822.796/345

The Chargé in Ecuador ( Drew ) to the Secretary of State

No. 1775

Sir: I have the honor to refer to the Department’s telegram No. 63 of April 19, 4 p.m., with regard to the suspension of sales of aviation gasoline to Sedta by the International Petroleum Company.

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On May 3 the International Petroleum Company informed its Ecuadoran representative, Mr. Raul Cucalón, that no further deliveries would be made to Sedta in view of instructions received from the Government of Canada. This information was apparently transmitted to Sedta and has been published in local newspapers. One article reported a statement by the Sedta office that it was aware of the suspension of future sales by the International Petroleum Company, but that it had made arrangements to obtain gasoline from other sources. The Sedta office indicated that its traffic in Ecuador would not be interrupted.

In recent conversations with the Minister of Foreign Affairs I have informally brought up the question of the elimination of Sedta. He has consistently replied that this could readily be accomplished by shutting off sales of aviation gasoline from Peru. The Department will also recall that President Arroyo del Río indicated to a Panagra representative that this was the logical way to eliminate Sedta. While neither of these officials has indicated that they would not be disposed to seek other means for the elimination of Sedta in the event that the shutting off of gasoline supplies does not prove effective, there is no doubt in my mind that our objective will be greatly facilitated if that company is obliged to suspend or reduce its services for lack of fuel.

The statement of the Sedta office that it has made arrangements to obtain gasoline from other sources is probably largely bluff. However, it is not impossible that they may have uncovered some source of supply of which we are not aware. The first possibility which occurs to me is Japan. Japanese vessels call in Ecuador from time to time, and if sufficient pressure from Germany were applied it is not inconceivable that Japan might be willing to supply the few hundred drums per month which would be adequate to permit Sedta to operate its full schedule. I understand that strenuous efforts have been made by the company to obtain gasoline from Argentina. I am not acquainted with the precise situation of the refineries there, but it occurs to me that if they are dependent for the manufacture of high-test gasoline on American supplies of Ethyl compound, we might be disposed to indicate that shipments of gasoline either directly or indirectly to Sedta might prejudice the likelihood of obtaining export licenses for future shipments of Ethyl compounds.

I assume that all American manufacturers of high-test gasoline including those operating refineries in Aruba or other parts of South America have been apprized of the situation and will under no circumstances permit sales to Sedta. It might be well also to warn these companies to be alert for any orders for aviation gasoline from new or unknown customers, as Sedta might endeavor to have supplies [Page 276] released to a dummy, either in Ecuador or some other country, for subsequent resale to it.

I do not doubt that these possibilities have occurred to the Department and may have already received its consideration. In any event, I desire to emphasize that the question of the supply of aviation gasoline is the crux of the situation, and we should not overlook any possible source of supply which it is within our power to cut off.

Respectfully yours,

Gerald A. Drew