Foreign Relations of the United States, 1951, The United Nations; The Western Hemisphere, Volume II

611.31/8–1051

Policy Statement Prepared in the Department of State

[Extracts]¹

top secret

[Washington,] August 10, 1951.

Venezuela

a. objectives

US objectives in Latin America are the security of the United States and of this Hemisphere, the maintenance of peace, the encouragement of democratic representative institutions, and positive cooperation in the economic field in order to help in the attainment of the first three objectives. Within this general framework our specific objectives in Venezuela are: to assure an adequate supply of petroleum, especially, in time of war, and to encourage the development of Venezuela’s rich iron ore deposits to supplement US reserves; to foster the economic stability and development of Venezuela and the achievement of a more balanced economy; to contribute to better living conditions for the masses as a sound basis for the growth of democracy and the continuance of a system of free enterprise; and to strengthen the friendship of the Venezuelan people and Government toward the United States and to promote their political development along democratic lines, both as an aid in defending the strategic Caribbean-Canal Zone area and as support for hemispheric cooperation, UN collective security efforts, and other basic US objectives.

b. policies

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In view of the predominant position of petroleum in the economic life of Venezuela and its importance to relations with the US the fluctuating world petroleum supply and demand situation is of considerable importance. By the end of 1949 Venezuela had established a new record in production amounting to nearly 1½ million barrels per day. At the same time as a result of the shift from world shortage to world surplus of petroleum, Venezuela was concerned over the possible effect of several developments. With the rapid growth of low-cost petroleum production and of transportation facilities in the Near East it seems likely that Venezuela will largely lose its European markets unless of course developments in Iran should remove that source of supply from western markets; in any event it will face increasing competition elsewhere. For example, the discovery of oil in western Canada threatens eventually to limit seriously the North American market for Venezuelan oil. While the competitive situation between oil companies operating in various parts of the world is a matter primarily for adjustment by the private interests concerned, nevertheless it is US policy to safeguard the nearby Venezuelan resources as of greater strategic importance to us than those of the Near East. Finally the cut-back of oil production in the US in late 1949 and early 1950, particularly in Texas, led to a strong drive in the US Congress to impose quota restrictions or prohibitive taxes on the importation of oil.

During the latter half of 1950 and the first half of 1951 increased demand for oil has created a new situation. While the long-range threats from Near East and Canadian oil remain, Venezuelan production has risen to a new all-time high of 1,700,000 barrels daily production which is close to the maximum efficient rate of production from present producing wells. The cut-back of US oil production has been largely eliminated. At present the independent oil producers in the US are not pressing for restriction on oil imports but the coal interests which have felt increasing competition from both domestic and foreign oil continue to threaten legislative action against imports particularly of heavy fuel oil.

The US-Venezuelan trade agreement, in effect since 1939,² reduced the import tax from 21¢ to 10½¢ per barrel on petroleum imports not in excess of 5 percent of US domestic refinery runs in the preceding year. The US-Mexican trade agreement which went into effect in 1943³ extended this reduction to oil imports irrespective of quantity and Venezuela benefited by most-favored-nation treatment. Upon termination of the Mexican agreement, effective January 1, 1951, the tariff quota provisions of the Venezuelan agreement again entered into force. It is not anticipated that Venezuelan production or export to the US will be curtailed as a result of this development, although according to industry estimates it will cost the companies and the Venezuelan Government some millions of dollars annually. While the economic effect is not crushing, the psychological and the political aspects coupled with pressure from Venezuela industrialists for higher tariffs on items included in Schedule I of the trade agreement have been substantial. The Venezuelan Government has pressed strongly for renegotiation of the trade agreement or, failing this, its termination. With considerable effort we succeeded in persuading the Venezuelan Government that it would be politically inexpedient to announce trade agreement negotiations involving petroleum at a time when the Congress was considering the extension of the basic trade agreements authority. Immediately upon passage of the 1951 Trade Agreements Act,⁴ the Venezuelan Government requested revision of the trade agreement and a joint announcement⁵ was made by the two governments to be followed by the issuance of public notice⁶ of intention to negotiate.

There is a further aspect of our petroleum policy in Venezuela concerned with the industry’s physical security.⁷ It would be difficult to exaggerate the importance of a continuous supply of Venezuelan petroleum to this country in case of a national emergency. In addition to the problem of nationalization, threats to the availability of Venezuelan oil may come from communist sabotage, domestic riot and disorder, or foreign attack.

