673. Telegram 1516 From the Embassy in Venezuela to the Department of State, March 29, 1971, 2201Z.1 2

[Page 1]

TELEGRAM
Department of State
CARACAS 1516

P 292201Z MAR 71

FM AMEMBASSY CARACAS
TO SECSTATE WASHDC PRIORITY 1823

CARACAS 1516

SUBJECT: VENEZUELAN REACTION TO SECRETARY’S TESTIMONY ON VENEZUELA

1. I WAS ASKED TO CALL ON FONMIN CALVANI THIS AFTERNOON, WHO USED AS HIS TEXT FRONT PAGE OF YESTERDAY’S EL NACIONAL, WHICH DISPLAYED LARGE HEADLINES STATING THAT SECRETARY IN HIS REPORT TO AMERICAN CONGRESS HAD DECLARED “VENEZUELAN PETROLEUM LEGISLATION INTRODUCES INSECURITY WITH RESPECT TO INVESTMENTS IN LATTER COUNTRY.” HE SAID HE HAD BEEN PEACEFULLY SLEEPING SUNDAY MORNING WHEN PRESIDENT CALDERA TELEPHONED TO ASK HIM WHAT THIS WAS ALL ABOUT. AS MINISTER BEGAN TO USE SUCH WORDS AS “TRAGIC” AND INDICATED THAT AMBASSADOR SOSA HAD SUDDENLY BEEN RECALLED TO CARACAS, I SAID THAT THERE WAS NOTHING TO GET EXCITED ABOUT.

2. I POINTED OUT THAT SECRETARY’S REPORT, WHICH I HANDED HIM FORTHWITH PURSUANT TO SECRETARY’S LETTER OF MARCH 24, HAD BEEN IN THE HANDS OF THE PRINTERS FOR SOME WEEKS. IN CONSEQUENCE, NEITHER HE NOR PRESIDENT CALDERA SHOULD JUMP TO CONCLUSION THAT USG WAS TIMING A CAREFULLY PLANNED RESPONSE TO CALDERA’S PRESS CONFERENCE OF LAST THURSDAY (CARACAS 1481). I SAID A MORE ACCURATE READING OF SITUATION COULD BE FOUND ON SAME FRONT PAGE OF SAME NEWSPAPER IN WHICH I WAS CORRECTLY QUOTED BY CORRESPONDENTS IN MARACAIBO WHO INTERVIEWED ME ON FRIDAY, MARCH 26, THAT THERE WAS NO OFFICIAL CAMPAIGN ORGANIZED BY USG AGAINST VENEZUELA. I HAD, HOWEVER, POINTED OUT THAT WE WERE A FREE SOCIETY AND BOTH OIL COMPANIES AND PRIVATE CONSUMERS [Page 2] WERE AT LIBERTY TO EXPRESS THEIR VIEWS WHEN OIL PRICES WENT UP BECAUSE OF ACTION OF PRODUCING COUNTRIES, WHICH INCLUDED OTHERS THAN VENEZUELA. WHAT HAD HAPPENED, IT SEEMED TO ME, WAS THAT NEWS OF SECRETARY’S TESTIMONY (WHICH COVERED A HUNDRED OTHER COUNTRIES THAN VENEZUELA) HAD BY COINCIDENCE BECOME JUXTAPOSED TO PRESIDENT CALDERA’S PRESS CONFERENCE.

COMMENT: IT WAS OBVIOUS THAT WHAT CONCERNS CALDERA PRINCIPALLY, AND BY REFLECTION HIS FOREIGN MINISTER, IS POSSIBILITY THAT ADECO OPPOSITION (CF CARACAS 1506) REPORTING REMARKS OF HERNANDEZ GRISANTI) WILL SEEK THIS OPPORTUNITY TO PLAY THE VENEZUELAN DAVID AGAINST THE AMERICAN GOLIATH WITH ADECOS SEEMING BRAVER AND BETTER THAN COPEYANOS.

3. I EXPRESSED SURPRISE AT THIS APPARENTLY VEHEMENT REACTION TO SECRETARY’S TESTIMONY BEFORE CONGRESS AND NOTED THAT PRESS HAD WIDELY IGNORED VERY PLEASANT REFERENCES TO VENEZUELA WHICH MADE UP MOST OF PARAGRAPH OF SECRETARY’S TESTIMONY. I WAS ALL THE MORE SURPRISED BECAUSE LAST SENTENCE OF TESTIMONY WITH REGARD TO OIL TAX LEGISLATION WAS NOTHING MORE THAN WHAT I HAD SAID IN MY SPEECH OF FEBRUARY 18 ALTHOUGH PERHAPS I HAD NOT USED ADJECTIVE “RETROACTIVE.” CALVANI WITH A THIN SMILE SAID HE THOUGHT MY SPEECH HAD GONE “TO THE LIMIT.” I REPLIED THAT I WAS HERE TO DEFEND THE INTERESTS OF MY COUNTRY AND COUNTRYMEN.

