AMERICAN OIL KINGS LOSE IN ARGENTINA
on November 15 President Arturo U, Illia issued a decree cancel+ ling all the contracts in Argentina granted to the international oil cartel in 1958=59 by the then President Arturo Frondizi.
President Illia, who took office -@ctober 12, had campaigned on a promise to void the contracts, ‘which were illegal under Argentine law * since they. stood in violation of the constitution and were never approved by parliament. Illia said that he would not last two months in office if he did not hnnor his campaign pledge, oo '
The cancellation order specifies that the oil companies shall be indemified -~ but under certain conditions, The Treasury must take ‘into account the amount of "injury" done the national interests, the damage done by irrational exploitation of Argentina's oil resources, the inadequate accumulation of reserves, the reduction in benefits wnich the YPF [Yacimientos Petroliferos *Fiscales -- the National Oil Department] had to absorb, and finally the taxes which the companies should have paid had they observed the laws of Argentina. SO ETS PP
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In the light of these condl tions, some observers in Buenos Aires characterized Illia's order as "provisional expropriation,"
Estimates vary on the amount of money involved, ne companies put the figure high, claiming that they have spent" $397,000,000 in k developing Argentina's oil fields, In an editorial November 14, the : New York Times put the figure as “over $200,000,000." The Chinese ho news agency Hsinhua [November 2] gave an estimate of $211,000,000, bn adding that profits wrested by the oil companies “from the country have come to nearly $376,000,000."
The companies involved include Pan American Argentina, a subsiddary of Standard Oil Company of Indiana (on a concession of 1,000, 000 acres it claims to have invested $64,000,000 initially and to have "reinvested" $39,000,000 out of profits): Tennessee Argentina, a sub= Sidiary of Tennessee Gas Transmission Company (a claimed investment of
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$44,300, 000) 5 Cities Service ($40,000,000); Standard Oil Company of New Jersey ($21,000,000). Companies with smaller investments include Transworld Drilling’ Company, a subsidiary of Kerr-McGee Oil Industries; Continental Oil; Marathon Oil Company-Union Oil of California; the Royal Dutch-Shell group; Southeastern Drilling Company and ENI ~ [Ente Nazionale Indrocarburi] of Italy.
The announcement that the Illia government intended to cancel the illegal contracts granted by Frondizi ~- who was considered. in New York and Washington circles to be a "model" Latin-American presi-~ dent (particularly when he ended diplomatic relations with revolutionary Cuba) == gave the Kennedy administration an acute case of heartburn, The consequence was a striking example of how an imperialist government acts as _ the executive committee of the ruling class, ~
o A Millionaire to the Rescue °
Cn November 8 Averell Harriman, former governor of New York and a member of Americats richest ruling families, arrived in Buenos Aires. He announced on landing that his trip had nothing whatsoever to do with the projected cancellation of the oil contracts, This disclaimer was said to have "surprised observers" in Buenos Aires. They could not imagine him flying that far just because he had his mouth set on one of the steaks for which the country is famous » : Journalists asked Harriman repeatedly if the purpose of his trip wasntt connected with the oil contracts but the multimillionaire just .as repeatedly, in accordance with the ethics of his class, stoutly denied "that his visit in Argentina had any connection with the problem of Argentine oil,"
However, the truth soon became public property. On November 1O the Argent ine government "leaked" to the press that Harriman had been invited to sign a joint statement on the cancellation of the oil con= tracts but "understandably, did not want to sign."
An "authoritative American source" [probably the embassy] said that "failure by the Argentine Government to act within the concept of the United States position can harm this climate (for foreign capital) and with it the Alliance for Progress,"
The demand levelled by the U.S. government, it appears, was "immediate and just compensation. ..
According to the Associated Press, “informed sources" said that Harrimants "mission was to save American contracts that are legal <= 'to save Argentinats face and American skin,'
The same sources said that Harriman "warned Argentine officials of possible consequences of the threatened annulment,'
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On the same day as the "leak" to the press, representatives of the | foreign oil companies met with Harriman, The subject of the conversation was not revealed,
"On Personal Instructions"
Two days later Leo Sauvage sent a dispatch from New York to the Paris daily Le Figaro revealing a few more tidbits about Harriman's trip.
~. "A eat and-dog fight is on between Washington and Buenos Aires where President Arturo Illia, as is now admitted without any beating about the busn in the American capital, flatly indicated to Under-Secretary of State Averell Harriman that he did not have the slightest intention of modifying the projects of his government concerning the nationalization of the oil industry.
"En route for the second annual conference of the Alliance for Pro= gress which has just opened at Sao Paulo and where he represents the United States, Mr, Harriman, on personal instructions of President Kennedy, went first to Buenos Aires in the hope, if not of maintaining the current contracts, of at least blocking their brutal cancellation, considered as imminent, and of obtaining at least, in the absence of new contracts, satis~ factory indemnification,
"He failed up and down the line. ...
-- “Phe irritation is-all the greater in Washington since-it.is fed by three aggravating circumstances:
"The Argentine defiance can snowball (an analogous situation exists in Peru particularly); the North American companies can easily be replaced (Mr, Illiats government has already received offers from Italy and even from the USSR); Mr. Kennedy's administration cannot impose its point of view without bringing down the whole edifice of the Alliance for Progress,
"It is no secret, for oxample, that Mr, Harriman, in his conversations in Buenos Aires, used very strong =~ even menacing -- language to make his - listeners understand that their attitude not only promised to discourage North American private investment but could compel the administration in | Washington, under pressure from Congress, to revise its aid program for Argentina,
For a few days, dispatches from Buenos Aires indicated that Illia might buckle under the pressure, The United Press International said November 13 that a "break" had come in the situation "after sharp and angry reaction from Washington to the Government's planned action, and to unconfirmed reports the Argentine armed forces also had intervened to get Presi« dent Illia to modify his hitherto adamant position,"
If the Kennedy administration had succeeded in getting Argentina's generals and admirals to put additional pressure on Illia, the move failed. The political unrest in Argentina constitutes a powerful counteracting pressure, This was proved when Illia decided that the wiser course was to > bow to the popular will and honor his canpaign promises no matter how ine comprehensible and immoral this might seem to the American oil kings and
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their errand boys in the White House and State Department.
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