824.6363 ST 2/153

The Chargé in Bolivia (Muccio) to the Secretary of State

No. 263

Sir: I have the honor to refer to Instructions No. 68 and No. 71, dated June 7 and 10, respectively, regarding the Standard Oil Company of Bolivia.43 The Legation was informed that the Department does not consider it desirable at the present time to reply to the communication from the Bolivian Minister for Foreign Affairs in view of the recent despatches suggesting that the best procedure for the present appears to be direct negotiations in La Paz without any active participation on the part of this Government.

The Legation understands that Mr. C. J. [F. C] Pannill has sent word to the Bolivian Minister for Foreign Affairs that in view of their failure to reach an agreement for the cancellation of the Decree of March 13 prior to negotiations, he must regard his mission as unavailing. I am informed that when the Company’s decision was communicated to the Bolivian Minister for Foreign Affairs, Dr. Finot sent word to Dr. Carlos Calvo insisting that an agreement should be arrived at without delay.

The “hands off” decision of the Company is in line with the suggestions of this Legation as contained in Minister Norweb’s despatch No. 244, of June 4, 1937. The Company would appear to be warranted in delaying matters while studying the implications of the Bolivian Government’s action on its interests in other Latin American [Page 293] countries. On the other hand, I do believe that something should be done to keep the issue alive before the Bolivian Government and, if possible, to counteract the universal feeling among Bolivians that the Junta has done the Nation a great service in ridding the country of the Standard Oil whose expulsion is now a closed incident. I am astonished to find that such important Bolivian officials as Mr. Antonio Campero Arce, Sub-Secretary of the Ministry of Mines and Petroleum, and Mr. Walter Montenegro, Secretary to President Toro, consider that the matter is closed; that the Government’s action was fully justified; and that the United States Government is not interested and will do nothing about the Standard Oil case. I am confident that neither of these persons knows that the United States Government has made its interest in the matter clearly evident to that of Bolivia. The attitude of these two government officials is a good reflection of that of the young “politicos” and of the ex-combatants.

The press here treats the matter as definitely settled. The Yacimientos Petrolíferos Fiscales Bolivianos is proceeding with the extraction and refining of petroleum products from the Standard Oil properties as if they were definitely its own. The national petroleum distribution company is developing a national distributing system under a fanfare of publicity, citing the blessings to the country of being independent of petroleum imports.

I have given considerable thought to the desirability of formulating, for suggestion to the Department, some act or plan to counteract the general impression amongst Bolivian officials and the Bolivian public generally that the Standard Oil matter is now a closed incident; that the United States Government is not interested and will not do anything. As to how this can best be done, I have come to no definite conclusion. Even though the Department were prepared to make an issue of the matter and to press strongly for the return of the properties, strong official representations would probably be unavailing at the present time. Such official representations would go to Finot, possibly as far as Toro, and certainly no further. I am confident that Toro and Finot would not dare cancel the decree of March 13th in view of the uncertainty of the internal political situation and that representations would not prevent their continuing to pose before the public as national benefactors. Should the United States unduly press such representations, forcing a successful conclusion, the political repercussions would likely be such as to precipitate the downfall of the present military Junta. This, in turn, would provide political capital to opponents of the United States and give rise to possible critcism of undue interference in internal matters of a friendly country. Furthermore, it would adversely affect the influence of the United States in the Chaco Peace Conference, possibly endangering the success of those negotiations.

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Possibly a statement at one of the press conferences from an official of the Department that the Standard Oil Company and the Bolivian Government are still searching for an amicable settlement of their differences and that it is the hope of the Department that a friendly adjustment may be found in the near future, might serve the purpose. Such a statement would have its effect on other Latin American governments, but I am confident that Toro and Finot would see to it that it did not reach the Bolivian public through the local press.

My only definite suggestion at this time is that the Standard Oil Company should have a competent American representative in La Paz to observe developments and little by little build up a situation to a point where negotiations may again be resumed. His mere presence would keep the matter before the Bolivian Government and populace generally, particularly if he were the type that had the knack of mixing with local officials and residents. In view of the internal political situation this cannot be done effectively by the two Bolivian citizens now here representing the Company.

Respectfully yours,

John J. Muccio
  1. Neither printed; instruction No. 71 transmitted to the Minister in Bolivia a copy of a letter of June 4, 1937, from the Standard Oil Company, the Department’s reply thereto, and a copy of a memorandum prepared in the Division of the American Republics.