The Ambassador in Brazil (Berle) to the Secretary of State
[Received 9:10 p.m.]
3450. For Braden64 from Berle. Re oil matter please see Embtels 344865 and 3449 November 17 which will bring you up to date and leave situation as well as perhaps it can be left. Situation is difficult: Deptel 2599, November 10 was substantially dictated by one of the oil companies and perhaps did not get full policy attention, with result that it looked like diplomatic pressure in favor of cartel group against sovereignty of Brazil—and incidentally against another powerful American group.
Best thing for Brazil at moment would be to put up refining industry in patrnership with Americans. Brazil has not as yet technical skill to do this alone and in any case must get supply of crude from outside. Hence partnership is indicated. They should also have competitive conditions. In my judgment price of gasoline has been too high partly because of bad Brazilian taxation but also because of unduly high profits by sellers of refined products at prices nominally fixed by Petroleum Council but actually fixed by agreement between them.