832.6363/11–1345: Telegram

The Ambassador in Brazil (Berle) to the Secretary of State

3411. With further reference to business of oil refining, both Gulf representative and Anderson of Standard Oil came in to see me today [Page 527]at their request. I likewise have been going into Brazilian end of situation. Standard now takes view that they do not oppose development of Brazilian refining. What they do wish is that American capital shall be permitted to have at least minority interest in such refineries. Gulf representative will come in tomorrow and I imagine will take same position. Further, since visits to Dept. I gather that Anderson talked to his board of directors convincing them that airtight monoply would not be desirable for them here, and he states to me that they will not fight entrance of Gulf to this market.

There remains question of present setup in Brazilian Petroleum Council. One of late acts of Vargas’ regime was to work out snap procedure by which within 30 days (which expire 2 weeks from tomorrow) certain companies were to bid for the privilege of operating Brazilian refineries after which they would get virtually monopoly concessions under a law excluding any Americans from entering business. The law appears to have been rigged so that only two Brazilian concerns could effectively bid on business. I told Anderson that if Gulf would agree, as I think they will, I would ask that matter be reopened in hope of permitting partnership arrangements between Brazilian and American capital to enter refining business. Standard says that while they of course want as large an interest in refining as they can get, they would be satisfied with minority interest. I will report further as developments proceed.

It would appear from what Anderson said that wise counsel has prevailed and that the trade war between Gulf and Standard has been abandoned, at least on Standard side, in favor of ordinary businesslike competition. If this is true it should make it easier for Brazilian authorities (who have no interest in defending one of the late acts of the Vargas dictatorship) to retire from policy of excluding all Americans from market.

Berle