4. CALVANI TRIED TO MAKE A REMONSTRANCE ABOUT SECRETARY’S USE OF THE WORD “RETROACTIVE” IN SPEAKING OF TAX ON PETROLEUM COMPANIES IMPOSED LAST DECEMBER, AND BEGAN FAMILIAR LEGAL EXEGESIS UNTIL I LET HIM READ PARA 2 A OF CARACAS 5549 WHICH HE ADMITTED WAS AN EXACT REPORT OF WHAT HE HAD SAID AT THAT TIME RE EX POST FACTO CHARACTER OF PROPOSED OIL TAX LEGISLATION. I ALSO LET HIM READ PARA 1 B OF CARACAS 5506 IN WHICH MINISTER OF MINES HAD MADE SAME ADMISSION. SINCE CALVANI HAD COMMENCED CONVERSATION BY EXPATIATING ON HIS INTEREST IN “SOCIAL ASPECTS” OF OUR MUTUAL PROBLEMS, I SAID THAT AS A SOCIOLOGIST HE WOULD COMPREHEND HOW A VENEZUELAN PEASANT MIGHT FEEL IF AFTER YEARS OF PAYING A TAX OF 100 BOLIVARES ON HIS LITTLE INCOME HE WAS SUDDENLY INFORMED IN DECEMBER THAT HIS NEW TAX WOULD BE 160 BOLIVARES RETROACTIVE TO JANUARY 14.

5. SINCE BY THIS TIME CALVANI HAD RUN OUT OF STEAM I TOOK OCCASION TO SAY THAT I EARNESTLY HOPED THAT OUR FEARS AS TO [Page 3] CLIMATE OF INVESTMENT IN VENEZUELA WOULD PROVE UNFOUNDED, I COULD ASSURE FONMIN THAT SECRETARY ROGERS HELD THE SAME VIEW. HOWEVER, WHAT WE NEEDED NOW WAS A PERIOD OF TRANQUILITY AND REALLY TRUSTWORTHY ASSURANCES FROM GOV THAT OUR INVESTMENTS WOULD NOT BE SUBJECT TO CONSTANT RISK OF THE RULES OF THE GAME BEING CHANGED AT ANY MOMENT BY POLITICAL WHIM. AT THIS POINT I TOOK OUT MY THUMBWORN COPY OF THE LONDON ECONOMIST OF MARCH 6 (CARACAS 1410, BELGRADE 961) AND SAID THAT EVEN THE COMMUNIST YUGOSLAVS SEEMED TO BE LOOKING TOWARD SOME FORMULA WHICH WOULD INSPIRE A BASIS OF CONFIDENCE FOR FOREIGN INVESTMENT WITH REALLY TRUSTWORTHY ASSURANCES THAT IN MIXED VENTURES THE FOREIGNER COULD PLAY ACCORDING TO RULES OF THE GAME WHICH WERE NOT SUBJECT TO CHANGE.

6. I SAID I WAS GETTING RATHER TIRED OF PLAYING THE ROLE OF SISYPHUS IN ROLLING THE STONE OF “HEMISPHERIC PREFERENCE” UP TO THE TOP AND HAVING IT CRASH DOWN AGAIN. I COULD EASILY SEE A POSSIBILITY THAT IF CALDERA GOVERNMENT COULD OFFER REAL ASSURANCES OF TRANQUILITY TO OUR OIL AND MINING ENTERPRISES, I FOR MY PART WOULD BE IN A BETTER POSITION TO BE MORE ELOQUENT ON HEMISPHERIC PREFERENCE. I HOPED THEREFORE THAT FONMIN WOULD, IN GIVING MY BEST REGARDS TO PRESIDENT CALDERA, ASSURE HIM THAT USG WAS NOT ORCHESTRATING A CAMPAIGN AGAINST VENEZUELA, AS I HAD POINTED OUT IN MARACAIBO; BUT THAT WE REALLY WERE ANXIOUS BUT STILL HOPEFUL AS TO CLIMATE OF CONFIDENCE FOR FUTURE INVESTMENT IN VENEZUELA.
GP–4
MCCLINTOCK

  1. Source: National Archives, RG 59, Central Files 1970–73, POL VEN. Confidential; Priority.
  2. Venezuelan Foreign Minister Calvani and Ambassador McClintock discussed comments made by Secretary of State Rogers about Venezuelan Petroleum legislation in testimony before the U.S. Congress.