824.6363 St 2/534

The Minister in Bolivia (Jenkins) to the Secretary of State

No. 739

Sir: I have the honor to refer to previous correspondence concerning the Congressional debate on the Standard Oil case and its results, [Page 469] particularly my despatches Nos. 726 and 731 of March 27 and 28, 1941, respectively.14

The debate has now been going on in the Chamber of Deputies, for about a week, after the conclusion in the Senate with a vote of approval of the Bolivian Government’s policy in the matter. The Minister of National Economy informed me yesterday that he thought the Chamber debate would last another fortnight.

As was the case with the Senate debate, the Ministers of Foreign Affairs, Finance and National Economy15 have had to be present in the Chamber for hours daily with consequent prejudice to their handling of regular administrative tasks. The same ground has been gone over in much the same manner as during the Senate debate. There have, however, been certain differences in stress.

In the first place, there has been so much attack on the Standard Oil Company from non-Government sources in the course of the debates and in the press, that the Cabinet officers have gone beyond their original stand that nobody was trying to defend the Standard Oil Company and have taken some of the ground out from under their opponents’ feet by attacking the Company fairly bitterly themselves. In this connection, it may be well to express my opinion that, whatever the rights and wrongs of the case, practically everybody in Bolivia, including the most conservative elements, is convinced of the alleged crimes of the Standard Oil Company and that it would be a practically impossible task to alter their beliefs in this respect.

As an example, the Minister of Foreign Affairs, certainly as honest a supporter of collaboration with the United States as there is in Bolivia, yesterday sent me a copy of a pamphlet entitled “Defraudation, History of an Oil Enterprise in Bolivia”, as containing a fair statement of the Standard Oil case, the viewpoints of which he shared. This article first appeared in the September–October [1939] number of Bolivia, a magazine published under the auspices of the Bolivian Consul General in New York, as a reply to a booklet entitled “Confiscation” circulated by the Standard Oil Company of Bolivia, and presents a pretty thorough indictment of the Company.

As a corollary to this increased antagonism to the Standard Oil Company itself, there has been an increase in the stress laid on the economic factor, i.e., the securing of loans from the United States, as the main and almost sole reason for a settlement. In an interesting exposition to the Chamber on April 1, 1941, for example, the Minister of Finance stated clearly that if a settlement of the Standard [Page 470] Oil question was arrived at Bolivia could expect loans from the United States. He said, in part (Legation’s underlining16):

“The Standard Oil’s claims have been put forward unofficially by the Department of State as a result of our request for economic cooperation. Those who think we should not request this help from the United States should ask themselves where we can find the necessary resources within our own economy. The public of Santa Cruz would protest energetically if it learned that it would be impossible to finance the railroad joining it to Cochabamba. I inquire what other manner there may be for financing this railroad. Let us not delude ourselves. Neither can Tarija think of developing itself without a railroad by which to export its raw materials. If we get $25,000,000, we can care for these and other vital necessities such as the road to Fortín Campero, communications between La Paz and the Beni, etc., which we cannot handle with our own scanty resources. I repeat that, if we had these resources in sufficient quantity, we should not have to make a settlement with the Standard.[”]

As has been reported before, the Government spokesmen have given the impression in their explanations that a loan for the construction of the Cochabamba–Santa Cruz Railroad is a foregone conclusion if the Standard Oil case is settled. In keeping with this the Minister of Foreign Affairs has so far suppressed the facts in the report of the two United States Army engineers17 on the feasibility of constructing the Railroad, forwarded to him by the Bolivian Minister in Washington. He and his Cabinet colleagues have erroneously tried to make it appear that the report was favorable. …

Another alteration in emphasis in the Cabinet officers’ presentation of their case before the Chamber as compared with their statements to the Senate has been their assurance that no definite settlement has yet been considered and that if and when any is decided upon it will be submitted to Congress for its approval. This is an apparent change in attitude as the original idea of the Bolivian Government seems to have been to get what would in effect be advance approval and then work out the details itself without the new ad referendum feature which has now been introduced.

