Memorandum of Conversation, by the Ambassador in Colombia (Beaulac)2
|Participants:||President-elect of Colombia, Dr. Laureano Gomez3|
Subject: Conversation with President-elect Laureano Gomez
[Here follows a discussion of Colombian internal affairs.]
Gomez said that he had been referred to as a “Falangist”. He is no Falangist. If he is a Falangist, where is his Falange? Who can imagine a Falangist leader without a Falange? He is a Republican. I told him that I myself had no worry on that score because, among other reasons, I knew that Dr. Gomez had been in Spain. The Latin American Falangists in general were those who had not been in Spain.
Dr. Gomez said that freedom of the press, of course, is a good thing. Nevertheless, abuse of this freedom by the press was one of the leading factors in bringing about the present situation between the Parties. He wants to see press freedom restored. However, he thinks the press should be more responsible. He would like a study made of the English Press Law with the idea that Colombia might adopt something similar.
He said that the state of siege4 would probably continue for a long time. If it should be ended now, Congress would have to be convened and it would immediately try to impeach the President. I asked him whether that meant that the state of siege might continue for a year. He said that that might be the case.
Dr. Gomez admitted that the continuance of a state of siege was in itself damaging to the country’s credit. Nevertheless, he contended it was better than the situation which had immediately preceded the declaration of a state of siege. That situation was one of chaos which [Page 803] threatened to destroy Colombia’s democracy. The continuance of a state of siege represented an effort to rebuild that democracy. People feel freer now than before the declaration of a state of siege. They have more protection for their lives and property and even have greater political freedom in the sense that the political “wars” between factions and towns have ended. Not more than twenty people, in Bogotá, with agents in the many communities throughout the country, were principally responsible for the condition of chaos that had developed in Colombia. These people are temporarily out of business.
Dr. Gomez recognized, nevertheless, that the state of siege should be ended as soon as possible. A government needs opposition and criticism. Democracy must be restored as quickly as possible if it is going to be restored at all.
Dr. Gomez recognized that the labor situation which the Tropical Oil Company has to contend with is a national disgrace.5 The idea that the Company is obliged to maintain on its payroll hundreds of workmen whom it can no longer use is preposterous and ruinous to the country’s credit. He said, “What foreigner would invest a dollar in Colombia in the face of such a precedent?” He said that he would not. He hoped that the situation could be overcome soon. I told him that one of the ironical aspects of this situation was that the company had recently been obliged to increase the wages of all these idle workmen in accordance with the President’s decree making wage increases obligatory.
Gomez said, in passing, that labor difficulties, particularly the manning of boats by crews two or three times larger than necessary, had killed traffic on the Magdalena River. I said that I understood indeed that this was the case and that I hoped that the river could be restored as an economic artery of commerce. He said that he hoped that it could.
Dr. Gomez asked me about the new petroleum decree.6 I said that it did not go far enough in the opinion of the companies. It removes some obstacles and creates others. It is not far-reaching enough to induce the companies to come back to Colombia, and it probably will not even halt the present tendency for companies still in Colombia to reduce their operations. I said that the companies had many other countries where they could go and work under vastly superior conditions [Page 804] than the Colombian Government appears willing to offer. Gomez added, “Yes, and they can find oil in some of those countries, too, which is more than they can do in Colombia.” I agreed.
I reminded Dr. Gomez that a couple of years ago the Government had called Max Thornburg, an internationally known petroleum authority, to Colombia to find out from him what the Government should do to stimulate petroleum activity. Thornburg had told the Government that he didn’t have to define the conditions the companies needed for their operations. The companies working in Colombia were the same companies that were working in other countries. The companies themselves knew what conditions they required and they knew what conditions they had obtained in other countries. All the Government had to do was to get together with the companies and make up its own mind what conditions it should offer them.
