921.53/5–1450: Telegram

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

confidential   priority

262. Embtel 261, May 13, 1 p. m.1 Following are my present views of Flota matter in light of Díaz projected trip to U.S.

Government fully aware of damage to US-Colombian relations from failure to settle Flota matter and anxious to contribute to settling it.
Government fears results of direct intervention in Flota more than it does a rate war, which after all would be directed against Flota rather than Government.
Sourdis formula2 was a sincere effort on part of Government to remove advantage Flota has over foreign lines because of discriminations and it would remove those discriminations. President informed me Thursday3 that it was Government’s idea to place Flota and other [Page 832] lines on exact plane of equality. Either exchange tax would be eliminated or equivalent tax would be collected from Flota.
Sourdis formula is objectionable to Flota which however is probably counting on foreign lines rejecting it.
With threat of rate war or acceptance of Sourdis formula by foreign lines facing Díaz and with Government taking side of foreign lines the lines should be in good position to force Díaz to comply with agreement.
Díaz will probably try to obtain pooling arrangement. This would be in benefit all lines.
There is nothing more the Government feels it can do at this stage.
Under circumstances I consider it tactically desirable for me to drop out of the picture and avail myself of statutory leave. Local Grace representatives agree. I therefore plan to fly to New York Wednesday enroute to Pawtucket, Rhode Island to join my family.4
  1. Not printed. Mr. Díaz’ visit to the United States, which began on May 28, did not result in any resolution of the freight rate dispute.
  2. For Minister Sourdis’ basic proposal, see footnote 1 to telegram 134, supra.
  3. May 11.
  4. In telegram 140 to Bogotá, May 16, the Department said in part: “Re Embtel 262 May 14 Dept concurs last Para. Dept most appreciative outstanding work you have done in this matter. For your info only Dept today informed Conference reps that, while it had no objection to Conference working out better deal with Diaz if it cld, Sourdis formula as amended para 3 your 262 May 14 wld remove any basis for diplomatic intervention our part long as it was adhered to by Col Govt.” (921.53/5–1450)