655. Memorandum From Viron P. Vaky of the National Security Council Staff to the President’s Assistant (Ellsworth)1 2

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  • Oil Imports and Venezuela

In view of the President’s decision to review our oil import policies, I am taking the liberty, in Dr. Kissinger’s absence, of bringing to your attention Venezuela’s vital interest in our oil import program, and the commitments we have made to review with the Venezuelans beforehand changes in the program which affect them.

Currently over 90% of Venezuelan export earnings come from oil and more than 45% of its oil is sold in our market. Because of its dependence on oil exports, the Venezuelan Government has continually chafed under the import restrictions we have imposed. More particularly, Venezuela has sought equality of treatment with Canada, which under the overland exemption to the import program, was given preferred status in our market (which in a modest way Mexico also enjoys).

We have not granted Venezuela the preferences requested, but recognizing that continued US access to a dependable supply of oil in Latin America is important to our national security—Venezuela’s response to the 1967 Middle East crisis validates this view—we have committed ourselves, beginning with President Eisenhower’s Administration, to take into account the mutual interest of the US and Venezuela in the oil import program, and to review significant changes in the program with Venezuela beforehand. During President Johnson’s administration we also granted certain preferences for Western Hemisphere oil in the Caribbean market, required the Defense Department to make purchases of Western Hemisphere oil, and put residual fuel oil imports outside the import program.

The increasing difficulty Venezuela has already had in maintaining its traditional share in the growth of the US market is likely to be exacerbated by lowering tanker differentials, growing pressure from other oil rich supply points, US consumer pressure for lower-priced Middle Eastern oil, and the advent of Alaskan oil now on the horizon. Serious reverses on the oil front could bring political reverses in Venezuela, as a result of which extremist movements could prosper.

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President Nixon has emphasized his interest in Latin American development and in providing a stimulus through trade arrangements. The Venezuelans will consider maintenance of our commitments in the field of oil as a test of this policy.

Attached for your information is a copy of a recent letter from Secretary Rogers to Secretary Hickel urging that the Venezuelans be given a full hearing on the particular subject of Machiasport. The State Department believes it is very important that the Venezuelans also be assured of a hearing in the course of the overall review of oil imports which you will be coordinating.

I will be glad to try to provide any further information on this matter you may desire.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 796, Country Files, Latin America, Venezuela, Vol. 1, 1969–1971. Confidential. Drafted by Nachmanoff. Printed from a copy that Vaky did not initial. The attached February 15 letter from Rogers to Hickel was not found. For more information on the President’s decision to review oil import policies, see Foreign Relations, 1969–1976, vol. IV, Foreign Assistance, International Development, and Trade Policies, 1969–1972, Document 182.
  2. Vaky discussed the importance of Venezuelan oil exports to both the U.S. and Venezuelan economies. He stated that if Venezuelan oil exports dropped, extremist movements in the nation would become more powerful.