, even if the U.S. and European markets were liberalized, it was unclear

that Argentine producers would be able to satisfy both the domestic and international

demand as they continued their long recovery following the institutional neglect of

the agricultural sector during the Juan Perón era.16

U.S. import restrictions on Argentine meat worked against the liberal agenda

shared by the Eisenhower and Frondizi governments. Although there is no evidence

that Eisenhower administration officials were motivated by anything other than the

serious health concerns of the possible introduction of hoof-and-mouth disease into

American stockyards, the policy functionally protected U.S. producers from

Argentine competition. At the same time, private and public U.S. elites aggressively

advocated the open door for trade and investment within Argentina. Since many

16
Memorandum of Conversation, 20 May 1959, FRUS, 1958-1960, 5: 564-567; Airgram,
Rubottom to Department of State, 28July 1961, RG 59 033.3511/7-2861, NARA; Memorandum of
Conversation, 25 July 1961, RG 59, 033.3511/7-2861, NARA. See also Memorandum prepared by
Beaulac, 26 August 1959, FRUS, 1958-1960, 5: 591-599. On Perón and the agricultural sector, see
Chapter 2.

88
herds were not infected with hoof-and-mouth, notably those in the Argentine South,

Argentines generally viewed the restrictions as a hypocritical exercise in

protectionism that violated the liberal values U.S. elites claimed to cherish. That

perception was strengthened by Washington’s refusal to work quickly to achieve a

compromise that provided fair access to U.S. markets without compromising the

health of American cattle. Instead, the dispute lingered, and would confront the John

F. Kennedy administration when it took office in 1961. The incident also

demonstrated the profoundly negative effect that unforeseen events could exert on

U.S. modernization efforts. The Argentine balance-of-payments deficit was one of

the fundamental economic problems that the nation faced, and U.S. officials had

worked with the IMF to provide a stabilization loan less than five months earlier. In

order to stabilize its balance of payments, Argentina needed to maintain healthy

export earnings. The nation’s ability to do so was compromised, not only by disease,

but also by the lackadaisical international response to the hoof-and-mouth problem.

Unsurprisingly, the continuing economic difficulties also prompted

discussions about new aid for Argentina in May 1959. Barros approached U.S.

officials to ask about the possibility of additional assistance. Frigerio flew to

Washington, touted the Frondizi government’s layoffs of public employees as part of

the existing austerity program, and joined Barros in hinting about new Argentine aid

requirements. Neither Barros nor Frigerio explicitly asked for new aid, but they left

no doubt that they sought additional assistance. The encounters left Rubottom

“disappointed.” He complained that the request “shoots a couple of holes in the very

89
useful picture of Frondizi’s Argentina which we have had for exhibition to the rest of

the hemisphere as the nation determined to stand on its very own two feet.”

Rubottom recognized Frondizi’s “courage” in the face of a “mountain of problems,”

and pledged that “[i]t goes without saying that we will do all we can to help.”

Nevertheless, he worried that the Argentine government was not being “realistic” in

some of its development requests, including aid requests to support hotel and airport

development. Ultimately, Rubottom concluded that the Argentines needed additional

guidance. Exposing the paternalistic and neo-imperial thinking embedded in the

ideology of U.S. aid for modernization, the Assistant Secretary wrote that “it clearly

is not a question of accepting their own judgment as to what they want and what they

think best for themselves.” Rather it was for U.S. officials and technical experts to

make decisions for the Argentines.17

Despite Rubottom’s desire to work with the Frondizi government, the

Eisenhower administration was not immediately prepared to offer additional loans.

U.S. officials planned to send Development Loan Fund Director Vance Brand to

Argentina in July to survey the situation and to expedite the use of existing credits,

but not to lay the groundwork for new assistance. Beaulac explicitly discouraged

Frondizi from formally requesting new aid. However, the Ambassador could offer

little inducement or alternative ways forward. He dismissed a suggestion that the

Export-Import Bank might help finance a Kerr-McGee drilling contract as

unworkable under the bank’s structure. Substantively, the United States could offer

17
Letter, Rubottom to Beaulac, 30 May 1959, FRUS, 1958-1960, 5: 568-570.

90
only to relieve Yacimientos Petrolíferos Fiscales (YPF) of the burden of making

payments in dollars that it did not possess. From the Argentine perspective, the U.S.

response was inadequate. The political and economic situation had deteriorated to the

point that rumors of a military uprising ran rampant. CIA Director Allen Dulles

reported that “Frondizi was hanging on by his eye teeth.”18

Frondizi’s unpopularity at home should not have come as a great surprise.

Since taking office through mid-1959, Frondizi had emphasized the fight against

inflation. The painful program of austerity became a signature part of his

government’s program. Frondizi’s commitment to strict budgets was highlighted by

budget-hawk and liberal internationalist Álvaro Alsogaray’s appointment as Minister

of the Economy on 24 June 1959. Frondizi recognized that his policy inflamed

domestic political tensions, and staked his presidency on fully implementing

stabilization within his first two years in power. Nobody embodied that commitment

more clearly than Alsogaray. A staunchly orthodox economic thinker, Alsogaray

emerged as an early critic of some of the state-led aspects of desarrollismo, and

Frondizi concluded that it was better to bring him into the government than keep him

as an outside critic. Moreover, Frondizi expected that Alsogaray’s leadership of the

Ministry of the Economy would serve to reassure military leaders who had forced

Frigerio out of the position and who remained mistrustful of the UCRI government.

18
Telegram, Beaulac to Dulles, 5 June 1959, FRUS, 1958-1960, 5: 571-572; Letter, Boonstra
to Bernbaum, 19 June 1959, FRUS, 1958-1960, 5: 577-578; Memorandum of Conversation, 10 June
1959, FRUS, 1958-1960, 5: 572-574; Telegram, Dillon to Beaulac, 12 June 1959, FRUS, 1958-1960, 5:
575; Editorial Note, re: NSC Meeting, 18 June 1959, FRUS, 1958-1960, 5: 576 (includes Dulles
quotation). Telegram, Beaulac to Dulles, 22 June 1959, FRUS, 1958-1960, 5: 580-582, contributes
additional analysis of military unrest.

91
Alsogaray’s economic leadership promised domestic hardship, but the President

calculated that he could hold the country together, despite the pain of austerity,

through 1960. By then, Frondizi believed, desarrollo would bear at least some fruit

for all social sectors.19

IV

Those benefits were far from immediately apparent to the Argentine working

class. Desarrollismo engendered a significant backlash from that segment of society,

which directed its ire at both the Frondizi government and its supporters abroad. The

working class was angered that the liberal international order imposed great hardships

upon it while transnational businesses profited. Workers further protested Frondizi’s

failure quickly to integrate organized labor and the broader Peronist movement back

into civil society along favorable lines, as he had promised during the 1958 campaign.

In response, workers repeatedly took to the streets in protest and called for work

stoppages in key industries. They sought a return to the Peronist state, whereby the

Confederación General del Trabajo (General Confederation of Labor, CGT) served

as a pillar of state power and that placed working-class interests at the forefront of the

national agenda. In the years following Perón’s removal from power, the labor

movement had fallen upon hard times. The year 1959 was among the most difficult,

19
Álvaro Alsogaray, Experiencias: De 50 años de política y economía Argentina (Buenos
Aires, 1993), 41-57; Arturo Frondizi, “Programa de estabilización para afirmar el plan de expansión
de la economía Argentina,” 29 December 1959, Frondizi, Mensajes Presidenciales, Tomo 1, 227-253.
Frondizi’s cabinet underwent frequent shakeups, making any individual’s status as a member of the
government functionally temporary. For Frondizi’s view of Alsogaray’s role in the government, see
Felix Luna, Diálogos con Frondizi (Buenos Aires, 1963), 46-47.

92
bringing ever-increasing protests and strikes directed against the austerity imposed by

desarrollo. Feeling betrayed by Frondizi’s adoption of liberalism, Argentina’s

workers became the most vociferous opponents of the government that they had been

instrumental in electing. Labor’s resistance was significant. It caused U.S. Assistant

Secretary of State for Economic Affairs Thomas Mann – an expert on Latin American

affairs – to worry in June 1959 that, despite the actions already taken, the United

States was in “danger of losing Argentina.”20

Working-class dissatisfaction concerned Frondizi as well. He had attempted

to maintain some semblance of working-class support in spite of the hardships that

his policies imposed. The President attempted to explain the need for fiscal austerity

by citing the country’s high inflation rate and arguing that it must be brought under

control for Argentines of any social class to enjoy economic security. Frondizi

continued to link participation in the liberal international order with Argentine

nationalism as a vehicle to bring modernity and development to the country.

However, Frondizi’s argument did not resonate among Peronist workers, who instead

saw alliance with the United States as an attack on Argentine sovereignty, and not as

a means toward national progress. Failure to pacify the politically active working

class threatened desarrollismo. Moreover, sustained labor unrest could cause military

elites to question the Frondizi government’s viability and once again to overthrow a

20
Daniel James, Resistance and Integration: Peronism and the Argentine Working Class,
1946-1976 (Cambridge, 1988), offers the most complete exploration of Argentine labor history during
the Peronist and post-Peronist period. Editorial note, re: Secretary’s Staff Meeting, 2 June 1959, FRUS,
1958-1960, 5: 571.

93
constitutionally elected government in order to deliver the country from the

Peronists.21

Indeed, the labor question – and in particular its relation to Peronism – was

the pivotal issue in the Argentine political system. The nation’s traditional economic

elites and military officers vehemently opposed Peronism and fought against the full

integration of working-class Argentines into the political system by opening positions

on the ballot to candidates of all ideological stripes. Divisive class politics had a long

history in Argentina. When the Radical Party broke into the political system with

Hipólito Yrigoyen’s electoral victory in 1916, its reforms fell short of integrating the

working class into the larger body politic. Yrigoyen earned the enmity of the nation’s

workers when he violently cracked down on labor protests in 1919. The working

class was forced to wait until Perón’s rise to power in the 1940s, with decisive labor

support, before it was fully integrated into the larger political system. As Argentines

continued to debate whether Peronism occupied a legitimate discourse in Argentine

civil society during the late 1950s and early 1960s, the labor question maintained its

central place in the nation’s discourse.

In the years that followed Perón’s fall, the CGT divided between a Peronist

faction, a liberal faction (which self-identified as “free” or “democratic”), and a

communist faction. Among those groups, the Peronists maintained their dominant

position in most of the unions affiliated with the CGT and called themselves the 62

21
Arturo Frondizi, “Programa de estabilización para afirmar el plan de expansión de la
economía Argentina,” 29 December 1959, Frondizi, Mensajes Presidenciales, Tomo 1, 227-253.

94
Organizations. The liberals (organized into the 32 Organizations), and the

communists (the 19 Organizations), elicited comparatively little support and enjoyed

very little influence. The 62 Organizations took the lead in opposing Frondizi’s

economic program after concluding that they had made a momentous mistake in

supporting his election. While desarrollo promised profits to transnational elites,

Argentine agricultural producers, and budding Argentine industrialists, it also

imposed significant costs. Those costs were not borne equally throughout society, but

rather fell disproportionately upon the nation’s workers.22

Austerity and balance-of-payments stabilization required the Frondizi

government to balance the budget, in part through deep cuts to the welfare state and

layoffs of public employees. While the nation’s elites and much of the middle class

did not feel those cuts immediately, workers did. The liberal international order, they

complained, offered benefits to the wealthy and ongoing hardship to ordinary people.

In response, workers directed their anger at the Frondizi government and its

American benefactors. The left wing of the working class identified “imperialism –

especially of the Yankee,” as the enemy of “national independence.” It complained

that “the great imperialist monopolies,” along with the IMF, caused “the cost of living

to increase barbarically.” From the standpoint of most workers, collusion between

national and transnational elites accounted for their daily misery. Moreover,

Peronists suspected that Alsogaray, the U.S. State Department, and the IMF conspired

to break organized labor in Argentina. While official relations between the United

22
James, Resistance and Integration.

95
States and Argentina had never been better, the application of desarrollismo infused

the labor movement with anti-American sentiment. Tellingly, critics of desarrollo

complained that policy was made by “reactionary forces” and “foreign monopolies,”

which consisted of national and transnational elites, and directed their ire

accordingly.23

In addition to anger at the austerity program imposed upon them, working-

class Argentines protested the very inflation that austerity was designed to curtail.

The salaries and benefits of workers were unable to keep up with the rising cost of

living, which was driven in part by the Frondizi government’s policies, such as the

hated increase in the price of meat. Executed to increase Argentina’s foreign

exchange earnings in the export market and provide a market incentive for producers

to increase production, the price increase imposed an additional hardship upon

already struggling workers that led to public unrest. Coming on the heels of austerity,

it appeared to add insult to injury. Argentine workers were justified in feeling as

though their economic security were under siege. Indeed, in the United States, New

Dealers had been far more concerned about the welfare of the working class than their

heirs were when they spread the gospel of modernization abroad. In the United States

during the 1930s, they had tinkered with ways whereby the state could protect the

economic security of ordinary Americans and at the same time produce an economic

recovery. In the process they created institutions designed to safeguard the economic

23
Statement, El Movimiento de Unidad y Coordinación Sindical (MUCS), 19 January 1960,
Caja 2: 1959-1962, ASASG (includes all of quotations except “foreign monopolies”); “Análisis
Económica, Social, e Institucional del País,” undated, Caja 2: 1959-1960, ASASG.

96
interests of most of American citizens through social security, unemployment

insurance, and legal protections for organized labor. The heirs of those New Dealers

forgot the importance of economic security for the working class for social stability

when they went to Argentina to spread the liberal system, and their oversight created

deep problems for desarrollo.24

Indeed, most Argentine workers found little to like about the liberal

international order. The Peronist working class complained that “with the ‘slogan’ of

free enterprise, the freedom of prices, and the freedom of association,” the

government endangered Argentine “sovereignty” and “economic independence.” Not

only had Frondizi sided with U.S. elites against Argentine workers, they argued,

desarrollismo struck at the nation’s foundation. Instead of facilitating the progress of

the national project as Frondizi argued, the Peronists protested that the liberal

international order mortgaged the Argentine nation to outside interests. Peronist

arguments resonated broadly. The CGT was able to mobilize a series of

demonstrations against the Frondizi government throughout its tenure in power, but

especially in 1959. While Peronist support was concentrated in the working class,

nationalist concerns reverberated with a broader audience and Peronists emerged as

the most vocal defenders of Argentine sovereignty in the face of the “imperialist”

challenge of Bretton Woods globalization.25

24
Ibid; Smith, Politics and Beef in Argentina; Minutes, Plenario Nacional de las 62
Organizaciones, 20 May 1960, Caja 2: 1959-1962, ASASG.
25
“Análisis Económica, Social, e Institucional del País,” undated, Caja 2: 1959-1962, ASASG;
James, Resistance and Integration.

97
 As the anti-American nationalism of the workers suggests, the question of

Argentine labor had significant transnational dimensions. Mutual mistrust marked

both sides. U.S. officials were suspicious of Peronists and feared that they might

eventually align with global communism. Since Peronists advocated Argentine

withdrawal from the liberal international order, U.S. elites hoped to co-opt the CGT

and integrate it into the larger political economy in the same manner that the

American Federation of Labor and Congress of Industrial Organizations (AFL-CIO)

was incorporated into the U.S. system. Under that system, the AFL-CIO remained

independent of the state and did not report directly to the Secretary of Labor. Free

from the state’s direct control, labor leaders enjoyed autonomy and worked with

functional elites from government and business to pursue mutual interests. By

contrast, Peronists sought to re-codify the 1945 Law of Professional Associations

(Decree 23,852), which facilitated the statist corporatist integration of the Argentine

working class into the larger political economy under the auspices of the CGT.

Under the Peronist system, all Argentine workers were required to join a union that

corresponded to an area of economic activity, such as the Railroad Union or the Light

and Power Union. Individual unions were required to acquire formal recognition

from the Ministry of Labor and were subsequently incorporated into the CGT. In turn,

the law formally placed the CGT under the authority of the Ministry of Labor as part

of a statist corporatist order. As historian Daniel James points out, the structure

created by the Law of Professional Associations offered a number of benefits to

workers, including “bargaining rights, protection of union officials from victimization,

98
a centralized and unified union structure, automatic deductions of union dues and the

use of these dues to underwrite extensive welfare activities.” In light of Argentina’s

conflict-ridden labor history, these advantages were significant. However, as James

acknowledges, the structure also meant that the state ultimately served as the sole

guarantor of working-class interests and CGT power. Ultimately the majority of

Argentine workers preferred to surrender a degree of their institutional autonomy in

order to gain the economic and social security that affiliation with the state

promised.26

Nonetheless, the method whereby labor was structurally integrated into the

larger political economy underscored the ideological differences between liberal and

Peronist philosophies. Frondizi’s policies, and questions about the future of statist

corporatist labor integration, generated anxiety among workers who feared that the

government intended to turn back the clock on the gains that they had made under

Perón. The Liberating Revolution had emphasized such priorities, and workers had

voted for Frondizi because he opposed the military government and its policies.

Although the majority of Argentine workers opposed liberal institutional reform, the

minority 32 Organizations were interested in leading such reform efforts. They were

joined by transnational labor elites, most importantly Serafino Romualdi and the

AFL-CIO. The AFL-CIO itself had an active international affairs apparatus. Leading

its inter-American division, Romualdi set out to spread the gospel of liberal or
26
James, Resistance and Integration, especially page 10; “Argentina-Guide to Program
Officers, Team Leaders and Lecturers,” undated, RG 18-009 Serafino Romualdi Files, 15/01,
Argentina, 1964, GMMA; Serafino Romualdi, Peasants and Peons: Recollections of Labor
Ambassador in Latin America (New York, 1967), 166.

99
“democratic” unionism throughout the hemisphere. To initiate the structural reform

of the CGT, Romualdi worked with the confederation’s liberal minority in an effort to

help them wrest control of the larger organization and inculcate their shared values

throughout the wider labor movement.27

AFL-CIO leaders shared in the consensus that advocated the American-led,

liberal modernization of the Global South. Prior to the 1955 merger of the AFL and

CIO, the AFL in particular undertook an independent foreign policy that closely

paralleled the objectives of the U.S. government and American business. AFL

foreign affairs leaders such as Jay Lovestone, Irving Brown, and Romualdi

demonstrated an eagerness to spread liberalism in Europe and Latin America when

they perceived the encroachment of either fascism or communism. Functional elites

representing both the American Federation of Labor (AFL) and the Congress of

Industrial Organizations (CIO) played important roles organizing the Marshall Plan

for the reconstruction of Western Europe. Yet their considerable influence was not

used to advocate on behalf of the interests of foreign workers to their governments,

nor did U.S. labor leaders spend considerable time sharing organizing strategies with

their European counterparts. Instead, U.S. labor elites worked to proscribe

communists from European labor unions and to plant the seeds of the American

system of privative corporatism in Europe. Ironically, AFL leaders such as

Lovestone and Brown endorsed a less overtly political role for labor that harkened

27
“Análisis Económica, Social, e Institucional del País,” undated, Caja 2: 1959-1960, ASASG;
Romualdi, Peasants and Peons.

100
back to their union’s origins as the standard-bearer for “pure and simple unionism,”

despite occasional protestations to the contrary. During the late 1930s, the AFL had

been suspicious of the John L. Lewis-led CIO because of its insistence on organizing

workers on an industry-wide basis regardless of workers’ skills, perceived eagerness

to strike in pursuit of labor objectives, potential to serve as a bastion of labor

radicalism, and cooperation with international labor organizations that included

communists such as the World Federation of Trade Unions. The CIO leadership’s

support for a more active labor role in the political economy – most notably its

support of industrial democracy – frightened the AFL leadership because it associated

the idea with totalitarian ideologies. AFL leaders sought an active role for labor

within the confines of a privative corporatist structure, but no more. The AFL ethos

survived the 1955 AFL-CIO merger and dominated the new confederation, including

its unified international affairs department.28

The AFL-CIO aggressively pursued ideological expansion in Latin America

after 1955. Union officials agreed with U.S. policymakers that the best way to

organize the growing Latin American working class in an effort to redress the

region’s deep poverty and imbalances of wealth could be found within a liberal

framework. From a practical standpoint, that meant American labor positioned itself

at the forefront of efforts simultaneously to obstruct communist expansion within

28
Hogan, The Marshall Plan; Anthony Carew, Labor Under the Marshall Plan: The Politics
of Productivity and the Marketing of Management Science (Detroit, 1987); Peter Weiler, “The United
States, International Labor, and the Cold War: The Breakup of the World Federation of Trade Unions,”
Diplomatic History 5:1 (Winter 1981): 1-22; Romualdi, Presidents and Peons; David M. Kennedy,
Freedom From Fear: The American People in Depression and War, 1929-1945 (New York, 1999),
288-322.

101
Latin American unions and to encourage those unions to embrace liberal unionism in

the mold of the New Deal system. Romualdi, assigned to Latin America as the

AFL’s regional representative in 1946, demonstrated extraordinary commitment to

the cause. An Italian immigrant who fled Mussolini’s Italy, Romualdi despised any

“totalitarian” ideology such as fascism or communism. The only alternative that he

believed held the promise of freedom was liberalism, and consequently Romualdi

became one of the most energetic promoters of that ideology within Latin American

unions. Indeed, he saw the specter of totalitarian ideologies lurking under the surface

of international labor organizations and questioned the independence of unions – such

as the CGT – that were formally linked to the state. Romualdi was well-prepared to

lead AFL-CIO’s efforts in Latin America. He spoke fluent Spanish, had traveled

extensively throughout the region, and enjoyed substantial high-level contacts with

the region’s trade union leaders. Through Romualdi’s efforts in Latin America, the

AFL – and then the AFL-CIO – became active in efforts to liberalize the region even

before the U.S. government provided a systemic commitment to such efforts.29

Although active in liberalization efforts before, by 1957 AFL-CIO officials

had fully appropriated the discourse of modernization theory for their own use.

29
On Romualdi’s background, as well as the background of AFL activities in Latin America
after World War II, see Serafino Romualdi, Presidents and Peons: Recollections of a Labor
Ambassador in Latin America (New York, 1967). For AFL-CIO activities in Argentina between 1946
and 1950, see Glenn J. Dorn, Peronistas and New Dealers: U.S.-Argentine Rivalry and the Western
Hemisphere, 1946-1950 (New Orleans, 2005). For a useful case study of organized labor’s
institutional and ideological location in postwar American liberalism, see Kevin Boyle, The UAW and
the Heyday of American Liberalism, 1945-1968 (Ithaca, 1995). Cliff Welch, “Labor Internationalism:
U.S. Involvement in Brazilian Unions, 1945-1965,” Latin American Research Review 30:2 (1995): 61-
89, points out that the AFL actively pursued a limited labor education program in Brazil during the
Truman era under the auspices of the Point IV program, a relatively rare foray for Truman into
economic support for labor liberalization efforts in the region.

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Union leaders clearly outlined those ideals in a December 1957 Statement on Inter-

American Affairs that continued to guide their efforts in the region. Illustrating the

union’s vision for labor within the hemisphere, the document in part read:

Drawing from the experiences of our own labor movement and the economic
development of our country, we have steadfastly urged for Latin America, as
well as for the underdeveloped countries of the rest of the world, a policy of
economic expansion based primarily on the increasing purchasing power of
the people. The economic difficulties at present experienced by so many
Latin American countries stem precisely from the failure to extend to the great
masses of agricultural, mining and industrial workers a fair share of the
benefits gained by the land owners, local industrial concerns, and foreign
investors.
On the other hand, Latin American countries – along with those in
other underdeveloped areas – need capital and technical assistance from
abroad for the modernization of their productive capacities and the
diversification of their economies. A great part of this needed capital can be
furnished by private investors…30

The statement further contended that Latin America could not develop economically

without external financial assistance supplied by organizations like the World Bank,

the Export-Import Bank, and other organs of public financing. The AFL-CIO

explicitly endorsed the diffusion of economic resources and technical knowledge

from the United States to Latin American nations. The principle of diffusing

modernity to the underdeveloped world was highlighted by public officials at the

1957 Inter-American Economic Conference in Buenos Aires, to the delight of

American union leaders. Like their contemporary modernization theorists, the AFL-

CIO’s leadership advocated a strenuous American effort to spread economic

liberalism throughout the less developed world and lobbied policymakers to make,

30
Minutes, AFL-CIO Subcommittee on Inter-American Affairs, 4 December 1957, RG 1-027
Office of the President, 58/4 Reports/Serafino Rom[ua]ldi, 1956-1957, GMMA.

103
and follow through on, the technical and financial commitments necessary to achieve

such objectives. AFL-CIO statements firmly endorsed such principles of liberalism

as consumerism and private enterprise, each of which could be enhanced by the

diffusion of technical knowledge abroad.31

Also like modernization theorists, AFL-CIO leaders believed that the danger

of communism and other “totalitarian” ideologies to the liberal international order

and American national security necessitated the strenuous promotion of the liberal

system in the less economically developed world. Noting Latin America’s extreme

poverty, high rates of inflation, and economic instability, the AFL-CIO explained that

“the Communists are exploiting legitimate economic grievances in order to infiltrate

and gain control of the unions.” American unionists further worried that “popular

front tactics revived by the Communists, [are] now parading under the cloak of

democracy and progressivism.” Given a worldview in which communists sought to

advance their agenda as a consequence of worker disenchantment and national

economic maladjustment, liberal labor had an important role to play in the

modernization process overseas. The Statement on Inter-American Affairs observed

that the Organización Regional Interamericano de Trabajadores (Regional

Organization of Inter-American Workers, ORIT) – the International Confederation of

31
Minutes, AFL-CIO Subcommittee on Inter-American Affairs, 4 December 1957, RG 1-027
Office of the President, 58/4 Reports/Serafino Rom[ua]ldi, 1956-1957, GMMA. See also Minutes,
AFL-CIO Inter-American Affairs Committee, 19 February 1959, RG 1-027 Office of the President,
58/5 Reports/Serafino Rom[ua]ldi, 1958, GMMA. In 1958, these themes were reinforced in another
statement on Inter-American affairs. See Draft Resolution Submitted by Committee on Inter-
American Affairs, “The Danger of Communist Infiltration,” undated, RG 1-027 Office of the President,
58/5, Reports/Serafino Rom[ua]ldi, 1958, GMMA.

104
Free Trade Union’s (ICFTU) Western Hemisphere affiliate – must play a leading role

in the process of Latin American development to ensure the triumph of economic

liberalism within influential Latin American labor unions. They sought to “assert

with renewed vigor that a truly democratic labor movement must be

uncompromisingly opposed to the Communists as well as the Fascists and every other

brand of totalitarianism.” The idea of democracy was thus an important part of the

modernization program from the perspective of labor elites, who encouraged the U.S.

government to support governments that were committed to “the democratic way of

life.” However, they defined the characteristics of democracy as a system that

included not only free elections, but also that resulted in elected officials who did not

subscribe to any totalitarian political philosophy, even if such a candidate was the

choice of the majority of the electorate. A democratic system, under their definition,

could not elect a Peronist or a leftist. Under such reasoning the AFL-CIO leadership

denounced as undemocratic certain constitutionally elected governments, including

that of Perón in Argentina and Cheddi Jagan in British Guiana.32

Romualdi believed that organized labor had an obligation to work

cooperatively with the government to further their mutual goal of liberal

32
The AFL-CIO opposed dictatorships throughout the hemisphere and regularly provided
statements against those from a variety of ideological backgrounds, from Trujillo in the Dominican
Republic to Castro in Cuba (Peronism too was still seen as an undemocratic ideology inconsistent with
liberal values). In addition to ibid, see Statement by the AFL-CIO Executive Council on Meeting of
American Foreign Ministers, 16 August 1960, RG 1-027 Office of the President, 58/6,
Reports/Serafino Rom[ua]ldi, 1960, GMMA; Draft Resolution Submitted by Committee on Inter-
American Affairs, “The Danger of Communist Infiltration,” undated, RG 1-027 Office of the President,
58/5 Reports/Serafino Rom[ua]ldi, 1958, GMMA; Minutes, AFL-CIO Subcommittee on Inter-
American Affairs, 29 January 1957, RG 1-027 Office of the President, 58/4, Reports/Serafino
Rom[ua]ldi, 1956-1957, GMMA; Stephen G. Rabe, U.S. Intervention in British Guiana: A Cold War
Story (Chapel Hill, 2005).

105
modernization. He employed the discourse of corporative neo-capitalism prevalent in

the United States, declaring that “the old concept of confining organized labor’s role

to matters pertaining to wages and working conditions and, above all, fighting the

employer, is being supplanted by the new concept of labor as a full-fledged partner in

a national society.” He went on to argue that as a partner, organized labor was “able

to work constructively with the government as well as with the employer, offering to

both of them his own contribution toward making social and economic progress

feasible and attainable.” Romualdi advocated the same privative, cooperative

relationship between government, business, and labor that the AFL-CIO pushed for in

the United States, which maintained the formal separation of functional interest

groups. His vision was significant in two respects. First, Romualdi believed that

organized and non-radical labor, operating within the confines of a liberal system,

was vital for the success of any national project. He thus agreed with Frondizi that

the liberal framework was best suited to facilitate the progress of the national project.

Second, Romualdi believed that as the voice of American workers, the AFL-CIO had

an obligation as “a partner in a national society” to join with the federal government

and American business in the promotion of the American system abroad. Indeed,

AFL-CIO efforts were supported financially by the state, as well as through

fundraising supported by private businesses. Romualdi’s vision was far more limited

than earlier calls for industrial democracy or the Peronist conception of a statist

106
corporative order. Yet it did purport to elevate organized labor to a status equal with

business within a system of mutual cooperation.33

As the AFL-CIO’s strategy for Latin American modernization came into focus,

Argentina posed a unique challenge for American modernizers. Romualdi believed

that because of Peronism, Argentina “had always constituted a great danger.”

Following a disastrous meeting with Perón and other members of his government in

1947, the labor ambassador did not return to Argentina until after the Liberating

Revolution. Because of Perón’s removal from power, by 1956 the AFL-CIO’s Latin

American specialist was bullish about Argentina’s future. Romualdi maintained

allies within the Comité Obrero Acción Sindical Independiente (Worker Action

Committee for Independent Unionism, COASI), a coalition of anti-Peronist Argentine

unions that served as a forerunner to the 32 Organizations that he identified as “our

affiliate” in the country. When first formed in 1949, the ICFTU included COASI.

Romualdi had shared the Liberating Revolution’s anti-Peronist objectives and

believed that “the problem, still serious, is how to reduce to the bare minimum the

Peronist influence which seems still strong among the rank and file.” ORIT was

prepared to work with COASI in a reeducation campaign aimed at Peronist labor

33
Gladys Delmas, “Latin Labor’s Alarming Christians,” At Home and Abroad, 25 February
1965, 27-30, RG 1-038 Office of the President, 62/1, ICFTU-ORIG, 1963-1965, GMMA. On the
AFL-CIO’s financial support, see “A Proposal for the Establishment of ‘The American Institute For
Free Labor Development’,” August 1961, RG 1-038 Office of the President, 56/27, AIFLD, 1960-1961,
GMMA. See also, Romualdi, Presidents and Peons.

107
within the CGT and hoped to open a fruitful relationship with COASI on the basis of

their shared liberal ideology. Romualdi believed that after years of resisting

Peronism he finally had the opportunity to secure the ideology’s annihilation. Such a

first step constituted a crucial prerequisite for the spread of liberalism because

Peronists would not join ORIT and thus ORIT could never enjoy significant influence

in Argentina until COASI controlled the CGT. Romualdi was ready to spend $10,000

in 1956 “for propaganda and organizational work in Argentina, including printed

material, radio time, equipment, etc.,” and he hoped to travel to Buenos Aires before

the year was out.34

Following the Liberating Revolution, the CGT called a general strike to

protest the anti-Peronist stance of the new government. The strike failed and the

CGT was subsequently intervened by the state – a process whereby labor leaders

were replaced by officials appointed by the government – before the end of

November 1955. The government’s intervention of the CGT provided the

opportunity that ORIT Secretary General Arturo Jáuregui had been waiting for. He

initiated communication with Alberto Patrón, the government interventor of the CGT,

in an attempt to forge a closer relationship between the two organizations. Even with

the government intervention, the Pedro Aramburu regime resisted the temptation to

34
Letter, Romualdi to José Treviño, 18 January 1956, RG 18-009 Serafino Romualdi Files,
1/2, Argentina, 1956-1959, GMMA. On Romualdi’s absence from Argentina and plans for the
reorganization of the CGT see Confidential Report on the Trade Union Situation in Latin America, 4
April 1956, RG 1-027 Office of the President, 58/4, Reports/Serafino Rom[ua]ldi, 1956-1957, GMMA.
Romualdi, Presidents and Peons, 49-63, explains the author’s hostility toward Perón and recounts the
disastrous 1947 meetings between AFL officials and the Argentine president and his top advisors. See
also Jon V. Kofas, The Struggle for Legitimacy: Latin American Labor and the United States, 1930-
1960 (Tempe, AZ, 1992), 343.

108
expell all Peronists from positions of influence, wisely fearing that such action would

further antagonize Peronists and likely trigger a series of general strikes and a period

of constant labor unrest. Writing in 1967, Romualdi concluded “that all the troubles –

social, political, and economic – that have plagued Argentina during the last decade

stem precisely from that enormous historical mistake: stopping the Revolución

Libertadora [Liberating Revolution] at the door of the CGT.” Despite the conflict

between Peronists and the military leadership, all agreed that solving the labor

question was crucial to the future of Argentina. Romualdi was determined to change

the CGT’s ideological orientation by initiating a reeducation campaign targeted at the

membership and by replacing Peronists in the leadership with liberals.35

ORIT began to support liberal reform of the CGT in 1955, but internal

squabbling between ORIT and the ICFTU created bureaucratic obstacles to the

furtherance of their objectives in Argentina. ORIT officials believed that the ICFTU

leadership in Brussels interfered excessively in the affairs of the Western Hemisphere

and then failed to follow through on the commitments that they made. In one notable

instance ORIT and ICFTU officials agreed in October 1955 to finance liberal labor

education in Argentina with $20,000, half of which was to be available for immediate

use. The ICFTU was charged with putting the plan into operation but waited eleven

months, until September 1956, when it sent Augusto Malave Villalba to Argentina.

Malave brought only $1000 with him, a far cry from the $20,000 promised. Having

35
Letter, Jáuregui to Patrón, 25 May 1956, RG 18-009 Serafino Romualdi Files, 1/2,
Argentina, 1956-1959, GMMA; Romualdi, Presidents and Peons, 155.

109
previously assured liberal labor allies in Argentina that the full level of funding would

be made available, ORIT officials felt obliged to accept the remaining financial

obligation and cut their activities elsewhere. There were also disagreements between

the two bodies on personnel issues. At the recommendation of allies within

Argentina, ORIT suggested that Angel F. Bravo direct the organization’s local

operations. However, the ICFTU questioned his effectiveness and sent Malave

instead. The disagreement was emblematic of the disputes between ICFTU General

Secretary J. H. Oldenbroek and Jauregui that limited the effectiveness of the related

organizations.36

Despite these setbacks, American labor leaders remained determined to spread

the gospel of liberal modernity in Argentina. George Meany headed a delegation that

arrived in Buenos Aires on 17 November 1956. Upon arrival, the delegation, which

also comprised David Dubinsky and Romualdi, was treated to a rhetorical

masterpiece from minority Argentine union officials, which included attacks on

“totalitarian” ideologies, including Peronism and communism. In his remarks to the

delegation, Jose Fontanella fondly spoke of Franklin Roosevelt, “the greatest

democratic president of all time.” Harold George Foster in turn invoked the famous

nineteenth century Argentine liberal Domingo Sarmiento’s admiration of the United

States. Representatives of the 32 Organizations thanked the AFL-CIO delegation for

36
On the ORIT-ICFTU dispute generally, see Draft letter, General Secretary of ORIT to the
members of the ICFTU ad Hoc Committee, undated, RG 1-027 Office of the President, 58/6,
Reports/Serafino Rom[ua]ldi, 1960, GMMA. On the effect of the dispute upon activities in Argentina,
see Memorandum, Romualdi to Members of the AFL-CIO Committee on International Affairs, 15
October 1956, RG 1-027 Office of the President, 58/4, Reports/Serafino Rom[ua]ldi, 1956-1957,
GMMA.

110
the AFL’s historic opposition to Peronism. Meany himself characterized the AFL-

CIO’s policy as “inter-Americanism without imperialism.” Overjoyed at returning to

Argentina, Romualdi gushed that “when I set foot again on Argentine soil, after ten

years, emotion got the best of me and I wept while scores of old friends almost

smothered me under an avalanche of abrazos [hugs]” 37

Yet such good feelings masked the relative inconsequence of the trip to the

advancement of liberal labor objectives. The liberal unionists who met the Meany

delegation did not represent the prevailing voices in the CGT; the Peronist 62

Organizations retained their dominance. The Peronists continued to enjoy greater

rank-and-file support in union elections. Generally, Argentine workers remained

loyal to the Peronist movement that had provided their only substantive political

advances. Until workers became dissatisfied with Peronism, or until they could offer

more positive inducements, AFL-CIO officials could enjoy meeting with their

Argentine friends to denounce Peronists but could not claim to have moved any

closer to their goal of changing the CGT’s ideological orientation.

By 1958, the AFL-CIO had made little headway toward its objective and the

CGT remained under government intervention. The Liberating Revolution had

offered nothing to induce Argentine workers away from Perón, and Frondizi soon

antagonized them further by adopting a liberal development program that cut public

37
Romualdi, Presidents and Peons, 158-159, including the Meany quote on inter-
Americanism; Letter, Romualdi to Raúl Lagarreta, 5 October 1956, RG 18-009 Serafino Romualdi
Files, 1/2 Argentina, 1956-1959, GMMA. Speech, José A. Fontanella, 21 November 1956, RG 18-009
Serafino Romualdi Files, 1/2 Argentina, 1956-1959, GMMA; Letter, Harold George Foster to Meany,
19 November 1956, RG 18-009 Serafino Romualdi Files, 1/2 Argentina, 1956-1959, GMMA.

