618.31/12–2354
Memorandum by the Deputy Assistant Secretary of State for Inter-American Affairs (Sparks) to the Under Secretary of State (Hoover)1
Subject:
- Effects on U.S.-Venezuelan Relations of a Possible Reduction or Limitation on U.S. Imports of Venezuelan Petroleum
After some rough going consequent to the Guatemalan affair, our relations with Venezuela are in the best shape they have been for many years. This also applies ‘to the relations between U.S. private companies and the Venezuelan Government. Venezuela is one of our staunchest supporters when it comes to trying to reduce Government-control, Government-regulation, and other “socialistic” tendencies in the economic development and trade expansion program in this hemisphere. Her delegation cooperated fully with us at the Rio Conference.
Any United States Government action to red ce or limit Venezuelan exports of petroleum to the United States would not only raise serious questions with regard to our bilateral trade agreements with Venezuela and provisions of GATT,2 but would adversely affect directly U.S. security, economic and political interests.
- 1.
- We are at present awaiting the Venezuelan decision to go forward with extremely important high level military staff talks regarding security of the oil fields and of the Caribbean area in general.
- 2.
- Restriction of U.S. imports of Venezuelan oil would seriously jeopardize the U.S. market for over $500 million worth of annual U.S. exports to Venezuela. In addition, Venezuela pays about $350 million annually to the United States for services. It should also be remembered that these goods and services are paid for in cash. The current favorable climate for the investment of private capital would also be seriously jeopardized. The value of U.S. private investments in Venezuela total over 2 billion dollars. There is talk of considering increased import duties, quotas and possible nationalization in the light of rumors that the U.S. will restrict Venezuelan petroleum imports.
There would be a distinct worsening of our overall political relations which would be felt not only inside Venezuela. It could well have a far-reaching effect and arouse serious doubts regarding the basic economic policies announced by this administration which were so forcibly and carefully outlined at the recent Rio Conference.