The Communist Party in Venezuela, which has been well organized and disciplined in comparison with other Venezuelan parties, has had an estimated membership of approximately 20,000; in the 1947 Congressional elections the party polled about 50,000 votes which represented 4.3% of the total vote. This party, sometimes called the Bed Communist Party (because of the color of the card used to aid the illiterate in voting), was declared dissolved by Government decree issued May 13, 1950, charging the party with subversive propaganda, promotion of illegal strikes, sabotage and armed attacks. Its leaders have either left the country, been arrested or gone into hiding. There is a much smaller dissident party, known as PRP⁸ or the Black Communists, which has been relatively quiet and continues as a legal party. The power of the Bed Communists as an underground organization has not yet had occasion to be tested.

The Communists had some success in organizing the labor movement. It has been estimated that from 10 to 25% of Venezuelan oil workers, some of them very strategically located, have joined Communist trade unions. In May 1950, a strike called primarily for political purposes by the Bed Communists and the outlawed Acción Democrática (AD) elements practically paralyzed the Venezuelan oil industry for a few days. In reprisal the Government dissolved the Communist labor federation of oil workers and 20 of its component unions, as well as 24 AD unions all of which participated in this strike. A few Bed Communist, AD and Black Communist unions which did not participate were not dissolved. While this strike was directed against the Military Junta rather than the US, it may serve as a reminder that in ease of war between the US and the Soviet Union, the Communist leaders will make every effort, as they have publicly proclaimed, to prevent a single drop of oil reaching the United States or its allies. However, if the present Government is in power, it will probably make every effort to prevent sabotage.

After the revolution of November 1948,⁹ the Military Junta out lawed the Acción Democrática political party which had supported the previous government,¹⁰ and abolished the labor federations and confederations which had been organized by that party. The individual AD unions were not abolished, but their experienced leadership was largely removed. This gave the Communists an opportunity to infiltrate the non-Communist labor movement, and there were indications that, prior to the Government decree outlawing their party, the Communists somewhat increased their influence over the policies of the former AD petroleum workers’ unions. The AD unions have successfully maintained their separate organizational identities, and the degree of Communist infiltration cannot be accurately determined. While the Government has made efforts to create labor unions with leadership acceptable to the Junta, it has been unsuccessful and when it became necessary to negotiate new contracts with the oil companies early in 1951, it was necessary to recognize a Unified Committee of Petroleum Workers composed of labor representatives from the legal unions as well as the Red Communist and the AD elements. These negotiations ultimately broke down and new labor contracts were placed in effect by government decree but the negotiations indicated the necessity for acknowledging the labor union strength of the outlawed political groups.

The possibility of communist sabotage was considered to be sufficiently serious even in 1948 to warrant the sending of a special mission to Venezuela to make a survey of security factors in the petroleum industry in Venezuela and the adjacent Netherlands West Indies. This mission found that, because of the dispersed character of the industry it would be impossible to prevent isolated acts of sabotage, but it did suggest several concrete measures which the companies and the Venezuelan Government could take in order to minimize this danger. The Embassy in Caracas was instructed to consult with representatives of the oil companies and, when desirable, with the Venezuelan authorities in order to put into effect as many as possible of the recommendations. While the oil companies were slow to acknowledge the need for improving the security precautions, considerable progress has been made during the past year and an Industrial Security Council composed of representatives of the oil companies with an Embassy officer as an observer has been meeting at frequent intervals to consider methods of improving security conditions.

Since the control of the Communist union leaders over the rank and file has not been put to any severe test and may in practice be far from complete, we should not limit ourselves to purely precautionary measures. We have been trying through our USIE program to make clear to all Venezuelans that Communist leaders are serving as tools of foreign imperialist power.

The second source of danger to the security of our petroleum supply in Venezuela lies in domestic riot and disorder. Political conditions in Venezuela are not entirely stable and it is possible to envisage a situation where law and order might break down completely and the country be delivered over to anarchy for a brief period of time. In such a case, it is possible that the latent resentment of the ordinary Venezuelans against foreigners could be fanned into flames by agitators, possibly Communist-inspired, and directed into a destructive attack against strategic petroleum installations.

