The Rise and Fall of Petro-liberalism: United States Relations with Socialist Venezuela

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The Rise and Fall of Petro-liberalism:

United States Relations with Socialist Venezuela, 1945-1948

by .

Christopher Thomas Landau

A thesis presented to Harvard University in partial fulfillment of the requirements for the degree of Bachelor of Arts with Honors in the Department of History

Cambridge, Massachusetts, 1985

CONTENTS

Prologue...........................................................................................................................................iii

viii

Introduction...............................................

Chapter I:

Chapter II:

Chapter III:

Chapter IV:

1945:

The Socialists Emerge .......................

1946: The Politics of Education

1

....................................................

12

1947: The Politics of Ambivalence ...............................................

30

1948 (1): The Politics of Consensus...........................................44

Chapter V: 1948

(2): The

Chapter VI:1948-1949:

Politics of Paralysis...................................................... 57

A FriendshipReassessed .................................................. 65

Conclusion........................................................................................................................................ 84 Bibliography........................................................................................................................... 114

ii

PROLOGUE

There is something Venezuela and Hispanic America must know. One more blow of the kind that democracy in Our America has been suffering has been administered in Venezuela. Who directs this machine of oppression which has been unleashed on our Continent? What are we to make of the notorious presence of the Military Attache of the Embassy of a foreign power in a Caracas barracks while a coup was getting underway?... the military insurrection was not an aberration of Venezuelan politics, but one more sign that the peoples of Latin America are being prevented from affirming their fundamentally democratic characteristics, from freely developing their wealth to obtain economic independence, and from determining their own destiny.... 1 Delivering these lines upon his arrival into exile in Havana in

December of 1948, the recently-deposed President of Venezuela, Romulo Gallegos, coyly but unmistakably accused the United States of fostering

Latin American authoritarianism.

Gallegos further alleged that "the

United States is looking more towards Europe than towards the Americas,

without seeing the dangers in the Americas.

The conduct of recent

United States governments had won Hemispheric goodwill, but now this feeling is rapidly disappearing."2 Given his international stature as

statesman and intellectual, these charges were rapidly disseminated throughout the Hemisphere, even reaching into heavily-censored

Venezuela.

The Good Neighbor was dead.

Not surprisingly, the allegations reinforced tendencies among Latin

Americans to suspect the United States of pursuing imperialist

domination and bolstering reactionary elements within their countries.3 In Venezuela in particular, they contributed to a persistent belief that

iii

the United States had viewed Gallegos and his leftist Accion Democratica

party as a threat to its political and economic ascendancy, had not

cooperated with his regime, and had directed or at least supported his

ouster.4 As the United States warmed to dictators in Venezuela and throughout the Hemisphere in the 1950s, many observers read this apparent

repudiation of Franklin Roosevelt's Good Neighbor philosophy back to the end of the Second World War or denied the existence of a truly friendly

"Good Neighbor" at all.

The general assumption spread that the onset of

the Cold War, the influence of reactionary businessmen, and the

departure of liberals from the Truman administration encouraged the

United States to construct a policy favoring authoritarianism.5

Close examination of United States relations with the socialist regimes which governed Venezuela from 1945 until 1948 uncovers a much more complicated story.

Important transitions were udderway in American

foreign policy as Washington moved from regional to global power.

The

relationship with Venezuela involved many of the fundamental components of broader American6 foreign policy--support for democracy, concern

about Communism, protection of private interests, strategic-military worries, and desire for stability.

Far from proving that the United

States refused to tolerate any challenges to its hemispheric dominance in this period, the course of relations with leftist Venezuela suggests that Washington actually responded flexibly within implicit parameters. Gallegos' Havana accusations are contradicted by his own gushing

statements at of President Truman's side in the United States five months earlier.

iv

This thesis will examine why the United States, at a time of unprecedented worldwide power, developed a close relationship with Venezuelan socialists and why that relationship turned bitter by the end

of 1948.

Such outcomes were far from inevitable, given the enormous

economic and strategic American stake in Venezuela and the breadth of

the changes instituted by the new regime.

The dynamic relationship

which evolved not only challenges traditional assumptions about American attitudes towards the Hemisphere, but suggests that alternatives to the identification with conservative forces evident by the 1950s were

possible. It quickly becomes clear that no single actor developed or imposed

United States policy.

