82. Telegram 7658 From the Embassy in Bolivia to the Department of State, October 23, 1969, 1605Z.1 2

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TELEGRAM
Department of State
LA PAZ 7658

0 R 231605Z OCT 69
FM AMEMBASSY LA PAZ
TO SECSTATE WASHDC IMMEDIATE 8865

INFO AMEMBASSY LIMA
USCINCSO
AMCONSUL COCHABAMBA
UNN

FOR UNDERSECRETARY
FROM AMBASSADOR
SUBJ: TALK WITH OVANDO REF: STATE 178650

1. SUMMARY: GENERAL OVANDO MET ME YESTERDAY EVENING (OCTOBER 23) AT HIS RESIDENCE WITH THE TRADITIONAL “ABRAZO” AND CALLING ME BY THE FRIENDLY DIMINUTIVE OF “RAULITO”. OVANDO WHO HAS BEEN ROARING LIKE A LION SINCE HE TOOK OFFICE APPEARED LIKE A MEEK LAMB. HE APPEARED TIRED, DISCOURAGED, TATTERED AND TORN, WITHOUT CONFIDENCE AND AFTER A FEW MINUTES MY IMPRESSION WAS THAT HE “NO LONGER WAS THE MASTER OF HIS SHIP”. HE HAD AN EMBARRASSED LOOK ABOUT HIM AND WOULD NOT LOOK ME STRAIGHT IN THE EYE. HE APPEARED DISORIENTED AND MOST OF HIS STATEMENTS WERE INCOHERENT AND WOULD NOT GIVE ME A STRAIGHT ANSWER. OVANDO APPEARED AS MAN ASKING FOR HELP WITH HIS NUMEROUS PROBLEMS, BUT YET UNABLE TO GIVE ME THE BASIS AND ASSURANCES USG NEEDS TO JUSTIFY SUCH HELP. ALL IN ALL THE MEETING WAS NOT A SATISFACTORY ONE REFERENCE US INTERESTS.

2. IN BEGAN BY EXPRESSING MY FRANK CONCERN AT DIRECTION USG-BOLIVIAN RELATIONS WERE TAKING. OVANDO SAID HE HOPED RELATIONS WERE NOT STRAINED BUT CONTINUED DEVELOP ON SOUND AND CONSTRUCTIVE FOOTING. HE SAID HE INTENDED SAFEGUARD PROPERTY AND RIGHTS OF US AND FOREIGN CITIZENS (APPARENTLY UP TO POINT OF POSSIBLE NATIONALIZATION, SEE BELOW). THROUGHOUT INTERVIEW, HE REPEATEDLY REFUSED ANSWER DIRECTLY QUESTION [Page 2] WHETHER HE AND CABINET PLANNED CONTINUE OR DROP PUBLIC ANTI-AMERICAN UTTERANCES AND STANCE, CHOOSING INSTEAD REITERATE ASSURANCE THAT AMERICAN PROPERTY WOULD BE PROTECTED AGAINST PHYSICAL ATTACK.

3. HE AGAIN AVOIDED CLEAR CUT RESPONSE TO QUESTION REGARDING GOB’S INTENTIONS TOWARD AMERICAN-OWNED FOREIGN PRIVATE INVESTMENT, SPECIFICALLY MATILDE, BOLIVIAN POWER AND SOUTH AMERICAN PLACERS. HE SAID HE THOUGHT MATILDE PROBLEM COULD BE WORKED OUT IN CONJUNCTION WITH CONSTRUCTION OF ZINC SMELTER (WHERE AND BY WHOM HE DID NOT SAY). BOLIVIAN POWER’S FUTURE, HE SAID, WILL DEPEND UPON HOW THEY BEHAVE. HE SAID COMPANY HAD INJURED ITS IMAGE BY BUYING $150,000 DURING OCTOBER 21 RUN ON BANKS AND HE WISHED THEY WOULD FOLLOW GASSER’S EXAMPLE AND RETURN MONEY TO BANKS IN PESO DEPOSITS. HE SAID POWER WAS SEEKING A RATE INCREASE WHICH UNDER CIRCUMSTANCES WOULD BE IMPOSSIBLE TO APPROVE. HE SAID THAT SOUTH AMERICAN PLACERS WAS REAL PROBLEM WHICH CABINET HAD NOT YET RESOLVED. HE SAID HE HAD NOT KNOWN OF VANDALISM WHICH TOOK PLACE DURING WORKER OCCUPATION OF PREMISES AND PROMISED MAKE RESTITUTION BUT HE STATED VERY CLEARLY THAT, OF THE THREE FIRMS, SOUTH AMERICAN WAS MOST VULNERABLE AND MOST LIKELY NEXT TO BE NATIONALIZED. I REPEATED MORE SPECIFICALLY MY EARLIER QUESTION: “CAN I ASSURE MY GOVERNMENT THERE WILL BE NO FURTHER NATIONALIZATIONS?” HE AGAIN DUCKED A DIRECT ANSWER, SPEAKING VAGUELY OF POLITICAL PRESSURES HE FACED AND THAT THIS DEPENDED UPON ATTITUDES ASSUMED BY COMPANIES.

