593. Memorandum From the Director of the Office of International Resources (Armstrong) to the Deputy Director of the Office of South American Affairs (Sanders)1
SUBJECT
- Venezuelan Participation in Arab League Oil Congress
Our reaction has been requested in regard to the significance of the invitation extended to Venezuela by the Arab League to participate in an Oil Congress to be held in Cairo in February and the probable acceptance of that invitation by Venezuela.
We have little to go on in appraising this situation; it is interesting that the first and the most constructive report of the meeting should have originated with the Canadian Ambassador in Caracas. The plans for the Congress have, however, been in hand for a number of months. It would appear that the Congress is intended [Page 1163] to have the character of an International Exposition as well as that of a study conference. At least three oil companies operating in the Middle East—Aramco, Gulf and British Petroleum—have been invited to attend and to present exhibits; of these, we know that Aramco has accepted.
The invitation to Venezuela should not have come to us as an entire surprise. Venezuela and the Middle Eastern countries are not utter strangers to one another. We recall that a Venezuelan “team” visited several of the Middle East countries in about 1950. The commonly accepted explanation for this trip was that the Venezuelans were “selling” the 50-50 concept to the Middle East and were thereby reducing the competitive advantage which low-cost Middle East oil would have vis-à-vis Venezuelan oil. Sheik Aldullah Tariki, the Saudi Arabian Director of Petroleum Affairs, participated in the National Petroleum Convention which Venezuela sponsored in Caracas in 1951, and he again visited Venezuela in 1956.
Our first instinct in regard to the Arab Congress, and Venezuela’s participation in it, would be to avoid any outward indication of alarm. It could be surmised that the objectives of the Arab participants—whatever they may be—would be served by more, rather than less, attention.
Secondly, we would feel that we should rest assured that the presence of Dr. Perez de la Cova is a factor on our side. He is a very competent petroleum economist and government official. It is inconceivable to us that he would permit Venezuela to be drawn into any schemes which would be broadly deleterious to the best interests of the oil industry—an industry which is well known to and appreciated by the Venezuelans in all of its ramifications, but about which many Middle Eastern officials have only the most vague notions.
The Venezuelans are in an incomparably better position to take over the petroleum industry in their country and to run it successfully, than are the Middle Eastern governments. Yet they have not done so; to the contrary they continue to exercise an admirable restraint and moderation in their administration of the industry. Venezuelans take pride in claiming authorship of the 50-50 concept; there is no evidence that they are themselves out to break that formula and it would not be reasonable for them to wish to see it broken or discarded by the Middle Eastern countries on a unilateral basis.
It would seem likely that we could at this point give credence to the Embassy’s statement that the Venezuelans are attending the [Page 1164] Congress reluctantly, and in the capacity of observers.2 Furthermore, it would in any event be unwise for the United States to intervene in any way. Venezuela and the Middle East countries are all sovereign states, and would sharply resent any advice from us.
- Source: Department of State, Central Files, 886.2553/11–1957. Confidential. Drafted by Minter R. Rutherford of the Fuels Division, Office of International Resources.↩
- Reference is to despatch 255 from Caracas, October 21, which reported that the Embassy had learned that the Venezuelan Government would rather not attend, but had received a formal invitation. (Ibid., 886.2553/10–2157)↩