111
employees and reduced the welfare state. American labor faced additional obstacles

to its objectives in the Argentine government. The Argentine Congress only

“reluctantly” adopted the International Labor Organization (ILO) convention on the

rights of labor to organize and bargain collectively. Indeed, it seemed unlikely that

the Frondizi government would be able to divorce the CGT from the Peronists despite

his intervention of Peronist-led unions, an essential AFL-CIO objective.38

As a consequence of the AFL-CIO’s institutional distaste for Peronist labor

and the persistence of Peronists in positions of power within the CGT, Romualdi’s

opportunities to influence Argentine labor through reeducation were limited. In mid-

October 1957, as part of a pilot labor education program that helped form the

curriculum later used in the American Institute for Free Labor Development (AIFLD),

a group of Argentine labor leaders came to the United States as guests of the U.S.

government. While the Argentines did not receive formal instruction during their two

month junket, they did tour AFL-CIO unions in different parts of the country to learn

about the operations of modern liberal unions through observation. AFL-CIO leaders

characterized the visit as “excellent.” The program provided the foundation for the

AFL-CIO’s larger strategy of creating institutions to educate Latin American labor

leaders. However, while such educational missions expanded rapidly in other

countries – most notably Brazil – they stagnated in Argentina because of the basic

incompatibility between the AFL-CIO and the Peronists. The lack of progress

38
Meeting of the ORIT Executive Committee, “Trade Union Freedom in the Western
Hemisphere,” 2-5 February 1960, RG 1-027 Office of the President, 50/2, Subjects-International Free
Labor Fund, 1957-1960, GMMA.

112
reinforced Romualdi’s belief in the importance of replacing Peronist labor leaders

with liberals with whom he could work. Reeducation of the working class could

occur only if the CGT leadership was replaced first by liberals. Romualdi did not

give up on his goal of bringing ideological and structural change to the CGT once that

new leadership was entrenched.39

The AFL-CIO also continued to conduct a dialogue with liberal Argentine

trade unionists in the hope that they might indeed replace Peronists as the dominant

voice in the CGT. Indeed, because of his intense anti-Peronism, Romualdi

maintained contacts almost exclusively with members of the 32 Organizations. It was

a strategic mistake. The decision earned the AFL-CIO the scorn of leading Argentine

union officials from the dominant 62 Organizations. In 1959, leaders of La

Fraternidad – the powerful railroad workers union – complained of the AFL-CIO’s

association with the 32 Organizations and its alternative railroad union. The

association was not a trivial matter. AFL-CIO delegates received entrée to meet with

Frondizi and represent the interests of Argentine workers. During the constant labor

unrest of 1959, AFL-CIO officials who could not legitimately claim to speak on

behalf of the majority of Argentine workers, attempted to mediate an end to the

railroad strike that was led by unionists whom Frondizi characterized as malcontents.

39
Minutes, AFL-CIO Subcommittee on Inter-American Affairs, 23 September 1957, and
Minutes, AFL-CIO Subcommittee on Inter-American Affairs, 4 December 1957, both in RG 1-027
Office of the President, 58/4, Reports/Serafino Rom[ua]ldi, 1956-1957, GMMA.

113
The AFL-CIO’s actions could only further antagonize Argentine workers who were

not already allied with the minority 32 Organizations.40

From the perspective of most Argentine workers, bringing an end to

Frondizi’s austerity program and reintegrating Peronism into the political system

proved more important objectives than the global ideological struggles that were part

of the Cold War. The austere effects of Frondizi’s economic development programs

fell upon the backs of working-class Argentines who were faced with a scaled back

welfare state and, in some cases, the loss of their jobs. While the working class

sacrificed under Frondizi’s liberal development program, similar sacrifices were not

as apparent from the wealthier elements of society. Transnational labor elites were

remarkably quiet in response to the concerns that Peronists shouted in the streets.

Self interest, and not abstract ideology, motivated these workers. Lacking a viable

alternative movement that seriously addressed their grievances, most working-class

Argentines continued to push for the reconstruction of the Peronist state.41

Romualdi made little headway during Frondizi’s presidency. Despite his

intense interest in Argentine labor, and passionate opposition to Peronism, other parts

of the region occupied more of his day-to-day concern, and more of the AFL-CIO’s

international affairs budget. In light of the continued popularity of Peronism among

40
For Romualdi’s correspondence with Argentine trade unionists, see the Argentina country
files in RG 18-009 and RG 18-001, GMMA. Memorandum, Sternback to Meany, 2 June 1959, RG 1-
027 Office of the President, 55/13, Geographical Files-Argentina, 1950-1959, GMMA.
41
Statement, El Movimiento de Unidad y Coordinación Sindical (MUCS), 19 January 1960,
Caja 2: 1959-1962, ASASG; “Análisis Económica, Social, e Institucional del País,” undated, Caja 2:
1959-1960, ASASG.

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rank-and-file workers, it is unsurprising that AFL-CIO leaders were unable to make

any progress in bringing about ideological conversion. Throughout the 1960s, the

CGT continued its struggle. Working-class Argentines remained focused on realizing

a heightened measure of economic security, while the AFL-CIO’s business unionism

model preached cooperation with the very “monopolies” that Peronists believed were

the agents of empire. As long as Argentine workers held the United States and

transnational corporations in such low esteem, Romualdi would find progress elusive.

At the same time, the AFL-CIO’s efforts in Argentina demonstrated the

importance of public-private partnership between functional elites in the execution of

U.S. foreign policy. Government, business, and labor leaders shared a basic vision of

the importance of their mission in the world and cooperated in their efforts to bring it

to fruition. With financial support from the U.S. government and American

businesses, the AFL-CIO embarked on a bold campaign to educate their Latin

American counterparts on the benefits of enlightened liberal unionism. It was an

attempt, however ill-designed and poorly executed, to replicate the structures of New

Deal liberalism that had rescued American industrial workers from economic

insecurity. Put another way, the AFL-CIO’s efforts were part of an attempt to

facilitate Argentine “take-off” into modernity.

VI

As Argentine workers protested desarrollismo, and Romualdi tried in vain to

liberalize the CGT, the Eisenhower administration continued its work with the

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Frondizi government to further the goal of modernization. In the midst of the labor

unrest of 1959, U.S. intelligence reports concluded that the austerity program offered

“good long-range prospects,” but cautioned that it was “unlikely that Frondizi will be

able to regain his lost labor support in the near future without making economic

concessions that will threaten his stability program.” Consequently, Frondizi was

“dependent upon the military for his survival.” Official Argentine frustrations

bubbled to the surface. In the months since the original aid agreement had been

completed, continued Argentine dependence upon U.S. assistance became clear to

U.S. officials. The Eisenhower administration was forced to consider the limits of its

support. U.S. officials were uninterested in making any “advance commitments”

before receiving further “clarification” of the political and economic situation.

Despite the cooperative nature of the original aid agreement, coordination between

the myriad organizations within and outside of the U.S. government that were

charged with international modernization efforts proved elusive.42

Remarkably, despite the fanfare given to the December 1958 aid agreement –

and the high importance members of the administration placed upon its successful

implementation – bureaucratic obstacles hampered the release of funds. Red tape in

both the United States and Argentina slowed the process. By the end of June 1959,

the only development aid actually distributed was that earmarked for the railroads.

Indeed, bureaucratic constraints were so pronounced that final allotments from

42
Memorandum, Cumming to Dulles, 24 June 1959, FRUS, 1958-1960, 5: 582-583; Letter,
Bernbaum to Boonstra, 26 June 1959, FRUS, 1958-1960, 5: 584-585.

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private bank loans signed in 1956 were only just completed. The problems of aid

distribution spoke to a fundamental problem within the liberal international order.

Even when consensus emerged among transnational elites in favor of aid in the

relatively limited form of loans, the various bureaucracies exhibited gross

inefficiency and left projects in limbo for years. That inefficiency contributed to the

uncertainty that poor and working-class Argentines held about the liberal

international order’s willingness, or ability, to affect their lives positively.43

Despite the obstacles, U.S. officials remained basically optimistic about

Frondizi’s economic policies in the summer of 1959. Beaulac wrote that “[i]n the

economic field, Argentina is making striking progress,” and opined that Frondizi

acted even more “courageously” than had the provisional government under the

Liberating Revolution. Beaulac continued to praise Frondizi’s approach as “an

example for the rest of the continent.” If more credits could be found to stimulate

private enterprise and the Argentine economy, Beaulac observed, not only would the

nation prosper but it could “also make a not unimportant contribution to our own

economy.” For his part, Alsogaray highlighted Argentina’s successful move from

“socialism” to free enterprise. In particular, he boasted of having achieved exchange

rate stability without government interference. Remarkably, Alsogaray mentioned

only in passing the role of the IMF stabilization loan in bringing about currency

stability. It remained to be seen whether the Argentine economy could maintain

balance without such an infusion of transnational capital. Beaulac’s positive

43
Memorandum of Conversation, 30 June 1959, FRUS, 1958-1960, 5: 587-589.

117
assessment of the Argentine economy stood in sharp contrast to the “grave problems”

that he found in the political field. He was well aware that Argentine workers

continued to protest the government’s economic policies. The political unrest was

punctuated by a September 1959 military revolt against Frondizi. It quickly fizzled,

but was illustrative of the depth of national dissatisfaction. Despite the domestic

problems, and his own government’s ambivalence about future aid requests, Beaulac

concluded that “[i]t may safely be said that relations between Argentina and the

United States have never been as good as they are today.”44

Alsogaray’s rosy view of the nation’s economic health to the contrary, the

economic data was actually mixed. In the first year of Frondizi’s government,

Argentina attracted only $32 million in foreign direct investment, and turned away a

similar amount in an effort to protect some domestic businesses from foreign

competition. Frondizi argued that “no country in the world has permitted the free

entrance of foreign manufacturing while developing that industrial sector. The most

illustrative case is that of the U.S. policy.” While the Argentine door was closed to

some businesses, Frondizi had opened it widely to others. Historian Celia

Szusterman reports that of the 254 foreign firms authorized to do business in

Argentina over the course of Frondizi’s economic program, ninety percent were in the

chemical, petrochemical, transport, metallurgy, and machinery sectors. Frondizi

sought targeted foreign investment in those particular economic sectors, and U.S.

44
Memorandum, Prepared by Beaulac, 26 August 1959, FRUS, 1958-1960, 5: 591-599;
Memorandum of Conversation, 6 October 1959, FRUS, 1958-1960, 5: 601-604.

118
companies accounted for sixty percent of total foreign investment. Although modest

in quantity, foreign investment accounted for a significant percentage of total

investment in key economic sectors, including automobile production, meat packing,

tobacco, rubber, agricultural machinery, and electrical machinery. Perhaps most

important, foreign investment in oil production had been designed to create national

self-sufficiency in the petroleum field. However, levels of foreign investment were

not enough to arrest the decline in industrial employment that plagued the Frondizi

era, which witnessed the net loss of 250,000 jobs between 1958 and 1963. Indeed,

foreign ownership of Argentine business combined with persistent unemployment to

further fuel the Peronist argument that under desarrollismo transnational elites

profited while Argentine workers suffered. It was a recipe for continued political

unrest.45

In February 1960, Eisenhower traveled to Argentina to reciprocate Frondizi’s

earlier visit to the United States. The Latin American trip provided Eisenhower with

the opportunity to showcase his administration’s renewed commitment to the cause of

regional development. Collectively, the two summits between Eisenhower and

Frondizi, separated by only a year, were meant to illustrate the cooperative nature of

the bilateral relationship. Notably, Eisenhower endorsed the idea, expressed by

Frondizi during his 1959 visit to Washington, that “[w]hen there is misery and

backwardness in a country, not only freedom and democracy are doomed, but even

45
Szusterman, Frondizi and the Politics of Developmentalism, 126-129; Luna, Diálogos con
Frondizi, 79-80 (including Frondizi quotation).

119
national sovereignty is in jeopardy.” In an address before the Brazilian Congress on

another leg of the trip, Eisenhower declared that for liberalism to prosper it must offer

tangible benefits to the people broadly. That same idea served as the foundation of

former Brazilian President Juscelino Kubitschek’s proposed Operation Pan America,

and continued to drive U.S. support for social development. Eisenhower’s rhetorical

commitment to the hemisphere’s workers and poor stood in remarkable contrast to the

actual effects of liberalization upon the Argentine working class. U.S. officials hoped

to alter those perceptions.46

The summit also provided the opportunity for substantive bilateral discussions

that centered predominantly upon economic issues. Only minor obstacles remained

before final settlements could be signed between the Argentine government and a

handful of U.S. corporations whose holdings had been expropriated under Perón.

Moreover, Eisenhower administration officials were supportive of Frondizi

personally. Well aware of the political costs associated with taming inflation, nearly

every member of the U.S. delegation at some point referred to the Frondizi economic

program as “courageous.”47

Nonetheless, some of the most difficult issues remained. Argentine trade

grievances in particular proved the most menacing challenge to bilateral cooperation.

Frondizi again protested the U.S. ban on cured meat imports from Argentina. Herter

sought to separate the political question of trade restrictions from the scientific
46
Milton Eisenhower, The Wine is Bitter, 240-242.
47
Memorandum of Conversation, 27 February 1960, FRUS, 1958-1960, 5: 609-610;
Memorandum of Conversation, 27 February 1960, FRUS, 1958-1960, 5: 607-609.

120
problem of hoof-and-mouth disease, but the issue was left to fester. As a result of the

ban, Frondizi estimated that the country lost $30-$40 million per year (U.S. officials

pegged Argentine losses at closer to $18-$20 million). Similarly, the Frondizi

delegation requested that Washington consult with them before approving additional

PL 480 sales to countries that served as Argentina’s markets. Under the PL 480

program, the United States sold surplus food to less developed countries at below-

market prices in an effort to combat global hunger. Argentine exporters believed that

PL 480 sales depressed the market price of their foodstuffs and that the program was

consequently counterproductive to U.S.-Argentine cooperation in development and

modernization efforts. Like the U.S. cured meat ban, the PL 480 issue was left

unresolved. The larger objective of increasing Argentine agricultural exports was

absolutely critical to the nation’s long-term economic well-being. Indeed, Frondizi

requested that he be invited to send an observer when U.S., Canadian, and European

officials met in order to assure the consideration of Argentine economic interests.

Frondizi attempted to convey the significance of the overall trade question,

concluding the discussion by insisting that “it was an immediate challenge to both

countries to try and settle the problem.”48

In part, Frondizi sought to circumvent Europe and the United States and to

expand trade within Latin America. His government had co-founded the Latin

America Free Trade Area (LAFTA) in 1960 to facilitate reciprocal trade between
48
Ibid. Memorandum of Conversation, 28 February 1960, FRUS, 1958-1960, 5: 616-617 (on
the meat ban); Memorandum of Conversation, 28 February 1960, FRUS, 1958-1960, 5: 618-619 (on
observing economic meetings); Memorandum of Conversation, 28 February 1960, FRUS, 1958-1960,
5: 619-624 (direct talks between Eisenhower and Frondizi).

121
members to mutual benefit. Although it was restricted to Latin American members,

LAFTA was designed to foster multilateral collaboration in the pursuit of

multinational economies of scale. The organization’s architects hoped that the

resulting breakdown of trade barriers would promote regional industrialization, which

in turn would generate enhanced self-sufficiency, stability, and prosperity. The

concept fit neatly into larger transnational discourses of modernization. The large

domestic U.S. market was credited with facilitating American industrialization, and

the Marshall Plan had been designed to make possible the economic integration of

postwar Europe. Nevertheless, LAFTA did not remove all trade barriers or create a

unified customs house as more strident proponents of regional economic integration

had hoped. There were also limits to what Latin American regional integration could

reasonably be expected to accomplish, even if fully implemented. For the most part,

Latin American economies produced similar goods, which reduced the opportunities

to trade for mutual benefit. U.S. officials were of two institutional minds about

LAFTA and other efforts to integrate the region economically. On the one hand, they

recognized the necessity of economies of scale to the process of industrialization and

liberal modernization and supported regional organizations that helped to create the

conditions for economic success. On the other hand, they worried that LAFTA could

promote protectionism to the detriment of American businesses. U.S. elites need not

have worried. Never a model of multilateral economic cooperation, LAFTA was

unable to integrate effectively Latin American economies. Rather than deal with a

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unified LAFTA, U.S. officials were able to continue to negotiate bilateral trade

agreements with regional economic partners.49

Further complicating Argentina’s economic problems, the country was unable

to repay its existing public debt on schedule. In direct talks with Eisenhower,

Frondizi stressed his need to refinance Argentina’s short-term debt owed to both

public and private creditors. Eisenhower agreed in principle, but observed that

refinancing would likely increase Argentine interest rates. Left unstated by the

meeting’s participants, Frondizi’s request suggested a fundamental weakness within

the nation’s development efforts. Specifically, the continuing liberal program was

dependent upon an ongoing cycle of borrowing and refinancing that only increased

the country’s overall debt burden. Failure to increase national revenues significantly

– which would require some adjustment of U.S. and European trade policies to

facilitate an increase in Argentine exports – promised to trap Argentina in a constant

cycle of debt. In addition to trade adjustments, Frondizi identified increased domestic

petroleum production as a means of counteracting the problem. However, like the

trade question, the Argentine national debt would continue to grow into an ever-

greater national problem.50

In addition to seeking cooperation on economic questions, the Frondizi

government continued to cast itself as a clear political ally of the United States.

Foreign Minister Diógenes Taboada discussed “the importance of the United States as
49
Carlos Florit, “Perfil internacional de un mundo en cambio,” in La política exterior
Argentina y sus protagonistas, 1880-1995, Ed. Silvia Ruth Jalabe (Buenos Aires, 1996), 149.
50
Memorandum of Conversation, 28 February 1960, FRUS, 1958-1960, 5: 619-624.

123
a guarant[or] for free-world security.” Continuing with that Cold War theme he

declared that “[i]f it were not for the United States, many countries would be under

Soviet influence today.” Argentine solidarity with U.S. Cold War interests extended

into the Western Hemisphere. As the U.S. relationship with revolutionary Cuba

continued its precipitous decline, Frondizi, according to the U.S. minutes of the

meeting, “expressed approval of our policies toward Cuba,” but added that “great care

should be taken in preparing any action ultimately to be taken, and also with the

timing of such action.” Frondizi had reason to be leery of Castro’s Cuba. Both U.S.

and Argentine officials complained that the Cuban press agency, Prensa Latina, “was

clearly meddling in Argentine affairs by the provocative material it disseminated not

only outside Cuba but inside Argentina itself.” The alleged Cuban actions raised the

specter of the expansion of communism in the hemisphere. In spite of slow progress

on critical trade questions, Frondizi continued to believe that Argentina had the most

to gain by operating from within the confines of the liberal international order and

under the protection of the informal U.S. empire.51

Voluminous scholarship by Eisenhower revisionists conclusively

demonstrates that, contrary to public perceptions during the 1950s, Eisenhower was a

decisive leader with command over his administration’s foreign policy decision-

making apparatus. Nonetheless, Eisenhower seemingly did his best to buttress the

orthodox view of a president more interested in recreation than governing, writing

51
Memorandum of Conversation, 27 February 1960, FRUS, 1958-1960, 5: 611-613;
Memorandum of Conversation, 28 February 1960, FRUS, 1958-1960, 5: 614-615; Memorandum of
Conversation, 28 February 1960, FRUS, 1958-1960, 5: 619-624 (direct talks between Eisenhower and
Frondizi).

124
about his fishing expedition in the Andes Mountains where his brother Milton

“provided the morning’s entertainment by losing his balance and falling into the icy

water.” Of greater significance than his limited success catching salmon, Eisenhower

reported that he was left “deeply impressed by [Frondizi’s] evident determination to

work for the fulfillment of Argentina’s destiny as a vigorous and prosperous partner

in the community of free nations.” Frondizi reinforced Eisenhower’s belief that the

people of the world ultimately reached for the same “American dream.” The

President wrote that both he and the Argentines “embrace the same sentiments, share

the same ideals and have the same conception of the norms of life.”52

In fact, Argentine patience with the American dream was waning. The warm

bilateral feelings shared during the summit were tested by the March 1960 Argentine

elections. Frondizi’s UCRI retained its congressional majority, but suffered reversals

to the UCRP, while the Peronists remained proscribed from the ballot. Most

menacing, the UCRP secured its victories by running against austerity and

desarrollismo. UCRP candidates were rewarded by the voters after accusing Frondizi

of betraying Argentine nationalism by inviting American informal empire. Faced

with congressional losses (although not the loss of the UCRI’s majority), Frondizi

52
Robert A. Divine, Eisenhower and the Cold War (New York, 1981); Fred I. Greenstein,
The Hidden-Handed Presidency: Eisenhower as Leader (Baltimore, 1982), are foundational works of
Eisenhower revisionism. Dwight D. Eisenhower, Waging Peace, 1956-1961: The White House Years
(New York, 1965), 528. See also Letter, Arnold to John Eisenhower, 25 February 1960, Eisenhower
Office Files, Part II International Series, Argentina-Goodwill Tour, February 1960/2, AFPC. Letter,
Eisenhower to Frondizi, 1 March 1960, Eisenhower Office Files, Part II International Series,
Argentina-Goodwill Tour, February 1960/2, AFPC; Letter, Frondizi to Eisenhower, 29 February 1960,
Eisenhower Office Files, Part II International Series, Argentina-Goodwill Tour, February 1960/8,
AFPC (contains the Frondizi quotation); Letter, Frondizi to Eisenhower, 8 March 1960, Eisenhower
Office Files, Part II International Series, Argentina-Goodwill Tour, February 1960/7, AFPC.

125
immediately became more insistent with his American benefactors. He complained

that the nation immediately needed highway expansion and road improvements, new

airfields, and additional steel production capacity. The Eisenhower administration

was slow to comprehend the ramifications of Frondizi’s declining domestic support

upon the larger modernization program, and as a result was slow to respond to

Frondizi’s concerns. Beaulac told Frondizi that proposed new public works projects

– such as an expanded road construction program – threatened to exacerbate the

budget deficit and tied money in public rather than more productive private endeavors.

Additionally, the Ambassador noted, the Frondizi government had overdrawn IMF-

limitations on credits by 100 million pesos. Although Frondizi entered his meeting

with Beaulac with “renewed intensity,” and discussed plans to continue cutting

personnel employed by the state, such as members of the grain and meat boards, he

could only have left disappointed. When faced with a looming crisis, the Eisenhower

administration appeared either unwilling or unable to help.53

In the wake of the disappointing electoral performance, and Washington’s

seeming indifference to the political consequences of the stagnant pace of

development, Frondizi sent Eisenhower a long letter, complete with a detailed

enclosure listing his grievances. He argued that Argentina faced a choice: either the

nation would develop in the liberal tradition or it would fall into dictatorship.

Frondizi was not satisfied with U.S. support for the former path to date. “I cannot but
53
“Frondizi Policy Faces Test Today,” 27 March 1960, The New York Times; “Frondizi Party
Trails in Argentine Elections,” 28 March 1960, The Washington Post; “Argentine Elections,” 29
March 1960, The New York Times; “Frondizi Pursues Economy Moves,” 3 April 1960, The New York
Times; Memorandum of Conversation, 7 April 1960, FRUS, 1958-1960, 5: 626-628.

126
point out the bureaucratic barrier set up by the slow process of the international credit

agencies,” he wrote, “to the detriment of the pressing needs which we must meet in

order to ensure adequate integration of our economy, launched on a path of

development that does not admit of delays.” Frondizi complained that the U.S.-

supported economic program “is daily becoming more burdensome without [the]

accompanying benefits being derived therefrom.” After two years of faithfully

following austerity, the nation’s GNP was declining, imports were down, export

levels were static, and domestic consumption and purchasing power was down.

Neither the agricultural nor the industrial sector had exhibited any dynamism.

Frondizi argued that only the petroleum sector was living up to the promise of liberal

development.54

Searching for U.S. assistance to tackle his mounting problems, Frondizi

specifically engaged the trade question. He objected that “the monetary and foreign

trade system … [needed to] ensure the conditions for an increasing contribution of

foreign capital and increasing the flow of reciprocal trade, has not evoked on the part

of the United States the response needed by [Argentine] national development.”

Frondizi continued by arguing that, “in the field of trade Argentina is threatened by

protectionist, highly restrictive, and even discriminatory policies with respect to the

import systems of the advanced Western countries.” Specific complaints about the

U.S. trade regime abounded. He noted U.S. restrictions on mutton imports from

54
Letter (and enclosure), Frondizi to Eisenhower, 9 August 1960, FRUS, 1958-1960, 5: 628-
634.

127
Tierra del Fuego, tung oil quotas, “artificial sanitary barriers against the importation

of cooked meats,” and other U.S. agricultural policies that supported domestic

producers – from his point of view unfairly – against Argentines. The mounting

bilateral problems, Frondizi warned, could lead to the deterioration of the U.S.-

Argentine relationship. To address the problems, Frondizi wrote that it was

“imperative” that “the Government of the United States directly make available

additional and adequate resources for the immediate initiation of a highway and

airport program,” and bypass the usual bureaucratic planning involved in such a

request. Remarkably, the “imperative” request was not for a systemic reform of the

trade regime but rather for assistance with new development programs.55

Eisenhower was displeased with Frondizi’s “emotional” letter. Frondizi,

Eisenhower complained, “sees his own problem clearly but does not appreciate the

difficulties that we undergo regarding our aid programs and the trade restrictions we

must maintain against other countries.” He was “somewhat astonished” at the depth

of the problems that Frondizi reported. Putting the letter in context, Under Secretary

of State Douglas Dillon reminded Eisenhower that “the economic situation in

Argentina is rather tight” and that the “anti-inflation measures that Frondizi has put

into effect are just taking hold.” Nevertheless, although Secretary of State Christian

Herter was open to future Argentine aid requests, he insisted that they continue to be

handled through normal channels. There was some merit to Eisenhower’s objection

that Frondizi failed to grasp the U.S. task of managing aid programs on a global basis.

55
Ibid (italics in original).

128
However, U.S. officials in turn failed to comprehend the magnitude of Frondizi’s

particular political and economic problems. Dillon could only suggest rushing

assistance for steel mill construction through the Export-Import Bank when

Eisenhower asked what they could reasonably expedite. There was no discussion of

taking serious steps to address Frondizi’s trade grievances, which were at the heart of

his overall critique, and indeed at the heart of Argentina’s economic problems. In his

official response, Eisenhower merely praised Frondizi’s “courageous” economic

policy – a message that had become routine – and promised to support “to the fullest

extent possible” Argentina’s “forward looking policies.” It amounted to only a

pledge of continued dialogue.56

Beyond the central question of trade, notable differences developed between

Washington and Buenos Aires as to the most efficient and effective means of putting

loans to productive use. Alsogaray argued that U.S. funding mechanisms were

inflexible because they required the Argentine government to submit a detailed

project proposal and wait months, if not years, for the approval of international

experts. Instead, the Frondizi government suggested that international loans should

be made to public and private Argentine lenders, who could in turn finance worthy

projects around the country. In particular, Frondizi imagined public works projects in

housing and airport construction that would develop infrastructure and alleviate

unemployment. The projects lacked specific plans meeting U.S. specifications, but
56
Editorial note, re: Eisenhower’s discussion with Dillon and General Goodpaster, 18 August
1960, FRUS, 1958-1960, 5: 634; Memorandum, Herter to Eisenhower, 2 September 1960, FRUS,
1958-1960, 5: 635-636; Letter, Eisenhower to Frondizi, 7 September 1960, FRUS, 1958-1960, 5: 636-
637.

129
Alsogaray emphasized the need for “flexibility” that would “facilitate quick

decisions.” Moreover, Argentine officials highlighted the need for public loans to

support infrastructure development in fields where private loans were more difficult

to secure, such as road building and housing construction. Conversely, they sought to

emphasize private loans in oil, steel, petrochemicals, pulp and paper, and

transportation. The Argentine proposal had the potential to take better advantage of

market forces than the existing system, and could minimize bureaucratic obstacles to

development. However, by removing layers of international bureaucracy, the

proposed system was also susceptible to corruption. Moreover, it required U.S.

planners to abdicate their role in the process in favor of Argentine citizens. If

implemented and honestly administered, the program would have been a working

model of the U.S. rhetoric that emphasized partnership in modernization. Instead, it

was dismissed.57

In late 1960, Frondizi began to rethink his larger international strategy. After

working with the Eisenhower administration for more than two years, he came to

believe that the U.S. commitment to Latin American development was inadequate.

Under the Act of Bogotá, signed on 13 September 1960, the United States committed

$500 million to the new Inter-American Development Bank (IDB), which Frondizi

believed was far from sufficient. Frondizi reacted by subtly adjusting his larger

international strategy. He insisted that the bilateral economic disagreements would

57
Memorandum of Conversation, 6 September 1960, FRUS, 1958-1960, 5: 638-642;
Memorandum of Conversation, 28 September 1960, FRUS, 1958-1960, 5: 643-646.

130
not weaken his political alignment with the United States in the Cold War. However,

Frondizi repeatedly stressed the distinction between political and economic spheres of

policymaking, whereas in the past he had highlighted their mutuality. By doing so,

he created a rationale whereby he could reduce his commitment to the United States.

Argentine officials had little desire to break with the United States so long as they

could demonstrate progress toward modernization under U.S. hegemony. Because of

the disappointing election results and continuing economic stagnation, it was unclear

how much longer the Frondizi government could afford to stay the course with its

liberal developmental strategy. Already in September 1960, Frondizi government

officials were not speaking with one voice. Arnaldo T. Musich, counselor to Frondizi,

complained of U.S. abandonment, and Alsogaray was left to assure Washington

officials that he did not speak for the government. Nonetheless, U.S. officials

stopped writing that the bilateral relationship was at its zenith.58

To figure out a way forward, U.S. Development Loan Fund (DLF) Director

Vance Brand traveled to Argentina in October 1960 to discuss new lending with the

Frondizi government. Despite the tone of Frondizi’s letter, and Eisenhower’s

response to it, both sides hoped to salvage transnational development efforts and

continue to work together in pursuit of their mutual goals. They hoped, in short, to

reduce the incident into a mere speed bump on the road toward Argentine modernity,

and the Brand mission was designed specifically to get over that hump. There were a

58
Memorandum of Conversation, 6 September 1960, FRUS, 1958-1960, 5: 638-642;
Memorandum of Conversation, 28 September 1960, FRUS, 1958-1960, 5: 643-646.

131
variety of possible initiatives that the Argentines deemed worthy of funding. In

particular, a proposal for a $382 million oil pipeline designed to connect Comodoro

Rivadavia with Buenos Aires promised to enhance further transnational investment in

the petroleum sector. The Texas Eastern-Dresser consortium’s pipeline project was

one of the largest transnational investment projects involving Argentina yet proposed.

Nevertheless, Brand was hopeful that the Argentines could increase their contribution

to the project from $11.5 million to between $50 and $60 million. To enhance the

position of Argentine credit on the world market and further diversify the list of

participating lenders, Brand suggested including bankers from New York, London,

Berlin, Paris, Geneva, Rome, and Asia. Once again, U.S.-led development efforts

were predicated on cooperative initiatives between public and private transnational

elites, this time to develop the infrastructure necessary to exploit petroleum efficiently.

All parties stood to benefit: transnational bankers would profit from the loans and

Argentines would acquire needed infrastructure. After the recent setbacks, affiliation

with the liberal international order again promised to deliver tangible benefits for the

Argentine national project.59

Beyond the pipeline project, much of Brand’s time was spent responding to

Argentine needs in the fields of housing and road construction. Despite relatively

slow progress approving housing loans, U.S. officials were sympathetic to Argentine

needs, and found the general proposals consistent with U.S. objectives. Alsogaray

believed that new housing construction, slum clearance, and infrastructure

59
Memorandum of Conversation, 19 October 1960, RG 59, 033.1135-BR/10-3160, NARA.

132
development was critical to securing popular support for desarrollo. Such measures,

he hoped, would demonstrate that tangible benefits could be derived from Frondizi’s

policies for all Argentines. Buenos Aires in particular suffered from a housing

shortage, and as part of its post-Bogotá commitment to inter-American social

progress, the Eisenhower administration made U.S. resources for home and road

construction available. Brand continued to advocate plans that emphasized public-

private cooperation in pursuit of development. Through a new organization similar to

the U.S. Federal Housing Administration (FHA), the Argentines proposed to

construct 3000 new housing units near the port of Buenos Aires, as well as additional

residential units on the city’s outskirts. They further planned to “urbanize” Ezeiza –

located in Buenos Aires province and home to Argentina’s international airport – by

constructing 75,000 apartment units and the necessary supporting infrastructure. The

new homes would be built by private construction companies upon state-owned land

with loans arranged through Argentine banks. Brand was eager to loan dollars to help

finance the private development of housing construction. He was also prepared to

loan $42 million toward the $80 million needed for road construction, with private

banks making up the difference and the Argentine government contributing an

additional 25 percent “over and above this total.” DLF plans combined self help,

private loans, and public U.S. loans into a coherent development package.60

60
Memorandum, Conover to Department of State, 31 October 1960, RG 59, 033.1135-BR/10-
3160, NARA. See also the attached Memorandum of Conversation, 31 October 1960, RG 59,
033.1135-BR/10-3160, NARA.

133
 The details of Brand’s proposals offer a view into the ideology that

underscored the larger U.S. efforts in Argentina. When Brand imagined Argentine

housing, he drew upon many of the structures of the emergent American suburb. An

iconic image of the 1950s United States, after World War II middle-class Americans

moved in increasing numbers from the cities and the countryside into the newly-

constructed suburbs. The suburbs were a sign of the prosperity that modernization

theorists hoped to replicate abroad. With financing from private banks, American

workers purchased their own homes. To facilitate a similar outcome in Argentina,

Brand worked to design a comparable infrastructure. Although he did not emphasize

single-family homes, Brand did foresee suburban expansion and hoped that Argentine

workers would be able to purchase their own dwellings. Building a high mass

consumption society demanded nothing less.61

The U.S. embassy considered the Brand visit a striking success. Despite some

well-founded concern among U.S. business leaders that the Argentine deficit was

unmanageable and an enduring apprehension about working-class unrest, a general

sense of optimism reestablished itself that, in the words of Economic Attaché Harry

Conover, the stabilization program “was beginning to bear fruit.” Modernizers could

point to such hopeful indicators as the re-stabilization of the peso after triple-digit

inflation in 1959, the repatriation of some Argentine capital, and increased levels of

overseas investment. Those hopeful indicators were especially important after the

61
On the rise of the postwar American suburb, and consumer culture more generally, see
Lizabeth Cohen, A Consumer’s Republic: The Politics of Mass Consumption in Postwar America
(New York, 2003).

134
recent critique offered by Frondizi. Brand was especially encouraged by Alsogaray’s

commitment to create a hospitable environment for transnational businesses generally,

and oil companies particularly. The Frondizi government planned further to divest

from state-owned enterprises with the hope that state-employed workers would

quickly find new jobs within a bustling private sector. Theoretically, the newly

liberalized public policy would unleash an entrepreneurial spirit whereby the

revitalized private sector would provide even better jobs for workers. Little

consideration was given their means of support in the interim, before the new jobs

were created. As the Eisenhower administration prepared to leave office, it had once

again rededicated the United States to assisting the cause of liberal modernity in

Argentina, but once again it had done so without addressing the trade question.62

VII

The Eisenhower administration embarked on a concerted effort to foster the

spread of liberal modernity in its relationship with the Frondizi government.

Eisenhower was joined in his mission by private elites who led transnational business

corporations and the AFL-CIO. Primarily, the modernizers relied upon loans to

stabilize the Argentine balance of payments and to finance industrial development

projects. While modest by global standards, U.S. investment in Argentine

62
Memorandum, Conover to Department of State, 31 October 1960, RG 59, 033.1135-BR/10-
3160, NARA. Memorandum of Conversation, 31 October 1960, RG 59, 033.1135-BR/10-3160,
NARA. On Alsogaray’s commitment to free-market ideology, see Alsogaray, Experiencias.

135
modernization constituted a significant commitment to the Frondizi government by

tying U.S. prestige to the success of desarrollismo.

Despite Frondizi’s invitation to transnational elites to assist in Argentine

modernization, their joint efforts did not enjoy widespread support among the

Argentine public. While Frondizi argued that transnational oil companies assisted the

development of the national project by helping Argentines exploit an important

natural resource, nationalists were unconvinced and saw the presence of transnational

oil companies as an assault on national sovereignty. AFL-CIO efforts to convince

CGT members that the benefits of liberal unionism exceeded those promised by the

return of the Peronist state made little headway with the working class, which

overwhelmingly continued to support the splintered Peronist movement. Frondizi’s

austerity program, designed to save the state’s scarce financial resources during the

continuing economic crisis, was unable to rectify long-standing and fundamental

economic problems. Indeed, after two years of working with the Eisenhower

administration, Frondizi expressed his frustration at barriers to Argentine exports and

the slow pace at which appropriated funds were transformed into development

projects.

Upon John F. Kennedy’s January 1961 ascent to the presidency, there was

some reason for optimism among those hopeful that a cooperative U.S.-Latin

American effort might lead to developmental successes. Kennedy had campaigned in

part on a pledge to play a more active and positive role in Latin America. As the

Cold War heated up in the region, Kennedy promised to expand upon Eisenhower’s

136
modernization strategy. Frustrated Argentines were open to the message. Kennedy’s

rhetoric harmonized with Latin American discontent and created heightened

expectations. Implementing the vision would be a more difficult matter.

