Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

569. Telegram From the Ambassador in Venezuela (Warren) to the Department of State¹

Caracas, January 12, 1956—4 p.m.

246. Saw President Perez this morning for periodic conversation. Following were covered:

1. Congratulated him on press reports today that last night he announced Venezuelan Government’s decision open doors for applications for oil concessions.² He reminded (see paragraph D Embtel 165 November 25) he had said they would be granted and only lack time had prevented his making announcement prior New Year. He was obviously pleased decision and my felicitations.

2. He thought time opportune for renewal military staff conversations. I told him Department and CINCARIB would be informed. President added conversations must await return Minister Defense from 8 day visit Peru (see 4 below).

3. Expressed my satisfaction Venezuelan Government has given approval Inter American Defense Plan with reservations.³ He decried importance reservations emphasized need desire Venezuela cooperate continental defense. I mentioned efforts already underway take care reservations.

4. I referred today press report Defense Minister Mazzei leaving for Peru. He said visit purpose laying corner stone monument Lima to Venezuelan revolutionary General Salom. (Peru Ambassador Garland was at President’s palace and confirmed above saying Mazzei going because had been unable accompany President Perez Lima trip.)

5. Said I was sorry US firms⁴ lost out on steel mill contract but hoped there would be other occasions when they would be considered and we could be helpful. He said Americans had lost out⁵ because guarantee terms were “a bit stiff” for a country priding itself on paying and possession unusual resources for paying.⁶ I said understood Venezuelan idea and as American tried explain position US firms. I brought out guarantee terms were not those US Government but those of industrial banking firms. He said understood but clear he thought they should have been able find way.

6. Gave him essence information contained Department’s A–91 December 6 re Whisper article.⁷ Stressed Department had studied matter see whether there anything it could do and found there was not. He commented he understood. I believe incident now passed.

7. I did not mention Manger candidacy⁸ considering it preferable he receive bad news first from Minister Foreign Affairs.

8. I mentioned again that military mission contract not yet renewed. He reassured me saying delay due simply press other matters. He was very complimentary re work mission saying he informed by his military they do more than they required do.

Comment: Reference 5 supra. I took opportunity suggest President that whenever I might find here some authority credit finance guarantees of calibre Burgess, Black or Waugh I would like bring him to President for a personal conversation re these important subjects. He indicated would welcome such opportunity. I can telephone him whenever I have such an authority.

Warren

1. Source: Department of State, Central Files, 831.19/1–1256. Confidential.
2. At a meeting of the Supreme Council on Production, January 11, the Government of Venezuela announced its general oil policy as a first step toward actually granting concessions. The announcement stated that special benefits would be required from new concessionaires, including increased exploration and exploitation taxes, increased royalties, higher percentage of oil refined in Venezuela, and cooperation with the government in developing certain industries. Documentation relating to the announcement is Ibid., 831.2553.
3. These reservations indicated: (1) that Venezuela’s contribution to continental defense would be limited to the defense of its own territory; (2) that arrangements with European powers for the security of colonies in the Western Hemisphere were the primary responsibility of the American states nearest to those colonies; and (3) that the Caribbean-Panama-Galapagos defense sector, which included Venezuela, should also include British Guiana. Documentation on this subject is Ibid., 710.5.
4. Reference is to the International General Electric Corporation. Documentation concerning the steel mill contract is Ibid., ARA Files: Lot 58 D 564, Summaries.
5. The Italian firm Fiat was awarded the contract.
6. These terms would have required the Government of Venezuela to post collateral in New York banks for an estimated $60 million of purchases in the United States, utilizing some of the dollar balance in the Venezuelan Central Bank.
7. Reference is to an article critical of Pérez in the December 1955 issue of Whisper. Documentation concerning the matter is in Department of State, Central File 731.11/11–2555.
8. Reference is to William Manger, candidate for election to the post of Secretary General of the Organization of American States. Documentation on Venezuelan support of Manger is Ibid., 361/12–2655 and 364/1–2456.