I told Dr. Gomez that the companies had, in fact, told the Colombian Government dozens of times what conditions they required but the Government and the Congress had not heeded their requests. The present Government had alleged a real desire to improve conditions. However the companies had read the recent petroleum decree first when it appeared in the newspapers. I said that some persons, of course, might allege that the companies’ views were interested views, and therefore should be taken with a grain of salt. In my opinion the companies’ views were decisive since it was the companies which would make the decision to invest or not to invest large sums of money in Colombia.
I recommended that the Government be more friendly and more frank with the companies. If the Government was not interested in retaining the companies in Colombia, it should tell them so and let the companies go elsewhere. If, on the other hand, the Government was interested in their remaining here and working here, then it should work closely with them, treat them as friends, and help them in the interest of Colombia’s economy and the Colombian people.
Gomez said that it was his intention to work closely with the oil companies. A lot of propaganda has been spread against the companies and a lot of people in the Government are afraid of being accused of having sold out to the companies in the event they cooperate with them. I said that I knew this to be a fact, and that the Communists had very assiduously and very successfully spread this propaganda and had excited these fears in public officials not only in Colombia but in other countries. Dr. Gomez agreed that this was the case. Dr. Gomez said that the oil companies are the only people who really know the oil business. They are the ones who have to risk their capital. Their views should be taken very seriously. He intends to call them in and engage in round-table meetings with them and work as closely as possible with them.[Page 805]
Economic Freedom and Investment of American Private Capital
I brought up the question of economic freedom in Colombia and ventured the opinion that Colombia has more to gain economically and politically from reasonable economic freedom that it has from a controlled economy. He said that he thought that certain controls were necessary to protect the people. I said that was undoubtedly true but other controls and barriers directly prejudiced the people. I referred to the tariff barriers and exchange taxes which the present Government has enacted and said that one result of these barriers was to make it possible for Colombian producers to charge exhorbitant prices, in many cases for inferior products. I said that this tended to keep the mass of Colombians poverty-stricken and created a social problem which constituted one of the principal threats to Colombia’s democracy. Gomez said that he agreed completely. He was against excessive tariff barriers. Governments operate too inefficiently to be able to adequately control a country’s economy. I agreed. I took the opportunity to assure him that the United States Government had no desire to kill any Colombian industry. Our general desire to see barriers to international trade reduced, which applied to Colombia as well as to other countries, did not imply any desire or intention to kill any existing Colombian industry.
I referred to the deterrent to American investment which the practices of the Exchange Control Commission constituted. I said that American business was reaching the conclusion that Colombia was a kind of trap from which it might not be possible ever to extract any dollars invested here. The Exchange Control people had recently made a ruling on the export of dividends which conceivably was satisfactory to a lot of people. But what assurance was there that the rule might not be changed tomorrow or the next day? There was no assurance. I asked Dr. Gomez what foreigner would invest money in Colombia under those conditions. He replied, “No one with any sense.” He then suggested the possibility that the Government might commit itself with foreign investors through some form of contract which would protect those investors against future legislation. I said that the idea was an interesting one.
Dr. Gomez then asked me what, in my opinion, was most needed to attract American capital to Colombia. I said that:
- Negotiation and ratification of a treaty of Friendship, Commerce and Navigation would be helpful.7 The draft treaty presented by the United States, I reminded him, had been accepted in principle by the Colombian Government, and negotiations are shortly to be resumed in Washington.
- Proper treatment of capital already here is perhaps of highest importance.
- The return to a system of law in the treatment of foreign investments. I referred again in this connection to the Tropical Oil Company’s labor question. After the Colombian Government had decreed compulsory arbitration in this case and the arbitrator appointed by the Government had frankly exceeded his powers and gone beyond the frame of reference in deciding that the Tropical Oil Company could not discharge employees no longer needed, the Company had appealed the case to the Council of State, which is supposed to give relief in such matters. Two years have passed and the Council of State has not yet said a word. It is a plain case of denial of justice to the Company. This denial of justice had damaged Colombia’s credit. He, Dr. Gomez himself, had referred to the case as a disgrace. It had not only scared foreign investors, it had scared Colombian investors too. Dr. Gomez said he knew that this was the case.