137
 CHAPTER 4

OPPORTUNITY LOST:
THE RISE OF THE ALLIANCE FOR PROGRESS AND THE FALL OF
FRONDIZI, JANUARY 1961-MARCH 1962

Elected U.S. president in November 1960, John F. Kennedy entered office

with the promise that he would “get the country moving again.” The youngest

elected president in U.S. history, Kennedy replaced the nation’s oldest president to

date and sought to highlight that contrast. One area in which the new president

believed he could draw a clear distinction with the Dwight D. Eisenhower

administration consisted of his policy toward Latin America. Kennedy argued that

Eisenhower had not taken seriously Latin American social and economic needs and

had violated the spirit of Franklin D. Roosevelt’s Good Neighbor Policy. To rectify

those problems, Kennedy pledged a new “Alliance for Progress,” under which U.S.

and Latin American elites would closely cooperate in pursuit of ambitious

modernization goals.

The year 1961 held great promise for a substantial new departure in inter-

American relations. Because of Kennedy’s heightened interest in the region, it was

conceivable that the political will could be assembled to address fundamental

economic and social problems on a multilateral basis. In particular, Latin American

138
governments sought better access to markets in the Global North on an equitable

basis, and the region’s workers demanded a larger share of the economic pie. At the

same time, most countries of the region continued to seek to diversify their domestic

economies through industrialization. Each of those concerns was present in

Argentina. In order to generate political stability while reforming global trade and

building the industrial sector, it was vital that modernizers address the social question

as well. In Argentina, that meant mollifying labor and assuring that the working class

quickly absorbed some of the benefits of the liberal international order. However, the

Kennedy administration soon learned the profound difficulty of its declared task.

II

Confronted with the dramatic victory of Fidel Castro’s socialist revolution in

Cuba, the Kennedy administration was motivated to strengthen U.S. containment

efforts in Latin America. U.S. officials in both the Eisenhower and Kennedy

administrations sought to contain the spread of communism in Latin America because

they believed that it endangered U.S. security and threatened the liberal international

order. U.S. officials thought that a vibrant market-based economic system based

upon liberal tenets would enhance the economic welfare of both U.S. citizens and

Latin Americans. On 13 March 1961, Latin American diplomats, U.S. officials,

ambassadors from Latin American states, and other functionaries gathered in the East

Room of the White House where Kennedy outlined his vision for inter-American

partnership. During the election campaign, Kennedy had highlighted the need for a

139
dynamic new policy departure in the spirit of the Good Neighbor Policy of the 1930s.

Like their predecessors in the Eisenhower administration, Kennedy administration

officials assumed that Latin America was an “active theatre” in the Cold War and that

for social and economic development to occur, Washington must first build stability.

Promising to move beyond the Eisenhower administration’s commitments to the

region, Kennedy announced an Alliance for Progress between the peoples of the

Americas. With great fanfare, he promised that the United States would help to

shepherd Latin Americans toward liberal modernity. The initiative offered a renewed

opportunity for the American policymaking community to address the region’s

fundamental debt and trade problems in genuine partnership with Latin American

elites.1

The Alliance for Progress comprised a comprehensive blueprint to confront

Latin America’s political, economic, and social problems that followed the principles

of the liberal international order. Success would mean that the region had achieved

“self sustaining growth.” The proposed Alliance would consist of a ten year program

of mutual cooperation between public and private elites from the Untied States and

1
Memorandum, Mann to Achilles, undated, RG 59, Records of the Bureau of Inter-American
Affairs, Lot 63 D 210, Latin American Socio-Economic Development Program-General, Folder 2,
NARA; Address at a White House Reception for Members of Congress and for the Diplomatic Corps
of the Latin American Republics, 13 March 1961, Public Papers of the Presidents of the United States,
John F. Kennedy, 1961, http://quod.lib.umich.edu/cgi/t/text/text-
idx?c=ppotpus;cc=ppotpus;q1=John%20F.%20Kennedy;rgn=full%20text;view=toc;idno=4730886.196
1.001, 170-175; Report to the President-Elect of the Task Force on Immediate Latin American
Problems, undated, Papers of President Kennedy, Pre-Presidential Papers, Box 1074, Task Force
Reports – Latin America, JFKL. Michael E. Latham, Modernization as Ideology: American Social
Science and “Nation Building” in the Kennedy Era (Chapel Hill, 2000), 69-108; Stephen G. Rabe, The
Most Dangerous Area in the World: John F. Kennedy Confronts Communist Revolution in Latin
America (Chapel Hill, 1999), 148-172.

140
Latin America. Revealing sensitivity to the distinctiveness of the various Latin

American states, Kennedy called upon each country to formulate its own long-term

plan. To facilitate the implementation of the Alliance, he sought collaboration

between the Inter-American Economic and Social Council (IA-ECOSOC), the Inter-

American Development Bank (IDB), and the Economic Commission for Latin

America (CEPAL), to coordinate better regional modernization initiatives and to

ensure that annual economic growth targets of no less than 2.5 percent could be met.

The Alliance that Kennedy envisioned sought to do more than just facilitate economic

growth and industrialization. Specifically, Kennedy called for such wide-ranging

programs as the expansion of scientific cooperation and teacher training, the

introduction of Peace Corps volunteers, and multilateral collaboration in security. On

the vital question of trade, he endorsed regional integration through such vehicles as

the Latin American Free Trade Area (LAFTA), and even agreed to examine

politically sensitive commodity export price problems on a “case-by-case” basis.

Kennedy also endorsed expanding the PL 480 program in Latin America to combat

regional hunger, although he appeared unaware of the adverse effects that the

program had on regional agricultural exporters, including Argentina. Additionally,

Alliance planners established social goals, such as land redistribution in countries still

dominated by latifundismo, increased access to education, higher literacy rates,

increased access to potable water and sanitation facilities, increased access to

healthcare, and lower infant mortality rates. The goals that the Kennedy

administration outlined were extraordinarily ambitious, and Alliance rhetoric

141
suggested that U.S. officials would pursue them in partnership with their Latin

American counterparts.2

The substance and rhetoric of Kennedy’s program offered a major opportunity

for a reevaluation of U.S. policy toward Latin America. Although rooted in the

policy departure initiated by the Eisenhower administration, Kennedy focused

presidential attention on Latin American underdevelopment and spoke to the region’s

social problems in addition to its economic problems. Progressive Latin American

leaders, including former Brazilian President Juscelino Kubitschek, Venezuelan

President Rómulo Betancourt, and CEPAL Secretary General Raúl Prebisch, were

encouraged by the early Alliance rhetoric. For instance, Kennedy concluded his 13

March address by calling upon the gathered dignitaries to:

once again transform the American continent into a vast crucible of

revolutionary ideas and efforts – a tribute to the power and the creative
energies of free men and women – an example to the world that liberty and
progress walk hand in hand. Let us once again awaken our American
revolution until it guides the struggle of people everywhere – not with an
imperialism of force or fear – but the rule of courage and freedom and hope
for the future of man.3

2
Address at a White House Reception for Members of Congress and for the Diplomatic Corps
of the Latin American Republics, 13 March 1961, Public Papers of the Presidents of the United States,
John F. Kennedy, 1961, http://quod.lib.umich.edu/cgi/t/text/text-
idx?c=ppotpus;cc=ppotpus;q1=John%20F.%20Kennedy;rgn=full%20text;view=toc;idno=4730886.196
1.001, 170-175; Memorandum, Mann to Achilles, undated, RG 59, Records of the Bureau of Inter-
American Affairs, Lot 63 D 210, Latin American Socio-Economic Development Program-General,
Folder 2, NARA.
3
Address at a White House Reception for Members of Congress and for the Diplomatic Corps
of the Latin American Republics, 13 March 1961, Public Papers of the Presidents of the United States,
John F. Kennedy, 1961, http://quod.lib.umich.edu/cgi/t/text/text-
idx?c=ppotpus;cc=ppotpus;q1=John%20F.%20Kennedy;rgn=full%20text;view=toc;idno=4730886.196
1.001, 170-175.

142
Kennedy’s political popularity was in large measure based upon his carefully

cultivated image of youth, vitality, and intelligence. The Alliance for Progress

reinforced those same strengths. The charismatic president packaged a liberal route

toward modernization with rhetoric calculated to appeal alike to groups as diverse as

Latin American elites, middle class managers, urban workers, and rural peasants.

Intellectually, the Alliance for Progress was rooted in the progressive ideology

of the New Deal. Lincoln Gordon, a Kennedy advisor on Latin American affairs and

subsequently an ambassador to Brazil, published a collection of his speeches

advocating the Alliance titled A New Deal for Latin America: The Alliance for

Progress. As the New Deal saved the Untied States from depression, communism,

and fascism during the 1930s, so would the Alliance save Latin America in the 1960s.

The ideology was perfectly aligned with the tenets of modernization theory, upon

which Kennedy administration officials drew. Indeed, under Kennedy, W. W.

Rostow resumed his service in government as the Deputy National Security Advisor

and worked to project further his ideological influence into the policymaking arena.4

Working through the Act of Bogotá, the Kennedy administration sought to

create “show cases” of liberal development that would transform Alliance rhetoric

into policy and provide for the “mobilization of hemispheric know-how.” Kennedy’s

eloquent speeches underscored to the peoples of the Americas that the program was

designed as a partnership – an alliance for progress – and not as just another aid

4
Lincoln Gordon, A New Deal for Latin America: The Alliance for Progress (Cambridge,
1963); Latham, Modernization as Ideology.

143
program administered from Washington. Alliance rhetoric suggested that Latin

American proposals would be treated on an equal basis with those from the United

States. That idea was challenged from the start by some in the bureaucracy. State

Department Counselor George C. McGhee and others in the Department did not

question the idea that representatives of the United States would facilitate the

momentum and force for change behind modernization projects. Such a conception

reflected the paternalistic worldview deeply embedded in Washington’s imagination

of the Global South. Even officials who spoke in terms of partnership often found it

easier to direct development initiatives in practice and thus fell back upon a

paternalistic policy. Ultimately, U.S. elites of all stripes hoped that Latin American

nations would successfully marshal their own resources through “self help” efforts to

sustain free market economic development within the framework of the U.S.-led

liberal international order. The Act of Bogotá effectively served as the administrative

“cornerstone of the new alliance for progress.” Consequently, Kennedy sought quick

congressional appropriation of the funding still pending for the Act.5

The Alliance for Progress was initially conceived of as a Marshall Plan for

Latin America. The Marshall Plan was launched in the wake of the devastation of

World War II in an effort to reconstruct Western Europe through a $13 billion

infusion of capital. Marshall planners were motivated by a desire to contain the

5
Memorandum, McGhee to Berle, 3 March 1961, RG 59, Lot 62 D 298, 1961 Latin American
Task Force, Act of Bogotá, NARA. For more on the rationale of supporting the Act of Bogotá and
increasing appropriations for the Social Progress Trust Fund, see Memorandum, Mann to Achilles,
undated, RG 59, Records of the Bureau of Inter-American Affairs, Lot 63 D 210, Latin American
Socio-Economic Development Program-General, Folder 2, NARA.

144
expansion of Soviet communism into Western Europe, which they believed more

likely so long as the continent remained in a state of economic depression. However,

public and private American elites also saw a vibrant and liberal Europe, in the image

of the United States, as crucial to the protection of American political and economic

interests and good for the people of that continent. Moreover, Marshall planners had

worked cooperatively with European elites in an effort to replicate the New Deal

policy synthesis that they believed had saved capitalism in the United States. The

New Deal system, which exemplified liberal modernity in the minds of policymakers

in the late 1950s and 1960s, was designed to integrate European economies so they

would be able to take advantage of economies of scale through the reduction of tariff

barriers and continental capital controls under the Marshall Plan. European state

sovereignty would be weakened and supra-national institutions would provide limited

but positive guidance over normal market mechanisms. The supranational

institutions would also bring together public and private functional elites in a

cooperative framework. While the full incarnation of the Marshall planners’ vision

did not immediately come to fruition, it laid the basis for the European Common

Market and eventually even the European Union. Moreover, the Marshall Plan

succeeded in reconstructing the war-torn industrialized countries of Western Europe,

limiting the appeal of communist parties in the region, and increasing European

global economic activity.6

6
Hogan, The Marshall Plan; Rabe, The Most Dangerous Area in the World.

145
 Alliance planners quickly realized that comparisons between the Marshall

Plan, which ultimately sought to rebuild and reform political and economic systems

and industrial infrastructures that already existed, and the Alliance for Progress,

which sought more fundamentally to transform political and economic systems and

construct industry where it largely had not existed, constituted fundamentally

different tasks. They also identified cultural barriers to liberal modernization in Latin

America that had not existed in northern Europe. Assistant Secretary of State for

Inter-American Affairs Edwin Martin identified “the cultural origins of most Latin

Americans” as a “major obstacle to Kennedy’s program.” Martin argued that the

Mediterranean heritage of many in the region supported anti-democratic tenets and

buttressed authoritarian political leadership. Like Martin, modernization theorists

saw a significant difference between rebuilding war-ravaged modern countries and

facilitating countries through their developmental take-offs. The latter was the

challenge that the Kennedy administration confronted in Latin America, and as a

result the Marshall Plan analogies eventually dissipated.7

The Alliance for Progress was ultimately institutionalized in Punta del Este,

Uruguay, in August 1961. The inter-American community pledged itself to political

freedom, economic growth along liberal lines, and the ambitious social goals

designed to provide ordinary Latin Americans with a sense that the Alliance worked

for them. The Kennedy administration promised to contribute at least $20 billion

over ten years to meet the Alliance’s objectives. Although rhetoric about democracy

7
Edwin M. Martin, Kennedy and Latin America (New York, 1994), 1-3.

146
and social improvement was genuine, the architecture of the Alliance for Progress

was clearly geared toward its economic objectives, the most significant of which was

the targeted minimum annual rate of economic growth of 2.5 percent. Alliance

planners also promised to create mechanisms that permitted the fruits of economic

growth to be shared by all Latin Americans, regardless of social standing, and the IA-

ECOSOC was charged with overseeing the vast array of Alliance programs.8

After having worked with public and private U.S. elites on development

initiatives since 1958, Frondizi held some reservations about the Kennedy departure.

Frondizi’s calculation that he would be able to demonstrate concrete benefits of the

liberal international order to all segments of Argentine society within two years of his

election had already been frustrated, and he believed with some justification that the

Eisenhower administration had not lived up to the commitments that it had made to

desarrollo. He was nevertheless willing to give the new program an opportunity to

succeed. Indeed, it offered the Argentine President the opportunity to cast himself as

a leading figure in inter-American affairs generally and the Alliance specifically.

Furthermore, Frondizi came to believe that Kennedy “genuinely wanted to inaugurate

a new era in relations between the peoples of the Americas.” Frondizi recognized

that a moment of opportunity to advance aggressively a transnational development

8
“Alliance for Progress: Official Documents Emanating from the Special Meeting of the
Inter-American Economic and Social Council at the Ministerial Level,” 5-17 August 1961,
Washington DC: Pan American Union – General Secretariat, Organization of American States, 1961.

147
agenda had presented itself. In that context, Argentina appeared to have been an ideal

test case for the Alliance.9

Indeed, U.S. officials agreed that Argentina held great potential within the

context of the Alliance for Progress. It had the distinction of having been the only

Latin American country Kennedy had visited before taking office, and in May 1961,

the Kennedy administration characterized the nature of the relationship as “the

friendliest in many years.” Additionally, U.S. officials recognized that Argentina was

one of the most populous Latin American countries, and that it possessed a more

developed infrastructure than most of its neighbors. When situated within the larger

regional context and viewed through the lens of modernization theory, Argentina

appeared to have been the most favorable possible test case for the Alliance.

Kennedy administration planners were so confident in Argentina’s potential to serve

as a showcase that they established a higher targeted rate of economic growth for the

country, calling for no less than 6 percent growth annually. While Martin traced the

authoritarian culture that he feared could doom the Alliance to the European

Mediterranean, including Italy, Spain, and Portugal – a region from which a majority

of Argentines could trace their ancestry – Argentina still seemed to possess an

inherent advantage because of its past prosperity. Under the administration’s logic,

the country’s most significant challenge was its struggle to eliminate what U.S.

officials identified as an authoritarian Peronist political culture. That calculation

9
Alberto A. Amato, Cuando fuimos gobierno: Conversaciones con Arturo Frondizi y Rogelio
Frigerio (Buenos Aires, 1983), 100-102.

148
mitigated against U.S. support for Peronist reintegration and encouraged continued

attempts to marginalize the ideology.10

Hampering modernization efforts, the Argentine economic crisis continued

unabated despite international efforts since 1958. October 1960 estimates placed

Argentine Central Bank debt at more than $800 million, with $600 million scheduled

for repayment between 1961 and 1963. A looming debt crisis – the result of the

international lending designed to foster modernization – threatened to stifle the

advances of desarrollo while the balance of payments continued to require the

infusion of new foreign capital if it were to remain in balance. Argentine dollar

reserves were threatened by a $221 million trade deficit with the United States in

1960. The cost of living had risen an astronomical 109 percent in 1959, 12.6 percent

in 1960, and would rise an additional 18.5 percent in 1961, continuing to strain the

consuming power of all Argentines and serving as a “constant preoccupation” of the

Frondizi government. After nearly three years of desarrollismo, most Argentines

found it difficult to identify substantial gains. Organized labor in particular continued

to protest desarrollo and the hardships it imposed upon them.11

10
Martin, Kennedy and Latin America, 1-3, 265-273; Juan José Cresto, Presidente Frondizi:
La política internacional a través de sus viajes al exterior (Buenos Aires, 2001), 207-208;
Memorandum, Burnstan to Hartigan, 23 May 1961, POF, Box 111, Countries: Argentina, General,
1961, JFKL; Report, NAC Working Group on Argentina (AID), undated, RG 59, Records of the
Bureau of Inter-American Affairs, Lot 63 D 50, Argentina 1961 Folder 2, NARA (on acceptable rates
of Argentine economic growth).
11
Memoranda of Conversation, 17 October 1960, RG 59, 033.1135-BR/10-3160, NARA;
Telegram, McClintock to Rusk, 21 March 1962, NSF, Box 6, 3/16/62-3/31/62, JFKL; Memorandum,
Burnstan to Hartingan, 23 May 1961, POF, Box 111, Countries: Argentina, General, 1961, JFKL;
Comunicado, Presidencia de la Nación, Secretaría de Prensa, 10 August 1961, Caja 2, 1959-1961,
ASASG (includes quotation on “constant preoccupation”); 62 Organizaciones, Conferencia de Prensa,
29 March 1960, Caja 2, 1959-1961, ASASG.

149
 Frondizi was nonetheless hopeful that the Alliance for Progress might form a

productive basis for moving forward with desarrollo. Soon after Kennedy’s East

Room speech, Frondizi sent the U.S. President a long letter endorsing the basic

framework for the Alliance for Progress. Like Kennedy, Frondizi stressed the pursuit

of social justice within the framework of liberal capitalism. Indeed, Martin

speculated that Frondizi aspired to emerge as “a co-leader” of the Alliance for

Progress. However, rather than simply parrot the ideas embedded in the Kennedy

program, Frondizi took seriously the Alliance rhetoric that stressed inter-American

partnership and brought his own ideas to bilateral conversations on Latin American

modernization. Specifically, he believed that the “initial impetus” of the Alliance

should focus upon the construction of basic infrastructure and the process of

industrialization, a strategy that he had followed since taking office. The Argentine

President believed that once the Alliance’s economic objectives were met, social

progress would follow. Kennedy, by contrast, sought to address each of those

problems simultaneously, recognizing that liberal policies would not receive popular

support if they failed to provide meaningful results to ordinary people. Indeed,

Argentina’s troubled political landscape provided a vivid illustration of the popular

discontent that followed from policy choices that marginalized the popular sectors.

Frondizi also wanted to make sure that the program concentrated on what he

identified as the causes of Latin American underdevelopment, and not merely the

symptoms. That is, Frondizi hoped that the Alliance would finally redress imbalances

150
in the global terms of trade and more efficiently buttress efforts by countries in the

Global South to industrialize. After having grown frustrated with the pace of

progress under the Eisenhower administration, the Frondizi government hoped that

these issues would finally be addressed. Some Argentines were especially optimistic.

Argentine Ambassador to the United States and later Economic Minister Roberto

Alemann was extraordinarily taken with Kennedy personally, and embraced Alliance

rhetoric of inter-American cooperation from his post in Washington.12

Kennedy and Frondizi met at the Hotel Carlyle in New York, while they were

in the city for meetings at the United Nations. Kennedy’s State Department

interpreter, Donald Barnes, remembered the meeting as “quite an exchange.”

Political differences were becoming apparent. Frondizi sought the admission of

Chinese representatives to the United Nations based on “the facts of the situation,”

and believed multilateral action against Cuba should be delayed until practical results

from the Alliance for Progress manifested themselves. He had begun to gravitate

toward Argentina’s traditional, generally independent international political position,

even while continuing to seek economic cooperation with the United States through

the Alliance for Progress. Barnes noted that “[t]here was no warmth” between

Kennedy and Frondizi, like that between Kennedy and Venezuelan President Rómulo

Betancourt. The Venezuelan President “shared really with [Kennedy] emotionally

12
Letter, Frondizi to Kennedy, 3 April 1961, POF, Box 111, Countries: Argentina, General,
1961, JFKL; Letter, Kennedy to Frondizi, 18 April 1961, POF, Box 111, Countries: Argentina,
General, 1961, JFKL; Martin, Kennedy and Latin America, 265-266; Alberto A. Amato, Cuando
fuimos gobierno: Conversaciones con Arturo Frondizi y Rogelio Frigerio (Buenos Aires, 1983), 90-91;
Roberto Alemann, Recordando a Kennedy (Buenos Aires, 1996).

151
the principles of the Alliance for Progress, which was not really the case with

Frondizi and some others who wanted American aid, but to apply it as they wished,

which is to build industry and then saying, the social reforms will come about later.”

Aside from the issue of personal friendship, Barnes identified a point of contention

between Kennedy and Frondizi. The Argentine President sought to lead the Alliance

for Progress toward economic development first while Kennedy harbored a far more

extensive view of what was possible.13

III

As he had since coming into office, Frondizi continued to think of his foreign

policy primarily as a component of desarrollo. To that end, he concentrated on what

the Alliance for Progress could contribute to those ends, including the possibility of

new loans. Indeed, Frondizi used his September 1961 meeting with Kennedy

primarily to discuss future U.S. lending designed to spur Argentine industrialization.

Specifically, Frondizi requested $146.7 million toward the expected $262 million cost

for the El Chocon-Los Colorados hydroelectric project, $220 million for meat-

packing and transportation development, $200 million for low-cost housing

construction, $65 million for fruit transportation, $149 million toward other

hydroelectric projects, $187 million for other irrigation projects, $20 million for fish

storage and processing, and $15 million for poultry raising and processing. Argentine

13
Oral history interview, Donald F. Barnes, 30 June 1964, by John Plank, JFKL; Telegram,
Bowles to Embassy in Buenos Aires, 27 September 1961, FRUS: 1961-1963, 12: 357-359; Juan José
Cresto, Presidente Frondizi, 203-218.

152
Foreign Minister Bonifacio del Carril pressed those requests in bilateral conversations,

and although U.S. officials wanted to vet all proposals thoroughly through the

relevant bureaucracies, they were also interested in continuing to help the Frondizi

government, albeit at far more modest levels. However, as Eisenhower had in earlier

years, Kennedy stressed that Frondizi must undertake “striking self-help measures” in

order “to obtain additional large appropriations required from [the U.S.] Congress for

assistance in economic and social development.” Despite the new rhetoric inherent

within the Alliance for Progress, international aid procedures remained remarkably

similar to those that had existed previously.14

Although Alliance rhetoric stressed the development of Latin American states,

some Kennedy administration officials sought to keep the region in a state of

dependence upon the United States. In a memorandum on U.S. policy toward

Argentina, Harvey Wellman, the Director of the Office of East Coast Affairs in the

State Department identified the primary U.S. objective as:

to assist Argentina toward economic recovery in a degree which will promote

political and social stability and earn Argentine good-will and confidence in
U.S. intentions, without, however, such over-commitment as would liberate
Argentina from financial dependence on the United States and thus encourage
[the] independence of Argentine international action which might not serve
U.S. interests.15

14
Telegram, Bowles to Embassy in Buenos Aires, 27 September 1961, FRUS: 1961-1963, 12:
357-359 (including quotation); Memorandum, Rusk to Kennedy, undated, POF, Box 111, Countries:
Argentina, General, 1961, JFKL; Oral history interview, Donald F. Barnes, 30 June 1964, by John
Plank, JFKL.
15
Memorandum, Wellman to Turnage, 12 July 1961, Records of the Bureau of Inter-
American Affairs, RG 59, Lot 63 D 50, Argentina 1961 Folder 2, NARA.

153
Indeed, Wellman suggested that if the Argentines achieved a level of economic

recovery that facilitated a neutralist foreign policy and potentially illiberal economic

policies, the United States should not hesitate to apply “concrete pressure” to correct

official Argentine behavior. Beyond his remarkable degree of frankness as to the

intent of U.S. policy, Wellman suggested few departures from existing policy. He

continued to insist upon the austere “self-help” regimen, which he believed would

benefit the Argentine economy and serve as an example to the rest of Latin America.

In order to deal effectively with the Argentines, Wellman posited that policymakers

would have to treat the Argentines “on a level of ostensible equality,” and work

constructively on requested economic and military aid. Ultimately Wellman was

suspicious of the harmonious official relationship that had materialized between the

Untied States and Argentina since 1955. He asked rhetorically “how long will the

honeymoon last,” between the two countries. Wellman’s answer to that question was

that it would last only so long as the Argentines needed U.S. assistance and thus

concluded that Argentine dependence upon U.S. aid was constructive. Although

impossible to determine the degree to which Wellman’s analysis influenced the

decision-making process of policymakers, his memorandum anticipated the results of

U.S. policy under the Eisenhower and Kennedy administrations.16

Despite Argentine hopes for a new departure in trade policy, problems

persisted. In particular, the 1959 U.S. ban on meat imports from Argentina continued

16
Memorandum, Wellman to Turnage, 12 July 1961, Records of the Bureau of Inter-
American Affairs, RG 59, Lot 63 D 50, Argentina 1961 Folder 2, NARA.

154
to fester. The Frondizi government insisted that Argentine exports were unfairly shut

out of the North American market, that the requirement that even cooked Argentine

meat exports – which were permitted entry into the U.S. market – must be re-cooked

in the United States, and that meat from Tierra del Fuego – where there had been no

recorded outbreak of Hoof-and-Mouth disease – should not be treated the same as

meat from the rest of the country. On 14 December 1961, Kennedy established a

scientific commission to investigate Hoof-and-Mouth disease in Argentina and to

report on the health and safety of Argentine meats. American scientists worked with

their Argentine counterparts, who had been adamant that U.S. import restrictions

were excessive.17

Indeed, Hoof-and-Mouth disease had been a significant problem for Argentine

herds. The disease was responsible for a 20 percent loss of cattle each year. In

response, Frondizi launched “Operation Beef” in 1959 with the goal of modernizing

the cattle industry, with financial assistance from the U.S. Agency for International

Development (AID). It was also true that Tierra del Fuego could legitimately demand

relief from the restrictions. There were also differences between Argentine scientists

who consulted with the Kennedy scientific team about the efficacy of the Argentine

method of cooking meats for export. They insisted that their method for cooking

meat within the nation’s frigoríficos sufficiently guaranteed the meat’s safety, but U.S.

17
Press release, White House, 3 March 1962, POF, Box 111, Countries: Argentina, PSAC
Report on Foot and Mouth Disease, 11/31/62, JFKL; Report on the Scientific Mission to Argentina on
Foot and Mouth Disease, 31 January 1962, POF, Box 111, Countries: Argentina, PSAC Report on Foot
and Mouth Disease, 11/31/62, JFKL.

155
scientists disagreed and outlined a more thorough procedure. Because the Argentines

sought access to U.S. markets, the views of the American scientists necessarily held.18

In an effort to move toward a settlement that protected American cattle from

Hoof-and-Mouth disease while also alleviating Argentine concerns, the commission

suggested a series of steps. Herds would be required to be vaccinated on the ranches,

and then revaccinated before being shipped to processing plants. Veterinarians would

be required to inspect cattle at the ranches. Argentine meat processors would be

required to adopt U.S. standards for cooked meat products, and Argentines must

permit U.S. Department of Agriculture (USDA) inspectors to oversee each step of the

process within Argentina. The U.S. team suggested further study of Tierra del Fuego

to determine whether alternate guidelines should be developed for the island. The

commission also proposed expanding the influence of international and transnational

agents over the Argentine meat industry. In addition to the introduction of USDA

inspectors, the commission sought to double spending for the Pan American Foot-

and-Mouth Disease Center, and to open a technical center in Argentina to supervise

the problem more effectively. In an interconnected world economy with heightened

concern about health and safety standards, the commission suggested taking a

traditionally domestic question and solving it within the international arena. The

result should not have been unexpected. The scientists were dispatched as technical

18
Ibid.

156
experts with instructions to help manage the liberal international order on the ground

in the Global South. In the process, state sovereignty was weakened.19

Trade and the balance-of-payments deficits continued to undermine Frondizi’s

economic policies. Economic Minister Roberto T. Alemann was especially

concerned about the return of deficits to the balance of payments when he traveled to

the GATT meeting in Geneva, and then on to New York and Washington, in the

autumn of 1961. He linked the effects of the ongoing dispute over the U.S. meat ban

to the nation’s account deficits. Those restrictions, which limited the free exchange

of Argentina’s most economically important export commodity, frustrated Argentine

officials and contributed to official suspicion that U.S. elites were motivated by

protectionism rather than by genuine health concerns. Alemann complained that

although Argentina followed the strict guidelines laid out by the IMF, the North

Atlantic countries “have not themselves been practicing what they preach” because

they protected their markets against Argentine competition. The Economic Minister

insisted that he had resisted the temptation toward bilateralism and trade

discrimination and insisted that the United States and European powers do the same.

Although Alemann did not expect any “overnight miracles,” he was hopeful that the

North Atlantic countries would bring their trade policies into conformity with the

liberalism that they preached abroad.20

19
Ibid.
20
Airgram, Hoyt to Rusk, 6 November 1961, RG 59, 033.3511/11-6101, NARA. See also
Roberto Alemann, “Roberto Alemann,” in Argentina, 1946-83: The Economic Ministers Speak, Ed.
Guido Di Tella and Carlos Rodríguez Braun (New York, 1990), 66-74.

157
 Alemann extended his critique of restrictions on trade in the Global North

when he met with European representatives in Geneva. He complained that unlike

Western European countries, Argentina did not subsidize its agricultural production.

European protectionism further inhibited Argentine exports to a traditional market. If

the British succeeded in joining the European Economic Community (EEC),

Alemann argued, Argentina’s ability to export agricultural products would further

deteriorate. He was hopeful that Italy would lift restrictions on Argentine beef in the

next year and found that GATT ministers at the very least understood the paucity of

progress that had been made on the question of liberalization of trade in raw materials

and foodstuffs from the Global South to the Global North. However, to the

disappointment of Argentine business and government leaders, Alemann was unable

to secure any concrete guarantees from the Europeans that they would take steps to

liberalize trade. Nor were the Europeans willing to reduce politically popular

agricultural subsidies for their domestic producers. Press reports indicated that West

Germany and Great Britain were especially leery of the Argentine mission.

Understanding Argentina’s economic dilemma was one thing, but creating an

international trade regime that did not discriminate against exports from the Global

South and that eliminated politically popular domestic production subsidies was

something that neither European nor American politicians were willing to support

fully. Nevertheless, because successful resolution of the trade question was vital to

establishing self-sustaining economic growth in Argentina, the failure of the Alemann

158
mission was a significant blow for desarrollo, and by extension the Alliance for

Progress.21

In addition to leading tariff and trade negotiations, it fell to Alemann to secure

a renewal of the $100 million IMF standby agreement. Additionally, Alemann sought

U.S. assistance for the construction of the El Chocon hydroelectric project. The

continuation of high rates of external assistance to Argentina did not escape the notice

of U.S. officials. AID estimated that in fiscal year 1963, Argentina would receive

$250 million in private loans and $350 million in aid from other states. Of that, an

estimated $200 million would originate from the United States and there was no

indication that Argentine dependence upon foreign lending would subside in the

foreseeable future. Indeed, in January 1962 the Export-Import Bank reported a $375

million overall financial exposure in Argentina, and U.S. experts calculated

Argentina’s debt to European creditors at $1 billion. They further estimated that it

would cost the Argentines 30 percent of their export revenues to service foreign debts

between 1962 and 1964, a notably high figure. Despite the persistent inability of the

Argentine economy to respond to the pump priming of transnational creditors, U.S.

officials expressed no concern about the increasing level of Argentine indebtedness.

Nor did they question their own strategy of extending ever more loans to Argentina in

the hope that at some point the takeoff would occur. Instead, they reasoned that all

Western nations had financed their transition into liberal modernity with borrowed
21
Airgram, Crume to Department of State, 19 December 1961, RG 59, 033.3511/12-1961,
NARA. Memorandum, Wellman to Turnage, 12 July 1961, Records of the Bureau of Inter-American
Affairs, Lot 63 D 50, Argentina 1961 Folder 2, NARA, identifies the problem of agricultural trade
restrictions as a significant obstacle to a harmonious U.S.-Argentine relationship.

159
capital. In that respect, the Argentine case did not appear striking. Despite U.S.

balance-of-payments concerns, a $200 million investment “to enable Argentina to

become a growing, free-enterprise oriented economy” seemed like a wise

investment.22

Frondizi hoped so. Desperately needing new loans, the Argentine President

wrote Kennedy on 1 February 1962 that the economic “progress which we have

achieved up to the present time, mainly because of the substantial collaboration of the

Government and private initiative of the United States, is highly encouraging and

quantitatively great.” With U.S. assistance, GNP had risen 5.7 percent in 1961,

despite the effect of poor weather conditions on the agricultural sector. In Frondizi’s

rendering, public and private U.S. financial and technical assistance was a

determinative factor in Argentine successes. However, Frondizi noted, the high cost

of living that accompanied his austerity program had not abated, and necessarily

restrictive credit policies led to scarce currency. He reported that his country faced a

“psychologically delicate set of circumstances.” Frondizi also lamented the heavy

burden of Argentina’s $450 million 1961 trade deficit.23

To address Argentina’s problems, Frondizi pledged a new round of liberal

reforms. Frondizi pledged to lay off half of the 200,000 workers in the state-owned
22
Memorandum, Battle to O’Donnell (through Bundy), 1 December 1961, RG 59,
033.3511/12-161, NARA. Report, NAC Working Group on Argentina (AID), undated, Records of the
Bureau of Inter-American Affairs, RG 59, Lot 63 D 50, Argentina 1961 Folder 2, NARA, contains the
estimates of total Argentine assistance in 1963. Memorandum, Linder to Kennedy, 3 January 1962,
NSF, Box 6, Countries: Argentina, 1/62-2/62, JFKL, contains January debt estimates. See also
Alemann, “Roberto T. Alemann,” in Argentina, 1946-83.
23
Letter, Frondizi to Kennedy, 1 February 1962, NSF, Box 6, Countries: Argentina, General,
1/62-2/62, JFKL.

160
railroads – notorious for their waste and inefficiency. He explained optimistically,

and erroneously, that “[t]hese reduction projects are not causing unemployment but a

mere transfer of employees from parasitical and unproductive activities to activities

created by the process of development.” Yet, he lamented, the process nonetheless

caused “strong reactions and disturbances” among the displaced workers. To

complete the envisioned reforms, and to industrialize the country further and provide

jobs for the increasing number of unemployed Argentines, Frondizi asked for

additional U.S. assistance, observing that “our own budget [is] inadequate” to push

through the “final stages” of development reform. Specifically, Frondizi asked for

$150 million to stabilize the peso against what he characterized as a “transitory”

balance-of-payments deficit, and for infrastructure development.24

As the Frondizi government pressed forward with its emergency assistance

request, it faced a new U.S. counterpart. State Department veteran Robert

McClintock arrived in Buenos Aires as the new U.S. Ambassador in early February

1962. Frondizi had complained that former Ambassador Willard Beaulac had

criticized government policy in his discussions with military officers and thus

undermined the government’s authority. Because he remained hopeful that Argentina

might play a significant role in the Alliance for Progress, Frondizi expressed

satisfaction that Kennedy had finally posted a representative in Buenos Aires with the

administration’s full confidence. McClintock’s background was not in the rough-

and-tumble of Democratic Party politics, as might have been expected from

24
Ibid.

161
somebody who had the reputation of a Kennedy loyalist with Frondizi, but rather the

equally challenging arena of the foreign service. With extensive experience in the

Middle East, the verbose McClintock accepted his first Latin American

ambassadorial posting in Buenos Aires.

Argentine Economic Minister Carlos Coll Benegas wasted no time before

pressing McClintock on the assistance request. In addition to the real economic

effects that would flow from a stronger peso, Coll Benegas argued that a significant

infusion of American capital would produce a psychologically positive result by once

again demonstrating the strong U.S. commitment to Frondizi and his economic

program. Time, however, was limited. Coll Benegas needed the funds within a week,

and he succeeded in convincing the new ambassador to make a positive

recommendation to his superiors in Washington. Rusk was also interested in

assisting the Argentines, but hesitated because he lacked a comprehensive list of

items to be funded with U.S. money. Pleading desperation, Coll Benegas threatened

that “if I cannot get an extension of foreign credits from some source, my only

alternative is the printing press – and you know what that will mean.”25

Although Rusk would have liked for the bureaucracy to have had more time to

study the request, time was of the essence, and the Kennedy administration approved

a new $150 million credit. McClintock dictated the terms of the agreement to Coll

Benegas on 20 February. In a departure from the 1958 agreement, the U.S.