Aside from his part in trying to make it appear that loans from the United States will be forthcoming if the Standard Oil case is settled, the Minister of Foreign Affairs, in his statements to the Chamber, has shown a somewhat more satisfactory approach to the problem than in the Senate. He went out of his way to defend the position of the Department, stating that the allegation in the petición de informe to which the Ministers are replying that the Department [Page 471] is imperialistic is unfounded. However, he went too far in this defense, having asserted that:

“The Department of State not only has not adopted the Standard’s arguments but has not even disputed the Supreme Court decision but instead has respected it, consequently neither supporting nor assisting toward the return of the ex-concessions of the Standard; this has been explicitly stated by the Department and confirmed to me by the Minister of the United States to Bolivia.”

I know of no proper basis for this statement and certainly did not give the confirmation which the Minister alleges I did.

One point should perhaps be made in regard to the Foreign Minister’s releasing of confidential documents and references to confidential conversations and negotiations which have been mentioned in previous despatches. I believe that his broad intentions in this respect have been good whatever the apparent disregard of normal diplomatic courtesy. He is in a position where his opponents are going to use every bit of ammunition they can to attack the Government and the idea of a settlement. With the leaks which inevitably take place in Bolivian Government offices, it is probably better for him to release the actual wording of communications and give his own account of negotiations and conversations than to have these brought up in a distorted manner by opposition Congressmen with the necessity for rectification later. As in the case of publicity in other countries, an original statement, accurate or erroneous, has more effect in Bolivia than a later correction. The Foreign Minister has thus seemingly felt that full publicity was the best strategy.

For example, he recently brought up the question of the representations by Ambassador Armour in Buenos Aires last year, under instructions from the Department, in regard to the Argentine-Bolivian negotiations for the utilization by Argentina of Bolivian oil. His statements on this point were not covered in the official Chamber summary of his remarks but persons who were present during this stage of the debate state that he gave the impression that the Department had disavowed any intention of interfering in a bilateral matter between Argentina and Bolivia, which is hardly accurate. However, as stated above, I believe that in this particular phase he is doing his best in a most difficult problem. He is in the position of trying to defend an unpopular policy and to show that the United States Government is not the devil his opponents would like to pretend. What would appeal to the American man in the street and to his Bolivian counterpart toward this end are as far apart as the two poles. Since he is dealing with a Bolivian, not an American, audience, he naturally colors his arguments to appeal to it.

As has been stated in earlier despatches, the bitter opposition to a settlement of the Standard Oil question has come from the left-wing [Page 472] groups, the Unified Socialists who are allied with ex-President Toro as well as the Independent Socialists with their national socialist trend of thought. These groups and the newspapers supporting them, which are doubtless partly financed by German sources, have concentrated on the totally false thesis that settlement of the Standard Oil case means return of the seized properties to that Company, which has not been advanced by the Bolivian Government forces in any way as a desideratum and which, so far as is known, is not even desired by the Company.

The opposition forces incited the mass meeting of labor unions in opposition to the Government’s Standard Oil policy scheduled for last night and mentioned in my despatch No. 731. This was, however, banned by the Government yesterday and was not held. The leftist deputies introduced a petición de informe calling on the Minister of Government to explain at a special session of the Chamber last night why the ban had been placed on the meeting. The session was not, however, held because of the lack of a quorum.

The announced meeting caused considerable concern in quarters supporting the Administration. In this connection, the Executive Committee of the new Government-supporting coalition of conservative and center political parties, the National Democratic Alliance, formation of which was reported in my despatch No. 718 of March 20, 1941,18 on April 2, 1941, issued a manifesto to the public, published in yesterday morning’s press, which reads as follows in translation:

“The Parties which form the National Democratic Alliance consider it their duty to address themselves to the People to warn them against a covert agitation on the part of audacious groups which wish to sow chaos in the Republic and again get control over its destinies.

“In recent days, these agitators have taken as their banner the question of the Standard Oil, spreading rumors in the street, in the daily press and in Parliament that what is being considered is the return of the petroleum wealth of the Sovereign Bolivian State to the Standard Oil. This calumnious version has already been denied repeatedly by the Ministers of State, by the President of the Nation himself and by representatives of the different parties in the Senate and Chamber of Deputies. Nevertheless, it continues to serve as an instrument to arouse street passions. There are in circulation at this very moment criminal incitations, couched in sensational verbiage, calling on the People for a public demonstration ‘against delivery of our petroleum and treason to the Fatherland’.

“It is the duty of every citizen to defy these instigations, behind which lurk ambition and anarchy. Nobody is thinking of despoiling Bolivia of its petroleum wealth. The agitation provoked by these unbridled groups may launch Bolivia into chaos and affect its future.”

