831.6363/1675: Telegram
The Acting Secretary of State to the Ambassador in Venezuela (Corrigan)
497. The Department has given careful consideration to the Venezuelan Government’s memorandum No. 1300 of May 13, and to your telegram No. 539, May 22, 2 p.m.,58 and 581, June 5, 7 p.m.
The Department does not wish, and at no time has intended, to carry on a legalistic discussion with the Venezuelan Government. Likewise, it does not wish, and at no time has wished, to jeopardize the negotiations of the petroleum companies by prolonged discussions with the Venezuelan Government.
As you are aware, however, this Government considers the principles of commercial policy set forth in numbered paragraph 3 of its telegram No. 367, April 26, 5 p.m., and your memorandum No. 1712, May 1, to the Venezuelan Ministry of Foreign Affairs59 as extremely important at all times. It considers them doubly important at present when actions such as that taken by the Venezuelan Government establish precedents entirely contrary to the principles of post-war policy with respect to international trade set forth in the Atlantic Charter,60 to which the Venezuelan Government itself has expressed adherence.
However, this Government, while adhering firmly to the principles enunciated in the above mentioned communications, always has regarded the acceptance or non-acceptance of the restrictive provision by the oil companies in their contract negotiations as a matter for decision by the companies themselves. It has placed no obstacle in the way of negotiations by the companies for concessions on terms which they consider satisfactory to themselves. Hence, the Department feels that responsibility for present stoppage of negotiations rests squarely upon the Venezuelan Government, which apparently has taken the position that the granting of further concessions is conditional upon the acceptance by this Government of the unsound principles embodied in the restrictive provision.
[Page 1670]The Department is of the opinion that, unless you perceive serious objection, reply to the Venezuelan Government’s memorandum should be made along the following lines.
In a written reply, you would express this Government’s appreciation of Venezuela’s collaboration with the United Nations, and of President Medina’s personal and official assurance that nothing in the resolutions implied a departure from his determination that Venezuela meant to do everything in its power to help promote the war effort and to cooperate with the United Nations in their post-war planning. You would express the fact that this Government considers the liberal trade principles set forth in the Atlantic Charter to be of fundamental importance, and that it cannot regard the prohibition against the refining in the Caribbean area of Venezuelan oil from new concessions as other than a restriction of trade and a discrimination against a specified geographic area, which area includes certain United States territory. You would add that the Government of the United States is less concerned over the fact that the restrictive provision would operate eventually to prohibit refining of Venezuelan oil in this area than it is (1) with the fact that, in its opinion, the provision is inconsonant with sound international commercial policy and (2) with the unfortunate precedent which the provisions would establish.
Further to your written reply in the foregoing sense, you would add the following oral comment.
The position of the United States is not influenced by any desire to freeze existing situations with respect to refining against natural economic development of refining in Venezuela or elsewhere. Also, since the companies are committed to refining in Venezuela in the post-war period, a restrictive provision of this nature, which is in conflict with sound commercial policy, seems unnecessary to attain the Venezuelan objective of increased refining within Venezuela.
You would also state orally that, because of the urgent war need of rapidly increasing petroleum production, and the desirability of offsetting by new concessions the rapid withdrawals from existing fields, which offsetting is to the best interests of both the Venezuelan Government and the companies, this Government has placed, and intends to place no obstacle in the way of negotiations by the oil companies for concessions on terms the companies consider satisfactory to them. It hopes that negotiations for contracts will go forward to speedy conclusion. At the same time, you would make it clear that this is not to be interpreted as a retraction by this Government of the principles set forth in your memorandum of May 1 and your written reply to the Venezuelan memorandum of May 13.
You would further indicate that if the precedent which would be established by the restrictive provision were followed by other countries, it might well prejudice Venezuelan interests to a degree which [Page 1671] would be in no way offset by the contribution to domestic economy which Venezuela expects to derive from the restrictive provision.
You would also express orally the strong hope that the Venezuelan Government will be disposed to reconsider the resolutions of the Ministry of Fomento with a view to noninclusion of the restrictive provision.
The Department believes that any reference to Venezuela’s just national aspirations (your 517, May 15) should be omitted to avoid misinterpretation.
If, in your judgment of the situation, the presentation of a note together with the oral comments along the lines of the foregoing would prolong the discussions or endanger the chances of the companies to secure the concessions, please report to the Department for further instructions. If, however, the delay involved in requesting further instructions would in your judgment jeopardize the resumption of negotiations, you are authorized to take such action as you feel advisable so that the companies’ negotiations can go forward.
Please report fully the course you follow and your reasons therefor.
- Neither printed.↩
- Latter not printed.↩
- Joint statement by President Roosevelt and British Prime Minister Churchill, August 14, 1941, Foreign Relations, 1941, vol. i, p. 367.↩