25
Telegram, McClintock to Rusk, 16 February 1962, NSF, Box 6, Countries: Argentina,
General, 1/62-2/62, JFKL; Telegram, Rusk to McClintock, 16 February 1962, NSF, Box 6, Countries:
Argentina, General, 1/62-2/62, JFKL; Telegram, McClintock to Rusk, 20 February 1962, NSF, Box 6,
Countries: Argentina, General, 1/62-2/62, JFKL (includes the Coll Benegas quotation).

162
government provided all funds without the participation of private banks. The

agreement included $60 million from AID, including $12.5 million for housing, $6.7

million for road construction, and $40.9 million for airport construction. AID

pledged an additional $25 million for projects agreed upon between U.S. and

Argentine officials at a later date. The Export-Import Bank promised $50 million for

projects in either the public or private sector, to be determined by Ex-Im officials

subsequently. Finally, AID contributed a $15 million stabilization loan. The

agreement included three conditions. First, the Argentines must negotiate a new

agreement with the IMF. Second, Frondizi was required to complete the railroad

reforms that he had previously outlined. Finally, the Frondizi government was

required to activate a National Development Council with haste. McClintock

complained that rather than providing a leading force for the Alliance for Progress,

the Argentines instead were constantly reacting to crises and lacked a coherent

national plan for development, a problem that the National Development Council was

intended to solve. Coll Benegas also received permission to use the entire credit to

strengthen the dwindling Argentine Central Bank reserves. Funds earmarked for

specific projects would be appropriated from the Argentine Central Bank, providing

the illusion of greater monetary stability because they would count as hard currency

reserves until spent. In very short order, the Frondizi government had convinced the

Kennedy administration to redouble U.S. modernization efforts. As the first

163
anniversary of Kennedy’s East Room address approached, Argentina received a

dividend.26

IV

The Argentine economic crisis occurred within the larger context of the

intensifying Cold War in the Western Hemisphere. After the disastrous U.S. invasion

of the Bay of Pigs that had been designed to depose Cuban revolutionary Fidel Castro,

the populist Castro government formally aligned itself with the tenets of international

socialism. The Cuban move marked a frontal assault upon international liberalism

and U.S. hegemony in the hemisphere. It cast a long shadow over inter-American

affairs in the Kennedy White House. Because Castro promised to export his

revolution throughout Latin America, the communist threat to liberal hegemony in the

hemisphere appeared greater than at any previous time during the Cold War. Both

the Kennedy administration, through the Alliance for Progress, and the Castro

government, through revolutionary socialism, offered responses to Latin America’s

pervasive social and economic problems. While Castro’s revolution motivated

Kennedy to focus greater attention on the region, it also led the Kennedy

administration to place increasing emphasis upon Cold War loyalty among Latin

26
Telegram, Rusk to McClintock, 17 February 1962, NSF, Box 6, Countries: Argentina,
General, 1/62-2/62, JFKL; Telegram, McClintock to Rusk, 20 February 1962, NSF, Box 6, Countries:
Argentina, General, 1/62-2/62, JFKL.

164
American leaders. At the same time, Frondizi began to rethink his own commitment

to U.S. Cold War objectives.27

Frondizi’s reappraisal represented a clear break from his established policy.

For instance, during a November 1960 visit by American governors to Argentina,

remarkably undiplomatic South Carolina Governor Ernest Hollings challenged

Frondizi’s firmness in the face of the Castro challenge. Frondizi insisted that

Argentina recognized the danger of Castroism and asserted that Argentina’s

opposition to Castro was clearer than even that of the United States. Frondizi’s anti-

communism also contained positive reverberations in Argentine politics. Distrusted

by the military and traditional elites because of his 1958 deal with former President

Juan Perón, Frondizi was able to use anti-communism as a means to assure Argentine

conservatives that there were limits to his heresy against their principles.28

Anti-communism also had the virtue of targeting an enemy who enjoyed

marginal support within Argentina. Communists received very little support, in large

part because workers who traditionally comprised the base of communist support

instead aligned with Peronism – a domestic populist movement not beholden to the

patronage of international figures and more attuned to Argentine nationalism.

Because of Peronism, communism lacked the ideological space necessary to build a

27
See Carlos Escudé and Kristin Ruggiero, “El factor político en las relaciones Argentino-
norteamericanos durante los presidencias de Frondizi y Guido,” at the Biblioteca del Ministerio de
Relaciones Exteriores Comercio Internacional y Culto, Buenos Aires, Argentina; María de Monserrat
Llairó and Raimundo Siepe, Frondizi: Un nuevo modelo de inserción internacional (Buenos Aires,
2003), 79-101; Stephen G. Rabe, The Most Dangerous Area in the World: John F. Kennedy Confronts
Communist Revolution in Latin America (Chapel Hill, 1999).
28
Memorandum, Rubottom to Department of State, 2 December 1960, RG 59, 033.1135/12-
260, NARA.

165
following. The Confederación General del Trabajo (General Confederation of Labor,

CGT) even equated communism with totalitarianism and aligned itself with

democratic principles. The Communist Movimiento de Unidad y Coordinación

Sindical (Movement for Unity and Union Coordination, MUCS) had attempted to use

the Cuban Revolution as a vehicle for increasing its own sway among the working

class. In 1960, it declared its solidarity with Cuban workers and their revolution

against “intervention or aggression from the North American imperialists.” However,

even American Federation of Labor and Congress of Industrial Organizations (AFL-

CIO) inter-American representative Serafino Romualdi recognized that communism

enjoyed limited appeal in Argentina. The fiercely anti-communist and anti-Peronist

Romualdi tended to exaggerate both the numbers of his ideological enemies and their

influence. However, after traveling in Buenos Aires when the Kennedy

administration initiated its ill-considered invasion of Cuba at the Bay of Pigs on 17

April 1961, Romualdi noted that a 20 April resolution to the CGT General Council

proposing solidarity with Castro was overwhelmingly rejected by “about ten to one.”

He also reported hopefully that of the 25,000 people who participated in May Day

rallies in Buenos Aires, only one out of every five attended events that could be

characterized as pro-communist or anti-American. While Romualdi accurately

viewed Argentine labor as Peronist-dominated, he took solace that Argentine workers

were uninterested in exchanging the liberal international order for the hegemony of

166
Moscow or Havana. As in the past, they instead pressed for practical improvements,

such as secure jobs that paid wages sufficient to support their families.29

For its part, the Frondizi government had long submitted to U.S. policy in the

Cold War. In light of his government’s extraordinary dependence on the United

States in economic affairs, Frondizi searched for a means to demonstrate his

independence. Looking back, he declared defensively that he had been “the president

of the Argentine nation, not of a protectorate.” However, given Argentina’s

economic needs and Frondizi’s own desire to emerge as a leading figure in the

Alliance for Progress, he had found it impossible to strike out an independent

economic position. Doing so would have contradicted desarrollo, which depended

upon U.S. cooperation. However, working from within the U.S. informal empire had

left Frondizi politically vulnerable domestically. In an effort to satisfy Argentine

nationalists without dismantling desarrollo, Frondizi chose to exert his independence

in the Cold War.30

Frondizi’s policy departure, whereby he reoriented his government away from

Washington and toward non-alignment in the Cold War, better reflected Argentina’s

tradition of neutrality. As Perón had done until 1950, Frondizi rejected the bipolar

structure of the Cold War system. His conception of the third way called for

29
CGT, Comisión Directiva Provisoria, Texto del mensaje del poder ejecutivo a la cámara de
senadores, undated (likely early 1961), Caja 2, 1959-1961, ASASG; Plenario Nacional del Movimiento
de Unidad y Coordinación Sindical (MUCS), Informe Central Resoluciones Organizaciones
Representadas, 24-25 June 1960, Caja 2, 1959-1962, ASASG; Report, Serafino Romualdi, “Castro
Loses Support of Latin American Labor,” 12 June 1961, RG 1-038 Office of the President, 61/20,
ICFTU-ORIT, 1961-1962, GMMA.
30
Felix Luna, Diálogos con Frondizi (Buenos Aires, 1963), 60.

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continued economic ties with the United States so long as they did not compromise

Argentina’s political neutrality in the Cold War. By arguing that “the division of the

world was not between capitalism and socialism, but between the developed world

and the underdeveloped world,” Frondizi joined other political leaders in the Global

South who sought to change fundamentally the transnational discourse of

international relations. African and Asian leaders had met in 1955 at the Bandung

conference in such an effort to reorient transnational discourses away from the East-

West conflict and toward underdevelopment in the Global South. By 1961, Frondizi

was prepared to align with that movement. When opportunities opened for economic

cooperation with the Soviet Union that he believed furthered Argentine interests –

particularly the advance of desarrollo – Frondizi pursued them. The Argentine

President thus revoked the U.S. “empire by invitation” in Argentina. Both Argentine

and U.S. officials had long recognized the inherent linkage between the political and

economic aspects of their bilateral relationship. Frondizi’s efforts to divorce those

spheres would not be easy.31

In the aftermath of the Bay of Pigs invasion, Frondizi discovered his

opportunity to stake a claim to his new position. The Kennedy administration sought

to expel Cuba from the Organization of American States (OAS) and forge inter-

31
David M. K. Sheinin, Argentina and the United States: An Alliance Contained (Athens, GA,
2006); Florit, “Perfil internacional de un mundo en cambio,” in La política exterior Argentina, Ed.
Jalabe, 156-162; Glenn J. Dorn, Peronistas and New Dealers: U.S.-Argentine Rivalry and the Western
Hemisphere, 1946-1950 (New Orleans, 2005); Frigerio quoted in Alberto A. Amato, Cuando fuimos
gobierno: Conversaciones con Arturo Frondizi y Rogelio Frigerio (Buenos Aires, 1983); Aldo César
Vacs, Discreet Partners: Argentina and the USSR since 1917 (Pittsburgh, 1984); Geir Lundestad,
“Empire by Invitation?: The United States and Western Europe, 1945-1952,” Journal of Peace
Research 23:3 (Sep., 1986): 263-277.

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American solidarity against Castro. Frondizi was unwilling to align immediately with

the U.S. position, and joined a chorus of Latin American leaders who had their own

approaches to the Cuban question. Indeed, different Latin American plans for

resolving the Cuban-American confrontation began to emerge in the fall of 1961.

The most important of those plans was proposed by Colombian President Alberto

Lleras Camargo, which generally followed the U.S. line. To address the problems

that the Cuban question opened, he proposed a meeting of foreign ministers at the

OAS at which they would discuss the related issues of economic development and

regional security. Additionally, Lleras proposed that in return for Cuba’s

normalization within the inter-American system at that meeting, Castro would pledge

to honor the country’s “obligations,” and refrain from fomenting revolution in the

hemisphere. Cuban “obligations” consisted of the nation’s contracts to foreign-

owned companies and governments. Lleras left open the possibility of multilateral

action under the Rio Treaty as a stick to wave at a defiant Cuba. Indeed, observers

expected that Cuban expulsion and isolation would result from the Colombian

proposal. Nobody expected Cuba to accept Lleras’ terms, which would have

constituted an unprecedented betrayal of the stated objectives of the Cuban

Revolution only months after its victory at the Bay of Pigs. As in U.S. policy toward

the region generally, political anti-communism and liberal economic development

were inherently linked within the proposal. The successful resolution of the Cuban

question on a multilateral basis constituted a high U.S. priority. Indeed, U.S.

Permanent Representative to the OAS DeLesseps Morrison called effective action on

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the Cuban question, “the most important success that the Kennedy Administration can

achieve in foreign policy.”32

The prospects of the Lleras plan were nonetheless poor in November 1961. In

order to take substantive action, the plan required the support of fourteen states in the

OAS. However, Brazil and Mexico, the two most populous nations in the region,

remained opposed. As a result, Colombian Ambassador Julio Ceasar Turbay

characterized Argentine support as “key” to the successful implementation of the

Lleras proposal. Morrison agreed. He argued that Argentina, Uruguay, and Chile

comprised the “key to our diplomatic success and likewise if the situation is

ultimately unfavorable, the reason for diplomatic defeat.” Frondizi took the

opportunity to demonstrate his political independence from Washington. On 22

November, Henry Hoyt, the Chargé d’ Affaires in Argentina, reported that Frondizi

planned to oppose the Colombian initiative, ostensibly on juridical grounds. Hoyt

observed that the Argentine government claimed that it was “not interested whether

its name appears in connection with [the] new proposals but [it was] very obvious to

me this [was a] question of thou dost protest too much and [that Frondizi was] very

much interested in being in the forefront of any proposals.” Indeed, Frondizi

calculated that the Cuban-American confrontation could serve as a means to enhance

32
Telegram, Wells to Rusk, 6 May 1961, FRUS, 1961-1963 12: 251-253; Telegram, Bowles
to Embassy Bogotá, 18 May 1961, FRUS, 1961-1963 12: 254; Telegram, Bowles to Embassy Caracas,
19 May 1961, FRUS, 1961-1963 12: 255; Circular, Rusk to all posts, 24 June 1961, FRUS, 1961-1963
12: 255-257; Memorandum of Conversation, 25 September 1961, FRUS, 1961-1963 12: 258-259;
Memorandum of Conversation, 25 September 1961, FRUS, 1961-1963 12: 259-261; Circular, Rusk to
all posts in the American Republics, 17 October 1961, FRUS, 1961-1963 12: 262-263; Memorandum,
Coerr to Ball, 4 November 1961, FRUS, 1961-1963 12: 263-264; Memorandum, Morrison to
Woodward, 15 November 1961, FRUS, 1961-1963 12: 265 (includes the Morrison quotation).

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his own prestige. Although the enhanced prestige that would accompany success

would help in combating his declining domestic popularity, Frondizi’s international

orientation forced him to walk a political tightrope to avoid further alienating either

domestic populists or the conservative military leadership.33

Before the end of November, Frondizi advanced his own proposal in place of

the rejected Lleras plan. There were some similarities. Like the Colombian initiative,

Frondizi proposed that the nations of the Americas take collective action through the

OAS to resolve the Cuban question. Also like Lleras, he called for a meeting of the

hemisphere’s foreign ministers. Such a meeting had previously been resisted by the

governments of Mexico, Brazil, and Chile, but Frondizi was confident that he could

bring them around. Unlike Lleras, Frondizi did not endorse collective action against

Cuba under the Rio Treaty, and thus advanced a far more conciliatory approach

toward Castro. Invocation of the Rio Treaty had been the crux of the Lleras plan, and

Frondizi threatened the U.S.-orchestrated expulsion of the Castro government with

genuine multilateral negotiations. The Argentine plan did not long survive. Frondizi

was unable to garner the support of his counterparts in Brazil, Chile, and Mexico,

each of whom continued to object to even conducting a meeting of foreign ministers.

On 3 December, Rusk declared that the Argentine model had “failed.” When the

OAS ultimately voted on Cuba’s expulsion in January 1962, a result that the Lleras

plan had been designed to achieve, the Argentine foreign minister abstained, along

33
Memorandum, Morrison to Woodward, 15 November 1961, FRUS, 1961-1963 12: 265;
Telegram, Hoyt to Rusk, 22 November 1961, FRUS, 1961-1963 12: 266; Telegram, Bowles to
Embassy Buenos Aires, 24 May 1961, FRUS, 1961-1963 12: 358.

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with his colleagues from Bolivia, Brazil, Chile, Ecuador, and Mexico. Frondizi

gambled his flagging reputation on his ability to generate a foreign policy victory and

lost. It was a sign of even greater problems on the horizon.34

Frondizi’s approach to international affairs engendered widespread suspicions.

U.S. officials were unsatisfied with the new government’s lack of political

commitment to the West in the Cold War. Frondizi’s 1963 comments on the Cuban

question fail to convey a plausible explanation of his policies. He explained that the

Cuban Revolution was “the violent expression of an underdeveloped country,” and

that Cuba was clearly “situated within the Soviet orbit.” Such a position would be

expected from somebody who supported the U.S. position. In part, Frondizi’s later

reaction to questions about the Cuban question reflected the great cost that his

position exerted upon his government. The Cuban negotiations came two months

before Frondizi was forced to ask for the $150 million February 1962 aid package

from Washington. Even with that assistance – and the declaration of the Kennedy

administration’s continued confidence that was inherently associated with it –

Frondizi’s position on the Cuban question enflamed the passions of Argentine

military leaders. They wanted Frondizi to take a firm stand against Castro, and the

34
Circular, Rusk to all posts in the American republics, 30 November 1961, FRUS, 1961-
1963 12: 267-268; Circular, Rusk to all posts in the American republics, 3 December 1961, FRUS,
1961-1963 12: 268-269.

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government’s actions strengthened their view that he was leading the country toward

ruin.35

When asked what he was most proud of accomplishing as president, Frondizi

responded that he was pleased to have played a leading role in national reconciliation.

Yet national reconciliation under Frondizi was illusory, or at least extremely short-

lived. The military remained adamantly opposed to the Peronists, and the working

class was openly hostile to the government. The basic ideological and class divide

came to a head in March 1962. Frondizi allowed provincial and congressional

elections to move forward with the full participation of Peronist candidates, who ran

for election under the Unión Popular (Popular Union). It was the first election held

since the advent of the Liberating Revolution that was truly democratic. Frondizi

finally made good on his campaign pledge to reintegrate Peronists into the political

process, although he hoped that his party, the Unión Cívica Radical Intransigente

(Intransigent Radical Civic Union, UCRI), would be able to hold together enough

support across class lines to keep the Peronists from making any sizeable gains. For

their part, the military’s leadership concluded that nothing positive could come from

Frondizi’s decision to permit the participation of Peronist candidates. The risk was

simply too great that the nation could choose an ideological backslide from the

35
Felix Luna, Diálogos con Frondizi (Buenos Aires, 1963), 102-105; Juan Carlos Torre and
Liliana de Riz, “Argentina since 1946,” in Argentina since Independence, ed. Leslie Bethell
(Cambridge, 1993), 281-282.

173
principles of the Liberating Revolution toward Peronism. It could mark the first step

toward the restoration of the Peronist state and the return of Juan Perón from his

Spanish exile.36

The political environment did not bode well for Frondizi and the UCRI.

Desarrollismo had not provided the gains it promised for the majority of Argentines.

Indeed, as historian Celia Szusterman observes, the industrial sector lost 250,000 jobs

between 1958 and 1963. Frondizi lacked personal credibility on the left because of

desarrollismo and on the right for allowing the elections to move forward and for not

taking a firm position in opposition to Castro. Yet Frondizi persisted in the hope that

he could maintain an anti-Peronist front and secure the backing of the country’s

liberals. With half of the seats in the Chamber of Deputies and fourteen

governorships – including the pivotal governorship of Buenos Aires Province – in the

balance, it was a high-stakes gamble. Without the participation of Peronist candidates,

the UCRI had enjoyed success in 1961 elections. On the basis of that result, most

observers favored the UCRI to win again in 1962, despite Frondizi’s anemic

popularity. Frondizi’s own analysis was somewhat more sober. McClintock met

with Frondizi at the presidential residence in Olivos after the Argentine President had

returned from a national campaign trip. Frondizi feared that if Peronists won the

elections, he would be deposed. “I am talking about a golpe de estado – a coup d’etat

now,” Frondizi told McClintock. McClintock, still new to his post in Buenos Aires,

downplayed the threat to Frondizi. “Throughout our interview,” he wrote, “[the]

36
Luna, Dialogos con Frondizi, 36; Torre and de Riz, “Argentina since 1946,” 283-285.

174
President evinced an almost feminine hyper-sensitivity to [the] attitude of his own

armed forces.” McClintock went on to describe the “overbearing, morbid fear of

Frondizi of his own military and his deep seated suspicion that we have been egging

them on against him.” U.S. officials had not worked to orchestrate a military move

against Frondizi, but had at times complained to military allies about Frondizi’s

policy choices that they disagreed with, especially on the issue of Cuba. Nevertheless,

Frondizi remained extremely concerned that the gamble he made by integrating the

Peronists would not pay off. It was also in the context of the tense election campaign

that the $150 million aid agreement was authorized to buttress the government’s

position.37

The results of the election conformed to the military leadership’s nightmare.

Peronists won ten of the fourteen contested governorships. Most notably, leading

Peronist labor leader Andrés Framini won the governorship of Buenos Aires Province,

rubbing salt in the wounds of the military and the Frondizi government. In the

legislative elections, Unión Popular received 2,530,238 votes. The UCRI mustered

2,422,516 and the UCRP 1,802,438. Frondizi’s gambit had failed. Frondizi

attempted to atone for permitting a pathway that the Peronists followed back to power

by canceling Peronist victories and intervening in the provinces that elected Peronist

governors. Frondizi hoped that by demonstrating resolve in the face of Peronist

victories he could salvage his presidency and stave off a military coup. Additionally,

37
Szusterman, Frondizi and the Politics of Developmentalism, 128, 208-215; Telegram,
McClintock to Rusk, 23 February 1962, NSF, Box 6, Countries: Argentina, General, 1/62-2/62, JFKL.

175
he finally broke diplomatic ties with Cuba in an effort to calm military concerns and

demonstrate political fidelity to the United States. The military, which continued to

conceive of itself as the institutional guardian of the Argentine nation, proved reticent

about giving Frondizi – who they had never fully trusted – the opportunity to make

additional mistakes. Frondizi understood the danger to his government, and even

asked McClintock to intercede with the military, a request that the U.S. Ambassador

at first declined but later agreed to carry out. Between 25 and 26 March, McClintock

spoke with military officers from all three service branches to offer them a

“foreigner’s point of view.” In the meetings, McClintock argued that it was better for

Argentina’s international position if Frondizi remained in power. Although one of

McClintock’s contacts indicated that Admiral Jorge Julio Palma, the naval chief and

coup advocate, was “shaken” after their meeting, the U.S. intercession was not

enough to save the embattled president’s job. Lacking a viable base of support, and

having antagonized nearly everybody in Argentina, Frondizi was removed from

power in a military coup on 29 March. The military interned the former President on

Martín García Island indefinitely, although Frondizi continued to claim rightful title

to his office.38

Remarkably, most U.S. officials offered little indication that they understood

their contribution in bringing about Frondizi’s demise. The intimate connection

38
Ibid; Torre and de Riz, “Argentina since 1946,” 282-285; Telegram, McClintock to Rusk,
18 March 1962, NSF, Box 6, Countries: Argentina, 3/1662-3/31/62, JFKL; Telegram, McClintock to
Rusk, 25 March 1962, NSF, Box 6, Countries: Argentina, 3/1662-3/31/62, JFKL; Telegram,
McClintock to Rusk, 26 March 1962, NSF, Box 6, Countries: Argentina, 3/1662-3/31/62, JFKL;
Telegram, McClintock to Rusk, 27 March 1962, NSF, Box 6, Countries: Argentina, 3/1662-3/31/62,
JFKL.

176
between the liberal international order and Frondizi’s hated desarrollismo escaped the

scrutiny of most U.S. officials. McClintock asserted that “these elections were

largely determined by factors of purely domestic origin and concern.” He went on to

write that the “Alliance for Progress was not directly involved nor was Castro

communism an essential factor in the outcome.” McClintock’s analysis glossed over

the significant role that U.S. modernization efforts played in Frondizi’s domestic

economic policies even as it highlighted the importance of working-class economic

discontent and nationalism directed against transnational businesses. Although they

had demanded the stabilization and austerity measures that were the hallmarks of

Frondizi’s new economic policy, U.S. officials heaped scorn upon the government as

the economy unraveled. They correctly concluded that the Peronists emerged

victorious in the March elections because ordinary Argentines were economically

hurting, but did not recognize the ways in which their own actions contributed to that

discontent.39

The coup that removed Argentine President Arturo Frondizi from power was a

setback both to Argentine advocates of constitutional democracy and to the nascent

Alliance for Progress. It came one year to the month after Kennedy’s East Room

speech that had promised a new era of inter-American cooperation and a renewed U.S.

commitment to democracy. With Frondizi’s fall, Alliance planners lost an elected

Latin American leader who was committed to market liberalization, and who was

39
Telegram, McClintock to Rusk, 21 March 1962, NSF, Box 6, Countries: Argentina,
3/16/62-3/31/62, JFKL.

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willing to face widespread domestic protest in an effort to impose austere financial

reforms. In the wake of Frondizi’s ouster, the fate of desarrollismo came into

question. It fell to José María Guido, the President of the Argentine Senate and new

President of the Nation, to provide an answer.

VI

Kennedy’s rise to the presidency in the 1960 election heralded a new

opportunity for inter-American cooperation. The new administration signaled its

willingness to work seriously in genuine partnership with Latin American

governments to pursue economic and social objectives. Kennedy sought to build

upon the principles of Operation Pan America and expand liberalism in the

hemisphere at the expense of communism and other varieties of populism because he

believed it would buttress U.S. security and economic interests. He was also

motivated by a missionary belief in the power of international liberalism to improve

people’s lives in the Global South. However, by failing to address adequately the

trade question, the Kennedy administration lost an opportunity to make real progress

toward its stated goals of economic and social development. Moreover, despite the

administration’s rhetoric, it was unable to demonstrate any tangible benefits to the

Argentine working class. The failure of the liberal international order to incorporate

poor and working-class Argentines – a weakness inherently acknowledged by

Alliance rhetoric about social development – constituted an insurmountable hurdle in

Argentina.

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 Frondizi’s forceful removal from power exposed the failure of U.S. policy

toward Argentina. Both the Eisenhower and Kennedy administrations had prioritized

the development of liberal political and economic institutions in the country. Despite

a four year commitment on the part of U.S. and Argentine officials to liberal

development policies, Argentina was no closer to a developmental takeoff in 1962

than it had been in 1958. Just as damaging, the nation’s democratic institutions

proved to have been fleeting. Presidential Special Assistant Arthur Schlesinger, Jr.

well understood the basic reason for Frondizi’s fall from power. In April 1962, he

argued that the Peronists “might not be as bad as has been painted,” and observed that

“the International Monetary Fund has had a complete lack of success in stabilizing

economies in Latin America without the Government falling from power.” As

Schlesinger acknowledged, the administration “needed a different approach,” because

“such harsh economic medicine resulted in killing the patient.”40

40
Editorial note, re: White House staff meeting, 2 April 1962, FRUS, 1961-1963 12: 373.

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 CHAPTER 5

DESARROLLO ENDANGERED:
SALVAGING LIBERAL DEVELOPMENT DURING THE GUIDO
INTERREGNUM, APRIL 1962-JULY 1963

The 29 March 1962 coup that removed Argentine President Arturo Frondizi

from power shook U.S. officials. Like the Eisenhower administration, Kennedy

officials had seen Frondizi as a constructive partner in progress. The Argentine

president had committed his country to a liberal reform agenda and followed through

on International Monetary Fund (IMF)-directed austerity programs despite their

unpopularity among the Argentine people. He was also a constitutionally elected

chief executive who could showcase the democratic character of the Alliance for

Progress. The coup opened to question whether the work that U.S. officials,

international businessmen, and the IMF had completed with the Frondizi government

would be undone.

U.S. officials scrambled to return Argentina to the path toward liberal

development that was embodied in Frondizi’s desarrollo program. The task was

daunting. U.S. elites faced continued political and economic instability, Argentine

nationalism, and a general climate of uncertainty. With his usual energy, U.S.

Ambassador Robert McClintock continued to coordinate the modernization agenda,

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encourage the return of semi-democratic government, and push for a new round of

lending to stabilize the ailing economy. McClintock successfully worked with

Argentine elites to secure a new IMF-directed economic assistance program and

helped maintain José María Guido in power, despite the threat of an additional coup,

until new elections were held in July 1963. Despite the successes, the cumulative

result of U.S. efforts did not create an environment that protected U.S. regional

interests. The Guido interregnum gave way to an elected government, but desarrollo

faced even greater peril in July 1963 than it had in April 1962.

II

In accordance with Argentina’s constitutional provisions on presidential

succession in the event of a “vacancy” in the presidency, the military promptly

installed Senate President Guido into the office that it had forced Frondizi to vacate.

With considerable imagination, military leaders argued that even though they caused

the presidential vacancy and Frondizi still claimed his right to the office, the nation

never abandoned constitutional procedures and thus maintained continuity of

government. Guido had not expected to take power, but ultimately spent 562 days in

office. His tenure greatly exceeded the ninety days that the constitution permitted

before new elections in the event of a vacancy, but the military had already

demonstrated its willingness to treat constitutional procedures as a guidelines rather

than rules. Throughout his time in office, Guido governed under threat of a new

military coup that would lead to the establishment of an outright military dictatorship.

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At the same time, Guido faced an active Peronist left that had been energized by its

electoral success the previous March. In short, he faced the same domestic political

straightjacket that had bound Frondizi, but did so without independent authority or

legitimacy.

Guido’s tenure in office would have been a substantial challenge for even the

most skilled politician, a description that defied the new president. Despite his rise to

the presidency of the Senate, Guido had not been mentioned as a serious presidential

candidate in his own right. Lacking any clear base of support, the new President

faced a recalcitrant military leadership, a disastrous economic situation, and a tense

international environment. Perhaps the only advantage enjoyed by the new

government was the public’s disgust with Frondizi. Since he had in some way

alienated nearly every conceivable domestic and international group, Frondizi’s plight

engendered little sympathy.

In light of the basic intellectual and political challenge posed by the coup,

Kennedy administration officials debated intensely whether or not they should

recognize the new Guido government quickly or wait a considerable period of time to

punctuate their disapproval of the way he ascended to power. It was an early test of

the Kennedy administration’s commitment to democracy. Supporters of quick

recognition, including Secretary of State Dean Rusk, the Argentina Country Desk in

the State Department, and McClintock, argued that in order to influence the new

Argentine government to adopt policies favorable to U.S. interests they must offer

recognition without significant delay. Since there was no chance of Frondizi

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returning to power, and given that the Argentine Supreme Court had ruled that Guido

was the legal president, they could not understand what the United States could

realistically gain by withholding recognition. Noting the severity of the economic

crisis, and the presence of “hot-blooded officers,” McClintock argued that “if [we]

wish to maintain even [the] present façade of civilian government we must act

quickly” and recognize Guido. By contrast, Assistant Secretary of State for Latin

American Affairs Edwin Martin and presidential assistant Arthur Schlesinger, Jr.

argued that recognition should be delayed because any perceived support of the

military coup would set a bad precedent with other countries in Latin America and

encourage similar behavior. Schlesinger especially worried that recognition in the

Argentine case would increase the likelihood that military leaders in other politically

troubled states including Peru, Venezuela, Ecuador, and the Dominican Republic

would follow the same path. Moreover, close Frondizi aide Rogilio Frigerio met with

Schlesinger shortly after the coup in an effort to remind the administration of how

cooperative Frondizi had been with the Alliance for Progress, and he encouraged the

United States to withhold recognition from the new government.1

Indeed, the shockwaves of the Frondizi coup reverberated strongly in

Venezuela where President Rómulo Betancourt was acutely concerned about

effectively managing the international response to the military deposition of a

1
On the staff meeting debate, see Editorial Note, FRUS, 1961-1963 12: 373; Memorandum,
Schlesinger to Kennedy, 30 March 1962, Papers of Arthur M. Schlesinger, Jr., Box WH-25, Argentina
4/61-4/62, JFKL. On McClintock’s concern about delayed recognition, see Telegram, McClintock to
Rusk, 13 April 1962, NSF, Box 6, Countries: Argentina, General, 4/62, JFKL. On Frigerio, see
Memorandum, Schlesinger to Martin, 24 April 1962, Papers of Arthur M. Schlesinger, Jr., Box WH-25,
Argentina 4/61-4/62, JFKL. The file also contains a long report written by Frigerio.

183
friendly, democratically elected government. The longest-serving, democratically

elected president in recent Venezuelan memory, Betancourt faced domestic

opponents on both his right and left and was constantly under threat of a coup. While

he told U.S. Ambassador in Caracas C. Allen Stewart that he did not think highly of

Frondizi personally, the Venezuelan President worried that if the inter-American

community did not take concrete action opposing the Argentine coup than he might

soon share Frondizi’s fate. In April, Betancourt announced that he would not

recognize the new government and recalled all Venezuelan personnel from the

nation’s embassy in Buenos Aires. Furthermore, Betancourt intended to introduce a

resolution requiring inter-American consultation before the recognition of de facto

governments at the next meeting of the Organization of American States (OAS).

However, the Betancourt Doctrine that called for non-recognition of non-democratic

regimes failed to gain resonance in Washington.2

The coup also caused some self-appraisals – albeit briefly – within the U.S.

government. Agency for International Development (AID) Administrator Fowler

Hamilton questioned whether the Alliance for Progress, through the austerity program

imposed by the IMF in 1959, had contributed to the Frondizi coup. He ultimately

concluded that matters would have been even worse without the February 1962

agreement that authorized $150 million in economic assistance, and that the United

States was blameless. Nevertheless, State Department officials hoped that the Guido
2
On the Venezuelan reaction, see Memorandum, Battle to Bundy, 14 April 1962, FRUS,
1961-1963, 12: 379-381; Stewart to Rusk, 11 April 1962, NSF, Box 6, Countries: Argentina, General,
4/62, JFKL; Stephen G. Rabe, The Road to OPEC: United States Relations with Venezuela, 1919-1976
(Austin, 1982), 139-167.

184
government could more effectively improve the lives of ordinary citizens while

continuing to pursue the financial stabilization and development programs

inaugurated by the Frondizi government. Although U.S., IMF, and Guido

government officials continued to view Frondizi’s harsh austerity program as a

macroeconomic necessity, McClintock described its application as “draconian,” and

noted its obvious lack of popular support. Such concerns rarely reappeared in the

subsequent months after the initial shock of the coup wore off.3

Given the shared perception among working class Argentines that Frondizi’s

economic program had been draconian, it is surprising that U.S. officials questioned

his commitment to global capitalism. Yet in the wake of the coup there was

speculation in both Buenos Aires and Washington that Frondizi had always been a

communist in disguise. It was a particularly useful theory for Argentine military

leaders, who could point to Frondizi’s attempts to arbitrate the U.S.-Cuban dispute

and his populist, pre-presidential writings as proof of his duplicity. McClintock, a

veteran diplomat but still new to his post in Buenos Aires, gave some credence to

such spurious claims. He cautioned that those who believed the theory “have given

Frondizi and Frigerio credit for more Machiavellian action than even these two clever

Italians could develop in their conduct of government.” Nonetheless, the

Ambassador submitted that even though “actual proof of communist design is

lacking … there is some smoke which cannot be entirely overlooked.” Despite

3
Memorandum, Hamilton to Kennedy, 6 April 1962, NSF, Box 6, Countries: Argentina,
General, 4/62, JFKL. For the “draconian” quote, see Telegram, McClintock to Rusk, 10 April 1962,
NSF, Box 6, Countries: Argentina, General, 4/62, JFKL.

185
Frondizi’s critics’ attempts to portray neutralist international political positions and

efforts to reintegrate Peronists into the domestic political system as communist-

inspired, the former president’s economic policies in office and subsequent writings

fail to support the conclusion. Only the thickest of Cold War glasses, which equated

neutralism with communism, could generate such an error. Yet the question of

recognition still loomed.4

It was answered on 18 April 1962 when Kennedy recognized the Guido

government. Despite their sympathy for Betancourt’s concerns, Kennedy

administration officials convinced themselves that the cause of constitutional

government would be strengthened if they extended formal recognition to Guido.

Ostensibly a civilian leader, Guido had called the legislature into session and

desperately tried to hold off military hardliners who wanted to govern the country

themselves. If U.S. officials were to reinvigorate the movement toward a liberal civil

society in Argentina, a Guido presidency appeared to be the only viable option in the

short term. Most importantly, Guido appeared unlikely to challenge U.S. political

and economic interests. For those reasons, the Kennedy administration decided that it

was in its own best interest to go along publicly with the fictional constitutionality of

Guido’s presidential ascendancy. The fiction of constitutional continuity would be

less damaging to the health of the Alliance for Progress than the alternative of a

military-led Argentine regime. U.S. policymakers made a rhetorical nod toward

4
Telegram, McClintock to Rusk, 14 April 1962, Telegram, McClintock to Rusk, 13 April
1962, NSF, Box 6, Countries: Argentina, General, 4/62, JFKL. Arturo Frondizi, Petróleo y nación
(Buenos Aires, 1963) offers a strong defense of the author’s market-oriented approach to petroleum
policy.

186
upholding democracy by calling for new Argentine elections at the earliest possible

convenience, provided that communists and Peronists were proscribed from the ballot.

Recognition was conditioned upon a pledge to hold such elections, and the

understanding that Guido was more than just a figurehead who masked true military

governance. Subsequent U.S. policy statements clarified that if the Argentine

military later led a coup against Guido and took power, consequences would include

the elimination of all U.S. assistance programs.5

In fact, the Kennedy administration lacked viable alternatives to recognition.

