Rio de Janeiro Embassy Files, Lot 61 F 30, Folder 523.1

The Counselor of Embassy in Brazil ( Mills ) to the Officer in Charge of Brazilian Affairs ( Kidder )

top secret
official—informal

Dear Randy: I received this morning your Confidential letter of May 15, 1951,1 enclosing Ed Moline’s memorandum of May 3 to Ivan White on “Brazil’s Proposed Petroleum Development Program” and a memorandum of the same date entitled “Brazil’s Petroleum Demand and Program for Petroleum Development” prepared by Ortiz of PED.

Without doubt you have seen the Ambassador’s Top Secret telegram 1503 of May 212 for the attention of Assistant Secretary Miller. It stresses the political importance which the Brazilians attach to receiving from us the equipment for both prospecting and refining which they have on order.

No one in the Department needs to be told of the nationalistic fervor surrounding the petroleum problem in almost every country which has hopes of developing self sufficiency in this field. Brazil, as you well know, is no exception.

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I make this well known observation merely as a reminder that many things of great importance to us may be influenced greatly by the way in which we handle the Brazilian request for assistance in purchasing petroleum equipment with their own resources. It is not unlikely that there are persons both inside and outside the Department arguing with sincerity that we should insist that Brazil accept the participation of private capital in both refining and exploration on the terms which such private capital has to date been willing to offer and to force such acceptance we should ration equipment releases.

From the Ortiz memorandum I judge that PED can make a case for the equipment either way on defense grounds. The nub of the matter as we see it, however, lies in the last sentence which reads as follows:

“To encourage the continuance and intensification of this alliance sympathetic consideration should be given to Brazil’s economic development programs, particularly in so far as they can be integrated into the over-all Western Hemisphere defense effort.”

The program which is dearest to the Brazilian heart is the petroleum program, both refining and exploration. If we do not wish the alliance to go sour in other fields, we should be slow to use the screws of “short supply” to prevent Brazil from obtaining equipment.

I think you are the one person in the Department who, because of your fairly recent residence here, fully realizes the emotional dynamite in this question and what damage could be done to the overall relationship if the Brazilians become convinced we are “welshing” on what they undoubtedly consider a commitment to help them buy petroleum equipment with their own money.3

Sincerely,

Sheldon T. Mills
  1. Neither the letter nor its enclosures are printed.
  2. Not printed.
  3. In a letter to Ambassador Johnson, dated July 5, 1951, Mr. Kidder stated in part the following: “Procuring petroleum equipment for the Brazilians is a tough, uphill fight in which we so far have the support and the good will of people in the Petroleum Policy Staff, in the Petroleum Administration for Defense, and in the Office of International Trade. The three-man group studying petroleum refinery equipment is working hard and is in close touch with the representatives in New York of the National Petroleum Council and with the American firms working for the Council. Progress is being made but it is impossible to come out with a flat approval of all of Brazil’s requests for equipment. The situation is becoming increasingly tighter … and refinery equipment must go to places where it will produce optimum results. Brazil’s case can be argued on several grounds but, when analyzed alongside other requirements for petroleum equipment, its case boils down to the paramount political considerations about which you and Shelly have written. We have made the strongest possible case based on those considerations.” (832.2547/6–2551)