The Ambassador in Colombia (Beaulac) to the Secretary of State

No. 768

Sir: I have the honor to refer to the Embassy’s despatch No. 712 of December 2, 1948,1 entitled “President and Ministers of Government and Mines and Petroleum are Not too Optimistic that Anything Will be Done by Present Congress Concerning the Petroleum Situation”, and to report that the Colombian Congress closed without the House having taken action on the petroleum bill which the Senate passed last year. Under the rules of the Congress, the bill is now dead. The oil companies consider that this development is a net gain for them.

The Government did not present to the Congress any legislation embodying the eight points presented to the President by the oil companies’ representatives on November 26. The Minister of Foreign Affairs, Dr. Eduardo Zuleta Angel, in conversation with me, blamed the Government’s failure on 1) excessive delay on the part of the companies in presenting their case to the President (although the companies waited three weeks for the Minister of Mines and Petroleum to obtain an audience with the President and then obtained the audience through the Minister of Foreign Affairs) and 2) the timidity of the Minister of Mines and Petroleum. Whatever the reasons, no bill was presented to the Congress which, therefore, took no action.

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Since the closing of the Congress, some of the oil companies’ representatives have had conversations with the Ministers of Foreign Affairs, of Mines and Petroleum, and of Government, and a plan has informally been worked out for the oil companies’ representatives to establish contact with the appropriate Congressional Committee soon after the first of the year. As already reported, Congressional Committees are now in permanent session, even when the Congress itself may not be in session. The Government has offered to support the eight-point program presented to the President by the oil companies’ representatives in the hope that this program, plus an additional point covering royalty and surface taxes, will be approved by the Congressional Committee which can then present it to Congress as soon as it convenes next July. One petroleum company representative has told me that the program also has the support of the President of the Petroleum Council, Dr. Felix Mendoza, although my informant is not familiar with the position of the other Petroleum Council members. The Minister of Foreign Affairs, in conversation with me, has offered to support the plan.

It is the Embassy’s intention, discreetly, to support the efforts of the oil companies’ representatives. The oil industry brought one hundred million dollars in foreign exchange into Colombia during the years 1945, 1946 and 1947. The Colombian Government continues to complain about Colombia’s chronic shortage of dollars which it is endeavoring to overcome through the device of loans to be contracted in the United States.

The Embassy continues to believe that the Colombian Government would improve its credit and would help itself as well as the other democracies if it would agree to establish more satisfactory working conditions for private petroleum companies in Colombia.

The Department of State on September 10 mentioned the subject of petroleum to the Colombian loan negotiators. (Reference Department’s Memorandum of Conversation dated September 10, 1948, entitled “Discussion with Colombian Economic Mission of Difficulties Encountered by United States Oil Companies in Colombia”.) The Embassy has not been informed that any further conversations on the subject between the Department and the Colombian representatives have taken place. Further, the Department representatives referred only to the labor aspect of the oil companies’ difficulties. Labor conditions have improved, temporarily at least, but the deficiencies of petroleum legislation continue to act as a deterrent to large scale exploration and exploitation (Embassy’s despatch No. 712, December 2, 19482).

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The Embassy has continued to discuss with the Colombian Government the desirability of improved working conditions for the petroleum companies on the ground that such a development would 1) provide Colombia with needed foreign exchange, 2) otherwise improve Colombia’s economy, and 3) constitute a normal act of cooperation with the United States and other democracies.

If the Department will take advantage of opportunities which naturally will be offered to it in the course of conversations concerning loans which Colombia desires to obtain in the United States, and concerning the new proposed Treaty of Friendship, Commerce, and Navigation which the Colombian Government says it wishes to enter into as an inducement for the investment of American capital in Colombia, then the Embassy also will be in a position to continue to urge the Colombian Government to grant the additional facilities the petroleum companies require if they are to invest additional substantial sums of money here.

On the other hand, if the Department should drop the subject it would undoubtedly be interpreted in Bogotá as lack of serious interest on the part of our Government in the future development of Colombia’s oil resources. Under the circumstances, there would be little the Embassy could say or do in connection with this subject without damaging its own position.

For the reasons set forth, the Embassy respectfully suggests that the Department continue, on appropriate occasions to urge the Colombian Government to engage in this normal and desirable act of cooperation.

Respectfully yours,

Willard L. Beaulac
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