Non-recognition would have opened the administration to criticism for abandoning

the principles of the good neighbor because it would have been interpreted in the

region as U.S. interference in the domestic political processes of a Latin American

state. However, the administration missed an opportunity to back off of its previous

commitment to Argentine development policies. Significant U.S. assistance to the

Frondizi government had not saved it. Instead, that government gave way to an

ostensibly civilian government that functioned independently of the military, but

under constant threat of a military coup. Instead of a strategic retreat from Argentine

development initiatives, the Kennedy administration chose to seek accord with Guido

5
Telegram, Rusk to McClintock, 15 April 1962, NSF, Box 6, Countries: Argentina, General,
4/62, JFKL; Telegram, Martin to McClintock, 18 April 1962, NSF, Box 6, Countries: Argentina,
General, 4/62, JFKL; Telegram, Ball to McClintock, 7 May 1962, NSF, Box 6, Countries: Argentina,
General, 5/62-6/62, JFKL; Telegram, Ball to McClintock, 19 June 1962, NSF, Box 6, Countries:
Argentina, General, 5/62-6/62, JFKL. As late as 17 April, presidential aid Ralph Dungan opposed
recognition, arguing that the announcement could be delayed without damage to the bilateral
relationship. See Memorandum, Dungan to Kennedy, 17 April 1962, President’s Office Files, Box 111,
Countries: Argentina, General, 1962, JFKL.

187
and continue its quest to incorporate Argentina fully into the liberal international

order.

III

From its outset, the Guido government decided to stand with the United States

both politically and economically. Foreign Minister Bonifacio del Carril invoked

geographic and cultural ties when he declared that “we are with the West because we

are Western.” Yet there were also pragmatic reasons why the Guido government

sought harmonious relations with the United States. Facing pressing trade, budget,

and balance of payments problems that had contributed significantly to the military’s

decision to remove Frondizi from power, Guido depended upon the active assistance

of patrons in Washington and New York for financial assistance.6

Expansion of agricultural exports at consistent price levels would go far

toward solving Argentina’s economic problems. The Guido government faced long

odds. Argentine agriculture was hampered by drought, the presence of Hoof-and-

Mouth disease in some cattle herds, institutional neglect that dated to Perón’s Import

Substitution Industrialization (ISI) strategy that systematically siphoned profits out of

agriculture and into industry, and international barriers to trade. Yet agricultural

exports were critically important because they provided Argentina with the bulk of its

foreign exchange earnings. The country was naturally suited for success in cattle and

6
Bonifacio del Carril, quoted in Jorge A. Aja Espil, “El antagonismo ideológico en América,”
in La política exterior Argentina y sus protagonistas, 1880-1995, Ed. Silvia Ruth Jalabe (Buenos Aires,
1996), 179-180.

188
grain production and the Guido government wanted to maximize potential returns as

part of its strategy to rectify the nation’s balance of payments deficit. Like Frondizi

before him, Guido hoped that through liberalization, he would both infuse Argentina

with foreign capital investment and eliminate foreign barriers to Argentine exports.

Argentina had done its part and opened its doors to international investment and

products. However, in order to increase Argentine exports to European and North

American countries, those states needed to reciprocate by opening their doors to

Argentine imports. Adequate reciprocity failed to materialize.

To protect domestic agricultural production, U.S. and European governments

were hesitant to agree to the kind of tariff revision that Argentines needed. While the

Argentine agricultural sector still suffered from the neglect of Perón’s ISI strategy,

protectionist barriers to Argentine exports in the Global North further compromised

the nation’s ability to earn dollars and exacerbated the balance of payments crisis. It

also exposed a double standard within the liberal international order. While U.S.

officials and their allies in business demanded the open door for trade and investment

abroad, they remained unwilling to liberalize their own markets to Argentine exports.

Although Argentine officials saw the nation’s $300 million annual trade deficit with

the United States as a pressing problem, U.S. officials countered that it was

economically unwise to try to balance trade on a bilateral basis. Besides, they argued

disingenuously, Argentina’s bilateral deficit was not a significant factor in its weak

balance of payments position. Nevertheless, nations throughout Latin America

shared Argentina’s frustration with barriers to access to global agricultural markets,

189
and continued to call for fundamental reform in the global trade of primary products.

Despite those calls, elites in the Global North were generally unwilling and politically

unable to address this core economic problem directly.7

The continued U.S. quarantine of Argentine meat constituted an especially

pressing issue for the Guido economic team that they were ultimately unable to

resolve. The Eisenhower administration stopped imports of beef from Argentina in

1959 after Hoof-and-Mouth disease was discovered in some herds. Argentine

officials, ranchers, and meat packers continued to lobby for the trade’s resumption.

In addition to benefiting producers directly, enhanced access to U.S. markets would

alleviate the negative Argentine balance of payments position. In response to the

Hoof-and-Mouth disease challenge, U.S. and Argentine scientists formed a

commission to further investigate the problem and U.S. officials launched Operation

Beef in an effort to expand Argentine beef exports globally. Since Hoof-and-Mouth

disease was a problem throughout much of Latin America, they hoped that the

commission’s work could form the basis of a larger, regional effort under the Alliance

for Progress.8

The question of access to the U.S. agricultural market again materialized in

late June 1962 when the U.S. Congress eliminated a previously promised 20,000 ton

sugar allotment for Argentina. The new legislation appeared to discriminate only

7
The best source on Argentine economic history remains Carlos F. Díaz Alejandro, Essays on
the Economic History of the Argentine Republic (New Haven, 1970).
8
Status Report on the United States-Argentine Hoof-and-Mouth disease Program, undated,
NSF, Box 6, Countries: Argentina, General, 7/62, JFKL; Telegram, Rusk to McClintock, 20 December
1962, NSF, Box 7, Countries: Argentina, General, 11/62-12/62, JFKL.

190
against Argentine sugar, leaving the sugar allotment of other Latin American nations

intact. McClintock begged Rusk to work with congressional leaders to reinstate the

Argentina’s quota, arguing that it represented “a practical measure within [the]

Alliance for Progress to assist an important and friendly Latin American nation.” In

light of the ongoing economic crisis and strength of Argentine nationalism, the sugar

issue threatened to produce anti-American demonstrations and play into the hands of

nationalists who were already agitated at the continuation of Frondizi’s economic

policies. Ultimately the State Department succeeded in restoring the Argentine sugar

quota, but the incident testifies to the precarious position of the Alliance for Progress

before Congress. Members from sugar producing regions promoted protectionist

agricultural trade policies designed to enhance their constituents’ sugar prices without

concern for the global ramifications of those decisions. While U.S. policy

aggressively worked to open Argentine markets, free-traders faced considerable

domestic challenges when they tried to open U.S. markets to Argentine products.9

Beyond the difficult trade questions, U.S. officials hoped to achieve

sustainable economic stability, but were pessimistic about their chances. Privately,

they complained that “Argentina is sick, sick, sick.” Yet despite their patient’s ailing

health, and McClintock’s earlier concern that the austerity imposed by Frondizi’s

desarrollo program had inflicted too severe a cost on ordinary people, U.S. economic

doctors remained orthodox in their economic prescriptions. From the perspective of

9
Telegram, McClintock to Rusk, 2 July 1962, NSF, Box 6, Countries: Argentina, General,
7/62, JFKL; Memorandum of Conversation, 19 July 1962, FRUS, 1961-1963 12: 395-398.

191
U.S. elites, liberal economic policies had not helped to cause Argentina’s political

and economic instability, but rather that instability existed because Argentine officials

had not been adequately aggressive in carrying out those policies.10

Guido immediately set out to demonstrate that he would aggressively

implement liberal economic policies. Faced with a balance of payments deficit,

Guido responded with a 29.3 percent devaluation of the peso in April 1962 and

tightened the money supply, further contracting liquidity. In response to the

overwhelming public discontent with the increased austerity policy, Guido removed

unpopular Minister of the Economy Federico Pinedo and reinstated veteran Álvaro

Alsogaray. But the latter was forced to walk the tightrope of satisfying Washington

patrons whose money he needed while avoiding the perception of being an American

lapdog. To do so, he sought to turn the perception of closeness to U.S. officials to his

advantage by claiming that only he could successfully go to Washington and secure

financial assistance.11

As Frondizi had done in 1959, Guido and Alsogaray looked to the United

States for assistance in salvaging the nation’s economy. U.S. officials suggested

railroad reform as a logical place to begin. Initially purchased by Juan Perón from the

British with frozen sterling reserves, the state-owned railroads were outdated and in

10
Telegram, McClintock to SecState, 17 July 1962, NSF, Box 6, Countries: Argentina,
General, 7/62, JFKL; Telegram, McClintock to Martin, 17 July 1962, NSF, Box 6, Countries:
Argentina, General, 7/62, JFKL.
11
Gary W. Wynia, Argentina in the Postwar Era: Politics and Economic Policy Making in a
Divided Society (Albuquerque, 1978), 114. In 1962, the Banco Central de la Republica Argentina had
a negative balance of foreign exchange reserves of $234 million (in constant 1970 dollars). See Díaz
Alejandro, Essays, 353.

192
disrepair. They operated at a substantial loss because, international observers argued,

the state maintained a bloated workforce. Given the Argentine economic crisis,

railroad reform appeared to U.S. and IMF officials as an opportunity for the

Argentine government to save money. Such a strategy carried political risk, however,

because it would require layoffs of state employees. Privately, Alsogaray promised

the Kennedy administration that he planned “to go further in reforming the railways

than even your government could desire.” However, he insisted that he could not

sign an agreement to reform the railroads because if the story leaked that a foreign

government had dictated the policy, “there would be a storm of protest.” Del Carril

had other ideas about how to prime the pump and proposed $700 million worth of

new development projects. If fully funded by the United States, those projects would

have totaled seventy percent of the year’s Alliance for Progress appropriations. The

Foreign Minister later clarified that he could “make due” with $150 million in aid

from the United States to help fund projects that would cost between $700 million

and $1 billion total, as long as the U.S. contribution was released expeditiously.

Alsogaray proposed to prioritize agricultural production, industrial projects that

promised rapid completion, and low-cost housing construction.12

Beyond discussions of new aid allotments, and instead of addressing the

discriminatory trade policies of the metropole, U.S. officials worked more rapidly to

12
Telegram, McClintock to Rusk, 4 May 1962, NSF, Box 6, Countries: Argentina, General,
5/62-6/62, JFKL. For the Alsogaray quote, see Telegram, McClintock to Rusk, 4 May 1962, NSF,
Box 6, Countries: Argentina, General, 5/62-6/62, JFKL. On del Carril’s requests, see Telegram,
McClintock to Rusk, 22 June 1962, NSF, Box 6, Countries: Argentina, General, 5/62-6/62, JFKL;
Telegram, McClintock to Rusk, 25 June 1962, NSF, Box 6, Countries: Argentina, General, 5/62-6/62,
JFKL.

193
appropriate the IMF-designed aid package approved in February 1962 in an effort to

bandage the Argentine economic hemorrhaging. The agreement permitted the Guido

government to draw $130 million from the Untied States, with priority given to

projects that dealt with agricultural development, housing, and roads. That included

up to $50 million for primarily private sector borrowers from the Export-Import Bank.

In addition, the Inter-American Development Bank (IDB) approved an $800,000

technical assistance loan. U.S. officials continued to demand assurances that the

money would not be used to pay off European creditors, who had not yet agreed to

reschedule Argentina’s short-term debt. Even with all of the help, U.S. officials were

not convinced that the Argentine balance of payments deficit could be corrected. For

his part, Alsogaray was outraged by what he regarded as the paucity of assistance

from Washington, particularly when he compared it to the $1 billion U.S. officials

approved for rival Brazil. "We must have put our case very badly in Washington,” he

declared, “if it is not realized there that we confront a truly desperate situation for

which immediate help is needed.” He pointed out that the United States “did come

forth with cash to help Brazil and save [Brazilian President Jaoa] Goulart. Now,

however, when we are on the brink of catastrophe, you tell us to get along with $130

million most of which will be bound up in red tape.” Alsogaray scolded U.S.

Treasury Secretary Douglas Dillon that the Kennedy administration confronted “the

last chance for a democratic regime combined with [a] free economy to continue

ruling in Argentina.” With the economic situation further deteriorating, Alsogaray

saw a simple choice: either the United States would come up with at least $200

194
million in immediate aid, a full $50 million more than he had earlier indicated the

country could make due with, or Argentina would fall into national bankruptcy and

the Guido government would give way to a military dictatorship. McClintock

concurred with Alsogaray’s analysis, and relayed his endorsement of expanded

assistance to Dillon and Kennedy.13

In addition to new balance of payments deficits, the Argentine government

and private citizens owed money on obligations contracted during the late 1950s.

Lacking the economic development that the previous loans promised, Argentine

debtors were crushed under the weight of interest payments in one of the first debt

crises to grow out of IMF lending policies. Alsogaray’s personal assurances to the

contrary, public and private U.S. elites continued to worry that he would use U.S. aid

dollars to pay European creditors. He even spoke to the subject before the American

Chamber of Commerce in Buenos Aires in an ultimately successful effort to quiet

their concerns.14

Despite their significant role in crafting and encouraging Argentina’s

economic policies since 1958, U.S. officials offered painfully little support. The IMF

and Treasury Department discouraged any immediate Argentine drawing on the $25

million already approved until a permanent arrangement was worked out between the

13
Telegram, Rusk to McClintock, 29 June 1962, NSF, Box 6, Countries: Argentina, General,
5/62-6/62, JFKL; Telegram, McClintock to Rusk, 2 July 1962, NSF, Box 6, Countries: Argentina,
General, 7/62, JFKL; Letter, Alsogaray to Dillon, 13 July 1962, NSF, Box 6, Countries: Argentina,
General, 7/62, JFKL.
14
On the Chamber of Commerce, see Telegram, McClintock to Rusk, 17 July 1962, NSF,
Box 6, Countries: Argentina, General, 7/62, JFKL.

195
Argentine government and the IMF, and they opposed any expansion of credit to

Argentina beyond what they had already approved. Indeed, U.S. officials called for

renewed emphasis upon Argentine “self-help measures.” They complained of

“Alsogaray’s inaction” in dealing with the economic problems and lack of effort in

his negotiations with Europe to reschedule old debt. Rusk also believed that by

having approved a total of $150 million through the IMF-Treasury agreement, the

United States had done its part to demonstrate support for Guido. It was now up to

the Argentines to find projects on which the money could be spent efficiently.

Specifically, IMF missions to Argentina continued to argue that economic recovery

was not possible without reforming, and ideally privatizing, the national railroads and

the state-owned petroleum company Yacimientos Petrolíferos Fiscales (YPF). The

deficit that the railroads and YPF generated each year, IMF experts argued, decisively

contributed to increasing inflation and prevented Argentina from maintaining its

currency exchange rate. If attempted, such measures promised to ignite a

groundswell of opposition within Argentina.15

Indeed, Alsogaray faced fierce domestic opposition to his austerity program,

particularly from the Confederación General del Trabajo (General Confederation of

Labor, CGT). Labor leaders mobilized their members in opposition to austerity

because of the disproportionate sacrifice required of the working class under the

policy. Working-class Argentines evinced little concern about the nation’s

15
Telegram, Rusk to McClintock, 2 July 1962, NSF, Box 6, Countries: Argentina, General,
7/62, JFKL; Telegram, Rusk to McClintock, 6 June 1962, NSF, Box 6, Countries: Argentina, General,
7/62, JFKL, includes the self help quotation. Telegram, McClintock to Rusk, 27 October 1962, NSF,
Box 7, Countries: Argentina, General, 10/62, JFKL.

196
international credit rating. Instead, the CGT’s Peronist leadership demanded that

back wages be paid, complained about the rising cost of living, and insisted upon the

elimination of the regressive sales tax. Such concerns were immediately tangible to

working Argentines as they sought to arrest the downward slide in their quality of life

since the 1955 advent of the Liberating Revolution. In an effort to achieve that

overriding objective, and protest the encroachment of global capitalism in Argentina

to the detriment of the working class, CGT leaders called a general strike in August as

part of the labor movement’s continuing struggle since the fall of Perón. Defiantly,

they declared that “the people have repeatedly expressed their repudiation of the

policies of hunger and unemployment that emanates from the International Monetary

Fund and Yankee capitalism.” These workers tended to support Peronists when they

were permitted to vote for such candidates. Despite the disinclination of the military

to reintegrate the working class into the body politic, workers still sought to voice

their views through whatever means they could find.16

Increasingly shut out of the nation’s formal governing structures, labor

militancy remained the last mechanism short of outright rebellion for workers to

challenge prevailing power structures. In turn, increased labor militancy triggered

mounting calls from the military’s hard-line colorado faction for Guido’s ouster and
16
Statement, Comisión Directiva Provisoria de la CGT, 12 July 1962, Caja 3, 1962-1963,
ASASG; On the August plan de lucha, see “Medidas [indiscernible] para asegurar el [éxito] del Plan
de Lucha,” Comisión Directiva Provisoria de la CGT, undated, Caja 3, 1962-1963, ASASG; “El
Pueblo Respondió A La Tiranía Vigente,” Boletín Informativo 62 Organizaciones, 1 August 1962,
Caja 3, 1962-1963, ASASG (includes the quotation on “Yankee capitalism”); Telegram, McClintock
to Rusk, 17 July 1962, NSF, Box 6, Countries: Argentina, General, 7/62, JFKL. Daniel James,
Resistance and Integration: Peronism and the Argentine Working Class, 1946-1976 (Cambridge,
1988), especially 165, provides a larger context for discussions of labor. James suggests that the labor
response to Guido’s austerity program was largely “muted” until at least May 1963.

197
the installation of a military junta. It was precisely the intensity of popular opposition

that made it impossible for Alsogaray to accede to such U.S. demands as privatization

of the state-owned railroad network, a move the CGT strongly opposed. Popular

discontent also posed a dicey political problem as U.S. and Argentine elites

contemplated future elections. U.S. officials hoped that the Peronist vote could be

fractured among multiple parties and that a repeat of the 1958 election, in which

Frondizi secured the Peronist vote, could be avoided. At the same time the Peronists

wanted the opportunity to vote for a Popular Front candidate if they were not allowed

to vote for an actual Peronist. Labor’s insistent defense of working-class interests,

combined with the military’s continued refusal to consider mainstream political

reintegration, exposed as fantasy any hope for national consensus on economic

policy.17

Washington officials understood that the Argentine working class posed a

political challenge, but nonetheless failed to understand the nature of the impasse.

Kennedy was confident that the working class could be effectively integrated into the

larger political-economy along liberal lines, as the American working class had been

in the 1930s. When the President met Alsogaray on 27 July at the White House, he

expressed pleasure that the Guido government had continued market-oriented

economic policies. However, like McClintock immediately after the Frondizi coup,

he was concerned “that a too conservative and cautious and deflationary policy would

17
On political unrest, see Alvaro Alzogaray, Experiencias de 50 años de política y economía
Argentina (Buenos Aires, 1993), 59-70. On U.S. concerns about the Peronist vote, see Telegram, Rusk
to McClintock, 3 August 1962, NSF, Box 7, Countries: Argentina, General, 8/62, JFKL.

198
meet the interests and desires of the privileged groups and the bankers but not serve

the needs of all the people.” Alsogaray, who must have been surprised by Kennedy’s

statement in light of the recently renewed U.S. emphasis on Argentine economic self-

help, agreed that working-class needs must be addressed in a comprehensive policy,

but could point only to plans to build low-cost housing as a means of doing so. While

important, access to affordable housing alone fell far short of addressing legitimate

CGT grievances. Nevertheless, U.S. officials charged with the day-to-day

implementation of policy were unlikely to push the president’s point. They focused

more on possible domestic reforms than they did upon the effect of austerity on the

working class. Remarkably, Kennedy evinced greater concern about the possibility

of social instability in Argentina than the nation’s own minister of economy, all the

while seemingly oblivious to the important role that U.S. policy had played in

encouraging the myopic focus on austerity and self-help. The U.S. role had not been

lost on working-class critics, who held political leaders in the United States

responsible for their declining living standards along with Argentine officials. The

Eisenhower and Kennedy administrations had antagonized the very people they

professed to have been assisting.18

In spite of the notable past limitations orthodox economic policies already

exposed, Alsogaray’s Washington trip lubricated the financial spigot. Under

increasing pressure and in the face of potential Argentine defaults, the U.S. Treasury

released a $20 million loan to stabilize the balance of payments and AID authorized

18
Memorandum of Conversation, 27 July 1962, FRUS, 1961-1963 12: 398-399.

199
an additional $80 million in project loans, including $25-$30 million for housing

loans. Other smaller loans were designed with strictly public relations objectives in

mind. A 5 billion peso loan was approved “to engender patriotism and recover

confidence and enthusiasm.” The Alsogaray trip also opened a dialogue aimed at

rescheduling Argentine debts to the Export-Import Bank. Beyond its debts owed to

the United States, Argentina faced $268.3 million in obligations to European creditors

due in 1962. If the Guido government did not reschedule those debts, that number

would jump to $374.9 million in 1963. Since Guido did not encourage the nation’s

private debtors to refinance, the possibility of an additional drain on the overall

balance of payments existed as Argentine debtors would purchase foreign currency to

meet their mounting obligations.19

Paris Club creditors were aware of the poor state of the Argentine economy

and recognized the probability that they would need to reschedule Argentine debt in

order for the country to avoid a default. Created in response to an earlier Argentine

financial crisis in 1956, the Paris Club comprised an informal group of creditor

nations that met together to restructure the debts of developing nations that otherwise

faced default. Paris Club members were motivated to collaborate so that no creditor

nation profited at the expense of the others in dealings with troubled debtor nations.

They were united in the belief that it was better to restructure debts collectively and in

the process avoid defaults than lose all of their investment in what would have

19
Memorandum, unsigned, 26 July 1962, NSF, Box 6, Countries: Argentina, General, 7/62,
JFKL; Telegram, McClintock to Rusk, 8 August 1962, NSF, Box 7, Countries: Argentina, General,
8/62, JFKL.

200
effectively been a series of bankruptcies by sovereign governments. In conjunction

with the IMF, the Paris Club provided debtor countries limited relief from their

obligations to public lenders (during the 1970s, private banks formed a similar

informal group called the London Club). Recognition by Paris Club members that

Argentina needed a new agreement to avoid a default did not cause them to move

quickly to schedule a meeting with Alsogaray. The architects of the Paris Club

conceived of the debt restructuring agreements that they pioneered as appropriate

only under extraordinary circumstances, not as a normal mechanism of national

finance. Consequently, Argentina’s return to the bargaining table was greeted with a

distinct lack of enthusiasm by the treasury officials of the European powers, who held

off the Argentine Minister of Economy until after the summer vacation season despite

the reemergence of coup threats in August. While Alsogaray finally met with Paris

Club representatives in September, they did not come to a final agreement until 24

October 1962. The deal restructured $270 million in debt and promised to provide

the Argentine Economic Minister with some additional room to maneuver.20

While those negotiations were ongoing, the Guido government faced

additional challenges that stemmed from the inability of U.S. AID technical experts to

find projects that they deemed worthy of funding. AID experts were charged with
20
For information on the Paris Club agreement, see:
http://www.clubdeparis.org/en/countries/countries.php?IDENTIFIANT=8&POSITION=0&PAY_ISO
_ID=AR&CONTINENT_ID=&TYPE_TRT=&ANNEE=&INDICE_DET= (29 January 2007). The
U.S. State Department monitored European handling of the debt problem, and encouraged the
Europeans to restructure Argentina’s debt. See Telegram, Gavin to Rusk, 10 August 1962, Box 7,
NSF, Countries: Argentina, General, 8/62, JFKL; Telegram, McClintock to Rusk, 17 September 1962,
NSF, Box 7, Countries: Argentina, General, 9/62, JFKL. Although the United States is now a member
of the Paris Club, it first participated in an agreement with Brazil on 1 July 1964. See:
http://www.clubdeparis.org/en/countries/countries.php?INDICE_DET=30 (29 January 2007).

201
approving worthy projects on which appropriated funds could be spent. Without their

approval, the development loans went unutilized. Compounding all of these

difficulties, the Argentine military surprised everybody by requesting a Military

Assistance Program (MAP) agreement similar to agreements arranged with other

Latin American nations, despite having previously denied interest in the program. It

was an impossible request. Kennedy would not have been able to explain to his

domestic audience why he helped fund a military that had already overthrown the

elected Frondizi government. If the military made good on its threats and removed

Guido from power as well, the damage would have been even worse.21

IV

While Guido continued to seek a solution to the intractable economic

difficulties, the world’s attention focused again on Cuba. On 14 October 1962, a U.S.

U2 spy plane photographed Soviet Medium Range Ballistic Missile (MRBM) sites

under construction in Cuba, despite Soviet Premier Nikita Khrushchev’s assurances

that he had no intention of introducing nuclear weapons to the island. Once the

MRBMs were assembled, the Soviets or the Cubans could launch missiles equipped

with nuclear warheads at targets in the United States. What followed was the most

tense superpower standoff of the Cold War, and the closest that the United States and

21
On the Argentine MAP request, see Telegram, McClintock to Rusk, 5 September 1962,
Box 7, Countries: Argentina, General, 9/62, JFKL. One month after the MAP request, the Argentine
Air Force announced that it would only buy three C-130s from Lockheed instead of the eight that it
contracted for because of the nation’s ongoing budget problems. See Telegram, McClintock to Rusk,
17 October 1962, NSF, Box 7, Countries: Argentina, General, 10/62, JFKL. On AID, see Telegram,
McClintock to Rusk, 10 October 1962, NSF, Box 7, Countries: Argentina, General, 10/62, JFKL.

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Soviet Union ever came to nuclear war. The developing crisis provided Guido with

an opportunity to demonstrate his fidelity to the Western cause. Where Frondizi had

sought to increase his international prestige and buttress Argentina’s credentials as a

neutral power by serving as an arbiter between Havana and Washington following the

disastrous U.S. invasion at the Bay of Pigs, Guido instead ordered his representatives

to “cooperate without hesitation” with U.S. officials during the missile crisis.

Argentina was the first Latin American country to offer military support should it

become necessary, an important symbolic declaration of solidarity with the United

States even if it had little practical utility. Ultimately, Guido’s orientation toward the

crisis specifically, and its ramifications for a pro-Western orientation in the Cold War

more generally, appealed to both Argentine military officers and to the Kennedy

administration.22

Guido hoped that his political support for the United States in the crisis would

redound to generate reciprocal assistance from Washington to help with the region’s

“less dramatic” but “still urgent” economic problems. Specifically, Guido argued that

communist support grew directly from depressed economic conditions, an argument

that some Kennedy administration officials had made when they launched the

Alliance for Progress. He further echoed the themes of the Alliance for Progress in

22
Letter, Guido to Kennedy, 24 October 1962, President’s Office Files, Box 111, Countries:
Argentina, General, 1962, JFKL. Even before the crisis, Guido had taken an anti-Cuban stance by
opposing Cuban entry into the Latin American Free Trade Agreement (LAFTA). See Telegram,
McClintock to Rusk, 19 August 1962, NSF, Box 7, Countries: Argentina, General, 8/62, JFKL. Aja
Espil, “El antagonismo ideológico en América, 162-1963,” in La política exterior Argentina, Ed.
Jalabe, 181-185, provides one of the few accounts by a Guido government official (Subsecretario de
Relaciones Exteriores) of its position on the missile crisis.

203
calling for greater cooperation to eliminate poverty, raise educational levels, and fight

diseases throughout Latin America as a means of addressing the problem of

communism. Guido reiterated his alignment with the United States in the Cold War,

writing that “even though [the] immediate physical danger has been ended with the

withdrawal of the offensive nuclear weapons … a potential danger still remains,

which threatens the democratic ideals, spiritual values, and way of life of the

Americas.” As a result, the Argentine President suggested that the peoples of the

Americas “must increase the harmonious and coordinated action of all the States of

this Hemisphere, in order to eliminate all overt or artful acts of subversion on the part

of Communism, which seeks to undermine the foundations of our social organization

as a means of weakening the invincible force of our loyal and mutual cooperation.”

Beyond a departure from Frondizi’s Cuban policy, Guido’s increasingly pro-

American international orientation was at odds with public opinion and Argentina’s

long-standing tradition of neutralism in global affairs. The striking departure was

nonetheless consistent with the international orientation of Argentina’s military

establishment. Guido no doubt hoped that his handling of the crisis would position

him favorably with anti-communist military officers who consistently threatened to

remove him from power, and with U.S. officials who could authorize loans of much-

needed dollars to cash-strapped Argentina.23

23
Letter, Guido to Kennedy, 30 November 1962, President’s Office Files, Box 111, Countries:
Argentina, General, 1962, JFKL; Letter, Kennedy to Guido, 26 December 1962, President’s Office
Files, Box 111, Countries: Argentina, General, 1962, JFKL; Message, Rusk to Muñiz, 10 December
1962, NSF, Box 7, Countries: Argentina, General, 11/62-12/62, JFKL. On Argentine neutralism, see
Joseph S. Tulchin, Argentina and the United States: A Conflicted Relationship (Boston, 1990).

204
 Argentine military support for the U.S. position during the missile crisis

improved U.S. relations with the armed services. McClintock had proposed to

diminish the power of the armed forces in an effort to unlock resources for economic

development. “Certainly,” he wrote in August 1962, “there are a good number of

Argentine Generals and Admirals whom I would gladly nominate for oblivion.”

After the military emerged as a strong institutional defender of U.S. interests,

especially during the missile crisis, U.S. policy toward the Argentine military also

changed. Although it contained a strong anti-democratic colorado faction, the

Argentine military revealed itself to be a loyal institutional ally with which the United

States should maintain cooperative relations. Expanding ties with military officials

could open U.S. officials to charges of anti-democratic practices. However, from

Washington’s perspective the opportunity to safeguard U.S. regional interests through

cooperation with military elites seemed to outweigh the drawbacks.24

Argentine performance in the missile crisis did little to improve the climate of

discussions surrounding new stabilization and development assistance. Certainly

Guido had hoped that Argentine political support for the United States in the missile

crisis would return economic dividends to Buenos Aires, but negotiations remained

complex. Recent rounds of U.S. economic assistance had not noticeably improved
24
Telegram, McClintock to Rusk, 14 August 1962, NSF, Box 7, Countries: Argentina,
General, 8/62, JFKL (includes the quotation). Stephen G. Rabe, The Most Dangerous Area in the
World: John F. Kennedy Confronts Communist Revolution in Latin America (Chapel Hill, 1999), 60-
63.

205
the situation. To the contrary, the unstable political and economic atmosphere that

had permeated Buenos Aires since before the 1962 coup finally came to a head in

December 1962. Salaries of public officials remained unpaid, bankruptcies reached

an all time high in November, strikes in the telecommunications and sanitation

industries were launched only to fizzle out, and yet another round of coup rumors

circulated throughout the city. An IMF team reported that Argentine debt stood at 22

billion pesos, and inflation continued to weaken the peso’s international exchange

position. McClintock argued that the deteriorating political structures were the cause

of the economic failure, writing that the “Argentine crisis has been basically a moral

bankruptcy, a crisis of confidence.”25

Argentina may well have had a crisis of confidence, but the economic crisis

was very real. Despite a positive balance in 1959 and 1960, in 1961 the nation’s net

exchange reserves returned to deficit, and continued to fall in 1962. Agriculture, the

central sector of the Argentine export economy, grew an anemic 1.5 percent between

1958 and 1962. In 1963, only one percent of manufactured products were exported or

sold abroad, and the nation continued to suffer from a negative balance of trade.

Annual rates of inflation averaged approximately thirty percent through the early

1960s. A strategic course-correction was needed in 1963, but instead Guido

requested additional loans.26

25
Economic statistics can be found in Telegram, McClintock to Rusk, 4 December 1962, NSF,
Box 7, Countries: Argentina, General, 11/62-12/62, JFKL; Telegram, McClintock to Rusk, 5
December 1962, NSF, Box 7, Countries: Argentina, General, 11/62-12/62, JFKL.
26
David Rock, Argentina: From Spanish Colonization to Alfonsín, 1516-1987 (Berkeley,
1987), 326-331; Díaz Alejandro, Essays, 352-354. Díaz Alejandro reports that the gold plus foreign

206
 The economic crisis created political casualties, of whom Alsogaray was the

most prominent. The Minister of Economy prided himself as the only Argentine who

could go to Washington, meet with Dillon, and return to Argentina with cash. The

reality was more difficult, and the bureaucratic challenges of dispersing money to

Argentina proved overwhelming. Alsogaray became a victim of what he called the

“chaotic” economy. As the U.S. Central Intelligence Agency (CIA) pointed out, the

Minister of Economy’s methods in carrying out even the “mild” austerity program

“antagonized influential political and military elements.” U.S. intelligence believed it

“unlikely” that the Guido government would “undertake the many basic reforms

necessary to begin economic recovery.” After months of bureaucratic infighting, and

with military prompting, Alsogaray resigned on 4 December 1962, and was replaced

by Eustaquio A. Méndez Delfino.27

As part of the December shakeup, Guido reasserted his own executive

authority. Tired of governing under constant military threat, Guido gave the officers

an ultimatum: either they should immediately remove him from power and rule the

country themselves or they must provide him with adequate political space to govern

independently. During the standoff, the military blinked first and Guido remained in

power. Because Alsogaray was the most prominent voice in favor of austerity, his

exchange reserves held in the Banco Central de la República Argentina fell from $161 million in 1960
to -$57 million in 1961, and bottomed out at -$234 million in 1962 (Díaz Alejandro provides his
economic statistics in constant 1970 U.S. dollars).
27
Alsogaray, Experiencias, 60-63; NIE 91-62, “The Situation and Prospects in Argentina,” 21
November 1962, FRUS, 1961-1963 12: 404-405; Telegram, McClintock to Rusk, 5 December 1962,
NSF, Box 7, Countries: Argentina, General, 11/62-12/62, JFKL.

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removal caused some concern in Washington about whether the anti-inflationary

policy would be jettisoned. International negotiations of a new round of lending and

refinancing had already commenced that was premised on the continuation of

Alsogaray’s austerity program. Measures approved in principle included a $30

million IDB housing loan, a stabilization package that included $25 million from the

IMF and $12.5 million from the U.S. Treasury, a $72 million Export-Import Bank

agreement to refinance existing debt, and a $150 million Paris Club rescheduling.

Except for the IDB housing loan, all aspects of the agreement were conditioned upon

completion of an IMF stabilization agreement and the IMF was eager to expand loan

packages to industry and housing projects. However, any move by the Guido

government away from Alsogaray’s stabilization programs would jeopardize

continued IMF cooperation. U.S. officials insisted upon IMF approval of

stabilization programs specifically to ensure that U.S. assistance was targeted at

economies that acceded to U.S. principles. The procedure guaranteed that Argentine

officials would follow policies that put their nation on the path toward liberal

modernity and U.S. officials demanded such assurance. To assuage the concerns of

IMF Mission Chief David Finch, Guido offered his assurance that “there will be no

change in Argentine economic or financial policy,” despite Alsogaray’s ouster. Once

again, the answer to Argentine economic problems from the international finance

community consisted of a new round of loans in an effort to manage existing interest

208
obligations and advance liberal economic development. Argentina’s day of

reckoning was postponed, but the underlying problem of excessive debt remained.28

In December 1962, McClintock committed himself to helping Guido secure

the new assistance package. He believed that the current regime was Argentina’s

“last chance government.” The “next step,” wrote the Ambassador, “will be [a]

military dictatorship and an eventual swing to [the] left following very serious social

disorder.” Muñiz agreed, telling McClintock that “if this [economic] team fails,

Argentina is not in danger of Peronism; it is in danger of Castro communism.”

Unable to maintain salary payments to state employees, the Argentines hoped to

receive at least some new credits ($80 million) before Christmas. While that proved

impossible, McClintock tried to expedite the complex bureaucratic process, even

arguing to his superiors that aid for Argentina represented “a good investment in

western hemisphere security.” The ambassador also situated the Argentine case

within the larger inter-American context, noting that Brazil and Peru also faced

internal crises and that containing Argentina’s problems might have a salutary affect

upon those neighboring countries. Even if it required an “extra large helping of salt”

to get through the Guido government’s recitation of its own accomplishments under

the Alliance for Progress, McClintock reasoned that it was at least a government

committed to the principles of the Alliance.29

28
Telegram, McClintock to Rusk, 5 December 1962, NSF, Box 7, Countries: Argentina,
General, 11/62-12/62, JFKL; Telegram, McClintock to Rusk, 7 December 1962, NSF, Box 7,
Countries: Argentina, General, 11/62-12/62, JFKL (includes Guido quotation).
29
Telegram, McClintock to Rusk, 12 December 1962, NSF, Box 7, Countries: Argentina,
General, 11/62-12/62, JFKL; Telegram, McClintock to Rusk, 13 December 1962, NSF, Box 7,

209
 Martin met McClintock’s dire analysis with skepticism. The Assistant

Secretary declared that there was “no way [to] obtain [a] sum of [$80 million] for

what cannot be termed anything other than [an] attempted political bailout from

normal Alliance for Progress funds without seriously jeopardizing [the] overall

program for this fiscal year.” While Martin recognized that Argentina was politically

and economically unstable, he returned to the discourse of self-help and argued that

“Alsogaray’s tendency” had been to “talk much and do little.” He further worried

that Mendez Delfino did not have the political backing to fight inflation effectively.

Martin subsequently made a one day trip to Buenos Aires to pursue the issues, but

refused to endorse any formula to fast-track financial assistance that would bypass

established IMF procedures. He was not opposed in principle to providing additional

assistance to the Guido government. However, Martin did not believe in bypassing

established policies that were designed to safeguard the interests of the liberal

international order, such as mandatory completion of an IMF agreement prior to

approval of U.S. assistance.30

To further promote Argentina’s case, Muñiz traveled to Washington to

explain his government’s policies to Kennedy and to beg for a new round of

economic assistance. The Foreign Minister cast the Guido government as a “sort of

Countries: Argentina, General, 11/62-12/62, JFKL; Telegram, McClintock to Rusk, 20 December 1962,
NSF, Box 7, Countries: Argentina, General, 11/62-12/62, JFKL; Telegram, McClintock to Rusk, 10
January 1963, NSF, Box 7, Countries: Argentina, General, 1/63, JFKL (includes the Muñiz quote).
30
Telegram, Martin to McClintock, 14 December 1962, NSF, Box 7, Countries: Argentina,
General, 11/62-12/62, JFKL; Edwin McCammon Martin, Kennedy and Latin America (New York,
1994), 275.

