The Chargé in Venezuela (Dawson) to the Secretary of State


33. In conversation with Betancourt last night, made points suggested in Deptel 10, January 7, 8 p.m., he admitted tacitly that new income surtax was devised to draw excess profits from oil companies and that it was given general form to avoid charge of discrimination or violation of commitments. Idea originated with Fomento Minister Pérez Alfonso.

Betancourt assured me that Junta would try to avoid taking any new arbitrary action affecting oil companies insisting its norm was to do things openly after consultation and negotiation not summarily. He balked, however, at making any sort of formal declaration to this effect saying “we cannot tie our hands”.

He explained failure to inform Ambassador Corrigan or affected parties in advance by stating that study which Fomento Ministry made on which decree was based was not ready until December 29 and that he had not yet read it when he last saw the Ambassador.

On subject of possible inflationary effects he said this would be guarded against and that it was intention to use large share of funds for purchase of equipment in US.

Entire explanation was utterly unconvincing. Very fact that measure originated with Fomento not Finance Ministry seems to indicate it was based on idea of a grab of what could be gotten away with rather than any real need for additional revenues. Analysis of reasons for imposition of surtax contained in dispatch 8279, January 10 written before last night’s talk only confirmed.

Betancourt was obviously reluctant to go into matter and switched conversation to means by which we could help.