Office of the Historian

378. Memorandum From the President’s Deputy Assistant for National Security Affairs (Scowcroft) to the President’s Assistant for International Economic Affairs (Flanigan)1

Washington, May 6, 1974.

SUBJECT

  • Venezuelan Nationalization—Your Memo of May 3

We had also been in touch with State on this and expressed our views that we should promptly communicate three points to the Venezuelans:

1. That we recognize their sovereign right of expropriation;

2. That this brings with it a responsibility for prompt, adequate and effective compensation, which we believe they understand and sympathize with, and that their recognition of this could provide an opportunity to assume a position of influence and leadership as other nations in the Hemisphere seek to deal with this same problem; and

3. That we consider consultation to be a two-way street. We regret that they had not seen fit to give us warning of their statement, but hope that as the matter progresses towards agreement on compensation, we can stay in close contact.

State informed us that they are calling in the Venezuelan Ambassador on Monday and assured us they will make a presentation of this nature to him. Normally this would also be done in Caracas, but in this particular circumstance State prefers to make the first representation in Washington.

We believe that President Andres Perez’s statement may have been only an expression of a hazy intention; until the Venezuelans provide us with further details, we should confine ourselves to the kind of [Page 1007] presentation outlined above. We have no reason to believe that the Venezuelan Government does not intend to provide full compensation. This is particularly true in view of their presently comfortable financial position. Our response to the President’s speech therefore should be a positive one and assume their intention to compensate.

  1. Summary: After Pérez announced a broad policy to nationalize foreign investment, Scowcroft informed Flanigan that the Department of State would tell the Venezuelan Ambassador that while the U.S. Government recognized the sovereign right of expropriation, it expected prompt, adequate, and effective compensation to be paid.

    Source: National Archives, Nixon Presidential Materials, NSC Files, Country Files, Box 797, Latin America, Venezuela, Vol. 2, 1972–. Confidential. Scowcroft wrote on the memorandum: “Peter—as we discussed this morning, I think this is getting straightened out. B[rent].” In telegram 90161 to Caracas, May 2, the Department instructed the Embassy to refrain from comment on Pérez’s April 29 statement on nationalization and noted that it intended to discuss the matter with a Venezuelan Embassy representative. (Ibid., RG 59, Central Foreign Policy File, D740105–0537) In a May 3 memorandum, Flanigan informed Scowcroft that the Department’s response was “extraordinarily inadequate.” (Ibid., Nixon Presidential Materials, NSC Files, Country Files, Box 797, Latin America, Venezuela, Vol. 2, 1972–) In a May 3 memorandum to Scowcroft, Low agreed that “State’s reaction to the Venezuelan statement was slow and their outgoing instruction was indeed weak,” and he transmitted a draft reply to Flanigan. (Ibid.)

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