4. IN VIEW OF PRESENT SITUATION, I TOLD HIM WE WERE NECESSARILY REVIEWING OUR AID AND MILITARY COMMITMENTS, THAT IF OUR ASSISTANCE IS NOT WANTED OR CANNOT BE EFFECTIVELY EMPLOYED WE CAN EASILY CLOSE DOWN MANY OF THESE OPERATIONS AND SEND PERSONNEL HOME. IN REPLY, HE SHIFTED GROUND TO CRITICISM OF MILGRP PROGRAM. HE SAID HE DID NOT KNOW WHAT CONTRIBUTION AMERICAN MILITARY MADE ALTHOUGH HE WOULD TALK TO GENERAL TORRES ABOUT BETTER USING THIS RESOURCE. (COMMENT: BOLIVIAN MILITARY HAVE SEEMED GENUINELY IRRITATED THAT AMERICAN MILITARY PERSONNEL DEPARTED ESTADO MAYOR OFFICES AT TIME OF GOLPE. OVANDO’S COMMENT, IN EFFECT, STATES BOLIVIANS WANT U.S. MATERIEL BUT NOT U.S. ADVICE.) ALTHOUGH I REPEATEDLY RETURNED TO USAID THEME, I COULD NOT INDUCE HIM TO COMMENT, EITHER IN FAVOR, AGAINST, OR NONCOMMITTALLY ON CONTINUATION [Page 3] OF PROGRAM.

5. WITH RESPECT TO GULF NATIONALIZATION, HE SAID GOB INTENDED TO COMPENSATE COMPANY FOR NATIONALIZATION, THAT GOB HOPED USE MECHANISM OF SELLING BOLIVIAN CRUDE TO GULF AT $2.25 PER BBL AND PLACING MONIES IN ESCROW ACCOUNT FOR FIRST PAYMENT SOME MONTHS HENCE. HE URGED ME TO USE MY GOOD OFFICES TO PERSUADE GULF TO COOPERATE WITH THE SCHEME.

6. IN REPLY, I REMINDED HIM OF NEED TO MAKE PROMPT, ADEQUATE AND JUST COMPENSATION, THAT WE ASSUME GOB WILL ENTER INTO DIRECT AND MEANINGFUL DIALOGUE WITH GULF, AND THAT NEGOTIATIONS SHOULD TAKE INTO CONSIDERATION GULF’S EVALUATION AS WELL AS THAT OF UNILATERAL COMMISSION ESTABLISHED UNDER NATIONALIZATION DECREE. IN RESPONSE TO HIS PLEA FOR HELP, I REMINDED HIM THAT GULF WAS OFFENDED PARTY AND THAT USG COULD NOT PROPERLY INTERVENE UNTIL BI-LATERAL TALKS HAD PROVED FRUITLESS.

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7. OVANDO SAID GOB PLANNED CONSIDER BOTH EVALUATIONS, EXPECTED GOB COMMISSION WORK COMPLETE WITHIN THREE OR FOUR MONTHS AND SUGGESTED THAT FRENCH ACCOUNTING FIRM (GEOPETROLE) SELECTED EARLIER BY SILES GOVERNMENT TO AUDIT GULF’S BOOKS MIGHT BE IN POSITION TO HELP RECONCILE DIFFERING EVALUATIONS. HE SAID HE APPROVED OF DIALOGUE AND HOPED TO BE ABLE TO SPEAK WITH CHUCK HALL OCTOBER 23 IF POSSIBLE. HE RECOGNIZED THAT GULF MIGHT FIND IT DIFFICULT TO COOPERATE AFTER NATIONALIZATION ACT BUT SUGGESTED AS “FACE-SAVING DEVICE” THAT CALIFORNIA SUBSIDIARY PICK UP CRUDE OIL PURCHASE CONTRACT. UPON MY RETURN TO WASHINGTON, HE URGED ME TO DISCUSS PROBLEM WITH “GULF HEADQUARTERS IN WASHINGTON.” ONLY COMPENSATION ROUTE, HE REITERATED, WAS THROUGH CRUDE OIL SALES AND IN THIS FASHION DEBT COULD BE REPAID IN TEN OR FIFTEEN YEARS. (COMMENT: HE DID NOT CLARIFY FORMULA HE MAY HAVE IN MIND, ALTHOUGH I ASSUME GOB IS THINKING OF EARMARKING PARTIAL VALUE EACH BBL SOLD FOR ESCROW COMPENSATION ACCOUNT.)

