The Economics of Neutral Countries during World War II : Argentine Perspectives

Argentina has had an extremely rich and turbulent monetary history. Its endless experiments in economic policy and its very erratic performance have frequently attracted the interest of historians. A study of the monetary and financial history of Argentina during the 2Oth century provides an excellent opportunity to contribute to the analysis of monetary and financial economics. This paper will discuss the development of Argentina’s economy and its capital market in the first half of the 2Oth century with a particular focus on the World War Il period and interactions with Germany’s global economic strategy and actions. Argentina was one 0f the ten most developed economies in the world at this time. It had a sophisticated financial market and, despite its long-standing strong economic and financial relationship with the United Kingdom, remained neutral until the very last months of the war. We discuss the relations between Argentina and the United Kingdom, the United States and Germany. The analysis will strongly focus on the multifaceted relationship between Argentina and Germany: trade relations, the role of foreign direct investment, the financial institutions, the impact of immigration, and political interactions between the two countries. The world crisis of 1930 led to a long lasting period of political and economic instability starting with the first military coup of modem Argentina. The increasing role and influence of the Armed Forces in the political life of the country will have an important impact on the international relations of Argentina. The traditional closeness of the political elite with Britain will be perturbed by the contagion of the ideological divisions of the military establishment. The influence of the German military in the training of the new professional Argentine Army since the beginning of the century will extend in the thirties to the rise of a strong pro-Axis faction in the Armed Forces leading to the coup of 1943. This trend of events will have a considerable impact on the political choices and the international relations of the country. Argentina remained neutral during most of the war years, as it did in World War I, but now with part of the militarv establishment as well as certain intellectual elites imbedded in a phalangist and fascistoid ideology in the frame of a political critique of liberal democracy. The goal of a new international scenario where the economic relations with Germany could counterbalance the traditional relation of complementarity with Britain and the emerging role of world leadership of the United States was the economic counterpart of the pro German factions of the Army. It vas expected that a new set of alliances could contribute to the development of the industrial sector against the traditional role of the country as an exporter of commodities in exchange for the imports of industrial goods. However, this vas not the dominant view of German strategists in the search for long term suppliers of raw materials. An essential strategic misunderstanding seemed to condemn the views of the Argentine pro Axis lobbies. In any case, the decisions and actions instrumented by Argentina in relation with Germany during the war years did not materialize in fundamental results to the stated objectives.