821.6363 Barco/456
The Assistant Chief of the Division of Latin American Affairs (Matthews) to the Assistant Secretary of State (White)
With reference to Mr. Caffery’s telegram No. 21, February 25, 5 p.m., concerning the Barco matter, and especially to the first point raised therein by Olaya, the following explanation may be of interest to you:
As you will recall, an agreement was finally reached in December, 1928, between Montalvo and the Tropical Oil Company settling their two years dispute concerning royalty payments (the interpretation with respect to refined products to be given clause 5 of the Tropical’s contract).23a This agreement provided that the Tropical should pay the Government immediately what it considered to be royalty payments due, and that the question of additional amounts claimed by the Government, based on its interpretation of clause 5, should be left to the Supreme Court by means of a suit brought by the Government. Public opinion in Colombia would probably regard that settlement as in the nature of a precedent, and since its provisions are substantially what Olaya is asking as an addition to clause 10 of the proposed Barco contract, I share his opinion that the omission of such additional clause would lay the contract open to attacks in Congress.
[Page 24]While the Gulf seem to me to have been quite conciliatory and reasonable in their present negotiations, I feel on the other hand that Olaya is sincere in wanting the changes primarily, if not entirely, in order to obtain congressional approval. I wonder if the Gulf fully realize: (1) that this is in effect their last chance to get back the Barco; (2) that Olaya is pressing for a settlement chiefly because he feels “under certain definite obligations to the Department”; and (3) that the Gulf’s chances of a favorable Supreme Court decision are “extremely remote”.
- See telegram No. 189, December 16, 1928, from the Minister in Colombia, Foreign Relations, 1928, vol. ii, p. 603.↩