The danger also exists of foreign attack, possibly of the hit and run variety, against petroleum installations. To meet this possibility, as well as to provide for all the strategic military aspects of the security of the oil industry and other strategic materials in Venezuela, conversations were held at Quarry Heights, Panama in March 1951 between the Caribbean Defense Command and the Venezuelan Chief of Staff of the Armed Forces and his advisers. A general agreement was reached regarding the requirements for defense of this area, including Venezuelan needs for additional military equipment. After this draft agreement has been studied by both governments steps will be taken for a further survey of the security requirements. When the results of these conversations as well as of any subsequent survey are approved by the two governments the Venezuelan Armed Forces may be expected to assist in defending sea and air lines of communication adjacent to Venezuela and to be ready to repel raids against strategic installations. Prior to these talks agreement was reached by the Departments of Defense and State that no consideration would be given nor reference made to the possibility of securing Venezuelan permission to land US troops in case of emergency, for the maintenance of order in the oil fields, either in the event of internal disorder or even in the event of war. The Department of Defense in April 1948 recommended that the Department of State explore such a possibility but the Department of State has held it is impossible and will in the foreseeable future continue to be impossible to request such permission from the Venezuelans. The nationalistic sentiments of the Venezuelans would be so outraged by such a suggestion that its rejection would be a foregone, conclusion, and, in addition, it would endanger the continuance of the friendly relations now existing. We must at least for the present accept the risk and content ourselves with whatever measures we can take within the framework of our non-intervention policy to increase stability in Venezuela. In the event of war, or immediate threat of war, it is possible, though far from probable, that Venezuela might be persuaded to accept military assistance from the US on Venezuelan territory. Such plans would, however, have to give due consideration to Venezuelan nationalism as was the case with the secret military agreement of 1942.¹¹

While access to an adequate supply of petroleum is of outstanding importance to the US in its relations with Venezuela, the existence of tremendous iron ore reserves of unusual purity is potentially of strategic value to the US. The Iron Mines Company of Venezuela, a Bethlehem subsidiary, made its first shipment of ore to the US in March 1951 and expects to increase production to more than 2 million tons annually. The Orinoco Mining Company, a subsidiary of U.S. Steel, has obtained concessions which it hopes to have in production within the next four or five years after dredging the Orinoco River for ocean-going freighters and which would eventually yield 10 million tons annually. Other large US iron mining companies may also seek concessions. This important addition to the dwindling high-grade iron ore reserves in the US and the increase in US private investment in Venezuela (which already approximates $1.5 billion) as well as the introduction of American personnel and methods into another section of Venezuela add to the importance of maintaining friendly relations. The development of this additional source of dollar exchange will likewise contribute to Venezuela’s economic stability. It is US policy to encourage Venezuela to accelerate its economic development by maintaining its present policies which have attracted private direct investment from abroad, supplemented in appropriate cases by external public investment in the country. Investment from abroad should be regarded as ancillary to internal investment which should be the principal source of funds for economic development. In the granting of the iron-ore concessions the Venezuelan Government has given further indication of its desire to maintain a favorable climate for private foreign investment and to encourage free enterprise.

General Economic Policy.

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The US made an effort in 1950 to encourage Venezuela to accede to the General Agreement on Tariffs and Trade¹² and to negotiate their tariff concessions under the terms of that agreement.¹³ However, the Venezuelan Government felt that the only item of major importance in its export trade is oil, that the US is its principal customer and that even if it participated in a multilateral agreement its negotiations would be almost wholly bilateral. Therefore Venezuela hopes through revision of the US-Venezuelan trade agreement to obtain in its own right as our principal supplier of oil the concessions which Mexico had obtained from us in 1943. A further deterrent to Venezuelan participation in multilateral negotiations was the difficulty of offering concessions on Venezuelan import tariffs at a time when protectionist sentiment is strong. Therefore, while our basic commercial policy indicates the desirability of encouraging Venezuelan participation in GATT we recognize the practical necessity of dealing bilaterally with Venezuela at this time.

As a means of diversifying the economy of the country and developing additional sources of foreign exchange, as well as for reasons of national pride, the Venezuelan Government has encouraged the expansion of a Venezuelan merchant marine and civil air carriers. It is our policy to regard this development favorably provided the Venezuelan Government interposes no obstacles to free competition by American carriers for this international trade. In mid-1950 the increasing amount of cargo carried by the Venezuelan Navigation Company and the Gran Colombian Merchant Fleet¹⁴ and their policy of undercutting Grace Line and other Shipping Conference vessels brought a threat of a rate war. The US used its good offices to bring all of the shipping interests together, and an agreement was reached to permit non-conference shipping lines to compete on fair terms with the conference lines.¹⁵ In December 1950 a circular letter¹⁶ was addressed to Venezuelan importers by the Ministry of Fomento which was obviously intended to influence importers to use national merchant vessels. The US Government pointed out that this appeared to be a means of interfering with free competition and the Venezuelan authorities agreed not to send further communications of this type.