210
New Frontier of Argentina.” Although the new cabinet – with military support –

succeeded in scheduling elections for the following winter (summer in the United

States), the economic situation remained dire. The current economic team, in power

for only a month and a half, “worked earnestly to maintain a free enterprise economic

system,” but was “in a state of desperation and alarm.” With a current budget deficit

of 30 billion pesos ($238 million), the IMF demanded that the state find a way to

close the gap by increasing tax revenues by 15 billion pesos while decreasing

expenditures by another 15 billion pesos. Muñiz complained that the requirement

was “beyond the realm of possibility.” Argentina needed immediate assistance,

including IMF renewal of the standby agreement to facilitate the roll-over of

European debt, a renewal of the $75 million bank credit which had just been repaid to

private U.S. and European banks, emergency assistance of some sort to the

agricultural regions affected by an ongoing drought, and some reserve currency for

the empty Treasury. In all, Muñiz estimated that his country needed between $50 and

$70 million, and needed it within approximately fifteen days. Otherwise, Muñiz

threatened, Guido was prepared to remove the current economic team and replace it

with one “which would install a directed economy with exchange controls.” The

future of private enterprise in Argentina hung in the balance.31

31
Because of the adverse nationalist reaction within Argentina that it would cause, Muñiz and
McClintock agreed not to portray the trip as one where Muñiz was forced to explain himself to the
American president. However, functionally the two men appeared to agree that was what the trip was.
See Telegram, McClintock to Rusk, 16 January 1963, NSF, Box 7, Countries: Argentina, General, 1/63,
JFKL. Memorandum of Conversation, 22 January 1963, FRUS, 1961-1963 12: 406-410. Although
both the meeting and the diplomatic contacts that led up to the meeting were dominated by discussions
of the economic crisis, the crisis receives no emphasis in then Sub-Secretary of Foreign Relations
Jorge A. Aja Espil’s important article. See Aja Espil, “El antagonismo ideológico en América, 1962-

211
 The Muñiz-Kennedy talks exposed cleavages within the Argentine political

establishment. Secretary of War Benjamín Rattenbach and Army Commander-In-

Chief General Juan Carlos Onganía were each willing to abandon the orthodox

economic policies that had failed to correct the economy. Pragmatically, they hinted

at a willingness to alter their course radically and follow the new Brazilian model of a

state-managed economy, rather than risk further economic deterioration and the

resulting social instability. While military officers vehemently opposed Soviet,

Cuban, and Peronist influences, some of them did not share U.S. elites’ ideological

aversion to state economic intervention. They were most interested in creating an

ordered system that would continue to guarantee their own privileged social position,

and if state economic intervention was required to produce stability then they were

willing to follow that course. Such thinking was not universal, and Pedro Aramburu

remained a strong proponent of economic liberalism. In a meeting with Kennedy, the

former Argentine president and perennial presidential hopeful suggested that Brazil’s

problems were the result of “gradual communist penetration.” Nevertheless, the fact

that the issue was even debated stoked international concerns about Argentina’s

commitment to fiscal austerity and economic liberalism.32

1963,” in La política exterior Argentina, Ed., Jalabe, 183-185. Aja Espil’s neglect of the international
dimensions of the economic crisis is also different from his priorities in 1963, when he met with
McClintock about the dire need for immediate assistance. See Telegram, McClintock to Rusk, 24
January 1963, NSF, Box 7, Countries: Argentina, General, 1/63, JFKL. Elections were initially
scheduled for 29 June 1963, but were later pushed back to 7 July 1963.
32
Ibid. For the Aramburu quote, see Memorandum of Conversation, 6 November 1962, NSF,
Box 7, Countries: Argentina, General, 11/62-12/62, JFKL.

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 The willingness of some Argentine officials to consider a different economic

strategy might be explained by the continued delays of the full implementation of the

February 1962 $150 million package. Further discussions of that package were put

off beyond the Kennedy-Muñiz talks of January 1963. IMF certification of

compliance was a precondition of new U.S. or IMF stabilization and development aid,

but the prospect of an IMF-mandated 15 billion peso budget cut in conjunction with a

15 billion peso increase in tax revenues appeared to be a recipe for disaster. To raise

taxes and further cut spending at a time when government suppliers and employees

had gone months without payments promised to destabilize the country further (the

Argentine government was approximately $80 million behind on contract and salary

payments). Argentina had also fallen $12 million behind in dues payments to

international organizations, and needed to pay $2.5 million immediately in order to

maintain its voting rights. At the very least, the policy was indicative of shortsighted

thinking within the IMF that gave little regard to the effect of austerity on the

working class, and the corresponding destabilizing influence working-class outrage

would have on the larger system. By contrast, Argentine political leaders were forced

to make decisions knowing that if they secured much-needed foreign assistance by

employing policies that increased economic efficiency at great human cost, they

would open themselves to voter discontent in the winter elections. Moreover, as

social and economic instability festered, more military officials considered the

213
possibility that they might represent the only institution capable of imposing order on

the country.33

Despite the instability that IMF-sponsored reforms were likely to cause,

Méndez Delfino sought to comply. He nevertheless worried that despite his best

efforts, he might be unable to work out an agreement with the IMF, and thus would

lose any possibility of public or private U.S. aid. McClintock found the Minister of

Economy “nervous and obviously under tension and pressure.” Privately Méndez

Delfino pledged that he would institute many of the structural reforms that U.S. and

IMF officials had long called for. Specifically, he promised to appoint an interventor

– a government director with authority to make reforms – to YPF, name a new head

of the railroad with the power to cut personnel and reorganize, create a commission to

increase tax revenues, pass 14 billion pesos in new taxes, and find 14 billion pesos in

spending cuts. Under the anticipated measures, the budget deficit would shrink from

approximately 50 million pesos to 22 million pesos. Méndez Delfino successfully

convinced McClintock that the Guido government was committed to the kind of self-

help measures that the Kennedy administration had long stressed, and again strongly

suggested that the United States should deviate from its established policy and move

forward with aid to Argentina even in the absence of an IMF agreement. Again,

33
The delay in aid authorization is discussed in Telegram, McClintock to Rusk, 8 January
1963, NSF, Box 7, Countries: Argentina, General, 1/63, JFKL. For problems between Argentina and
the IMF, see Telegram, Rusk to McClintock, 24 January 1963, NSF, Box 7, Countries: Argentina,
General, 1/63, JFKL. On the salary and contracts backlog, see Telegram, McClintock to Rusk, 24
January 1963, NSF, Box 7, Countries: Argentina, General, 1/63, JFKL. On the problem of Argentine
debts to international organizations, see Telegram, McClintock to Rusk, 8 February 1963, NSF, Box 7,
Countries: Argentina, General, 2/63-3/63, JFKL.

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McClintock argued to his colleagues in Washington that Argentina was worth the

proposed gamble and informed them that U.S. businessmen in Argentina agreed. As

before, Washington officials disagreed and insisted on following standard procedure

which required an IMF agreement before U.S. assistance could be appropriated.34

McClintock’s assurances aside, Washington and IMF officials remained

hesitant to double down on their Argentine bet. U.S. observers were skeptical that the

Guido government could even use aid dollars effectively, fearing that rising inflation

would devour any resources that they introduced to Argentina. Finch continued to

harbor serious doubts that Argentina’s “caretaker government” would be able to

commit to long-term reform measures, or even carry out the tax and spending reforms

already pledged. Furthermore, he was concerned that if the IMF gave special

consideration to Argentina, which had not yet met the conditions that the fund

imposed elsewhere in Latin America, it would weaken IMF credibility in future

negotiations. In particular, Finch worried that any perception of a sweetheart deal

with Argentina would undercut ongoing negotiations with Brazil. Despite those

apprehensions, Finch continued negotiations with Argentine officials. It was clear

that the liberal political economy of the country would collapse if he were not

forthcoming with some sort of assistance. Indeed, the Argentine military hinted that

it would print 90 billion pesos if the country did not receive $30-$50 million in

34
Telegram, McClintock to Rusk, 24 January 1963, NSF, Box 7, Countries: Argentina,
General, 1/63, JFKL; Telegram, Hoyt to Rusk, 25 January 1963, NSF, Box 7, Countries: Argentina,
General, 1/63, JFKL. For more on the pledge of railroad reform, see Telegram, Stevenson to Rusk, 26
January 1963, NSF, Box 7, Countries: Argentina, General, 1/63, JFKL.

215
external aid. Dollar amounts of “needed” funds varied. Muñiz said that he needed

$150 million, but could get by on $70 million in new aid.35

In the final analysis, U.S. and IMF officials saw two choices: either they could

double down their bet and provide a new round of loans in the hope that they would

push Argentina over the top on the road toward liberal modernity or they could cut

their losses and accept the consequences of an Argentine default and likely turn

toward statist economics. The leaders of international finance chose to ignore their

own bleak analysis and increased their already substantial bet that they could bring

Argentina into the liberal international order. They were motivated to contain

Peronism (and perhaps communism), buttress the rights of private international

capital, ensure that the 7 July 1963 elections would occur, and ultimately bring

Argentina into liberal modernity.

The new agreement contained multiple parts. First, a relatively small-scale,

$30.5 million road construction loan was signed on 18 March. It was only a

harbinger of the new, nine-figure stabilization and development agreement finalized

days later. The IMF approved $50 million in new loans, of which $25 million would

be available for immediate drawing and the other $25 million would be available over

five months beginning in June. At the same time, the IMF renewed its previous

standby agreement. The U.S. Treasury pledged to release an additional $25 million in

35
On the IMF, see Telegram, Rusk to McClintock, 6 February 1963, NSF, Box 7, Countries:
Argentina, General, 2/63-3/63, JFKL; Telegram, McClintock to Rusk, 18 March 1963, NSF, Countries:
Argentina, General, 2/63-3/63, JFKL. On U.S. concerns, see Telegram, Hoyt to Rusk, 25 January
1963, NSF, Box 7, Countries: Argentina, General, 1/63, JFKL; Telegram, Stevenson to Rusk, 26
January 1963, NSF, Box 7, Countries: Argentina, General, 1/63, JFKL.

216
conjunction with the IMF release. The Export-Import Bank agreed to refinance

Argentina’s outstanding debt to other U.S. creditors. The Bank’s package included

$37.7 million to refinance debts due in 1963, $20 million to service principle

payments due after 30 June 1963, and $11 million to retire the principal payments on

capital goods previously purchased in the United States. The agreement was

conditioned upon the completion of a similar restructuring agreement with the Paris

Club so that none of the assistance granted in this bailout would be used to pay other

creditors. Although there was some lingering discontent about the size of the package

on the part of Guido officials, especially relative to the recent $400 million package

that the United States helped put together for Brazil, all parties were pleased to have

finally secured a finished deal.36

Effectively, the agreement offered clear international recognition that

Argentina was bankrupt and would not otherwise have been able to pay its debts.

Argentina faced an imminent default in a liberal world system that did not possess a

bankruptcy court for state creditors. In 1959, the liberal international financial

community had bet on the Frondizi government and provided it with one of the first

significant IMF-led, stabilization and development loan packages. That package had

been designed to set the Argentine economy on the path toward sustained growth and
36
On the loan for road construction, see Telegram, McClintock to Rusk, 18 March 1963, NSF,
Countries: Argentina, General, 2/63-3/63, JFKL. Letter, McClintock to Méndez Delfino, 22 March
1963, NSF, Box 7, Countries: Argentina, General, 2/63-3/63, JFKL. On Argentine discontent over the
Brazil aid package relative to their own, see State Department Circular, Rusk to Embassies, 30 March
1963, NSF, Box 7, Countries: Argentina, General, 2/63-3/63, JFKL. Rusk noted that European
refinancing would yield an additional $135 million to Argentina through 1964 and that Export-Import
Bank refinancing would restructure $92 million of Argentine debt, provided the Guido government
met all preconditions. It was, Rusk argued, a very generous assistance package even when compared
to the Brazilian deal.

217
development without the need for continued trips back to the IMF with hat-in-hand.

Indeed, it successfully created positive net exchange reserves in 1959 and 1960. But

by 1961, the economy declined once again. The trend continued into 1962, and a

second IMF program was approved. Like the first package, the second failed to

provide the sustained growth and stability promised by its architects. Rather than

cutting their losses, IMF and U.S. officials instead approved a third bailout. In so

doing, international elites missed another warning sign that advertised the perils of

imposing a model of political economy upon a country that lacked a positive

consensus for the model.

Even after the agreement was signed, the Guido government remained unable

to pay state salaries. Although appropriations for such were usually conceptualized

as a domestic matter, it rose to a level that demanded international negotiations

because emergency aid was conditioned upon Argentine compliance with the IMF

stabilization program. Continued non-payment of salaries following the completion

of the agreement was unacceptable from the standpoint of the Guido government,

which still faced possible removal by coup if the military determined that civilian

leadership could not provide adequate stability. Guido’s entire cabinet resigned on

the evening of 12 May, causing a crisis of leadership just after the conclusion of the

economic agreement. The new Minister of Economy, José Alfredo Martínez de Hoz,

declared that Argentina “cannot reach [the] election date of July 7 unless we can pay

government salaries by that date.” In order to pay salaries and make “token

payments” to government suppliers, the Economic Minister targeted some of the

218
funds earmarked for bank reserves to make the payments. Martínez de Hoz insisted

upon “high level” talks with the IMF that bypassed Finch, whom he apparently did

not trust. The political situation was critical, he explained, and McClintock agreed.

By this time, the ambassador’s investment in the success of the economic program

was personal. He had lobbied his colleagues in Washington forcefully to approve

assistance yet again for Argentina. McClintock hoped “that responsible people in

Washington will realize that we are now literally in the home stretch on [the] race to

bring Argentina successfully to an electoral solution and a constitutional

government.” He went on to write that “if through technical worries over [the] IMF

standby we should now turn a negative ear to this last chance government, we will

have provoked, in my opinion, an inevitable move toward a reactionary government

initially of [the] right and ultimately of the left.” In McClintock’s calculations, the

United States had the power to determine Argentina’s fate. It was the responsibility

of the United States “to bring Argentina to an electoral solution and a constitutional

government.” For his part, Martinez de Hoz chose to pursue an informal

understanding with the IMF and his U.S. allies rather than pursue an updated, formal

agreement that he believed would have been politically “disastrous.”37

VI

37
Telegram, McClintock to Rusk, 24 May 1963, NSF, Box 7, Countries: Argentina, General,
4/63-5/63, JFKL. On the cabinet resignation, see Telegram, McClintock to Rusk, 13 May 1963, NSF,
Box 7, Countries: Argentina, General, 4/63-5/63, JFKL; Telegram, McClintock to Rusk, 24 May 1963,
NSF, Box 7, Countries: Argentina, General, 4/63-5/63, JFKL.

219
 The final aid agreement did not address all bi-lateral economic issues and

failed to satisfy fully the U.S. business community. Long-standing negotiations

continued toward an investment guarantee agreement, designed to insure private

investors against the risk of expropriation or war. U.S. officials and bankers argued

that once signed, the investment guarantee agreement would enhance international

private investment in Argentina. Since public and private U.S. elites agreed that the

private sector served as the most important vehicle for economic development, they

saw the agreement as critical to Argentina’s success. From their perspective, the

agreement would guarantee stability and the rule of law against the uncertainties of a

politically and economically unstable region. In January 1963, Muñiz expressed

skepticism that the presence of an investment guarantee agreement would lead to any

significant increase in foreign investment. He was particularly reluctant to include

language that guaranteed foreign investment against the risks of “war or civil war.”

Nonetheless, talks moved forward in Washington with Argentine Ambassador

Roberto Alemann at the urging of public and private U.S. elites.38

The investment guarantee agreement was ultimately concluded in June 1963.

While Martinez de Hoz pushed for greater flexibility in IMF terms so that he could

bring government salary and contract accounts up to date, he gave final approval to

the agreement. McClintock informally linked approval of three aid loans already

conditioned on Argentine compliance with IMF terms – including $20 million for
38
Telegram, McClintock to Rusk, 16 January 1963, NSF, Box 7, Countries: Argentina,
General, 1/63, JFKL; Telegram, McClintock to Rusk, 27 March 1963, NSF, Box 7, Countries:
Argentina, General, 2/63-3/63, JFKL; Telegram, McClintock to Rusk, 9 May 1963, NSF, Box 7,
Countries: Argentina, General, 4/63-5/63, JFKL.

220
balance of payments financing, $12.5 million for housing, and a $3 million

“feasibility study credit” – with signature of the investment guarantee agreement. At

the same time, McClintock continued to support Martinez de Hoz’s requests to the

IMF for leniency in terms so that he could make salary payments.39

While business leaders pushed for an investment guarantee agreement, they

also worried that the Alliance for Progress was unduly emphasizing the public sector

at the expense of the private sector. Although Kennedy administration officials had

been more optimistic about the possibilities of limited public intervention in the

economy than the Eisenhower administration, they continued to stress the central

importance of private investment when they met with Argentine leaders and in

internal communications. The limited change in official policy between the two

administrations still caused some concern, perhaps highlighted by the March IMF

agreement. Argentine business leaders, who were as committed as many of their

norteamericano counterparts to laissez faire ideology, agreed that the benefits of

private investment were underemphasized in the overall Alliance for Progress. It was

a remarkable statement of concern given that the entire IMF program had been

designed to create the conditions for sustained private economic leadership and

emphasized privatization at the expense of the public sector. It was also illustrative

39
Telegram, McClintock to Rusk, 1 June 1963, NSF, Box 7, Countries: Argentina, General,
6/63-7/63, JFKL. It is unclear from the telegram what was to be studied with the “feasibility study
credit.”

221
of the wide crevice that separated the Argentine business community from the

Argentine working class, which felt the painful affects of austerity.40

Consequently, business leaders continued to face the countervailing force of

organized labor. In May 1963, labor ministers representing Organization of

American States (OAS) members met in Bogotá, Colombia, to discuss labor and the

Alliance for Progress. Organized labor leaders took advantage of the meeting to

stress their view that workers needed to be better integrated into the Alliance if its

goals had any chance of being met. In particular, labor worried primarily about

product price stability. Colombian President Guillermo León Valencia Muñóz argued

that Latin American countries were “not underdeveloped but under-paid,” and OAS

Secretary General José Mora agreed that prices were a fundamental problem.

Uruguayan Labor Minister Walter Santoro even suggested that a transnational

minimum wage was a necessary condition for balanced economic development. U.S.

public relations officials emphasized labor’s role in the Alliance for Progress as well.

In a message to the conference, Alliance for Progress coordinator Teodoro Moscoso

asserted that “the Alliance cannot have success if it does not help all of the free

unionists in America.”41

Declarations of solidarity between society and labor from Bogotá aside,

effective political reintegration of working-class Peronists in Argentina remained a

40
Airgram, McClintock to Rusk, 25 March 1963, NSF, Box 7, Countries: Argentina, General,
2/63-3/63, JFKL.
41
Statement, Agencia France Presse, “La Conferencia de Ministros del Trabajo,” undated,
Caja 4: 1963, ASASG. For the Mancuso statement, see Boletín, Embajada de los Estados Unidos de
América, Buenos Aires, 9 May 1963, Caja 4: 1963, ASASG.

222
distant possibility. The March stabilization and development agreement reiterated the

Argentine government’s commitment to liberalization, including a focus on “self-

help,” at odds with working-class interests.

The economic agreements concluded by the Guido government yielded mixed

results. The peso traded at stable levels against the dollar between December 1962

and June 1963 (fluctuating only between 133-1 and 138-1). A public-sector wage

freeze helped contain inflation. As a result of the Central Bank’s new dollar drawing

rights, Argentine exchange reserves increased from $114 million in December 1962

to $179 million in mid-May 1963. Through an import surcharge, increased public

utility fees (applicable to the railroads and oil), an agriculture production tax, some

sales taxes, and railroad and YPF reform, U.S. officials hoped that the Argentine

government would be able to reduce the budget deficit from 44 billion pesos to 20

billion pesos within one year. Finally, the Central Bank adopted conservative lending

policies designed to foster currency stability, pledging to limit credits to the

government to 2 billion pesos and credits to the private sector to 500 million pesos.42

Despite these positive economic signs, McClintock still concluded that overall,

“there has been little, if any, fiscal progress.” He worried that tax revenues would

remain static, in part because customs revenues decreased with the slide in Argentine

imports. While helpful to the balance of trade deficit, the revenue decline hurt the

treasury. Although there was hope that the railroads and YPF could be reformed and
42
Telegram, McClintock to Rusk, 1 June 1963, NSF, Box 7, Countries: Argentina, General,
6/63-7/63, JFKL. Unlike the neo-liberals of the 1990s, U.S. officials in 1963 did not automatically
conclude that all tax increases were unwise and looked favorably upon the series of tax proposals
outlined.

223
made more efficient in the short-term, the national railroads operated at a 30 billion

peso deficit and YPF struggled to meet its $72 million obligations to foreign

companies. In order to pay outstanding salaries and debts, Martinez de Hoz needed

29 billion pesos and he only had 20 billion pesos. While both the IMF and the

Argentine Ministry of Economy continued to search for ways to close the 9 billion

peso gap, they confronted a fundamental structural budget deficit. With his faintest

praise, McClintock wrote that “it is little short of miraculous that [the] economic

situation is as good as it is, almost in spite of [the] government.” Yet it was that very

government that McClintock had supported so forcefully in aid negotiations. Perhaps

the Ambassador believed that he was the singular force that kept Argentina from total

collapse.43

VII

The hope that economic assistance would pull the Argentine political system

through to the 7 July elections was one of the underlying reasons for its approval.

Implicitly, McClintock, others in the Kennedy administration, and IMF leaders

assumed that the elections would return a stable government that would carry forward

under the international commitments made by Guido. In part because of the

electorate’s mood, it remained an open question whether the military would even

allow the 7 July election to go forward until the first ballots were marked. The

Peronist victories in the March 1962 elections that more than any other factor

43
Ibid. YPF debts to foreign companies were climbing at a rate of $2.5 million each month.

224
precipitated the coup against Frondizi were still fresh in the minds of suspicious

military hardliners. Those hardliners – the colorados – repeatedly forced changes in

Guido’s cabinet, second-guessed every major executive decision, and threatened to

remove the president from power and govern themselves. They continually worried

that Perón, Frondizi, or Rogilio Frigerio might find a way to use the electoral system

as route back to power.44

Despite the considerable financial assistance that the United States had

provided, U.S. officials discovered that they had little real leverage to force elections

to move forward even under conditions where Peronist candidates were proscribed.

Given U.S. recognition of Peruvian golpistas in August 1962, McClintock pointed out

that “non-recognition and suspension of aid … is a fairly tired horse to flog.”

Moreover, he argued that “to forestall an ultimate Castro-communist take-over, [the

United States] will eventually have to recognize and probably also to resume

economic and financial support of whatever regime is in power in Argentina so long

as it is anti-communist.” McClintock concluded that “no amount of foreign aid can

44
There is considerable State Department cable traffic, as well as CIA analysis’, of the
unstable Argentine political situation available in the National Security Files, Argentina Country Files,
at the John F. Kennedy Library. Concerns were especially heavy in August 1962, November 1962,
April 1963, and June 1963. As early as October 1962, the CIA began to provide electoral analysis.
For example, for CIA predictions that a Peronist or Frondizist would prevail in open Argentine
elections, see CIA Telegram, “Argentine Political Situation,” 6 October 1962, NSF, Box 7, Countries:
Argentina, General, 10/62, JFKL. As late as June 1963, the CIA believed it possible that the military
would stop the election and institute a coup. See CIA Telegram, “Possibility of a Coup against the
Argentine Government,” 8 June 1963, NSF, Box 7, Countries: Argentina, General, 6/63-7/63, JFKL.

225
excise [the] ghost of Perón from those who fear him. Mental therapy to provide [a]

remedy for the malady must be entirely indigenous [and] ‘made in Argentina’.”45

In spite of all the challenges, the failure of Argentina to hold some form of

elections would have been interpreted throughout the world as a sign of failure for the

Alliance for Progress. A similar sense was shared by members of the military’s

moderate azul faction, which had publicly endorsed a return to democracy. While

General Juan Carlos Onganía considered running for office himself, he remained true

to azul principles and allowed the elections to move forward without his name on the

ballot. In light of these myriad domestic and international pressures, Argentine

leaders agreed that the 1963 elections would utilize the 1958 ground-rules. Peronists

were not allowed to field their own slate of candidates, and would have to choose

between the candidates of other parties or cast blank ballots in protest, thus forfeiting

influence over the future political direction of their country. The military, with U.S.

encouragement, was unwilling to risk a repeat of the March 1962 election results that

trumpeted widespread Peronist support in the country. They also hoped to assure that

no candidate was able to “ride [the] Peronist tiger,” by co-opting the support of the

Peronist movement as Frigerio and Frondizi had done in 1958. Del Carril even asked

the Spanish government to keep Perón under “political quarantine” for six to eight

45
Telegram, McClintock to Rusk, 22 August 1962, NSF, Box 7, Countries: Argentina,
General, 8/62, JFKL; Telegram, McClintock to Rusk, 18 August 1962, NSF, Box 7, Countries:
Argentina, General, 8/62, JFKL. For the McClintock quote on the ghost of Perón, see Telegram,
McClintock to Rusk, 18 March 1963, NSF, Countries: Argentina, General, 2/63-3/63, JFKL.

226
months in an effort to prevent the former president from exerting any influence over

the election, a concern shared by U.S. and Spanish observers in Buenos Aires.46

The field of presidential candidates was crowded. Despite their proscription

from the ballot, Peronists joined with Frondizi supporters and fielded Vicente Solano

Lima under the banner of Unión Popular (Popular Union) as a candidate for president.

Technically the new party was legal because it carefully avoided the language of

peronismo or justicialismo. The anti-Frondizi faction of the Unión Cívica Radical

Intransigente (Intransigent Radical Civic Union, UCRI) backed Oscar Alende and the

Christian Democrats fielded Raúl Matera. Arturo Illia, a medical doctor from

Córdoba, ran on the Unión Cívica Radical del Pueblo (People’s Radical Civic Union,

UCRP) ticket. As expected, Aramburu mounted his own campaign and created the

Unión del Pueblo Argentino (Union of Argentine People), a new conservative and

anti-Peronist political party.47

46
Telegram, Rusk to McClintock, 3 August 1962, NSF, Box 7, Countries: Argentina, General,
8/62, JFKL (includes the tiger quotation); Telegram, McClintock to Rusk, 17 September 1962, NSF,
Box 7, Countries: Argentina, General, 9/62, JFKL; Telegram, McClintock to Rusk, 27 September 1962,
Box 7, NSF, Countries: Argentina, General, 9/62, JFKL; Telegram, McClintock to Rusk, 7 August
1962, NSF, Box 7, Countries: Argentina, General, 8/62, JFKL. Onganía received high praise in the
United States and was noted for his lack of political ambition. An unsigned telegram, noting that the
United States awarded the General the Legion of Merit, read: “General Onganía is reserved,
unpretentious, and self-confident …. [He was] not ambitious in the political sense.” See Telegram,
unsigned to U.S. Embassy in Buenos Aires, 11 March 1963, NSF, Box 7, Countries: Argentina,
General, 2/63-3/63, JFKL. CIA Telegram, 6 March 1963, NSF, Box 7, Countries: Argentina, General,
2/63/-3/63, JFKL, however, indicates that Onganía had been involved in some coup rumors and
considered running for president, confusing Washington’s picture of the General. Some clarity came
in late-June when McClintock wrote that Onganía was happy to see the election move forward. See
Telegram, McClintock to Rusk, 28 June 1963, NSF, Box 7, Countries: Argentina, General, 6/63-7/63,
JFKL.
47
Juan Carlos Torre, “Argentina since 1946,” in Argentina since Independence, ed. Leslie
Bethell (Cambridge, 1993), 289-90.

227
 It did not occur to U.S. officials that candidates outside of the Unión Popular

seriously threatened the liberal reform agenda in Argentina. They miscalculated.

Unión Popular was far from the only faction to preach Argentine nationalism. Indeed,

going into the 1962 elections, Argentines who could agree on very little else began to

form a nationalist consensus suspicious of the IMF agreement and the role of foreign

capital. They blamed the international community for continued high unemployment

and lack of economic progress. If allowed to cast their ballots, Argentine voters were

disposed toward candidates who pledged to reassert national sovereignty. Illia most

effectively utilized Argentine nationalism to his advantage during the campaign. His

most notable campaign pledge was his promise to cancel the contracts that Frondizi

had signed with private oil companies. The vast majority of the companies that held

oil contracts were transnational corporations, and most were based in the United

States. Oil nationalism had long been a fixture in Radical Party politics, dating to

President Hipólito Yrigoyen’s founding of YPF in 1922 in an effort to maintain

domestic control over national oil resources, an act recalled fondly by the Argentine

public. Despite its background, the Illia campaign excited little concern from U.S.

officials who were instead fixated on the Peronists.48

With the exception of the Argentine military, the Kennedy administration was

seemingly more concerned than anybody about the possibility of Peronists returning

48
César Tcach and Celso Rodríguez, Arturo Illia: Un sueño breve: El rol de peronismo y de
los Estados Unidos en el golpe militar de 1966 (Buenos Aires, 2006); Juan Pandis, Arturo Illia: Un
tiempo de la democracia argentina (Buenos Aires, 1993),14-18, 31; Juan Carlos Torre, “Argentina
since 1946,” in Argentina since Independence, ed. Leslie Bethell (Cambridge, 1993), 289-90; Ricardo
Illia, Arturo Illia: Su vida, principios y doctrina (Buenos Aires, 2001), 85-86.

228
to power. As part of his duties, McClintock maintained contact with Peronists,

usually working through organizer Raul Matera, who harbored presidential ambitions

of his own. The Ambassador held Matera in low esteem, and described him as

possessing “no independent will of his own,” while merely parroting Perón. Clearly,

the veteran diplomat concluded, when dealing with Peronists it was “obvious we are

dealing with scoundrels.” Having learned from past elections that the popular sector

was astute at finding ways to exercise influence, the Argentine government, military,

and U.S. officials planned to manage the 1963 election more carefully. Rusk

complained that Perón was “almost unique among twentieth century dictators in that

he retain[ed] a large following because he was deposed at a time when many of his

followers were still unaware of [the] extent to which he had debauched their country.”

By defining Perón as a “major problem,” U.S. policy focused on excluding the voices

of Peronists from Argentine politics instead of finding a way to reintegrate the

powerful populist element into the nation’s political life within a democratic

framework. With a clear focus on the Cold War ramifications of managing

democratic processes in Argentina, Rusk worried that if a future Peronist government

came to power and then failed, the appeal of communism could be enhanced as the

only remaining viable, populist position. The very real Peronist challenge and the

mythical specter of a dynamic future communist movement seemed to Washington

officials to constitute the focal points of opposition to Argentine liberalism in a

teeming electoral field.49

49
Telegram, McClintock to Rusk, 27 October 1962, NSF, Box 7, Countries: Argentina,

229
 Indeed, those concerns were shared by the Argentine authorities, who

approved a series of decrees in June that banned Solano Lopez’s candidacy, to the

delight of U.S. officials. McClintock commented that the “main purpose of these

clarifying decrees has been [to] assu[a]ge fears of nervous military that somehow or

other [the] Machiavellian Perón – Frigerio – Frondizi team will still outsmart the

brave and patriotic soldiers.” Similarly, for all of their bluster about spreading

democracy through the Alliance for Progress, U.S. officials were constrained from

advocating fully democratic elections in Argentina because of the likelihood of a

Peronist restoration. As U.S. officials consistently demonstrated in their attitude

toward Argentina, the official U.S. commitment to democracy ended when that

commitment compromised the liberal international order.50

The proscription of Unión Popular changed the dynamics of the election.

Rather than throw their support to one of the other candidates, Perón and Frondizi

ordered their followers to cast blank ballots in protest. By opposing the contracts that

Frondizi had signed with foreign petroleum companies, Illia narrowly won the

presidency. He had spent his life in Radical Party politics and was best described as a

center-left politician, uninterested in the reintegration of Peronists, but concerned that

recent economic policies had undermined Argentine national sovereignty. Illia could

General, 10/62, JFKL (for the Matera discussion); Telegram, Rusk to McClintock, 13 October 1962,
FRUS, 1961-1963 12: 400-402 (includes the quotations on Perón); National Intelligence Estimate (NIE)
91-62, “The Situation and Prospects in Argentina,” 21 November 1962, FRUS, 1961-1963 12: 404-405;
James, Resistance and Integration, 165.
50
For the McClintock quote, see Telegram, McClintock to Rusk, 28 June 1963, NSF, Box 7,
Countries: Argentina, General, 6/63-7/63, JFKL.

230
not lay claim to an overwhelming mandate. He triumphed with a plurality of only

25.15% of the vote in an election that saw 19.2% of voters follow the orders of Perón

and Frondizi by casting blank ballots. The new president elect understood that

despite his underwhelming victory at the polls, his pledge to cancel the oil contracts

had broad popular support, including the backing of Peronists. Combined with his

party’s historic commitment to oil nationalism, Illia possessed both ideological and

practical reasons to follow through on his campaign promise to cancel the contracts,

and in the process restore Argentine sovereignty to the oil fields.51

VIII

Guido provided U.S. modernizers with what they wanted in Argentina. His

government attempted to stabilize the economy through a liberal reform agenda,

firmly stood against Castro and communism, and held semi-democratic elections that

proscribed Peronist candidates but restored Argentina to limited electoral democracy.

Yet despite Guido’s diligent commitment to liberal policies supported by U.S. elites,

the era he governed is best remembered for its extreme political and economic

instability. The Guido government was forced to fend off constant military

challenges to civilian rule and negotiate major economic assistance and debt

refinancing deals with the international community. Yet the liberal orthodoxy that

51
César Tcach and Celso Rodríguez, Arturo Illia: Un sueño breve: El rol de peronismo y de
los Estados Unidos en el golpe militar de 1966 (Buenos Aires, 2006); Juan Pandis, Arturo Illia: Un
tiempo de la democracia argentina (Buenos Aires, 1993),14-18, 31; Juan Carlos Torre, “Argentina
since 1946,” in Argentina since Independence, ed. Leslie Bethell (Cambridge, 1993), 289-90; Ricardo
Illia, Arturo Illia: Su vida, principios y doctrina (Buenos Aires, 2001), 85-86.

231
the Guido government followed was unable to put the country on the long-term path

toward stability and prosperity or provide for the majority of the Argentine people.

Continued alignment with the United States, it seemed to many Argentines, did not

deliver on its promises.

The voters sent their message of discontent in the 1963 elections. Although

the electorate fractured and denied anything resembling a clear majority to any single

candidate, an underlying resurgence of Argentine nationalism provided a common

denominator throughout most of the electorate. The proud population did not want to

be led by the United States, the Soviet Union, Cuba, or any other country. Instead

they began anew the Argentine quest to find a third way that Guido had abandoned.

Illia began his presidency with a promise to affirm autonomy at home by reasserting

state sovereignty over the nation’s oil fields. It was the single issue that commanded

widespread support among the Argentine population, and it forecasted a gathering

storm in U.S.-Argentine relations that endangered desarrollo anew.

232
 CHAPTER 6

PETROLEUM PITFALLS:
OIL, ARGENTINE NATIONALISM, AND THE DEMISE OF THE
MODERNIZERS’ MOMENT, JULY-NOVEMBER 1963

Despite persistent problems since the March 1962 coup, American

modernizers hoped in mid-1963 that Argentina had at last stabilized. International

lenders had approved a nine-figure stabilization and refinancing package and

disbursements under that package had begun. Argentine military officers acted with

caution and refrained from removing José María Guido from power in favor of a

military junta, assuaging some Kennedy administration fears. Instead, the officers

allowed elections to proceed in July 1963, albeit without Peronist candidates, and

those elections handed the presidency to Arturo Illia. However, as the dust settled

following months of high activity, the outlook appeared more ominous to American

modernizers. As in 1958, success at the polls required demonstrable nationalist

credentials at odds with the liberal international order promoted by U.S. elites. Illia

exuded Argentine nationalism and was consequently catapulted into the Casa Rosada

upon the promise to cancel privately-held contracts between international oil

companies and Yacimientos Petrolíferos Fiscales (YPF), the Argentine state-owned

oil company.

233
 Growing Argentine hostility to international liberalism, manifested in the

petroleum dispute, ushered in a crisis in U.S.-Argentine relations. Private and public

U.S. elites reacted at first cautiously, and then firmly, to meet the Argentine oil

challenge. Kennedy administration officials, oil company executives, and

congressional representatives feared that if the Argentine government successfully

cancelled American oil contracts then other oil-rich nations would become

emboldened and follow their example. Such an assault on private property rights

challenged the foundation of the liberal international order and the American vision

of modernity that the Alliance for Progress was designed to foster. The specter of

cancellation stoked a debate in the U.S. Senate over the American foreign aid

program, particularly when recipient countries challenged the property rights of

American corporations. Such political pressure complicated efforts by administration

officials and oil executives to reach a modus vivindi with Illia by further exacerbating

nationalist sentiment among Argentines, which in turn reinforced American

disenchantment with Argentina. By the time Illia issued his cancellation decree on 15

November 1963, the relationship between the United States and Argentina was

poisoned, and the modernizers’ dream of remaking Argentina in the image of the

United States was in tatters.