[Page 473]

As can be seen from the above, the Standard Oil question has become a political football which is being used for purely partisan purposes in a completely unfair manner. The allegations in the manifesto that the left-wing opposition is utilizing the Standard Oil case in order to attempt to create a false impression in the public and to take advantage of this for its own selfish ends seem to be fully substantiated. It has been brought out by the Cabinet officers, in their testimony, that the present Bolivian Administration has followed the directives on the Standard Oil question laid down by the very deceased President, Germán Busch, who is pointed to by large sectors of the leftist opposition as their idol. This fact is, however, conveniently brushed aside or ignored by the opposition.

It is unfortunate that the bringing up of the Standard Oil case at this time, by unilateral action of the Bolivian Government, without any suggestion or pressure on our part, should have the effect it has had but this is perhaps inevitable in Bolivia where petty political designs play a far more important role in the thoughts and actions of most politicians than do questions of national need or benefit. The situation has, however, been made worse by the bad generalship and lack of courage of the Government forces on the whole in presenting their arguments. Fortunately, they have recently been more vigorous in their approach. While the present agitation has its elements of danger, it seems probable that it will blow over as similar affairs have in the past. The success of the Government in banning the meeting scheduled for yesterday without any material trouble arising is an indication that it may be getting the situation into hand.

This political situation is, of course, an internal Bolivian matter. It is, nevertheless, unfortunate that the agitation should revolve around a question in which the United States is involved. Furthermore, it has an inevitable effect of weakening a Government, which, for all its vacillation, is more friendly to the United States by far than the nationalistic and radical opposition, part of which is under German influence.

As has been remarked before, the most unfortunate aspect may come if and when Congressional approval for a policy of settlement of the Standard Oil case is obtained. Should a settlement be reached, the very Cabinet officers who have been presenting the Government’s case have so weighted their arguments as to convince the Bolivian public that, in return for a small cash payment to the Standard Oil Company, Bolivia will get very substantial loans from the United States.

Such loans can hardly be justified either on the grounds of Bolivia’s capacity to pay, since it is now in default on American loans to the total of $100,000,000 in principal and arrears of interest with no concrete [Page 474] steps whatever yet taken for adjustment, or on those of real need, since Bolivia is the one Latin American country which is today in a better economic position than at the outbreak of the European War. Its exports have increased and it is getting a better price for tin and other products.

Unfortunately, these considerations are not apparent to the average Bolivian who knows only that the United States through the Export-Import Bank has extended loans to other Latin American countries, but not to Bolivia. No thought is ever given whether loans are really needed or how they are to be repaid. The general attitude may be summarized in the statement of one of the most enlightened of the Cabinet officers to Mr. Warren Lee Pierson, President of the Export-Import Bank during his recent visit to Bolivia, “What is our share (Guánto nos toca a nosotros)?” The general feeling is distinctly that economic cooperation would mean cash in hand for Bolivia from the United States. Should loans not be forthcoming for Bolivia after a Standard Oil settlement, anti-American agitators will have excellent ammunition, given the peculiar Bolivian mentality. Our friends in the Bolivian Cabinet are placing us in a most difficult position, I fear, and I don’t see just how we are going to be able to counteract it.

As I have tried to make clear in previous despatches, I am not averse to a sensible loan to Bolivia for real needs, such as improvement in communications which could form part of or connect with the Pan American Highway, as a measure of intercontinental solidarity, but I do feel that every effort should first be made to bring a proper understanding into the presentation of the problem locally. A $25,000,000 loan, as suggested by the Minister of Finance, seems beyond the bounds of common sense under existing conditions in this country. It is regrettable to have to admit that the debate in the Congress seems to have done more harm than good to our relations with Bolivia, and even if the Government gets a favorable vote in the Chamber, it is evident the radicals will continue their opposition to any settlement involving a cash payment to the Standard Oil Company.

Respectfully yours,

Douglas Jenkins
  1. No. 726, March 27, not printed.
  2. Edmundo Vásquez headed the latter two Ministries.
  3. Printed in italics.
  4. Not printed; for summary of report, see despatch No. 562, January 6, 1941, from the Minister in Bolivia, Foreign Relations, 1940, vol. v, p. 553.
  5. Not printed.