Decision-making'resulted from a continuous

interplay of bureaucratic and ideological imperatives, and different

groups--the Embassy in Caracas, the State Department, the C.I.A., the military, the White House, the oil companies, and others--had varying

amounts of input.7 Because Venezuela was not generally regarded as a major international, or even regional, actor, its affairs were handled

at middle and lower levels in the United States government, and could

thus be treated in relative isolation from broader policies. What evolved out of bureaucratic realism, strategic alarmism, democratic idealism, Hemispheric paternalism, and economic pragmatism

was a complex yet sophisticated attitude which can be characterized as petro-liberalism.8 This response to Venezuelan socialism was born out of

fear, confusion, and hope in revolutionary 1945 and grew through pragmatic accommodation into the foundation of the relationship.

Petro-liberalism was an amalgamation of progressivism and conservatism

v

applied to the three areas in which the United States approached relations with Venezuela: the economic, strategic, and political.

It

represented the attempt of a United States with essentially conservative

goals to adapt to a progressive regime.

The multiple components of this

outlook cannot realistically be isolated, for they often merged in the thinking and actions of those involved.

Petro-liberalism identified

democracy with stability, and allowed for emerging nationalism to be manipulated so as ultimately to strengthen the position of the United

States.

Exploring the roots of the petro-liberal consensus in American

policy towards Venezuela, as well as its manifestations, consequences, and decline afford valuable insight into policy-making in the early

years of the Truman administration and its attitude towards change in

Latin America.

Studying this volatile relationship is particularly interesting not

only because Venezuela has received little attention from scholars, but because 1945-1948 was a crucial period in the histories of both Venezuela and the United States.

Two conditions formed the background

for this rather unique relationship--Venezuela was a Latin American

republic, a category of nations over which North Americans perceived special responsibility, and it was the largest petroleum exporter in the world, offering tremendous economic opportunities.

United States policy

was thus characterized by tension between strong political and economic imperatives as well as between the accepted principle of

non-intervention in local politics and the urge to become involved.

While United States interest in Latin America declined during the immediate postwar years, strategic, rich, and politically complex

vi

Venezuela entered the consciousness of policy-makers as never before,

emerging as a regional leader.

As throughout the Caribbean Basin, the

United States had enormous influence in Caracas, and its actions must be viewed not only in the context of American diplomacy, but as primary

determinants of Venezuelan history.

vii

INTRODUCTION

While the United States and Venezuela established diplomatic links in the 1830s, their relationship remained distant throughout the nineteenth

century.9 As military strongmen rotated power in Caracas and devastated the interior in ceaseless feuding, Venezuela remained economically

backward and internationally insignificant.

Brief bursts of American

interest accompanied a border dispute with Great Britain over Guiana in the 1890s and a debt-settlement crisis in 1901-1902, but aside from the

Minister and a handful of businessmen in Caracas, few Americans knew or

cared about Venezuela.

Yet while Washington exhibited little interest in Caracas, precisely the reverse was true in the opposite direction, as Venezuelans accepted the United States as a regional leader and Americans as indispensable

partners in the economic development of the country.10 By 1908, when General Juan Vicente Gomez established an absolute dictatorship over Venezuela which was to last until his death twenty-seven years later, a fundamental asymmetry of interest--which continues to characterize

Venezuelan-American relations--had developed.

Ironically, Gomez' rule, a period of political and cultural retardation, marked the beginning of a dynamic era for Venezuela's

economy--the Age of Petroleum.

In the second decade of the twentieth

century, vast oil deposits were discovered in Lake Maracaibo, and Gomez and his cronies haphazardly parcelled out concessions to foreigners.

viii

Three companies quickly became dominant--Creole (an affiliate of Standard Oil of New Jersey) and Mene Grande (a Gulf Oil subsidiary), both American, shared with the Anglo-Dutch Shell almost 95% of production.

A number of smaller American firms, including Texaco,

Socony-Vacuum, Pantepec, and Atlantic, produced the remaining 5%. By 1928 Venezuela was the second-largest petroleum producer in the

world.11 Oil revolutionized its entire economy, and by the early 1930s accounted for almost 98% of export earnings, a figure which has

persisted to the present.

The oil companies thus came to exercise at

least as much influence as the government.

While they directly employed

only a small percentage of the work force, the revenue the companies

produced and the services they required provided the foundation for the entire economy, affecting the lives of millions of Venezuelans. Events in Mexico in 1938 irrevocably affected the relationship

between Venezuela and foreign investors.

By nationalizing foreign oil

properties without compensation, the Mexican government injected tension

into the atmosphere of petroleum investment.

While Venezuela indicated

little desire to emulate the move, the companies were forced to

reconsider their standing.13 When General Isaias Medina assumed the Presidency of Venezuela from

Gomez' successor in 1941, both the oil companies and the impoverished

government were eager to establish an agreement.14 In 1943, after extensive negotiations, an understanding was reached which not only guaranteed the three large companies their current holdings, but

distributed among them vast new concessions in return for a higher rate

of taxation.

ix

Progressive Venezuelans, encouraged by political liberalization in the post-Gomez years, criticized the agreement.