A bilateral Air Transport Agreement was signed by the US and Venezuela in May 1948 but never ratified by the Junta despite repeated US efforts. For approximately a year the Venezuelan Government has adopted measures which are considered to be discriminatory against US carriers. It is our policy to conclude a mutually satisfactory agreement, or failing this to establish conditions of reciprocity which do not presently exist.

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Encouragement of Democracy and Friendship for US.

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In November 1950 the President of the Military Junta, Lieutenant Colonel Delgado Chalbaud, was assassinated. A civilian successor, Dr. German Suarez Flamerich, was chosen as Junta President by the other two Lieutenant Colonels who comprised the Junta and the same group of military leaders who created the Military Junta in November 1948. At the same time the word “military” was dropped from the official title of the Junta. Despite the fact that the three-man Junta acts as a unit in issuing all decrees, it is generally felt that Lieutenant Colonel Perez Jiménez,¹⁷ Minister of National Defense, is the most powerful member of the Junta.

The Junta’s declared intention to return as rapidly as possible to a democratic form of government has been tempered by its desire to maintain order and to prevent, by whatever means, the return to power of Acción Democrática or any group opposed to the present Government. In this connection it should be remembered that throughout Venezuelan history the armed forces have held almost uninterrupted power and they have no intention of again permitting a civilian government to gain real control and so end their domination. On April 18, 1951 an electoral statute was promulgated which provides for election of a constituent assembly by a process which will require approximately 14 months. This assembly would decide upon a new constitution and would review the actions of the present government. It is anticipated that from three to six months later there would be an election of a president and a congress as well as municipal officials. Some of the constitutional guarantees have been restored and the elections will be carried out by compulsory voting by all those 18 years of age or over but barring participation by any leaders of Acción Democrática or the outlawed Communist Party. Thus the return toward political democracy is in progress.

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During World War II Venezuela acquired nearly $4 million worth of military equipment under Lend Lease and settlement of this account has practically been completed. Further arms were sold to Venezuela under the Interim Arms Program, but the lack of legislative authority for inaugurating an arms standardization plan and the relatively high cost of American arms were responsible for the fact that Venezuela during the post-war period acquired the greater part of its purchases of arms from European countries, principally Great Britain, Belgium and Czechoslovakia. Present re-armament efforts of European countries are increasingly preventing such sales. Under the terms of the Mutual Defense Assistance Act,¹⁸ Venezuela is able to purchase arms and equipment from the US whenever our own military requirements and our arming of higher priority countries in other parts of the world will permit. Venezuela has indicated a desire to obtain a substantial amount of armament from the US and a portion of the equipment requested is being supplied. While Venezuela has expressed dissatisfaction with the length of time required for processing requests for equipment and our inability to supply certain types of armaments we have endeavored to assure the Venezuelan Government of our desire to meet that country’s hemispheric defense requirements as rapidly as possible bearing in mind the higher priority needs created by such situations as the Korean conflict.

It is recognized that some of the Venezuelan requests are in excess of genuine hemispheric defense needs.¹⁹ Accordingly, the US will seek to persuade Venezuela to minimize its military expenditures in time of peace by maintaining only those armed forces necessary to meet its obligations for collective defense. It is emphasized that military cooperation must be held within the limits of Venezuela’s economic means and no training or equipment will be provided which is likely to be used for aggression or threat of aggression against any other American republic. Recognizing that Venezuela has never engaged in a foreign war and that despite certain minor points of international friction there is no indication of a current threat of aggression, it is nevertheless this Government’s policy to discourage any armaments race between Venezuela and any neighboring countries. In matters of inter-American military cooperation for hemispheric defense our policy will continue to be guided by the overall policy set forth in the National Security Council’s decision of May 18, 1950²⁰ which provided for the creation of a Western Hemisphere Defense Scheme and for the closest coordination between the Departments of Defense and State in the implementation of this program at all stages as well as the timing of the individual steps.

