823.2553/1–1650
Memorandum by the Director of the Office of North and West Coast Affairs ( Mills ) to the Assistant Secretary of State for Inter-American Affairs ( Miller )
Subject: Telegram to Lima on Petroleum Decree-Law
Lima’s telegram 28 raises a fundamental moral question—should we, even if it is to our practical advantage, urge a de facto government to issue a decree-law when, for political reasons, it desires to postpone the question for congressional action?
Arguments in favor of this action:
- (1)
- We desire to develop Peru’s petroleum resources, both for strategic reasons and because of the effect petroleum development would have on Peru’s economic development and balance of payments.
- (2)
- The present draft law is considered highly favorable both by interested American oil companies and by our petroleum people. If it can be issued as a decree-law, and operations begin under its authority, it will probably receive the blanket approval of Congress along with the other decree-laws of the Junta. If on the other hand it is subjected to extensive debate in Congress, it will almost inevitably run into strong opposition from the coastal agriculturalists—who in 1946–47 were strong enough to prevent the approval of the Sechura contract.1
Arguments against this action:
- (1)
- We would be urging a de facto government to take action less constitutional than that it is proposing.
- (2)
- It could conceivably—though I believe this unlikely—raise some doubts in the minds of the Junta members regarding our stand on the necessity of ratification of the Rio Treaty by the Peruvian Congress.
Recommendation:
On balance I believe an informal approach, avoiding the moral question which would very likely not occur to them, would not have [Page 984] undesirable repercussions and might achieve the desired result. A telegram is attached in draft.2
- In 1947 the Peruvian Congress had failed to approve a Government proposal to grant the International Petroleum Company, a subsidiary of Standard Oil Company of New Jersey, a concession to develop oil resources of the Sechura Desert.↩
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Telegram 14 to Lima, January 23, was sent as drafted and read: “Informal approach along lines last para urtel 28 approved.” (823.2553/1–1650) In a letter of January 30 to Mr. Mills, Ambassador Tittmann said in part that an approach to President Odría regarding the oil legislation would be delayed owing to the latter’s illness. The Ambassador concluded:
“I intend to make my approach to Odría along the lines of hemisphere strategy rather than appearing to support the private oil interests. In any event I doubt if it would be seemly for an American Ambassador to insist that the petroleum law be promulgated before Congress assembles as such insistence might give the impression that we did not trust the institution of the legislature. Which might not be so good even if true.” (823.2553/1–3050)
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