831.6363/10–2845: Telegram

The Ambassador in Venezuela (Corrigan) to the Secretary of State

1009. Minister Fomento,26 in signed statement delivered to local representative Oil and Gas Journal and cabled to Tulsa today for publication Thursday, said when any govt came into power other than through constitutional processes all constitutional rights and laws invariably were suspended, but that in Junta’s first decree the de facto govt announced its intention to respect all laws. This applied, of course, to all except those which interfered with administration of authority. He added Junta could not upset national economy by disturbing capital or industry, recognized need of foreign capital and stated Junta will not touch oil law, concessions or con tracts and has no intention of nationalizing or expropriating industry. As reported my telegram 968, October 22, 6 p.m.,27 Minister [Page 1415] Fomento and Betancourt informed Creole, Gulf, Shell heads that, if it is found government is receiving share provided by 1943 oil law, they will be satisfied. In statement to Oil Journal, representative [of] Minister reiterated same thing, i.e., Junta is interested only in ascertaining that royalty payments are honestly calculated. Creole head,28 consulted by Journal representative in drafting statement for Minister’s signature, considers it eminently satisfactory. In view foregoing, it is not deemed advisable or necessary approach Junta, as suggested in Department’s telegram 696, October 27, 2 p.m., since sufficient assurances already have been given by it that 1943 law will be respected. To do so might give impression that decision respecting recognition was being influenced by factors outside those related to usual US practice. Local heads principal producers satisfied with reassurances received. There have been accusations from Left fringe that “delay” in recognition was being caused by oil company influence. Consequently approach by Embassy before recognition might well produce reaction unfavorable to industry. What matters is intention of Junta, not its promises which could and doubtless would be broken in stress.

Conversations before revolution with Betancourt show he is fully cognizant that Venezuelan position in post-war world oil industry depends upon its ability to compete on even terms with lower cost Near Eastern fields. He is also astute enough to realize hopes of putting into effect its economic and social program upon which its popular support relies depend upon oil revenues. There is every reason to expect that Betancourt appreciates Junta’s basic interests are thus similar to those of oil companies and that he will treat them with kid gloves unless pressure from labor becomes too great. Of course, Embassy expects that controversies between companies and Junta on labor matters, taxes, and other details will arise but what we are now concerned with is basic structure of their relations.

  1. Juan Pablo Perez Alfonso.
  2. Not printed.
  3. Arthur T. Proudfit, President of Creole Petroleum Company of Venezuela.