FOREIGN RELATIONS, 1942, VOLUME VI



would be just and fair to the industry. He said that such negotia-
tions were proceeding on an informal basis between him and the
representatives of the various companies for some time but that no so-
lution had yet been reached. The concessions under which the com-
panies operate have been obtained over a period of years and on
the basis of various petroleum laws. They vary greatly from each
other. Royalty and tax rates are not uniform nor are exonerations
from import duties on materials needed. Dr. Manrique Pacanins
has been endeavoring to secure the agreement of the companies to
a new basic petroleum law, and new contracts for the companies, which
would establish as far as possible uniform legal and fiscal conditions
for all of the companies and for all of the concessions which they
hold. In some cases, the new contracts would be less favorable than
the old contracts and in some cases, more favorable. Dr. Manrique
Pacanins said, however, that the companies, while being extremely
affable and full of protestations of a desire to cooperate, continue to
insist on taking a legalistic approach rather than a broad approach
to the problem. For example, Mr. Lineham [Linamn.], representing
the Standard Oil of New Jersey, agreed to suspend court actions on
important matters pending the outcome of the negotiations and Dr.
Manrique Pacanins had so advised the President.'5 He learned subse-
quently, however, that the Standard Oil Company had presented an
important case to the Supreme Court for decision without mentioning
this fact to him.
  The essential reason why the negotiations have not met with success
has been that the companies do not wish to give up any of the so-called
rights which they have acquired in the past, particularly under the
Gomez 16 regime. Dr. Manrique Pacanins believes that some of the
rights the companies enjoyed would not stand a test in the courts-
he referred in this instance to one or two cases in which the oil com-
panies had been required to pay large sums of back taxes. . . . The
Government believes that under proper relationships the oil com-
panies can benefit the country greatly, and the country the oil
companies, but that a satisfactory agreement can only be worked out
in a friendly atmosphere based on a clear understanding of and sym-
pathy for each other's problems. If the companies do not recognize
their social and economic responsibilities and take a broad view of the
problem, informal negotiations lead nowhere and then court action
is the only alternative.
  Mr. Bonsal said that while this is a problem between the Govern-
ment of Venezuela and the companies, he would be untruthful if he
said this Government had no interest in it.
  15 Isaias Medina Angarita.
  '6 Juan Vicente G6mez served during the period 1909-1935 as either President
or Chief of Army.



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