II

During his campaign for the Argentine presidency, Illia pledged to cancel

private oil contracts because he believed that they were problematic in two key

234
respects. First, Illia alleged that the contracts were illegal. Former Argentine Chief

Justice Dr. Alfredo Orgaz buttressed Illia’s legal contention and argued that the

contracts must be voided because they were not signed in accordance with the state-

owned petroleum company’s statutes. He wrote that former President Arturo

Frondizi’s appointment of a “personal delegate” to handle the oil contracts constituted

an illegal delegation of presidential powers. Orgaz further observed that while the

Frondizi contracts were signed after a process of direct negotiation, Argentine law

stipulated that contracts must proceed through a process of competitive bidding. Illia

further contended that the contracts were illegal because the Argentine Congress had

not ratified them. Under Illia’s interpretation of Argentine law, even private

ownership of oil refineries was illegal. While his government argued that the rule of

law and constitutional procedures demanded that the contracts be cancelled, U.S.

officials and oil executives maintained that to the contrary, the rule of law

necessitated the sanctity of those same contracts.1

In addition to their inherent illegality, Illia argued that the oil contracts were

contrary to Argentine economic interests. International oil companies, Illia said,

acted in bad faith when they signed the contracts and remitted an excessively large

proportion of their profits out of the country. The new president’s position reflected

the views of the vast majority of his constituents. Many Argentines saw the contracts

1
Telegram, McClintock to Rusk, 11 July 1963, NSF, Box 7, Countries: Argentina, General,
6/63-7/63, JFKL; Report, Soloman to Mann, undated, RG 59, PET 15-2 ARG, NARA. On Orgaz, see
Telegram, McClintock to Rusk, 2 November 1963, RG 59, PET 10-3 ARG, NARA; “Opin acerca de
los contractos de petróleo el Dr. Alfredo Orgaz,” 28 October 1963, La Nación. Telegram, McClintock
to Rusk, 5 November 1963, RG 59, PET 11-2 ARG, NARA.

235
as illegitimate for reasons beyond those outlined by Orgaz simply because Frondizi

had run for election in 1958 on a nationalistic platform that opposed foreign

investment, only to reverse positions once in office. As a result, by U.S. government

estimates U.S. corporate oil investment in Argentina reached between $200 and $300

million in 1963. Under Frondizi’s decree, YPF entered into two types of contracts:

development, and refining and drilling. While the drilling contracts were relatively

uncontroversial, the development contracts touched a nationalistic nerve in the

Argentine body politic and were the focus of Illia’s presidential campaign.2

Illia’s election was the manifestation of public unease with the liberal agenda

that had guided Argentine development since Frondizi’s 1958 election. The program

emphasized the liberalization of trade and investment, the destruction of state

economic controls, the privatization of enterprise, and the reliance on outside

economic experts from the IMF to design a development program. However, the

majority of Argentines did not see tangible results from that program. To the

contrary, they felt increasing unease at the seeming loss of sovereignty to

international corporations, bankers, and other financial experts. Although IMF-

directed austerity programs received the ire of the popular sectors, opposition to the

oil contracts concentrated their disenchantment.

Opponents of the presence of international oil companies in Argentina

coalesced into voluntary associations and called for contract cancellation. Opposition
2
Telegram, McClintock to Rusk, 11 July 1963, NSF, Box 7, Countries: Argentina, General,
6/63-7/63, JFKL; Report, Soloman to Mann, undated, RG 59, PET 15-2 ARG, NARA; Telegram,
McClintock to Rusk, 2 November 1963, RG 59, PET 10-3 ARG, NARA; Telegram, McClintock to
Rusk, 5 November 1963, RG 59, PET 11-2 ARG, NARA.

236
to Frondizi’s oil decree had festered since Frondizi signed the first contracts in 1959.

At that time, Alberto Casella and Alejandro Clara co-founded the Movement in

Defense of Argentine Petroleum. Turning over to transnational institutions the

nation’s energy resources, they argued, fundamentally imperiled national sovereignty

and local control of Argentina’s national destiny. “Each nation,” Casella and Clara

wrote, “must have an energy policy of its own that cannot be subject to international

plans for exploitation and that responds to the true interests of its own country and not

foreign economic interests.” They argued that international corporate control of the

sector hampered the development of a national energy policy. Casella and Clara did

not question the wisdom of industrialization and the vibrant development of the

nation’s energy resources. On the contrary, they argued that the most industrialized

and hence modern nations in the world had control over their own energy resources.

Since Argentina aspired to joint their ranks, the country must control its own energy

and protect its sovereignty.3

The 62 Organizations, the dominant Peronist faction of the Confederación

General del Trabajo (General Confederation of Labor, CGT), announced its support

of oil contract cancellation September 1963. The CGT was a bastion of Argentine

nationalism and its members were especially suspicious of the United States. CGT

leaders asked if the Alliance for Progress was “a North American deceit,” and

worried that their “own national destiny” was “tied” to the Alliance. Like the

3
Alberto T. Casela and Alejandro Clara, Petróleo, soberanía, y paz (Buenos Aires, 1963),
quotation on page 10.

237
Movement in Defense of Argentine Petroleum, Argentine workers did not challenge

the underlying objective of industrialization. To the contrary, the CGT was eager to

help Argentina advance from a state of “underdevelopment” to “development.” At

the same time, the Argentine working class was concerned about maintaining control

of that process and believed that the liberal reforms had surrendered much of their

sovereignty. This working-class discourse was especially important in framing the

domestic political context in 1963. Although most Peronists cast blank ballots in the

presidential election to protest the ban on Popular Front candidates, the economic

nationalism embedded in their ranks had boiled over and inculcated the majority of

Argentine society. With the Popular Front – including Peronists – proscribed, Illia

had best positioned himself to take advantage of the voters’ heightened nationalism.

The possibility of mass protest chained Illia to his campaign promises in the face of

the coming international pressure.4

Illia’s success at the polls posed a dilemma for U.S. officials. On the one

hand, they were encouraged by the ascent of the Radicals. Immediately prior to the

election, U.S. officials held out hope that the UCRI and UCRP might bridge their

differences and reunite to provide a unified alternative to the Peronists. While the

merger did not transpire, American officials remained optimistic that the Radicals

were a political group with which they could work constructively. As a historically

middle-class party, the Radicals represented the group that modernization theory

4
“El MUCS insta a los 62 Gremios a apoyar el programa de Illia,” 10 September 1963, La
Razón, press clipping found in Caja 4, 1963, ASASG; CGT statement, “Estado actual de la alianza
para el progreso,” Gerardo Jorge Schamis, 11 December 1963, Caja 4, 1963, ASASG.

238
posited as the vanguard of liberal democracy. When viewed through the lens of

modernization theory, Radical victories could thus be interpreted as a sign of

American-style modernization taking hold in Argentina. On the other hand, U.S.

officials were deeply troubled by the possibility that Illia might make good on his

campaign promise to cancel foreign petroleum contracts. An assault against private

property rights was fundamentally at odds with American modernizers’ objectives,

and did not fit with their preconceptions of what middle class political parties would

do once in power. Radical cancellation of the contracts would expose problems

within the basic theoretical underpinning of modernization theory.5

The significance of the Argentine oil crisis transcended borders in the minds

of U.S. public and private elites who worried that successful Argentine cancellation

of American oil contracts would set a dangerous precedent that could be followed

elsewhere in the hemisphere, most menacingly in Venezuela. Venezuela contained

greater oil reserves than Argentina, and served as an American petroleum supplier.

U.S. ambassador to Mexico Thomas Mann, who would go on to become an

influential Assistant Secretary of State for Inter-American Affairs under Lyndon

Johnson, expressed great concern that “the pattern set in Argentina will almost

inevitably be followed a short while hence in Venezuela whose oil is incomparably

more important to us economically and strategically than Argentina’s.” Mann went

on to declare that he “would far rather see us go down in defeat in Argentina with our
5
On U.S. hopes for Radical unification, see Memorandum, Little to Bundy, 6 July 1963,
FRUS, 1961-1963, 12: 412-413. W. W. Rostow, The Stages of Economic Growth: A Non-Communist
Manifesto (Cambridge, MA, 1961), specifically identifies the middle class as the vehicle for liberal
modernization.

239
guns smoking as it were, if this be necessary, th[a]n to surrender in Argentina on a

principle that will hurt us badly in Venezuela.” In addition, the Peruvian government

contemplated similar action against international oil companies and administration

officials feared that Argentine cancellation would embolden Peruvian nationalists.

From the point of view of U.S. elites, the illiberal assault on contracts and private

property rights functioned like a cancer that if not confronted would spread across

national borders. Consequently, they reasoned that the cancer must be contained and

eradicated in Argentina.6

Despite the seriousness of the situation, U.S. officials and oil executives were

slow to comprehend the significance of Argentine nationalism. In their considerable

pre-election analysis, the embassy team failed to recognize and report to Washington

on the depth of Argentine nationalism. They did not seriously contemplate the

possibility of contract cancellation. In early July 1963, American oil companies came

to believe that they simply needed an effective public relations campaign to influence

positively Argentine public opinion. Private and public American elites believed that

Illia was fundamentally "reasonable" in his personal approach to the oil contracts

dispute. Ambassador Robert McClintock, however, worried that the embassy would

have to shoulder “heavy responsibility” in order for the dispute to end happily

because “the petroleum people are handicapped by an apparent inability to get

6
Telegram, Mann to Rusk, 15 November 1963, RG 59, PET ARG, NARA; Telegram,
McClintock to Rusk, 14 November 1963, RG 59, PET 6 ARG, NARA; Telegram, Rusk to McClintock,
14 November 1963, RG 59, PET 6 ARG, NARA. For information about the PEMEX oil exploration
contracts with American corporations, see Telegram, Mann to McClintock, 14 November 1963, RG 59,
PET 6 ARG, NARA.

240
together to defend their own interest and by that worldwide fundamental suspicion

that all foreign oil companies are by their very nature fantastically rich exploiters of

someone else's patrimony.” Drawing upon his previous experience as ambassador to

Lebanon, McClintock added that he had “learned a good deal on this account in the

hard school run by the Arabs," and was prepared to deal with the Argentines.7

So long as the Argentine government reasonably compensated the affected

corporations, U.S. political and business leaders conceded that Illia had the legal right

to cancel the contracts. In answer to a reporter’s question about the growing oil crisis,

President John Kennedy observed that “we can’t deny the sovereign right of a country

to take action within its borders.” He nevertheless hastened to point out that the

United States “can insist that there be equitable standards for compensating those

whose property is taken away from them.” There was even a sense among U.S.

officials and oil executives that at least some of the Argentine grievances possessed

merit. Two American oil corporations, Standard Oil of Indiana and Esso,

acknowledged that the contracts may have been "disadvantageous" to Argentina, and

suggested that renegotiation constituted a reasonable request. Indeed, in September a

rumor circulated in Argentina that Kennedy himself believed that “the contracts

signed in 1958 had been by gangsters and with gangsters.” U.S. officials strongly

denied the rumor, but the damage was done. For its part, the Illia government

remained adamant that the entire question of oil contracts was properly a domestic

7
Airgram, McClintock to Rusk, 6 July 1963, RG 59, PET 5 ARG, NARA. For quotations see,
Telegram, McClintock to Rusk, 14 August 1963, RG 59, PET 6 ARG, NARA. See also Memorandum,
Read to Bundy, 20 September 1963, RG 59, PET 6 ARG, NARA.

241
matter that would be settled on the basis of Argentine law, within the Argentine

political and judicial system.8

By contrast, American officials identified their interests as bound tightly to

Illia’s challenge to the liberal international system. McClintock observed, “in this

game there are some big marbles at stake." He estimated that the nation’s corporate

stake in Argentine oil was $230 million for exploration and development and $7

million in drilling. Additionally, YPF owed $75 million to U.S. firms in accumulated

debts. McClintock complained that YPF was “disastrously managed” and groused

that the company “simply does not pay its debts.” For their part, Argentine officials

agreed that the stakes were large and estimated that U.S. companies had remitted

$130 million from Argentina since their contracts went into effect. By subtracting the

$130 million remitted from the $230 million total investment, the Illia government

argued that negotiations regarding corporate compensation for cancelled contracts

should proceed based upon actual corporate investment of $100 million. Furthermore,

it contended that that actual compensation should amount to significantly less than

$100 million once tax and other claims the Argentine government had pending

against the corporations were taken into account.9

8
Kennedy press conference, 14 November 1963, Public Papers of the Presidents of the
United States, 1963 (Washington, D.C., 1964), 850. Memorandum, Wellman to Martin, 17 July 1963,
RG 59, PET 10-2 ARG, NARA, discusses Standard Oil and Esso. Memorandum, Read to Bundy, 18
September 1963, RG 59, PET 6 ARG, NARA. Argentine arguments that the oil question constituted a
strictly domestic matter are detailed in Telegram, Harriman to Rusk, 11 November 1963, RG 59, PET
15 ARG, NARA.
9
Telegram, McClintock to Rusk, 14 August 1963, RG 59, PET 6 ARG, NARA;
Memorandum of Conference, 9 November 1963, RG 59, PET 15-2 ARG, NARA. Thee compensation
figures were heavily disputed. British officials in Buenos Aires estimated that the Argentines could
owe as much as $400 million on cancelled contracts.

242
 U.S. officials viewed the Illia government’s position on oil contracts as a

product of national hysteria surrounding petroleum. McClintock dismissed Argentine

critics of international oil as “highly emotional, and, at times, almost hysterical.”

Indeed, McClintock opined that there was something about the petroleum issue that

made one “reasonably level-headed businessman,” with ordinarily “moderate and

objective” views, less level-headed when the subject turned to oil. Similarly, the

Ambassador dismissed the concerns of a naval officer with whom he enjoyed regular

contact. When the subject turned to oil, McClintock noted that his counterpart was

“obviously speaking as an Argentine,” and consequently was “somewhat emotional

on this issue.” From the U.S. point of view, there was no room for disagreement

about oil. Argentines who supported international private involvement in petroleum

development were viewed by U.S. officials as reasonable, mature individuals with

viewpoints worth considering. By contrast, Argentines whose views diverged from

U.S. policy were dismissively labeled “emotional,” and part of lingering Argentine

traditionalism in the context of Modernization Theory. Nevertheless, their views

reflected part of what McClintock identified as a “wave of nationalism” overtaking

the bilateral relationship. Such narrow-minded thinking on the part of U.S. officials

in Buenos Aires, who were unable to understand the underlying material disaffection

of Argentines that fueled nationalism, contributed to the embassy’s failure to evaluate

adequately the seriousness of Argentine grievances.10

10
Telegram, McClintock to Martin, 13 November 1963, RG 59, PET 10-3 ARG, NARA;
Telegram, McClintock to Rusk, 7 November 1963, RG 59, PET 15 ARG, NARA, discusses former
naval officer Lavista (no first name is given).

243
 In part because they saw the Argentine position as the product of irrational

and emotional nationalism that belied Argentina’s lingering traditionalism, U.S. elites

were initially optimistic that they could reach a settlement with the new Illia

government. While trying not to be "pollyanish” about the prospects of success,

American modernizers thought that the new president was a man of good faith whom

they could “educate” about matters of political economy and international affairs.

State Department analyst Thomas Hughes believed that Illia was only a “moderate

nationalist-leftist,” and remained optimistic about potential for bilateral cooperation

within the framework of the Alliance for Progress. Conservative Argentines who

opposed Illia’s petroleum policy and supported U.S. interests in the country shared

the belief that the new president could be guided and they prodded U.S. officials to do

all that they could to pressure the new president. Among the more alarmist, former

Argentine Commerce Secretary Juan Martin worried that “communist influence”

threatened both the oil contracts and the investment guarantee agreement and urged

U.S. action. Martin was an outlier, and the majority of observers pointed out that the

UCRP had no experience governing the country, having been out of power for

approximately thirty years, and suggested that the new president would have to learn

how to govern responsibly on the job. Julio Cueta Rua, former Argentine Minister of

Commerce under the Pedro Aramburu government and an orthodox economic thinker,

believed that "it was necessary quietly and patiently to educate [Illia government

officials], to explain, to guide, to prevent them from making serious mistakes."

244
Assistant Secretary of State for Inter-American Affairs Edwin Martin agreed that “we

have an educational task to perform with the new administration and we have

undertaken and are continuing our efforts to do so.”11

By September 1963, doubt had crept into American thinking about their

reeducation goals. Although U.S. officials continued to believe that Illia was

basically moderate, they belatedly came to understand the depth of Argentine

nationalism and concluded that the domestic political environment functioned as a

significant constraint on presidential action. Minister Counselor and Counselor

General of the Embassy in Buenos Aires Henry Hoyt found it “very obvious” that the

Illia government operated “without full knowledge of [the] situation and on [a] very

emotional basis.” He singled out some of the “emotional” elements of the

government and wrote that “[Ricardo] Balbin, [Miguel Ángel] Zavala Ortiz, and

others of more nationalistic stripe have just about convinced Illia that he can not go

back on [his] political platform without being considered another Frondizi.” Since

the popular sectors concluded that Frondizi had betrayed them after his election by

instituting a liberal reform agenda, the argument proved powerful.12

11
Memorandum of Conversation, 24 September 1963, RG 59, PET 10-2 ARG, NARA. See
also Telegram, Hoyt to Rusk, 21 September 1963, RG 59, PET 10-3 ARG, NARA, for the
“pollyanish” quotation. Telegram, Hoyt to Rusk, 25 September 1963, RG 59, PET 15-2 ARG, NARA;
Memorandum, Hughes to Rusk, Papers of Arthur M. Schlesinger, Jr., WH-25, Argentina, 5/62-9/62,
JFKL. See the previous chapter for information about the investment guarantee agreement. For Juan
Martin’s concerns, see Telegram, McClintock to Rusk, 8 November 1963, RG 59, PET 10-3 ARG,
NARA. For Cueta Rua’s concerns, see Telegram, Hoyt to Rusk, 19 September 1963, RG 59, PET 15-
2 ARG, NARA.
12
Telegram, Hoyt to Rusk, 18 September 1963, RG 59, PET 15 ARG, NARA. Remarkably,
Hoyt sent a more optimistic telegram only one day later, indicating waffling thinking within the United
States embassy in Buenos Aires. Telegram, Hoyt to Rusk, 19 September 1963, RG 59, PET 15-2 ARG,
NARA; Memorandum, Robbins to Martin, 18 September 1963, RG 59, PET 10-3 ARG, NARA.

245
 In fact, in meeting the Argentine petroleum challenge American oil executives

worked closely and cooperatively with public officials. Despite the insistence of

administration officials that their job was not to advocate for American companies,

they did believe that the “interest of United States was deeply committed to

preservation of law and to the fair treatment of private capital.” Given the high stakes

for liberal internationalism and the shared interests of business and government, the

Kennedy administration was prepared to act as a proponent. Martin assured oil

executives that future U.S. assistance for Argentina would be leveraged against

progress in coming to a favorable settlement on the oil question. State Department

officials met with oil executives in Washington and in Buenos Aires during the crisis

to discuss strategy and coordinate approaches. Oil executives were keenly aware that

U.S. national interests were intimately tied with the activities of private American

companies. Continental Oil, which had very limited stakes in Argentina and planned

to divest from the country, offered to time its departure to best serve the overall

American strategy.13

III

In addition to its bilateral and regional implications, the Argentine oil crisis

also threatened to erode domestic political support for the Alliance for Progress.

13
See Emily S. Rosenberg, Spreading the American Dream: American Economic and
Cultural Expansion, 1890-1945 (New York, 1982) for a discussion of the origins of the promotional
state. Telegram, McClintock to Rusk & Harriman, 13 November 1963, RG 59, PET 15-2 ARG,
NARA; Telegram, Ball to McClintock, 19 September 1963, RG 59, PET 6 ARG; Memorandum of
Conversation, 23 September 1963, RG 59, PET 10-2 ARG, NARA.

246
Critics of U.S. aid programs complained that the Kennedy administration should not

provide economic assistance to a government in Argentina that closed its doors to

American private investment and businesses. U.S. officials in turn complained to

their Argentine counterparts that their policies caused political headaches for the

administration in Washington and energized such foreign aid critics. The fact that the

administration had just agreed to a major assistance agreement in March 1963 did not

help pacify domestic critics of the new Argentine government.14

Foremost among those critics was Iowa Senator Bourke Hickenlooper, a

Republican who served as the ranking GOP member of the Foreign Relations

Subcommittee on American Republics Affairs. Hickenlooper subscribed to the

emerging consensus of the late Eisenhower era in favor of increased U.S. government

involvement promoting liberal internationalism in Latin America. Concerned that

Fidel Castro’s expropriation of American property in Cuba could provide a model

that would be followed elsewhere, Hickenlooper decided that new legislation was

necessary to defend American property rights. In response, Hickenlooper sponsored,

and Congress approved, the first Hickenlooper amendment to the Foreign Assistance

Act of 1962. The amendment required the executive branch to eliminate foreign aid

to regimes that expropriated American property. Illia’s pledge to cancel American oil

contracts energized the Iowa Senator to sponsor a second amendment in an effort to

force the administration to cut aid in cases where private contracts were cancelled but

14
On administration complaints to Argentine officials, see Telegram, McClintock to Rusk, 23
October 1963, RG 59, PET 10-3 ARG, NARA. For talking points that describe U.S. policy toward
Argentina, see Department of State Paper, 15 November 1963, FRUS, 1961-1963, 12: 417-419.

247
no property was expropriated. Hickenlooper argued that such legislation was vital to

secure the role of private enterprise in regional development efforts, to assure that

“well-known and well-established principles of international law designed protect

private investment” were followed, and to verify that contractual obligations were

fulfilled.15

Although oil executives shared Hickenlooper’s desire to protect private

investment in the hemisphere, most of them fundamentally disagreed with his

methods. Kennedy administration officials worked with most of the affected oil

companies to resist congressional passage of the second Hickenlooper amendment.

Union and Esso joined McCormick in arguing that the threat of externally applied

economic sanctions to an internal Argentine matter would only exacerbate Argentine

nationalism, politically restrict Illia’s ability to come to a mutually beneficial

accommodation with the companies, and ultimately harm U.S. interests. Oil

executives further believed that the threat of the Hickenlooper amendment could not

serve as effective leverage because ultimately it would only eliminate $86 million in

aid, barely one percent of Argentine GNP.16

15
Samuel L. Baily, The United States and the Development of South America, 1945-1975
(New York, 1976), 101-104 touches on this point. Robert David Johnson, “Constitutionalism Abroad
and at Home: The United States Senate and the Alliance for Progress, 1961-1967,” International
History Review 21:2 (June 1999): 414-442, provides background on the Senate’s attitude toward
foreign aid and discusses the Hickenlooper amendment. Johnson touches only briefly on Argentina,
and does not engage the oil crises in Argentina or in Peru in his analysis. Telegram, Rusk to
McClintock, 18 October 1963, RG 59, PET 10-3 ARG for the ultimate quotation. See also Telegram,
Martin to McClintock, 29 October 1963, RG 59, PET 10-3 ARG on the origins of the Hickenlooper
amendment.
16
Telegram, McClintock to Rusk, 28 October 1963, RG 59, PET 15-2 ARG, NARA; Report,
Soloman to Mann, undated, RG 59, PET 15-2 ARG, NARA. Notably, Pan American (a subsidiary of
Standard Oil of Indiana) became the one major oil company to break with the other oil companies and

248
 Despite strong objection from the Kennedy administration and its oil industry

allies, the Senate Foreign Relations Committee recommended that the new

Hickenlooper amendment be added to the Foreign Assistance Act. The report caused

deep concern within the State Department, which could “easily foresee catastrophic

results toward a negotiated settlement of [the] oil contract problem if in fact [the]

Senate and House do accept this new amendment.” McClintock expected an

"explosion," and warned that the resulting Argentine political dynamics would force

Illia to abandon any moderation and follow the nationalists’ line. The problem, said

McClintock, went beyond the question of oil and placed the “whole Alliance for

Progress program in this country…in jeopardy.” Additionally, the Argentine military

could turn against the United States if aid were withheld and the overall Argentine

economy collapsed, a result that would be blamed on the United States.17

The concerns expressed by administration officials and oil executives proved

well-founded. In conversations with McClintock, Illia expressed his disgust with the

Hickenlooper amendment, complaining that its passage "caused positions to harden

and [made the] task [of arriving at a settlement] more difficult all the way around."

Illia maintained that he had an obligation to the Argentine people to cancel what they

believed were illegal contracts. McClintock played for time in the hope that it would

be defeated when taken to the Senate as a whole or in conference with the House. He

the administration and argue in favor of the Hickenlooper amendment. See Telegram, Rusk to
McClintock, 22 October 1963, RG 59, PET 10-3 ARG, NARA.
17
Telegram, McClintock to Rusk, 19 October 1963, RG 59, PET 15 ARG, NARA; Telegram,
Ball to McClintock, 30 October 1963, RG 59, PET 6 ARG, NARA.

249
saw “a faint glimmer of light at the end of the oil pipeline,” that not all contracts

would be annulled. The best alternative that American officials and oil executives

could see involved direct renegotiations between the Argentine government and the

companies on a case-by-case basis, although the Argentines were hesitant to accept

such an alternative. Naturally, as Martin noted, “if temperatures rise, and threatening

or defiant statements are issued by Argentine officials, our problems are also

increased."18

Martin’s analysis brings into stark contrast the influence dilemma that faced

American officials throughout oil crisis. Nationalist sentiment within Argentina

would only be exacerbated to the detriment of the oil companies and the Alliance for

Progress if it appeared to the Argentine public that heavy-handed American tactics

pressured a favorable outcome from the Illia government. Adoption of the

Hickenlooper amendment would also give international critics of the United States

evidence of American imperialism. As early as August, Soviet press reported that

Argentines were angry at the “crude” pressure that Americans placed upon their

government officials. It was not clear, furthermore, that pressure would even be

effective, as prominent Argentine officials such as Leopoldo Suárez publicly

reaffirmed their intention to move forward and cancel the contracts regardless of what

the norteamericanos might think about it. Foreign Minister Zavala Ortiz declared

that the Hickenlooper Amendment would destroy "the little faith that may still exist in
18
For meetings between Illia and McClintock, see Telegram, McClintock to Rusk, 28 October
1963, RG 59, PET 15-2 ARG, NARA. On McClintock’s confidence, see Telegram, McClintock to
Martin, 30 October 1963, RG 59, PET 15-2 ARG, NARA. For the Martin quote, see Telegram, Martin
to McClintock, 23 October 1963, RG 59, PET 10-3 ARG, NARA.

250
the Alliance for Progress." Argentina’s newspapers were also critical. The Buenos

Aires daily Clarín editorialized that Hickenlooper gave strength to "pseudo-

nationalists to pressure the Government into stopping the flow of foreign capital

necessary for the economic development of Argentina." La Nación, a major Buenos

Aires daily, reported on the “deficiencies of the Alliance for Progress,” and Foreign

Minister Zavala Ortiz sought a greater Latin American voice within the Alliance.19

On the other hand, U.S. policymakers and oil executives believed that if they

did not respond to the allegations that private petroleum companies entered into their

oil contracts in bad faith, their silence might be interpreted as an admission of guilt.

When Retired Admiral Arthur Radford, an occasional consultant to the administration,

suggested that the oil companies should simply pull out of Argentina, Martin resisted.

The Assistant Secretary was adamant in his view that if the companies left Argentina

in such a way that suggested they had not lived up to their obligations, U.S. interests

throughout the region would be imperiled. American business could soon face a

closed door for trade and investment in Argentina. Such a setback might lead to

restrictions on private businesses throughout the hemisphere. Certainly, oil contract

cancellation would be a major setback for the Alliance for Progress. Yet U.S.

officials were sometimes prone to overestimate their ability to bring the Illia

19
Memorandum of Conversation, 24 September 1963, RG 59, PET 10-2 ARG, NARA. On
the influence dilemma generally, see also Telegram, Martin and Dungan to McClintock, 8 October
1963, RG 59, PET 10-3 ARG, NARA. For Soviet press references see Telegram, Kohler to Rusk, 14
August 1963, RG 59, POL ARG-US, NARA. For Suárez’s position see Telegram, McClintock to
Rusk, 24 October 1963, RG 59, PET 15 ARG, NARA. On Suarez and Clarín, see Airgram,
McClintock to Rusk, 29 October 1963, RG 59, PET 15-2 ARG, NARA; “Argentina y la ayuda
foránea,” La Nación, 1 November 1963.

251
government around to their position. After the Hickenlooper amendment had already

been reported out of committee, McClintock forgot his previous, more realistic

analysis of the damaging effects that the legislation would likely have on bilateral

relations and mused that the Senate might “walk the cat back and not adopt [the]

Hickenlooper amendment in return for a conciliatory attitude by Argentine

government.” That is, McClintock hoped that the threat of the Hickenlooper

amendment would cause the Argentines to capitulate, the same reasoning exhibited

by Hickenlooper when he first proposed the legislation.20

Any such hopes proved entirely misplaced. Argentine officials unwaveringly

argued that the popular will, the “sanctity” of the constitution, and national

sovereignty demanded cancellation. Provisional Senate President Eduardo Gamond

and UCRP Deputy Pugliese complained that the Hickenlooper amendment was

“aimed directly at Argentina,” and defiantly asserted that the "sovereign Argentine

congress will not be intimidated.” Although U.S. officials had hoped that their earlier

economic assistance would provide some influence, Argentine officials instead

explained that the amendment “causes Argentines to be even more inflexible than

ever in attitude toward American oil companies." Potential economic losses also

failed to calm Argentine sentiment. The probability of short-term economic problems

likely to result from contract cancellation had no noticeable effect in curbing

Argentine nationalism. As pressure increased from the United States in the form of

20
Memorandum of Conversation, 24 September 1963, RG 59, PET 10-2 ARG, NARA. For
the McClintock quote, see Telegram, McClintock to Rusk, 23 October 1963, RG 59, PET 10-3 ARG,
NARA.

252
the Hickenlooper amendment, the Argentines applied an equal amount of rhetorical

force and determination to proceed with cancellation.21

U.S. officials were concerned about their ability to influence events in

Argentina even after the seemingly inevitable cancellation. They reasoned that

because YPF was incapable of maintaining petroleum production at existing levels,

Argentine officials would renegotiate the contracts with little delay. However, the

embassy in Buenos Aires worried that if the U.S. Congress cut Alliance for Progress

assistance while the negotiations were in progress, Argentine officials would feel

compelled to stall, despite the damage such a delay would cause to both sides. Indeed,

the U.S. Senate was reducing the president’s foreign aid budget while the

administration complained that such cuts hampered his ability to run an effective

foreign policy. Given Argentine nationalism, if the Kennedy administration took

action perceived by Argentines as vindictive on what they considered a domestic

matter, the situation would almost certainly deteriorate further. Even worse, with a

ministerial-level meeting of the Inter-American Economic and Social Council (IA-

ECOSOC) scheduled for November, the possibility existed that Argentine grievances

could take center stage and further erode support for the Alliance for Progress

throughout the hemisphere. The oil crisis was critically close to breaking

containment.22

21
Telegram, McClintock to Rusk, 23 October 1963, RG 59, PET 10-3 ARG, NARA.
22
Telegram, McClintock to Rusk, 25 October 1963, RG 59, PET 15 ARG, NARA; Editorial,
11 November 1963 Washington Post; "Senate Rejects A Latin-Aid Curb," 13 November 1963, New
York Times; "Foreign Aid Cuts Hamper Policy, Kennedy Insists," 15 November 1963, New York Times;
Telegram, Rusk to McClintock, 13 November 1963, RG 59, PET 10-3 ARG, NARA.

253
 IV

To manage the Argentine oil crisis, Kennedy dispatched veteran diplomat and

international trouble-shooter W. Averell Harriman on a special mission to Buenos

Aires. Already scheduled to represent the United States at the IA-ECOSOC meeting

in Brazil, the stated purpose of the Harriman mission to Buenos Aires was to discuss

the Alliance for Progress generally and not the oil crisis specifically. In fact,

Harriman recognized that the two issues were intimately linked. U.S. Ambassador to

Brazil Lincoln Gordon protested that Harriman’s trip to Buenos Aires in advance of

the Sao Paulo talks “would create very serious public repercussions” in Brazil, “as

well as governmental resentment” because the trip gave Brazil’s rival special

attention in advance of the conference. Harriman responded by pointing to the

“critical situation in Argentina which could affect [the] entire Alliance for Progress

and have significant repercussions in Brazil.”23

Harriman brought extensive international experience dating to the Franklin

Roosevelt administration to his mission. He was a strong believer in the spread of

American values internationally, attended the meetings that led to the Atlantic Charter,

and was an architect of the Marshall Plan for the reconstruction of Western Europe

during the late 1940s and early 1950s. Harriman also had previous experience as an

23
Telegram, Rusk to McClintock, 5 November 1963, RG 59, PET 10-3 ARG, NARA.
McClintock received assurances that Illia would not issue any decrees regarding the oil contracts prior
to meeting with Harriman. For the Harriman-Gordon exchanges, see Telegram, Gordon to Harriman, 6
November 1963, JFK, NSF, Brazil, November 1-15, 1963, AFPC; Telegram, Harriman to Gordon, 6
November 1963, JFK, NSF, Brazil, November 1-15, 1963, AFPC.

254
advocate for Western oil interests. During the Iranian oil crisis of the early 1950s,

Harriman undertook a special mission to Tehran in an effort to forestall

nationalization of the Anglo-Iranian Oil Company.

As their 8 November meetings began, Illia explained to Harriman the political

necessity of canceling the oil contracts and highlighted his grievances against the oil

companies. Illia understood that his decision could negatively affect the Alliance for

Progress and that it would likely result in less foreign aid and private investment from

the United States. He nevertheless believed that the public demanded cancellation.

The president promised that affected companies would have their cases heard through

a judicial process that would result in compensation based upon “a mutual

estimation” of proper indemnification. He even left open the probability that the

companies could receive new service contracts once they were properly ratified

through constitutional processes. However, Illia was absolutely clear in his

determination to issue a decree that cancelled the contracts. Following the meeting,

Harriman reported that he felt like “a prisoner condemned to capital punishment who

at least knows [that his] appeal for reprieve has gone to [the] governor.”24

Given the high stakes involved, Harriman decided to cast aside any concerns

he might have harbored about aggravating Argentine nationalism and adopted an

aggressive posture. He threatened that even if the U.S. Congress did not include the

Hickenlooper amendment on the final foreign aid bill, assistance from the United

24
Telegram, Harriman to Kennedy and Rusk, 8 November 1963, FRUS, 1961-1963, 12: 415-
416.

255
States would cease if contracts were cancelled. Harriman was “deeply committed to

preservation of law and to the fair treatment of private capital” and insisted that

Argentina uphold those principles. Harriman’s tough posture, however, did not

produce the results he hoped for. Illia pointedly stated that the decision to cancel the

contracts “was taken before you arrived,” and “was irrevocable.” Harriman pressed

on, and repeated the standard American line that the best course for Illia to follow if

he believed that the contracts were illegal or against Argentine economic interests

entailed direct negotiation with the oil companies. He bluntly told Illia that it would

"never be understood," in the United States or elsewhere, if Argentina unilaterally

annulled the contracts without due process. Argentine officials said that they were

prepared to compensate oil companies with "settlement accounts" for losses suffered.

However, negotiations as to the size of those accounts would proceed only after the

contracts were annulled. Most oil companies indicated a willingness to renegotiate

the contracts, but were absolutely opposed to their unilateral cancellation. Ultimately,

no matter how passionately Harriman argued the American position, Minister of

Economy Eugenio Blanco maintained that the contracts were illegal to begin with and

detrimental to Argentina’s economic well-being.25

Worried that Illia was surrounded by “highly emotional, nationalistic

individuals who are contriving to build up counter-claims that will minimize eventual

compensation,” Harriman changed course in talks with Blanco and urged immediate

25
Telegram, McClintock to Rusk & Harriman, 13 November 1963, RG 59, PET 15-2 ARG,
NARA; Telegram, Harriman to Rusk, 9 November 1963, RG 59, PET 15-2 ARG, NARA;
Memorandum of Conference, 9 November 1963, RG 59, PET 15-2 ARG, NARA.

256
adjudication of the dispute in the absence of direct negotiations. Harriman believed

that by following a judicial course instead of executive decree, the Illia government’s

actions would be acceptable internationally while also allowing the government to

satisfy its domestic political requirements by taking action on the contracts. However,

Blanco was unwilling to follow the course that Harriman charted and argued that such

an action was contrary to Argentine law, which Blanco believed demanded executive

action. The meetings were incredibly tense, as Harriman noted that the U.S.

government “would not tax its people to provide funds directly or indirectly to

expropriate properties [of] American citizens in [activities] we considered appropriate

for private enterprise.” In stark contrast to the Guido government’s position, Illia’s

advisors flatly stated that they might be better off without U.S. loans and other

assistance.26

Negotiations finally stalled when Blanco provided Harriman with a draft of a

joint declaration that he hoped they could release. It delineated the Argentine

position, stating that the contracts were illegal and economically disadvantageous to

the nation, but affirmed the “respect which would be had in Argentina for rights of

companies involved and for proper settlement of accounts.” The proposed joint

declaration also left open the possibility of new exploration contracts for American

oil companies. Harriman rejected the draft statement and countered by again

proposing either direct negotiations of new contracts between the companies and YPF,
26
Telegram, Harriman to Rusk, 9 November 1963, RG 59, PET 15-2 ARG, NARA;
Memorandum of Conference, 9 November 1963, RG 59, PET 15-2 ARG, NARA; Telegram,
McClintock to Rusk, 11 November 1963, RG 59, PET 15-2 ARG, NARA; Telegram, Harriman to
Rusk, 11 November 1963, RG 59, PET 15 ARG, NARA.

257
adjudication in Argentine courts, or an executive commission that would effectively

renegotiate the contracts, as acceptable alternatives to an executive decree.

Ultimately Harriman believed that “unilateral” Argentine action, specifically contract

cancellation by executive decree, was unacceptable, while Illia believed that

executive decree was the only acceptable vehicle with which to resolve the problem.