8. I REMINDED HIM THAT HIS FIRST AND PROPER NEGOTIATING PARTNER WAS GULF. I NOTED, HOWEVER, THAT I UNDERSTOOD TALKS WERE NOT GOING, WELL AND WERE NOT LIKELY IMPROVE AS LONG AS MINMINES QUIROGA CHOSE ENCOURAGE BAD NEGOTIATING CLIMATE BY RESORTING TO ILL-TEMPER AND THREATS. FURTHER, IF, AS HE SAID, GOB PLANNED FULL COMPENSATION RATHER THAN ONLY FOR SURFACE CAPITAL ASSETS AS MINMINES QUIROGA HAD STATED PUBLICLY, HE HAD BETTER COORDINATE THIS WITHIN GOVERNMENT. (AT THIS POINT, OVANDO [Page 5] LOOKED NERVOUSLY TOWARD DOOR AS THOUGH SOMEONE WERE LISTENING TO CONVERSATION AND AGREED TO SEE CHUCK HALL AS SOON AS POSSIBLE.) I ALSO SUGGESTED THAT IF COMMISSION-GULF NEGOTIATIONS BROKE DOWN, HE GIVE ME BOLIVIAN COMMISSION EVALUATION BEFORE RELEASING IT TO PRESS. IF BOLIVIAN FIGURE APPEARS PREMATURELY PRESS, THE GOB POSITION WILL PETRIFY AT THAT POINT AND NO MEANINGFUL RECONCILIATION AND NEGOTIATION THEREAFTER CAN TAKE PLACE. HE AGREED THAT THIS WAS GOOD IDEA.

9. HE DISCUSSED THE PROBLEM OF DEVALUATION AND HE ASKED FOR MY RECOMMENDATION. HE SAID GOB WAS LOOKING FOR A FORMULA, THAT HE FEARED HIS GOVERNMENT WOULD BEAR POPULAR BLAME FOR MEASURE ALTHOUGH MATTER HAD BEEN UNDER DISCUSSION AS LONG AGO AS BARRIENTOS’ REGIME, BUT THAT GOB MUST COME UP WITH AN ANSWER BY MONDAY, OCTOBER 27. I SAID THIS WAS DECISION HE HAD TO MAKE BASED UPON CIRCUMSTANCES HE FACED AND TAKING INTO CONSIDERATION RECOMMENDATIONS OF EXPERTS AND OTHERS.

10. COMMENT: OVANDO’S PRESENTATION WAS MARKED BY INDECISION, LACK OF CONFIDENCE AND PRESENTIMENTS OF TROUBLE FOR THE FUTURE. HE GAVE IMPRESSION THAT HE IS NOT EXERCISING CONTROLLING INFLUENCE NOR THAT HE HAS POWER EVEN TO REDEEM THOSE FEW COMMITMENTS HE MADE. AS EVIDENCE THAT CONVERSATION ENDED IN STAND-OFF, I TOLD HIM REPEATEDLY THAT I MIGHT BE ABLE TO HELP HIM BUT FIRST I NEEDED SOME INDICATION THAT HIS GOVERNMENT HAD SERIOUS INTENTIONS TO ADOPT MORE POSITIVE ATTITUDE TOWARD US. AT NO TIME WAS HE ABLE GIVE MORE THAN VAGUE AND UNCONVINCING REPLY TO THIS QUESTION.
CASTRO

  1. Source: National Archives, RG 59, Central Files 1967–69, POL 15–1 BOL. Confidential; Limdis. Repeated to Lima, USCINCSO, and AMCONSUL Cochabamba.
  2. As instructed in State telegram 178650, Ambassador Siracusa expressed concern to General Ovando about the deterioration of United States-Bolivian relations. The Ambassador told the President the U.S. Government was reviewing its assistance programs toward Bolivia.