"Co-Prosperity Sphere"

Last week little Paraguay signed two treaties, one with Bolivia, the other with Argentina. They looked like the most innocent of treaties (tariff reductions, roads, loans, a pipeline, cultural exchanges). Actually, they were move and countermove in an intricate diplomatic campaign being waged by Argentina for commercial and possibly political control of her smaller neighbors.

Argentina has always believed that she ought to be mistress of the entire La Plata watershed, which includes all of Paraguay and parts of Bolivia, Uruguay and Brazil. In a sense she has been, for most of the trade of the region has had to pass down river through her territory. This circumstance made Paraguay her vassal and forced the other countries to pay heavy tribute to Argentine railroads, river boats and ports of transshipment.

There was much complaining upriver, but little was done about it until Argentina's reactionary Government put itself out of good international society by its too-friendly attitude toward Germany. Then things began to happen. Paraguay, with its strategic position and the fightingest population in South America, was courted from all sides. Big and arming Brazil gave a 100,000 conto loan ($5,170,000), gave President Morinigo a royal tour, offered freeport privileges at Santos on the open Atlantic. The U.S. has constructed a much-needed road in Paraguay, is building another, and has flooded the little country with Lend-Lease, doctors, agricultural experts and military technicians.

Qualified Freedom. Argentina has not been idle. As Paraguay's chief supplier, large customer and road to the outside world, she could threaten as well as promise. The Bolivia-Paraguay treaty would be a smarting defeat for her "free-trade area." Free trade with big Argentina was one thing. Free trade among little neighbors was quite another. Sore point was the threatened pipeline which would bring Bolivia's landlocked oil to the Paraguay River and allow it to compete, locally at least, with Argentina's own.

Seriously alarmed during the early negotiations, Argentina fought back in several ways. Her propagandists tried to stir up memories of the bloody Chaco War between Paraguay and Bolivia, and spread the indignant story that the treaty contained a secret military clause which glanced in her direction.

All efforts failing, Argentina signed her own treaty with Paraguay, giving trade and financial concessions never dreamed of before. Simultaneously she redoubled her frantic efforts to entice neighbor Chile into her "free-trade area," offering a subway for Santiago, a tunnel under the Andes and other pleasant things. The Chilean leftist press described it as another attempt by Argentina to escape from isolation.

This flurry of hard-boiled peso-diplomacy reminded postwar planners that expansionist nationalism is not dead, that all may not be Wallace-sweet in the postwar world.

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