- Strengthening Colombia’s democracy would strengthen its credit. Investors naturally feel more secure in a democracy than in a dictatorship.
I said that I had been in Latin America many years and had witnessed a complete swing of the pendulum as far as relations between foreign companies and Latin American countries were concerned. Twenty-five years ago, the big foreign companies were strong and didn’t hesitate to use their strength, while governments were relatively weak. Large companies had had little or no sense of the importance of public relations and little or no feeling of responsibility toward communities where they operated. Governments had naturally reacted and had erected safe-guards against the actions of the companies and controls over them. The companies, meanwhile, had recognized their failures and had taken steps to correct them. The companies had learned a great deal in fact. The United Fruit Company, for example, had become a model so far as public relations were concerned. It had developed a very high sense of social responsibility. Governments, on the other hand, had erected one control after another until they had reached a point where they were damaging their own interests and the interests of their people by discouraging foreign investment. The time had come for the pendulum to begin to move in the other direction. Gomez said he agreed.
Poverty in Colombia
During the conversation the subject of Paraguay came up. I told Dr. Gomez that I had not seen in Paraguay the signs of extreme poverty that I had seen in Colombia despite the fact that Paraguay is a poor country with practically no industrial development and Colombia is a comparatively rich country with a considerable industrialization. He asked me where I had seen this poverty in Colombia. I said that I had seen it right in Bogotá where workmen dress in rags, are sick looking, and are obviously under-nourished. He remarked that they [Page 807] also were badly housed. I said that prices of most commodities in Colombia are cruelly high and it is a mystery to me how the mass of people in the cities survive. It is well known, of course, that they can not live in health. He said that these observations were extremely interesting to him. I tied in this observation with the discussion of barriers to international trade mentioned above.
Cooperation With the United States
I expressed the hope that Dr. Gomez’ administration would be successful and helpful to the Colombian people and offered my cooperation. I assured him that the United States had no desire or ambition which went counter to any Colombian interest. On the contrary, our Government, and our people as well, were convinced that our security and well-being depended upon the security and well-being of other countries, including Colombia, and that by helping Colombia we were helping ourselves. I assured him that I would never make of his Government any request or suggestion which I considered was contrary to Colombia’s interest, just as I would never make a request or suggestion which I considered was contrary to United States’ interests.
Dr. Gomez thanked me for this assurance and said that he accepted it completely. He said that he was thoroughly convinced that Colombia had nothing to fear from the United States, that there was not the slightest pressure being exerted by the United States on Colombia in any direction, that there was not the slightest cloud in the relationship between the two countries, and that, on the contrary, Colombia had everything to gain by complete cooperation with the United States. He asked me not to hesitate to discuss with him any matter on the frankest terms and to make any suggestion on any subject. I said that I would not hesitate to speak to him at any time on any subject in a most frank manner and asked him to call on me at any time in connection with any matter that might occur to him.
[Here follow remarks of Dr. Gomez concerning the administrative structure of the Colombian Government.]
- This memorandum is enclosed with despatch No. 17 from Bogotá, January 11, not printed. (721.00/1–1150)↩
- Dr. Gomez was inaugurated on August 8, 1950.↩
- The Colombian Government had declared a state of siege on November 9, 1949.↩
- For documentation regarding the labor problems encountered by Tropical Oil Company in Colombia, see Foreign Relations, 1948, vol. ix, pp. 448 ff.↩
- The decree had been issued on January 5. In telegram 5 of that date from Bogotá, Ambassador Beaulac had stated in part: “Royalties and rentals are materially increased [by the decree] in exchange for tax benefits of questionable value … Some relief granted re size and shape of concessions but fundamental question of number of concessions to be held by single company not changed.” (821.2553/1–550)↩
- This topic is further mentioned in the memorandum by Sheldon T. Mills, Director of the Office of North and West Coast Affairs, of a conversation held April 5, 1950, p. 814.↩