Until such time as Venezuela’s defense role has been specifically set forth and agreed upon by both countries, it is our policy to scrutinize with great care all applications for export of armaments to Venezuela and to avoid encouraging any significant increase in Venezuela’s military forces and equipment not obviously required for hemispheric defense plans already approved or for commitments to the UN.

c. relations with other states

No major friction has existed in recent years in Venezuela’s relations with other states, with the exception of the Dominican Republic. This tension arose from the harboring of each other’s exiles and reached its peak with a threat of possible hostilities under the Acción Democrática Government. It has nearly disappeared since the November 1948 revolution. Venezuelan resentment toward Cuba for permitting the Inter-American Conference for the Defense of Democracy to meet at Habana in May 1950 and for permitting a Cuban official to publish remarks insulting to the Venezuelan Junta caused a near-rupture in relations in mid-1950; ex-President Betancourt’s²¹ residence in Habana since August 1950 is another source of irritation. At present, relations with Cuba may be said to be neither strained nor cordial.

The present Venezuelan Government has held some fear of hostile action by a combination of AD exiles and the “Caribbean Legion”²² possibly operating from Guatemala and conceivably aided by the Communist Party. The principal AD exiles are living in Cuba, Costa Rica, Mexico, and the US and have been active in disseminating propaganda against the government which overthrew them, and it may be assumed they are plotting its overthrow. However, the most careful investigations have failed to substantiate rumors that AD was attempting to procure arms for this purpose in the US. Despite frequent reports that the Caribbean Legion is planning armed attempts to overthrow the Venezuelan and other governments, no significant effort along these lines is at all likely. Our general policy in all these cases of friction has been to urge reliance upon established inter-American machinery for maintenance of hemispheric peace and solidarity, to oppose intervention by one state in the domestic affairs of another either directly or by aiding exiled groups and at the same time to make clear that we consider the denial of democratic rights by any country to its citizens inconsistent with the expressed ideals of the American republics.

The Guatemalan Government was very friendly toward the AD administration and has not resumed relations with Venezuela since the 1948 coup. Uruguay is the only other American republic with which the present Venezuelan Government has not yet resumed relations.

Venezuelan relations with Colombia and Ecuador have been traditionally friendly, although in the case of Colombia because of a variety of problems which have arisen in recent months relations are not perhaps as cordial as they normally have been. These three countries which once formed Gran Colombia have stressed their common cultural tradition and in recent years have endeavored to strengthen economic ties through such efforts as the Gran Colombia merchant fleet. Venezuela has been less enthusiastic than Colombia with respect to these efforts, but is a valued partner because of its large supplies of dollar exchange. The Quito Charter signed by Ecuador, Colombia, Panama and Venezuela in August 1948 envisages among other things a Customs and Economic Union. Only Colombia and Ecuador have ratified this Charter and the Venezuelan Foreign Minister has stated that while many useful steps may be taken by the newly organized Provisional Gran Colombia Economic Council, a customs union is not suitable between countries which lack complementary economies. It is our policy to favor developments which strengthen the economy of Venezuela, so long as they are not in conflict with our commercial policies and do not result in unfair discrimination against US enterprise.

Venezuela has maintained basically friendly, although not close, relations with its other large neighbor, Brazil. A recent affinity has developed with Peru as both military juntas came into power by coups d’état. In contrast, Venezuela’s firm friendship with Haiti dates back to its struggle for independence when Bolivar received aid from Haiti.

Venezuela has, at times, desired the independence of the Netherlands West Indies from European rule but there has been no recent agitation. In the past Curaçao and Aruba have been a meeting place for Venezuelan exiles plotting their return to power.

Relations with Great Britain, which have been generally friendly, are affected chiefly by the presence of British oil companies (Shell subsidiaries) producing about one-third of Venezuela’s oil. Some passing resentment arose in 1950 from a British proposal to restrict imports of dollar oil from Venezuela, although the British foreign exchange situation which gave rise to the proposal improved sufficiently to eliminate the necessity for any restrictions. Venezuelan dissatisfaction with the 1899 award which settled the boundary dispute with British Guiana flared up again in the Venezuelan press at the beginning of 1951. While Venezuela would like a revision of this boundary and has also indicated that it would welcome the independence of all the European colonies in this hemisphere, it is not believed that this dispute will extend beyond the pages of the Venezuelan press. Reference to such issues is apt to be accompanied by expressions of gratitude for our historical role as a defender of Venezuela’s sovereignty.

