81. Telegram 178650 From the Department of State to the Embassy in Bolivia1 2

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For Ambassador from Under Secretary


  • La Paz 7568 and previous

1. In accordance with decisions taken by IG/ARA, you should approach the President of the Revolutionary Government in the first instance and such other high Government authorities as you consider appropriate under the circumstances in Bolivia to express the United States Government’s grave concern at the present state of relations between the Government of Bolivia and the United States. You should refer to appropriate statements by high Bolivian Government officials critical of the United States, its aims and objectives, as well as to physical attacks on the offices of United States Government agencies and those of its nationals, and verbal attacks on United States programs in cooperation with the Government and people of Bolivia. You should also refer to such information as you have and which would not violate any confidences concerning prospective threats against other American companies besides Bolivian Gulf. [Page 2] With regard to the expropriation of Bolivian Gulf, you should state that it is our understanding that the company was interested in conducting negotiations in good faith with the Bolivian Government to meet the latter’s desires for additional participation in the benefits accruing from the development of Bolivia’s natural gas and petroleum resources. The United States Government was therefore surprised when these negotiations were summarily and unilaterally terminated and the assets of Bolivian Gulf and YABOG, a corporation jointly owned by Bolivian Gulf and YPFB, were seized.

2. The Government of the United States is concerned about what it hears and sees about the Government of Bolivia’s intentions with respect to the substance and tenor of our relations. The Government of the United States is most interested in a definition by the Government of Bolivia of its intentions and the future course which it intends to pursue in relations with the United States.

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3. We hope that what we have been hearing and seeing does not in fact reflect the attitude of the GOB and the Bolivian people toward the US. If the attitudes and actions of the Bolivian Government make it impossible to continue our past cooperation, we will have to review the entire spectrum of our programs, which have been and are designed to aid the Bolivian people but which can only be effective in an atmosphere of cooperation and mutual respect. The Government of the United States will keep its programs under constant review in order to determine the level of our activities consistent with the general character of our relations, the actions of the Bolivian Government, and the consequent ability of our missions to achieve the objectives of the programs in which they cooperate. As a vital component of such a review, the Government of the United States would hope for frankness and candor from the Bolivian Government with respect to its own evolving position. We earnestly request President Ovando to give us a clear statement on the policy of his Government.

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4. On the specific issue of nationalization of the Bolivian Gulf Oil Company, you should express to President Ovando as well as the Foreign Minister and other appropriate Ministers, including the Minister of Mines, that the United States Government has noted that Article 4 of Decree No. 08956 establishes a commission to determine the amount, conditions, and terms of the indemnity to be paid to Gulf for the assets nationalized. Unilateral determination of such an indemnity creates no major problem for the United States Government provided it meets the accepted international norms for procedural justice and that compensation accorded is prompt, adequate, and effective. We would assume that consultations with Gulf would be necessary in order to establish compensation which meets the internationally accepted norms. We believe that negotiations in this respect should be carried out between the Bolivian Government and representatives of the company concerned, but if the Bolivian Government believes that it cannot do so, the Government of the United States would expect to be closely informed [Page 5] as the evaluation of the assets of its nationals progresses and would expect to be informed by the Government of Bolivia of the prospective compensation to be accorded to such nationals before the matter is made public and before the Government of Bolivia reaches a final and irreversible decision.

5. You should make the approach without delay unless you have strong objections, in which case you should notify Washington immediately.


  1. Source: National Archives, RG 59, Central Files 1967–69, POL 15–1 BOL. Confidential; Immediate. Repeated Priority to Lima. Drafted by Crimmins and Chapin; cleared by Samuels, Vaky, Legal Advisor Stevenson, and Meyer, and in USIA, ISA, CIA, AID, DOD, JCS, and Treasury; and approved by Richardson.
  2. The Department instructed the Embassy to express concern at the present state of relations between the United States and Bolivia, and asked the Embassy to inform the Bolivian Government that it must pay compensation for nationalized U.S. companies.