Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

611.31/2–1352

Memorandum of Conversation, by Maurice M. Bernbaum of the Office of South American Affairs

secret

[Washington,] February 13, 1952.

Subject:

• Venezuelan Position on Military Equipment

• Participants: Arthur Proudfit, President, Creole Petroleum Corporation
• George Koegler, Standard Oil Company
• Ambassador Edward Sparks
• Mr. Mann
• Mr. Bernbaum

Mr. Proudfit described a recent conversation with Colonel Marcos Perez Jimenez, Venezuelan Minister of Defense and Member of the Military Junta, regarding Venezuelan-US relations. Colonel Perez Jimenez then told him of his complete dissatisfaction with the negative response of the US Government to Venezuela’s repeated orders for military equipment and expressed the opinion that the US did not really intend to furnish Venezuela with its requirements. While conceding good will toward Venezuela in the Department of State and in the US as a whole, he expressed the opinion that such good will did not apply to the present Military Government and that this situation was accordingly reflected in US indifference to the aspirations of the Military Junta for a build up of its military strength. Responding to Mr. Proudfit’s protestations that there must have been a misunderstanding, Colonel Perez Jimenez went on to say that there was no basis for any misunderstanding since Venezuelan requirements for military equipment were clearly stated and actually approved by the US Military Negotiators at the US-Venezuelan Military Staff Talks recently held at Panama. Colonel Perez Jimenez stated that he was fully aware of the limitations on the extent to which Venezuela could expand its military forces and that Venezuela would not be in a position under any circumstances to do any effective fighting outside of its own territory or, for that matter, adequately to defend the sea approaches to Venezuela. He did insist, however, on his determination to build up a force adequate to protect Venezuela’s strategic petroleum and iron ore installations. Colonel Perez Jimenez was further quoted as having stated that this question of military equipment was the most important of all outstanding problems between Venezuela and the United States. Mr. Proudfit explained this emphasis on military equipment as due largely to the pressure being exerted upon Colonel Perez Jimenez by a large number of his subordinate officers. One of them was quoted as having stated that they amount to no more than tin soldiers in the absence of the equipment necessary to make the Venezuelan army an effective fighting force. (It may clearly be inferred that Colonel Perez Jimenez considers that his most important problem is that of maintaining his prestige within the army as the basis for his continued control over the army and Venezuela as a whole. His ability to secure modern arms in adequate quantity would be a most important factor.)

Mr. Mann thanked Mr. Proudfit for this information and told him that this problem of military equipment was thoroughly understood in the Department which had been devoting a great deal of time and energy to its solution. He then described in detail the long series of misunderstandings due largely to the fact that the Venezuelan Government had not been following through with the Department of Defense on its orders for equipment. He pointed out that the list submitted by the Venezuelan Government at Panama had been submitted as an explanation of Venezuela’s aspirations and had not been supplemented by firm orders to the US Government. In those relatively limited cases in which firm orders were submitted through the Department of State, there had not been the necessary follow-through to confirm such orders after the Venezuelan Military Attaché in Washington had been apprised of the results of price and availability studies. In other words, the problem here seemed to be largely one of procedure rather than of substance which would best be solved by the appointment of capable Venezuelan personnel both in Washington and in Venezuela to formulate Venezuelan requirements and follow them through the Departments of State and Defense. Mr. Mann stated that ARA had finally determined that it would be necessary for it to furnish this service to the Venezuelan Government. The Bureau has as a result undertaken the unprecedented function of maintaining a running check list of equipment ordered by the Venezuelan Government through the Department in order that such requests might be carried through to a successful conclusion.

Mr. Mann then stated that the Venezuelan Government had little to fear from the priority situations. Although its needs for specific items of military equipment would naturally be evaluated in terms of the needs in other theaters faced with present or potential shooting wars, its priority position had recently been improved to the point where it was in a far more favorable position than most countries outside of NATO. Mr. Mann added that this was a most encouraging development in the Department of Defense which had been sponsored by State and that it should undoubtedly be reflected in a relatively smooth flow of equipment to Venezuela on the basis of orders effectively placed by that country. He pointed out, however, that it would not always be possible to grant to the Venezuelan Government the specific items of equipment when desired. He mentioned tanks as an example of equipment desired by Venezuela which was also in critical demand for Korea and the build up of essential NATO forces. He added that the Venezuelans had insisted upon the most modern models and had thus far consistently refused to accept any old models or substitutes such as armored cars which would do an equally effective job in Venezuela. He stated that the Venezuelan Military Attaché had recently been referred to the appropriate Defense authorities in the hope that a mutually satisfactory arrangement might be worked out.

Mr. Mann then referred to Venezuelan grievances over payment terms. He stated that our laws did not permit us to accede to the Venezuelan suggestion that all equipment be purchased on the basis of a 25% down payment with the remaining 75% to be paid upon delivery. We have, however, been able to work out an arrangement which was equal to the best treatment accorded any other country. Venezuelan purchases were, under this arrangement, divided into three categories:

1. Equipment already available for delivery on which payment would naturally be made immediately;

2. Equipment requiring rehabilitation or modernization—payment terms in this case would involve periodic payments on demand for the cost of rehabilitation and payment for the original value of the equipment shortly before delivery; and

3. New equipment requiring manufacture—in this case orders might be divided into two general categories: the first would involve equipment being manufactured by firms which could not finance their own operations for one reason or another and which accordingly required progressive payments as equipment was being manufactured. Since the US Government was precluded by law from financing such advances on behalf of a foreign government, these advances would have to be made by the Venezuelan Government upon demand. The other involved equipment being manufactured by firms in a position to do their own financing. In such cases the Venezuelan Government would not be required to make any payments until shortly before delivery. Mr. Mann then pointed out that this represented a tremendous cutting and elimination of red tape and appeared to constitute a most reasonable approach to the matter. It clarifed the fact that it was not the US Government which was manufacturing and selling the equipment to the Venezuelans but rather individual firms for which the US Government was in fact acting as agent.

Mr. Mann stated that the foregoing had recently been conveyed to the Ambassador¹ on one occasion and on another to the Counselor² and Military Attaché³ of the Venezuelan Embassy in the form of a memorandum⁴ and detailed oral explanation. Although hoped that this information would be passed on accurately to the Venezuelan Government, we are also furnishing it to our Embassy in Caracas which would be in a position to make certain that all was completely understood by the appropriate Venezuelan military officals.

Mr. Proudfit expressed his complete understanding of the problem being faced by the Department and approval of the manner in which it was being handled. He added that he would be delighted to pass on this information to Colonel Perez Jimenez immediately upon his return to Venezuela. In thanking Mr. Proudfit for his assistance, Mr. Mann suggested that he visit the Embassy for a thorough briefing on details before seeing Colonel Perez Jimenez. Mr. Proudfit agreed that this would be a good idea.⁵

1. Antonio Martín Araujo.
2. Aureliano Otáñez.
3. Lt. Col. Federico Schael.
4. The referenced memorandum, drafted by Mr. Davis, dated Feb. 8, 1952, is not printed (731.5 MSP/2–852).
5. In telegram 380, from Caracas, dated Mar. 2, 1952, Ambassador Warren reported that Col. Pérez Jiménez had expressed satisfaction with the recent U.S. offer to sell light tanks to Venezuela, that he raised no objection concerning the method of payment, and that his attitude had “changed completely.” (731.5 MSP/3–252)