Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

566. Memorandum of a Conversation, Department of State, Washington, June 14, 1955¹

Washington, June 14, 1955

PARTICIPANTS

• Messrs. Holland, Sparks, Hilton, Atwood, Dearborn, Davis

Mr. Holland expressed his concern over reports that the Venezuelan Government is taking a more pugnacious attitude in its differences with the U.S.; that the influence and prestige of the foreign oil companies is diminishing; and particularly, that the elements in the Government who favor its intervention in business are gaining in influence.

Based on Mr. Davis’ study of the reports and despatches from Embassy Caracas, special reference was made to developments in the national steel industry (including the Caroni power project) and the petro-chemical, natural gas, oil, and aluminum industries. Brief reference was made to the factors of desire for power and graft.

Mr. Holland suggested that in order to take effective action to combat the unfavorable trend we should know who was responsible for it. It is his impression that in Venezuela possibly no more than 4 or 5 individuals determine policy of this sort and if we know what makes them act as they do we may be able to persuade them that such action is not in their best interest. After discussion of the problem the following course of action was agreed upon:

An instruction will be sent to Embassy Caracas² asking the Embassy for its views as to the key individuals in this situation and what makes them feel and act as they do as well as any other suggestions the Embassy may have to offer.³ Upon receipt of this information we will formulate our procedures. Possible lines of action would be as follows:

1) Let those appropriate key Venezuelans know that if Venezuela ceases to be identified in U.S. minds with private enterprise, Venezuela will lose the battle against oil restrictions in our next Congress. It should be made clear that it is not the State Department, but Venezuela’s friends in U.S. business and industry who decide this battle.

2) Advise key Venezuelans to use their funds, for example, to set up Venezuela’s own Eximbank which could further the industrial development of the country, rather than sinking Government funds directly in investment industry. (This would not preclude assistance by our own Eximbank). Highway development would offer a highly constructive use for Venezuelan Government funds.

3) Get our Embassy in Caracas to tell us what industries it believes will next be invaded by the Venezuelan Government and then beat the bushes here for U.S. private capital to undertake whatever industrial development is necessary along this line in Venezuela.⁴

4) In the near future an OCB paper should be worked out to serve as a guide and directive for U.S. Government policy in this field.⁵

1. Source: Department of State, Central Files, 611.31/6–1455. Confidential. Drafted by Davis.
2. Sent as instruction A–5 to Caracas, July 8. (Ibid., 611.31/7–855) The Embassy prepared a preliminary list of key Venezuelans and sent it to the Department under cover of Warren’s letter to Holland of September 15. (Ibid., Holland Files: Lot 57 D 295, Venezuela) Later, another list was drawn up in cooperation with the U.S. Information Service and transmitted in despatch 474 from Caracas, January 27, 1956. (Ibid., Central Files, 731.00/1–2756)
3. Warren commented on this subject in a series of informal letters to Holland in August and September 1956. (Ibid., Holland Files: Lot 57 D 295, Venezuela)
4. Instruction A–5 also included points 1–3.
5. Reference is to “Analysis of Internal Security Situation in Venezuela and Recommended Action,” June 13, 1956. (Department of State, OCB Files: Lot 61 D 385, Latin America) See Document 570.