On that fundamental division the talks collapsed and Harriman explained to U.S.

oilmen that he “ran into the same thing you fellows did – a brick wall.” That brick

wall caused the Harriman mission to fail to achieve its objectives and exposed the

strains within the U.S.-Argentine relationship. Harriman developed virulently

negative impressions of his Argentine counterparts, whom he described with

adjectives such as “ineffectual,” “voluble,” “self-opinionated,” and “arrogant.” The

oil question rubbed raw the emotions of both Americans and Argentines.27

From Buenos Aires, Harriman traveled to Sao Paulo for multilateral talks on

the Alliance for Progress. He remained hopeful that cancellation of the oil contracts

might be delayed, despite the failure of the Buenos Aires talks. In contrast to his

assessment of Argentine negotiators in Buenos Aires, he found the Argentine

delegation in Sao Paulo “constructive” and generally supportive. When Brazil

proposed to create a permanent committee to study declining terms of trade as part of

27
Telegram, McClintock to Harriman, 11 November 1963, RG 59, PET 15-2 ARG, NARA.
For the text of the statement that the Argentines proposed, see Telegram, McClintock to Rusk, 10
November 1963, RG 59, PET 15-2 ARG, NARA. For the “brick wall” quote, see “Triumph of
Nationalism,” Time, 22 November 1962, available at
http://www.time.com/time/printout/0,8816,898019,00.html (accessed 9 February 2007). On
Harriman’s impression of the Argentines, see Telegram, McClintock to Rusk, 11 November 1963, RG
59, PET 15-2 ARG, NARA; Telegram, Harriman to Rusk, 11 November 1963, RG 59, PET 15 ARG,
NARA.

258
an effort to minimize American control over the Alliance for Progress, the Argentines

responded with a proposal to transform the permanent committee into an interim

coordinating committee that would leave U.S. control intact. The Argentine position

was probably designed in large part to minimize fallout with the United States in the

oil dispute. Meanwhile, Harriman continued to try to convince the Argentines to

moderate their position on the oil crisis. In the context of the discussions that were

taking place at the conference, U.S. officials suggested recruiting Economic

Commission for Latin America (CEPAL) Director Raúl Prebisch to attempt to

influence the Illia government to take a more conciliatory line with the oil companies.

Since Prebisch was personally invested in the success of the Alliance for Progress,

U.S. officials hoped that he would prevail upon the Argentines at the eleventh hour to

pull back from the brink of cancellation in the interests of the inter-American system.

Nothing came of the suggestion, possibly because Argentine native Prebisch was out

of favor with policymakers in Buenos Aires.28

Despite his determination to cancel the oil contracts, Illia sought to minimize

the damage to the nation’s bilateral relationship with the United States. In November,

U.S. oil corporation Union-Cabeen reported that Illia was examining oil exploration

contracts between PEMEX, the Mexican state-owned oil company, and American

corporations in an effort to find a way toward a modus vivindi with the United States.

Under both Mexican and Argentine law, all subsoil resources were state-owned.

28
Telegram, Harriman to Rusk, 14 November 1963, RG 59, PET 10-3 ARG, NARA;
Memorandum, Read to Bundy, 14 November 1963, FRUS, 1961-1963, 12: 160-162; Telegram,
McClintock to Harriman, 15 November 1963, RG 59, PET 15 ARG, NARA.

259
Companies that operated in Mexico entered into ten-to-fifteen-year exploration

contracts with PEMEX. In most cases of oil discovery by a U.S. corporation, the

company received fifty percent of the profits until its expenses were recouped, and

then fifteen percent of the profits. The percentage of profits dedicated to the

contracted companies continued to decline over time. When asked for his input on

the Argentine oil situation, Mann expressed great misgivings about the possibility that

the “Mexican example” might be followed in Argentina and argued that “in terms of

Alliance objectives … nothing could be more wrong.” Illia also unsuccessfully

attempted to decouple the oil dispute from the general framework of the Alliance for

Progress by de-linking potential restrictions on Alliance aid from Argentine actions

upon the oil contracts.29

U.S. efforts to salvage the Argentine oil situation were for naught. On 15

November, Illia issued the long-promised decree that cancelled all of the oil contracts.

Article VI left open the possibility of credits against the oil companies for “losses

resulting from the irrational exploitation of the resources on the part of the contractors;

the waste of petroleum resulting from inadequate storage; and economic damage due

to the forced reduction of the production by YPF as a result of the obligation to accept

29
Telegram, Mann to Rusk, 15 November 1963, RG 59, , PET ARG, NARA; Telegram,
McClintock to Rusk, 14 November 1963, RG 59, PET 6 ARG, NARA; Telegram, Rusk to McClintock,
14 November 1963, RG 59, PET 6 ARG, NARA. For information about the PEMEX oil exploration
contracts with American corporations, see Telegram, Mann to McClintock, 14 November 1963, RG 59,
PET 6 ARG, NARA. For Argentine efforts to decouple the Alliance for Progress from oil, see
Telegram, Rogers to Rusk, 13 November 1963, RG 59, PET 10-2 ARG, NARA.

260
all of the production of the companies; and of the taxes to which they should have

paid by virtue of fiscal legislation in effect.” The decree provided that private

companies could continue operations as if the contracts were still in force during a

period of renegotiation. All actions were also subject to judicial review. Concurrent

word came from the American embassy in Santiago, Chile, that Illia intended to send

an “expendable” representative to Washington who was absolutely committed to oil

cancellation. Although it hoped to maintain a constructive relationship with the

United States, the Illia government signaled its resolve and determination to see the

president’s campaign pledges through, unlike the earlier Frondizi government.30

Illia understood that YPF was ill-equipped to conduct oil exploration

operations independently, and that American petroleum companies remained

interested in securing returns on their investments in Argentina. Before the ink dried

on the cancellation decree, U.S. officials, American oil executives, and the Illia

government began looking for ways to minimize the damage. Having satisfied the

Argentine public’s political requirements, Illia privately called for the companies to

“make us an offer.” He believed that since “the old contracts have been wiped off the

board, the way is open to new contracts of mutual interest and legal standing.”

Suárez, who had forcefully advocated contract cancellation, asked the companies to

30
For the text of Illia’s decree, see Telegram, McClintock to Harriman, 16 November 1963,
RG 59, PET 15-2 ARG, NARA; and Telegram, McClintock to Rusk, 16 November 1963, RG 59, PET
15-2 ARG, NARA. See also Telegram, McClintock to Harriman, 14 November 1963, RG 59, PET 6
ARG, NARA; Telegram, McClintock to Martin & Harriman, 16 November 1963, RG 59, PET 10-3
ARG, NARA; Telegram, McClintock to Rusk, Harriman, and Martin, 17 November 1963, RG 59, PET
10-3 ARG, NARA. On news from Santiago, see Telegram, Cole to Rusk, 15 November 1963, RG 59,
PET 17 ARG-US, NARA.

261
continue operations and payments as though the contracts were still in effect, while he

negotiated a permanent solution with them. The companies, in coordination with the

American embassy in Buenos Aires, charted three simultaneous courses of action.

First, within approximately one week of cancellation the companies planned to

challenge the decree on constitutional grounds in the Argentine courts. Second, the

companies would follow the course Suárez outlined and undertake new contract

negotiations. Finally, the companies planned to continue producing oil at normal

levels, while not undertaking any new exploration.31

Publicly, Kennedy projected some understanding toward the Argentine

position. He noted that the Argentines were in the process of trying to work through

“staggering problems,” and that the United States needed to “adjust [its] interests.”

However, Kennedy did not propose to redraw significantly American interests and he

remained “concerned about the oil in Argentina.” During an 18 November speech in

Miami, the president declared that although “no country can tell another how it must

order its economy, no nation should act within its borders so as to violate the rights of

others under accepted principles of international law.” Kennedy reiterated his belief

in the central role private capital must play in the Alliance for Progress, arguing that

“[if] we are to have the growth essential to the requirements of our people in this

hemisphere then an atmosphere must be developed and maintained that will

31
Telegram, McClintock to Harriman & Martin, 17 November 1963, RG 59, PET 6 ARG,
NARA; Telegram, McClintock to Harriman & Martin, 16 November 1963, RG 59, PET 10-3 ARG,
NARA. For the Illia quote, see Telegram, McClintock to Rusk, Harriman and Martin, 16 November
1963, RG 59, PET 10-3 ARG, NARA. For a description of how the oil cases would be adjudicated,
see Telegram, McClintock to Rusk, 21 November 1963, RG 59, POL 15-3 ARG, NARA.

262
encourage the flow of capital in response to opportunity.” Although he did not refer

to Argentina directly, the message was clear: oil contract cancellation was antithetical

to the administration’s vision of liberal internationalism and disruptive to the inter-

American system. The president was also scheduled to meet with Argentine Vice

President Carlos Perette for talks on the oil crisis. In preparation for those talks,

Harriman and Martin counseled Kennedy to be firm, and stressed that even if the

Hickenlooper amendment was not included in the final foreign aid bill, cancellation

assured that private and public investors would turn away from Argentina and thus

derail plans for national economic development.32

McClintock relayed those same concerns directly to Illia. While walking his

dog on the evening of 16 November, it occurred to McClintock to visit Illia at the

president’s home in Olivos. McClintock drove his own car through the rainy night to

the clandestine and unexpected rendezvous. After being invited in, the visibly angry

ambassador refused to shake hands with the president and again warned of the dire

consequences that were sure to befall Argentina as a result of its actions, particularly

the loss of investment capital and American aid. Argentina, he warned, would

become a pariah in the eyes of businesses and financiers throughout the Western

world. Although Illia indicated a willingness to continue talking to American

officials about the oil problem, he also believed that he had been open and helpful to

32
Kennedy press conference, 14 November 1963, Public Papers of the Presidents of the
United States, 1963 (Washington, D.C., 1964), 850. For relevant exerts from Kennedy’s Miami
speech, see Telegram, Rusk to McClintock, 19 November 1963, RG 59, PET 10-3 ARG, NARA.
Telegram, Harriman and Martin to Rusk and Kennedy, 16 November 1963, RG 59, PET 10-3 ARG,
NARA.

263
date. With what McClintock described as “an air of wondering,” Illia questioned

what “all the shouting was about.” From his point of view the annulment decree

appeared eminently fair because it permitted the companies to continue operations as

if the contracts were still in force throughout a period of negotiations. Furthermore,

all actions were subject to judicial review. Ultimately calling his government’s

position “irreversible,” Illia declared that “we have no more to talk about,” and ended

the meeting. Despite Illia’s attempts to minimize bilateral tensions surrounding the

oil issue, there remained serious division between the U.S. and Argentine positions.33

Illia’s views were even further removed from the predominant opinion in the

U.S. Congress. The cancellation decree provoked what Rusk described as a “violent”

reaction among legislators. Senate leaders called for the immediate cessation of

economic assistance to Argentina. Senate Majority Leader Mike Mansfield (D-

Montana) declared that assistance to Argentina should be "suspended pending a just

settlement," and called Argentine cancellation "a serious blow at the Alliance for

Progress." Senator George Smathers (D-Florida), a member of the Foreign Relations

Committee, agreed that all assistance to Argentina should be eliminated because the

cancellation decree did not guarantee compensation for the companies. Majority

Whip Hubert Humphery (D-Minnesota) emphasized “that we cannot continue to

tolerate the use of foreign aid money to help [the] confiscation of American

33
Telegram, McClintock to Rusk, Harriman and Martin, 17 November 1963, RG 59, PET 10-
3 ARG, NARA; Pandis, Arturo Illia, 49-50. Pandis’ account, based upon an interview Illia gave in
1979, notes that Illia believed the meeting occurred on 18 November. Because the State Department
telegram is dated 17 November and refers to events the previous night, 16 November is the most likely
date of the meeting. The story is also conveyed in César Tcach and Celso Rodríguez, Arturo Illia: Un
suenño breve (Buenos Aires, 2006), 62-63, which also includes the Illia quotation.

264
property." Those voices from the Democratic Party reinforced the political clout of

Republicans suspicious of foreign aid, such as Hickenlooper, at the expense of the

modernizers who believed that the United States government could play a central role

exporting the American system abroad.34

The Kennedy administration explored the legality of Illia’s decree as soon as

it was issued. State Department legal affairs advisor Andreas Lowenfeld found that

Illia’s cancellation decree did not breach international law because it was not

discriminatory, the annulment’s stated purpose was the public good (permitted under

international law), and the decree was not confiscatory. Breach of contract did not

violate existing international law. Nor did it provide compensation for damages

resulting from loss of future profits. Argentine law was a different matter and

Lowenfeld concluded that cancellation ran afoul domestic legal codes. Despite Illia’s

protestations that the oil contracts were prepared illegally, the Argentine attorneys

that Lowenfeld consulted argued that they were legal and binding. The consulted

attorneys agreed that under the law, no property had been forcibly taken from the

companies. Consequently there were few legal remedies for the companies to pursue

in the short term, promising a more drawn-out legal process aimed at demonstrating

the illegality of the cancellation decree.35

34
Telegram, Rusk to McClintock, Martin, and Harriman, 17 November 1963, RG 59, PET
10-3 ARG, NARA; "Senators Ask Ban on Argentine Aid; Action Deferred," 17 November 1963, New
York Times. Kennedy continued to scoff at congressional limitations on foreign aid and what he
interpreted as congressional hand-tying of his ability to execute a successful foreign policy. See
"Foreign Aid Cuts Hamper Policy, Kennedy Insists," 15 November 1963, New York Times.
35
Memorandum, Lowenfeld to McClintock, 17 November 1963, RG 59, Lot 65 D 8,
Argentine Oil - EST 1963, NARA.

265
 Significantly, Lowenfeld explained that under the requirements imposed by

the Hickenlooper amendment, the president was not required to suspend assistance

until "a reasonable time 'after a government has taken' steps to repudiate or nullify

existing contracts." Under accepted practices, “a reasonable time” meant that the

president had six months to act. Kennedy administration officials had been hoping

for additional time since Illia was first elected to try to “educate” their colleagues.

Lowenfeld’s determination further suggested that the oil negotiations would not be

resolved quickly.36

On 22 November, McClintock completed his own detailed analysis of the

future prospects for U.S.-Argentine relations. The Ambassador’s report reflected the

poisoned atmosphere between the two countries. McClintock concluded that “on the

whole Dr. Illia’s new Government has started out on [a] level of almost guaranteed

incompetence.” He went on to describe the new government as, “narrow-minded,”

“highly nationalistic,” and “basically suspicious of foreigners.” McClintock lamented

the degree of “anti-American” sentiment reflected by “extremist youths from

Peronists to Nazis.” The Ambassador also worried openly about the political

tendencies of the UCRP, which seemed to him to possess an ideology “taken from

19th century socialism,” that tended toward “an increasing participation of the State in

economic enterprise.”37

36
Ibid.
37
Telegram, McClintock to Rusk, 22 November 1963, NSF, Country File: Latin America,
Box 6, Argentina Cables, Vol. 1, 11/63-8/64, LBJL.

266
 Turning his attention to specific issues, McClintock observed that the

“Alliance for Progress excites no real interest in [the] present Argentine Government

and probably only faint interest in [the] Argentine people.” Consequently, he argued

that while the administration “should continue scrupulously to observe its word for

AID projects we have contracted for,” it should not initiate any new projects.

McClintock thus advocated the gradual abandonment of concerted efforts to export

American-style liberal modernity to Argentina. That mission, championed by

McClintock with dedication since assuming his position, now appeared hopeless. At

the same time, he suggested that the “most effective single step would be quietly to

negotiate a MAP [Military Assistance Program] agreement without publicity.”

McClintock suggested a $7.5 million package designed to “show General Onganía

that we had faith in him and would encourage his resolve to sustain constitutional

government.” McClintock remained wary of a golpe, although he considered Illia’s

forcible removal by either the military or the Peronists almost inevitable. He

nevertheless conceived of fruitful relations with the Argentine military as an

evermore important component to a productive bilateral relationship.38

McClintock’s palpable disillusionment was rooted in his longstanding support

of Argentine modernization. He had argued consistently for increased U.S. economic

assistance to nurture Argentine development and democratization. McClintock had

fought for the IMF’s understanding before the 1963 elections to nurture the economy

through the elections. Yet after the cancellation decree was issued, some Argentine

38
Ibid.

267
lawmakers attempted to have the ambassador declared persona non grata. Like

Woodrow Wilson before him, McClintock accepted the idea that the United States

could effectively spread its system of democratic capitalism abroad, and that stability

would ensue once democracy firmly took hold in Argentina. Illia’s cancellation of

the oil contracts stung the ambassador deeply. Like the young liberals who

accompanied Wilson to Versailles in 1919, McClintock emerged disillusioned with

the outcomes of the modernization program. His instinct was to blame the Argentines

for turning their backs on progress without reflecting upon the decisive role that the

United States, the IMF, and transnational business had played in bringing about the

critical moment. McClintock, as much as anybody, had tied U.S. prestige to

Argentine stability and prosperity within a liberal framework. He took the

subsequent defeat of that program hard.39

McClintock’s analysis, completed on what turned out to have been the last

day of Kennedy’s presidency, foreshadowed a change in emphasis in U.S. policy

toward Latin America. Under the Mann Doctrine – named after Johnson’s Assistant

Secretary of State for Inter-American Affairs Thomas C. Mann – the new Johnson

administration dispensed altogether with the Wilsonian mission of spreading

democracy. It privileged rightist dictatorships that protected private property and

clearly proscribed communists, but did not emphasize liberal development. Like the

coming Mann Doctrine, McClintock’s report stressed the presence of nationalistic

39
On attempts to have McClintock declared persona non grata, see Tcach and Rodríguez,
Arturo Illia, 64; Walter LaFeber, “A Half-Century of Friends, Foreign Policy, and Great Losers,”
http://www.alumni.cornell.edu/lafeber/transcript.cfm.

268
and anti-American attitudes among a significant portion of the Argentine voting

public and encouraged a closer U.S. relationship with Argentine military elites even

as it advocated a withdrawal from economic development projects. Combined with

the congressional backlash against foreign aid, McClintock’s analysis reflected the

declining faith in the modernizers’ foreign policy agenda.

Some former Kennedy administration officials later maintained that the

Alliance for Progress remained stable and healthy in November 1963. They argued

that the Lyndon Johnson administration was responsible for the Alliance’s subsequent

demise. By contrast, scholars Jerome Levinson and Juan de Onis observe that the

Alliance was on the brink of failure when Johnson assumed the presidency. In the

most comprehensive assessment of Kennedy’s Latin American policy to date,

Stephen G. Rabe acknowledges that Kennedy brought hope for socio-economic

improvement to Latin America, but contends that he ultimately sacrificed those ideals

to an anti-communist gunboat diplomacy based upon Cold War considerations. Rabe

thus argues for continuity between the Kennedy and Johnson administrations’ Latin

American policies. The story of U.S. engagement with Argentina under the Kennedy

administration supports the latter position. The Alliance itself had little effect in

Argentina; transnational economic development efforts were most active during the

late Eisenhower period. Indeed, Argentina was the location of considerable setbacks

for the Alliance for Progress. The combination of the 1962 coup that overthrew

269
Frondizi from the presidency and Illia’s cancellation of contracts held by

transnational oil companies actively operated against the Alliance’s objectives.40

Frondizi also believed, both when he governed Argentina and in retrospect,

that the Alliance for Progress never reached for its full potential. He believed that

Kennedy had been the victim of reactionaries in the United States who would not

allow his ideas to be implemented. Frondizi had every reason to be frustrated with

the inadequacy of the Alliance for Progress. He had positioned his government to

have taken a lead role in the Alliance, having laid the groundwork during the

Eisenhower era. His developmentalist strategy was premised on a cooperative

relationship with the United States that would lead to expanded trade and increased

levels of foreign direct investment. Despite Kennedy’s heightened rhetoric associated

with the Alliance for Progress, he was unable to commit fully the Congress and the

American public to the endeavor. The gap between rhetoric and reality led to

Frondizi’s frustration.41

In the aftermath of Kennedy’s 22 November 1963 assassination, Perette,

described in U.S. briefing papers as an “ultranationalist” whose “political career has

40
For a representative and forceful example of the Kennedy administration’s perspective, see
Arthur M. Schlessinger, Jr., A Thousand Days: John F. Kennedy in the White House (Boston, 1965).
See also Edwin Martin, Kennedy and Latin America (New York, 1994). Jerome Levinson and Juan de
Onis, The Alliance that Lost its Way (Chicago, 1970); Stephen G. Rabe, The Most Dangerous Area in
the World: John F. Kennedy Confronts Communist Revolution in Latin America (Chapel Hill, 1999).
On the Mann Doctrine, see especially Walter LaFeber, “Thomas C. Mann and the Devolution of Latin
American Policy: From the Good Neighbor to Military Intervention,” in Behind the Throne: Servants
of Power to Imperial Presidents, 1898-1968, Thomas J. McCormick and Walter LaFeber, eds.
(Madison, WI, 1993), 166-203.
41
Alberto A. Amato, Cuando fuimos gobierno: Conversaciones con Arturo Frondizi y
Rogelio Frigerio (Buenos Aires, 1983), 103.

270
been notable for the opportunism and extreme nationalism he displayed,” met with

U.S. officials about the oil crisis. The Argentine Vice President assured Rusk,

Harriman, and Martin that since the contracts had been cancelled by executive decree,

the oil crisis could be decided fairly in the courts. Perette further pledged that the

companies would be compensated, announcing that “foreign investment had nothing

to fear from Argentina.” Despite his own bleak analysis of the Argentine situation,

McClintock intended to continue secret talks with Illia in the hope of reaching a

compromise that would salvage the rights of U.S. oil companies. He hoped in vein to

rescue the liberal international order in Argentina that public and private U.S. and

Argentine elites had worked to construct.42

VI

American confidence in the Argentine commitment to normal market

mechanisms and the free flow of investment capital across borders was severely

shaken by Illia’s cancellation of private oil contracts. By unilaterally canceling the

contracts, the Argentine government provided an illiberal precedent that other states

might follow. Worse, the Illia government was elected specifically to challenge

transnational oil companies that operated in Argentina. Such a wave of economic

nationalism posed a deep challenge to American modernizers by attacking their

central values. Rather than the advance of liberal capitalist development, American

42
Telegram, Rusk to McClintock, 28 November 1963, RG 59, POL 7 ARG, NARA;
Department of State Paper, 15 November 1963, FRUS, 1961-1963, 12: 417-419; Telegram,
McClintock to Harriman and Martin, 17 November 1963, RG 59, PET 6 ARG, NARA.

271
elites witnessed a staggering reversal that raised questions about the soundness of

modernization theory.

The Argentine oil crisis contributed significantly to reframing the political

discourse in the United States as it affected efforts to spread democracy and liberal

development throughout the Global South. With bipartisan support and over

administration objections, the second Hickenlooper amendment was reported out of

the Senate Foreign Relations Committee and ultimately incorporated into the Foreign

Aid Act of 1964. Domestic critics of foreign aid were unwilling to fund governments

that did not share the core U.S. belief in the sanctity of private property and free

markets. They responded forcefully to Illia’s challenge in Argentina and differed

only in tactics with the Kennedy administration.

As Lyndon B. Johnson ascended to the presidency, the foundations of the

Alliance for Progress were already showing cracks. A veteran New Dealer with great

faith in the liberal system, Johnson committed himself to nation building in South

Vietnam. However, Johnson had never felt personally invested in the Alliance for

Progress, and the Alliance that he inherited was stranded in choppy seas with few

prospects of successfully transplanting the American system to the nations of Latin

America. As the new President sought to negotiate with the Illia government, it

became clear that Argentina would not soon evolve into a bastion for liberal

modernity as the Eisenhower and Kennedy administrations had hoped.

272
 CHAPTER 7

CONCLUSION:
“CIVILIZATION AND BARBARISM”

In 1845, Domingo Sarmiento published his iconic account of “life in the

Argentine Republic in the days of tyrants,” originally titled Civilization and

Barbarism: The Life of Juan Facundo Quiroga, and the Physical Aspect, Customs,

and Practices of the Argentine Republic. Challenging what he characterized as the

unenlightened rule of the caudillos, Sarmiento framed the debate about Argentina’s

future as a battle between the forces of civilization and those of barbarism. For

Sarmiento, civilization was rooted in the cultural and racial heritage of Western

Europe. Applied to South America, Sarmiento contrasted the European-influenced

civilization that he located in urban environments with the barbarism of the

countryside. He further identified a clear ideological component to civilization in the

form of nineteenth century liberalism. In the ongoing conflict that led to Argentina’s

emergence as a modern nation state, urban liberals faced down the federalist caudillos

loosely aligned with Juan Manuel de Rosas of Buenos Aires. Those caudillos and

their supporters, Sarmiento argued, emerged out of an inferior racial and cultural

background. In his book, he used Juan Facundo Quiroga – caudillo leader of La

Rioja – as the manifestation of the barbarism of the pampas. Because of his political

273
ideology, Sarmiento himself was repeatedly forced into exile while the Argentine

provinces were ruled by the caudillos. To counteract their influence, Sarmiento

looked to both Europe and the United States for civilizing influences. Following

Rosas’ ultimate defeat in 1852, Sarmiento went on to serve as minister to the United

States before being elected president in 1868.1

The juxtaposition of the forces of civilization against the forces of barbarism

was at the heart of the national meta-narratives of both the United States and

Argentina. Americans could easily relate to Sarmiento’s civilizing mission because

their national story was infused with the same basic conflicts. Indeed, the Argentine

liberal looked to the U.S. experience of taming the western frontier from “savage”

influences as he conceptualized the Argentine national project. Ultimately,

Argentines and Americans each viewed themselves as exceptional, chosen, and

special. The historical ideological evolution of the two countries had lasting

significance into the mid twentieth century. Because of the power that discourses of

civilization and barbarism had exuded, it was easy for both societies to accept a new

theoretical grouping of societies. The labels had evolved from civilization and

barbarism to modern and traditional.2

1
Domingo Faustino Sarmiento (translated by Kathleen Ross, introduction by Roberto
González Echevarría), Facundo: Civilization and Barbarism (Berkeley and Los Angeles, 2003).
Sarmiento’s book is best known today by the one word title, Facundo. Its first English translation was
titled Life in the Argentine Republic in the Days of Tyrants.
2
Matthew Frye Jacobson, Barbarian Virtues: The United States Encounters Foreign Peoples
at Home and Abroad, 1876-1917 (New York, 2001); Michael H. Hunt, Ideology and U.S. Foreign
Policy (New Haven, 1987).

274
 W. W. Rostow’s juxtaposition of modernity against traditionalism did not

fundamentally reshape the older discourse. Instead, modernization theory infused

new social scientific models into tropes that had been employed by such diverse

thinkers as Sarmiento, Thomas Jefferson, Frederick Jackson Turner, Theodore

Roosevelt, and many others. Modernization theorists nonetheless sought to

demonstrate their distinctiveness from those older discourses. For instance,

modernization theorists did not explicitly employ race as a distinct category of

analysis, as their ideological forerunners had done. Instead, they argued that cultural

factors reinforced traditionalism and that by following a prescribed pattern, any

society could overcome such cultural obstacles and takeoff into liberal modernity.

However, they shared a basic inclination to lump societies together on the basis of

predefined criteria, without sensitivity to local cultural traditions. Because they were

less encumbered by racist ideologies, modernization theorists in particular

emphasized the shared elements of the human experience. Consequently, they argued

that no matter their roots, all societies could achieve American-style liberal modernity.

The Americans who traveled abroad to spread the gospel of liberal

development and progress consciously situated their efforts within this longer

tradition of U.S. transnational missionary activities. Former Agency for International

Development (AID) official Vernon Ruttan phrased the sentiment best:

When I first became involved in development assistance I saw no basis for

concern about why U.S. private voluntary organizations … were engaged in
foreign assistance. I simply took the involvement as a given because the need
for technical and economic assistance in the developing world was so obvious.
However, I recall commenting to a colleague that Robert Chandler, Director
of the IRRI [International Rice Research Institute], “is a missionary for

275
 science. In an earlier generation, he would have come to Asia as a missionary
for the church.”3

American modernizers evoked a similar faith in the liberal international order. They

believed that it was best suited to protect U.S. economic and security interests, and

that it offered the best available hope of economic and social improvement to the

world’s poor. The modernizers possessed a paternalistic worldview. Despite

occasionally stressing cooperation and partnership with elites from other societies,

they fundamentally believed that they knew best what other people needed. U.S.

elites listened little to the concerns of their Argentine counterparts while readily

prescribing policies.

In light of the similar narratives of civilization and barbarism embedded in the

United States and Argentina, the Argentines appeared to modernizations theorists as

ideal candidates to forge a takeoff. In 1958, U.S. and Argentine elites pledged to

cooperate and bring about that objective. Under presidential administrations of both

major political parties, the United States invested financial resources and national

prestige in the success of Argentine development efforts. Yet by November 1963, the

modernizers faced significant setbacks and were actually farther from their goal than

they had been in 1958, despite their considerable efforts.

There were multiple reasons for that failure. First, U.S. and European elites

functionally ignored the fundamental trade question. Although they conditioned

international development and balance-of-payments assistance in part upon Argentine

3
Vernon W. Ruttan, United States Development Assistance Policy: The Domestic Politics of
Foreign Economic Aid (Baltimore, 1999), xx.

276
market liberalization, U.S. and European governments refused to reduce their tariffs

on Argentine agricultural imports. North Atlantic governments also continued to

provide their domestic agricultural producers with generous farm subsidies. At the

same time, they preached the evils of state support for business and agriculture in the

Global South. In the final analysis, the demands of the domestic U.S. and European

political economies undermined Argentine development efforts by placing Argentine

goods at a competitive disadvantage on the global market.

Second, the failure of desarrollo to incorporate working-class Argentines

constituted a fundamental weakness of the program and contributed significantly to

the policy’s failure. Working-class Argentines bore the brunt of the self-help

measures promoted by Washington. They suffered under the burden imposed by the

increased cost of living even while the Frondizi government reduced the social safety

net that had been provided by the Peronist welfare state. As a result, working-class

Argentines, who had supported Frondizi’s election in 1958, were forced into open

opposition by 1959. A vibrant political force, Frondizi’s failure to integrate the

working class undermined his government. Left unresolved, the labor question

continued to cast a shadow over Argentine civil society that extended through the

subsequent decades.

The efforts of U.S. and Argentine elites to bring liberal modernity to

Argentina brings into focus important themes in the history of the U.S. engagement

with the world. For instance, the U.S.-Argentine relationship reveals the tension

inherent between the Washington-promoted liberal international order and

277
nationalism. Frondizi sought to link the two concepts within the malleable

ideological framework of desarrollismo by arguing that the liberal international order

facilitated autonomous Argentine development and thus advanced the cause of

Argentine nationalism. The vast majority of Argentines rejected Frondizi’s reasoning

and instead interpreted liberalism as a fundamental assault upon Argentine

nationalism. They distrusted the liberal international order because its leaders in the

United States and the International Monetary Fund (IMF) established guidelines for

self-help that Argentina and other less developed countries were required to follow in

order to receive stabilization and development assistance. That “self-help,” which

usually amounted to fiscal austerity by the receiving government at the expense of the

working class, resulted in popular unrest. The Argentine working class and its union

leaders in the Confederación General del Trabajo (General Confederation of Labor,

CGT) understood that Frondizi’s austerity policies were backed by his patrons in

Washington – and they resented Washington’s meddling. Furthermore, Argentines

from across the social spectrum overwhelmingly supported Arturo Illia’s decision to

cancel the contracts that Frondizi ordered Yacimientos Petrolíferos Fiscales (YPF) to

sign with transnational oil companies. They saw Argentine national autonomy as

threatened by the liberal international order and supported governments that pledged

to protect nationalist interests. The failure of liberals in the United States and

Argentina to safeguard at least some of the concerns of Argentine nationalists

contributed to the failure of desarrollo, and accounts in part for popular Argentine

apprehension about the U.S. role in the world.

278
 A close examination of U.S. efforts in Argentina underscores the corporative

construction of American power. Business, labor, and the state cooperated in the

formulation and execution of U.S. policy. Reflecting the political and economic

power of domestic agricultural producers, the Eisenhower and Kennedy

administrations could not address the trade question to Frondizi’s satisfaction.

Meanwhile, petroleum executives worked closely with U.S. officials in a joint effort

to resolve the 1963 oil crisis. The U.S. embassy consulted closely with the U.S.

Chamber of Commerce in Buenos Aires on matters of mutual interest and clearly

considered the promotion of U.S. business interests to have been one of its central

functions. Finally, the American Federation of Labor and Congress of Industrial

Organizations (AFL-CIO) – in concert with the U.S. government – actively worked to

export its model of business unionism to Argentina. Understanding the corporative

neo-capitalist construction of U.S. power is thus critical to understanding the origins

and execution of U.S. foreign relations.

Frondizi’s failed attempts to divorce political and economic policies exposed

the great difficulty inherent in such an endeavor. He sought simultaneously to

reintegrate the Peronists, keep military officers placated, and impose austere

economic reforms. It was a fantastically difficult endeavor, and one that Frondizi

ultimately failed to bring to fruition. The same was true of Frondizi’s 1961 Cuban

policy. The Argentine president chose to use the Cuban issue to demonstrate his

political independence from Washington. The decision strained his links to the

Kennedy administration and enraged Argentine military leaders. Ultimately, it was a

279
high risk policy that failed to deliver the expected results. While many in the country

likely appreciated Frondizi’s independent stand, his autonomous foreign policy

maneuvering did not make them forget about the austerity program under which they

suffered. Ultimately, the gambit did not lead to UCRI electoral victories in the March

1962 election and Frondizi quickly reversed the policy after those losses.

U.S. interaction with the post-Frondizi governments of Argentina also

demonstrates the relative unimportance of democracy promotion within the liberal

international order. Despite their high rhetoric, U.S. elites did not prioritize the

spread of democracy as a central tenet of U.S. policy toward Latin America. Viewed

from one yardstick, the Kennedy administration’s recognition of their limited ability

to impose a particular form of government on other countries represented progress

from Woodrow Wilson’s insistence that he could force the advance of political

liberalism throughout hemisphere. However, U.S. recognition of the José María

Guido government was premised upon the idea that such a policy offered the only

path whereby U.S. officials would be able to maintain their influence in Argentina.

Yet despite their remarkable levels of influence since 1958, U.S. officials had been

unable to build the society that they set out to construct in Argentina. Indeed, under

Guido, Argentina requested and received new rounds of U.S. assistance simply to

avoid an economic collapse. The removal of the semi-democratic Frondizi

government was a clear sign that the modernization agenda was floundering in

Argentina. That sign was either ignored or missed entirely by policymakers.

280
 Despite the Alliance for Progress’ failure to deliver on its promises, the view

from Washington was not entirely bleak. While Argentina did not become a

showcase for the virtues of liberal development, neither did communism advance.

However, U.S. policy did not play a significant role in determining that outcome.

Because of Peronism, communism did not enjoy widespread support among the

Argentine working class. Although U.S. officials and conservative Argentine

military officers often evoked the possibility of a communist-Peronist alliance,

Peronism existed as a self-contained movement in Argentina. Peronist leaders

evinced little interest in merging with international communism. While aspects of

Peronism – particularly its emphasis on a positive role for the state as a guarantor of

social justice – shared similarities with communist ideology, there was little serious

danger the two movements would combine. Indeed, the Argentine Communist Party

was only a bit player in the Argentine political system. The internal dynamics of the

Argentine political landscape, to a far greater extent than any intervention from

Washington, was responsible for communism’s anemic popularity in the country.

Finally, Argentine development efforts offer a window into the Bretton

Woods phase of globalization. The IMF – itself a Bretton Woods institution – played

a critical role dictating reforms to the domestic economic system to Argentine

political leaders. Indeed, U.S. policy across the Eisenhower and Kennedy

administrations was to condition U.S. aid upon a favorable recommendation from an

IMF team. Moreover, U.S. policy at the height of the Cold War was not only geared

toward a defensive strategy of containment. Rather, containment also came to imply

281
the maintenance and spread of the liberal international order in the non-communist

Global South. Fundamentally a contest between two different ideologies of

modernity, the Global South became critically contested terrain in the Cold War

during the 1950s and 1960s. At the same time, Argentines from different socio-

economic backgrounds proffered different models for development and contributed in

important ways to the transnational discourse of development.

The late 1950s and early 1960s marked a moment of opportunity to build

political, economic, and social stability. Because of the Cold War, transnational

interest in Argentine development was heightened. That opportunity was squandered,

with adequate blame to go around. The Frondizi government downplayed the

importance of generating results for all Argentines, and in so doing alienated nearly

everyone in the country. The Argentine military’s lack of commitment to political

liberalism destabilized the country. Although with some initial reluctance, U.S.

officials were content to work with unelected governments as long as they excluded

communists and Peronists. U.S. modernizers pushed the Argentines toward “self-

help,” but did not make any serious attempt to address the trade question, making

impossible any attempt to balance the country’s accounts. Transnational bankers

repeatedly loaned Argentines far more money than could reasonably be expected to

be repaid on schedule, even after the failure of past loans had been demonstrated. At

the same time, Argentines continued to push for ever greater development and

stabilization lending in the hope that the next round of loans would generate self-

sustaining growth. Despite the convergence of political interest in both Argentina

282
and the United States, the opportunity to ensconce firmly Argentina on the road

toward liberal modernity failed.

Desarrollismo ended tragically in Argentina. In their efforts to export liberal

modernity to Argentina, the missionaries of modernization contributed to social,

political, and economic instability. The failure of Frondizi’s agenda – including

economic development, political democracy, and Peronist reintegration – increased

the polarization of Argentine civil society and helped to make possible the conditions

that led to the barbarism of the Dirty War.

283
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