Venezuela maintains diplomatic relations with the USSR and Czechoslovakia, in the former case by Chargés d’Affaires at present. While many who sought to overthrow Dictator Gómez²³ were trained in Communist revolutionary methods, relatively few Venezuelans had, or have, the slightest interest in cooperating with the international objectives of the USSR. However, the principal Communist Party, until outlawed last year, exerted an influence in organized labor and certain other groups, and is continuing to function as an underground movement.

d. evaluation

US policies have been successful in encouraging friendly cooperation between the Venezuelan Government and American oil companies and have thus created a favorable atmosphere for the continuance of US private ownership of the oil industry and have prevented any widespread demand for nationalization by the Venezuelan Government. It is especially important at present that this Government continue to use its best efforts to this end. We should also continue to encourage the economic development of Venezuela along present lines as representative of the effective functioning of the free enterprise system. In this connection the success of our technical assistance programs, encouraging economic development and diversification of industry in Venezuela warrants not only their continuance but their expansion along the lines envisaged under the Point IV program.²⁴ In fact, Venezuela affords an excellent opportunity for the effective use of Point IV. While it is certain that any technical assistance which strengthens the economic stability of Venezuela and increases its desire to cooperate with the US is of permanent and real value to our national security, it is important that we not confine our Point IV activities to those fields which make a direct contribution to US security under emergency conditions. We must bear in mind that our concern for the long range economic welfare and development of Venezuela will contribute substantially to the security of the US.

Our efforts to guide the commercial policy of Venezuela along the lines of reduced trade barriers have been successful only to the extent that they have moderated the trend toward protectionism. It now appears that the best interest of both countries will be served by modifying our trade agreement so as to permit Venezuela to effect tariff increases on a limited number of import items covered by the present agreement in exchange for certain compensatory concessions. At the same time Venezuela wishes to obtain in its own right the tariff concession on US imports of oil which was granted to Mexico in our trade agreement with that country. In view of the importance to both countries of avoiding high US tariff barriers against Venezuelan oil this Government must make an effort to work out a mutually acceptable modification of the trade agreement with Venezuela. Efforts should also be continued however to dissuade the Venezuelan Government from imposing high Venezuelan tariffs or restrictive quotas on imports of significance to US exporters.

We were successful, as a result of this Government’s efforts in mid 1950, in avoiding a rate-war between Venezuelan and American shipping lines which would have been detrimental to the best commercial relations between the two countries and we have discouraged certain actions by the Venezuelan Government which would have violated the spirit of the agreement between the shipping lines. It is hoped that current efforts to resolve the conflict between US and Venezuelan aviation interests will be equally successful.

It is difficult to evaluate the results of our efforts to encourage restoration of a greater measure of democracy. The slow steps which Venezuela has taken in this direction were undoubtedly due primarily to other factors than the preference for a democratic form of government manifested by the US. Nevertheless, Venezuelans, whether in the Government, among the opposition or among the governed, are not unaware of the preference of the American press and public for civilian rule and democratic processes, and it can be assumed this fact has had some influence on the plans of the ruling clique.

Our efforts to maintain and strengthen Venezuelan friendship at the government and upper-class levels have met with reasonable success. On the other hand much remains to be done, particularly in the direction of greater appeal to the laboring masses and among the students and writers, especially in view of the appeal of Communist propaganda to these groups.

The US Army, Air and Naval Missions in Venezuela have achieved some success in improving the standards of the Venezuelan Armed Forces. The unavailability or high cost of US arms compared with those of European manufacture have militated against standardization of Venezuelan arms along US lines. Although the urgent requirements of the US and our commitments to higher priority non-hemispheric countries make it impossible to grant all of the arms requests received from Venezuela, even within the limits of those which would serve the hemispheric defense needs of that country, nevertheless Venezuela has recently been receiving a portion of the equipment which it has requested. The fact that the Venezuelan Government has sufficient exchange to meet the dollar cost of this equipment has placed it in a better position than most of the other American republics.

It is understood that the Department of Defense has now, in accordance with the stipulations of NSC 56/2, tentatively formulated a specific role which Venezuela should play in the defense of this hemisphere. This development, as well as the study by the Departments of Defense and State of the results of the bilateral military conversations at Panama, should furnish guidance in meeting Venezuela’s requests for arms. The State Department has long felt that export of arms to Venezuela as to the other American republics should be limited to what is strictly essential to the performance by those countries of their role in defending the hemisphere from external aggression, in performing such police functions as are called for by the United Nations and in maintaining their internal security. It has felt that additional arms are an economic burden and a stimulant to competitive arming and therefore detrimental to the achievement of important US objectives.

