832.6363/2–1447

The Chief of the Division of Brazilian Affairs (Dawson) to the Ambassador in Brazil (Pawley)

confidential

Dear Mr. Ambassador: On receipt of your letter of February 14, 194741 concerning the position of the Embassy vis-à-vis the formulation [Page 460]of Brazilian petroleum legislation, I got out the Department’s telegram no. 1566 of December 27, 1946, to which you refer, and discussed the matter with officers of the Petroleum Division and others. Incidentally, the telegram and the letter from Mr. Loftus to Mr. Harmon which you enclosed with your letter to me had the same origin and were consequently intended to be complementary, not contradictory, in method of approach.

I understand that a letter has been received from you by Mr. Clayton43 on the same general subject and that a reply is being drafted at present. This should clarify the whole question but, pending its receipt by you, a few comments from me might possibly be useful.

As I understand it, the Department’s telegram no. 1566 had two objectives: (a) To suggest that the best means of drafting sound petroleum legislation in Brazil would be by the employment of an experienced individual or firm to act as an adviser to the Brazilian drafting committee; and (b) to stress the Department’s feeling that, at this stage, the Embassy should limit its channels of approach on petroleum legislation to informal rather than formal ones.

So far as point (a) is concerned, I know from my own experience in Venezuela that the services there of Duke Curtice and Herb Hoover, Jr., were invaluable in pulling out legislation which was satisfactory to both the Venezuelan Government and the bulk of the oil companies operating in Venezuela. With the Venezuelans’ lack of technical experience, there would unquestionably have been many bugs in the legislation had experienced, impartial persons knowing the oil business from all angles and in whom the Venezuelan Government had confidence not been available for consultation. The situation seems even clearer in Brazil, where nobody in the Government has much practical knowledge in petroleum matters. However, it is obviously up to the Brazilians to decide whether they want outside advice.

As regards point (b) the letter of January 29 from Mr. Loftus to Mr. Harmon was intended as an amplification and interpretation of the pertinent portion of telegram no. 1566. In other words, the thought is that the Embassy should continue for the present to interest itself in the proposed legislation entirely through informal channels. In this way, the Embassy can exercise some influence discreetly and still leave the way open for the Department and itself to take a formal position should the drafting turn out badly. In essence, I gather that the responsible officers on the economic side approve entirely of the [Page 461]manner in which you and the Petroleum Attaché have been handling the matter so far.

I hope in my fumbling efforts at explanation above I have not made the matter still more confusing.

With kind personal regards,

Very sincerely yours,

Allan Dawson
  1. Not printed.
  2. William L. Clayton, Under Secretary of State for Economic Affairs.