While the changed situation with respect to the supply and demand for armaments has practically eliminated the likelihood of any effort to stimulate export of US armaments to Venezuela it is still essential that there be a clear understanding of the exact role which Venezeula (as well as the other American republics) is to play in hemispheric defense. Our inability to supply Venezuela with some of the arms useful for hemisphere defense may lead us to encourage Venezuela to substitute other military equipment, but there should be an effort to restrict this equipment to types which are genuinely useful to its role in the Western Hemisphere Defense Scheme. Our military missions and any contact between Venezuelan and US officials should be used to persuade Venezuela of the desirability of fitting its requirements to this mutually agreed upon defense scheme.

1. The portions omitted from this policy statement duplicate material in the policy statement for Venezuela for the previous year, which is printed in Foreign Relations, 1950, vol. ii, p. 1024.
2. For text of the United States-Venezuela reciprocal trade agreement, signed at Caracas, November 6, 1939, and entered into force, December 14, 1940, see Department of State Executive Agreement Series (EAS) No. 180, or 54 Stat, (pt. 2) 2375. For documentation relating to the negotiation of the agreement, see Foreign Relations, 1938, vol. v, pp. 956 ff.
3. For text of the United States-Mexico reciprocal trade agreement, signed at Washington, December 23, 1942, and entered into force, January 30,1943, see EAS No. 311, or 57 Stat. 833. For documentation on the termination of the agreement, see Foreign Relations, 1950, vol. ii, pp. 939 ff.
4. For text of the Trade Agreements Extension Act (Public Law 50), approved June 16, 1951, see 65 Stat. 72.
5. For text of the joint announcement, dated June 18, 1951, see Department of State Bulletin, July 2, 1951, p. 17.
6. For text of the public notice, dated August 29, 1951, and related press releases of the same date, see ibid., September 10, 1951, pp. 433–436.
7. Documents pertaining to security measures in the Venezuelan oil fields during 1051 are in Department of State decimal file 831.2553 for that year. For previous documentation on this subject, see Foreign Relations, 1950, vol. ii, pp. 1019 ff.
8. Partido Revolueionario Proletaries
9. For documentation on this subject, see Foreign Relations, 1948, vol. ix, pp. 126 ff.
10. Reference is to the government of Rómulo Gallegos, who was inaugurated as President of Venezuela in February 1948.
11. Reference is to the Staff Agreement drawn up at Caracas, January 15, 1942, not printed. The agreement was modified and put into effect by an exchange of notes at Caracas, January 28, 1943; for text of the notes, see Foreign Relations, 1943, vol. vi, pp. 793–794.
12. For text of the General Agreement on Tariffs and Trade (GATT), concluded at Geneva, October 30, 1947, and entered into force for the United States, January 1, 1948, see Department of State Treaties and Other International Acts Series (TIAS) No. 1700, or 61 Stat. (pts. 5–6).
13. For documentation on this subject, see Foreign Relations, 1950, vol. ii, pp. 1019 ff.
14. Flota Mereante Gran Colombiana, S.A., a shipping line jointly owned by Venezuela, Colombia, and Ecuador.
15. For documentation relating to the shipping agreement, see Foreign Relations, 1950, vol. ii, pp. 1019 ff.
16. Not printed.
17. Marcos Pérez Jiménez.
18. For text of the Mutul Defense Assistance Act (Public law 329), approved October 6, 1949, see Stat. 714.
19. Documentation concerning United States policy with respect to hemisphere defense may be found on pp. 985 ff.
20. Reference is to the decision of the National Security Council (NSC) to adopt the NSC document entitled “United States Policy Toward Inter-American Military Collaboration”, designated NSC 56/2, and dated May 18, 1950; for text, see Foreign Relations, 1950, vol. i, p. 628.
21. Rómulo Betancourt.
22. A group of political exiles and military men from countries in the Caribbean with the alleged aim of overthrowing certain dictatorial governments in the area.
23. Juan Vicente Gómez held power In Venezuela from 1908 to 1935.
24. For documentation relating to organizational and other aspects of the Point Four Program in 1951, see vol. i, pp. 1641 ff.; for documentation concerning the technical assistance policy of the United States toward the other American Republics as a group, see pp. 1038 ff.