A fledgling socialist

party, Accion Deaiocratica, in particular, seized upon opposition to the

proposed law as a major plank of its platform.

The adecos--as the

party's adherents were known--charged Medina with selling out to

Yankee

Imperialism."15 The rubber-stamp Venezuelan Congress, though, overwhelmingly approved the law.

With United States private interests the standard-bearers of the American presence in Venezuela, the diplomatic mission played a

supportive, low-profile role.

It was not upgraded to an Embassy until

1939, when Dr. Frank Corrigan, a Roosevelt political appointee, became the first United States Ambassador to Venezuela.

During World War II,

petroleum became a vital strategic as well as economic resource, and

Venezuela, the world's largest exporter, assumed a crucial international role.

From the early 1930s, and especially during the war, the main

United States objective in Venezuela was the insurance of a reliable and

plentiful supply of oil, a goal invariably linked to continued American

control of the major companies.

As the development of the Middle

Eastern oil fields was still years in the future, the country provided

crucial supplies for the Allies.

At the war's end, Venezuela's vast

reserves were suddenly a strategic asset to the United States.

As State

Department historian Herbert Feis summarized American thinking at the

war's end, "Oil, enough oil, within our certain grasp seemed ardently

necessary to greatness and independence in the twentieth century.' 6 Reactions to the coup which brought socialists to power in Caracas must

be viewed in this context.

x

Chapter I

1945: THE SOCIALISTS EMERGE

By mid-1945, for the first time in decades, liberal civilians began

to question publicly the foundations of the Venezuelan government.

A

new party of intellectuals and workers, Accion Democratica, accused the Medina regime of insincerity and graft.

Encouraged by World War Il's

apparent mandate for change, the party called for sweeping alterations in the Venezuelan government's attitude towards the people.

It

identified with international socialism, particularly the British Labor

Party, and advocated a Marxist reorientation of Venezuela's government.

While small in numbers, Accion Democratica's leaders actively sought to promote political awareness among a people resigned to military rule. Important sectors of the military, however, also questioned the

authority of their Commander-in-Chief.

World War II injected young

officers with a desire to stamp out the prevailing laxity and corruption of the army.

The notoriously slow and arbitrary promotion process, as

well as minimal wages and living conditions, had eroded institutional

quality.

Disgusted by the political scheming of Medina's ruling clique,

reformers grew anxious to withdraw the army from active political

participation to improve professionalism and morale.2

Reports to Washington from the American Embassy in Caracas reflected the cynical attitude of most Venezuelans, complaining about Medina

without seriously questioning his legitimacy or ability to retain power.

1

2 By early 1945, sentiment within the mission had become so hostile

towards the administration that Counselor of Embassy Allan Dawson distributed a memorandum admonishing that "we should be extremely

careful in keeping from even the semblance of propagandizing for or

against the Venezuelan government.

Our job is to report impartially.

Embassy leaders did not feel Venezuelan politics were part of their natural sphere and sought to stay out, confident that the dictator's designated successor would be approved by the docile Congress.

One group within the mission, however, remained unyieldingly hostile, much like its counterparts in the Caracas barracks.

During the war, the

increasingly large staff of the military attache's office developed close links with the junior officers who ran Venezuela's armed forces and came to share their distaste for Medina.

The Attache, Colonel Henri

Luebberman, unlike most of his colleagues in Latin America, strongly advised the Pentagon not to send additional lend lease arms to

Venezuela, citing the danger that "lend lease...can easily be turned against us, particularly in the case...where a government keeps itself in power by the use of arms securred [sic] from the United States."4 In

other messages, he decried Medina's "low character, money-grubbing propensities, political ineptitude, and other faults, including personal cowardliness."5 By July, two impatient majors, Marcos Perez Jimenez and Carlos

Delgado Chalbaud, channelled the discontent of the lower levels of the armed forces into concrete plans for a coup.

They believed that

political power must be given to civilians, The choice, however, was limited to four political parties:

Medina s Democratic Venezuelan

3

Party, two factions of the Communist party, and the small but dynamic socialist Accion Democratica.

Without a better alternative, it was to the socialists that the

conspirators turned.

They offered Accion Democratica'3 leaders control

over the government which would be formed in the wake of a successful coup.

The proposal was a risk-free, for the party would hardly be

tainted if the movement failed, and the adecos accepted.6 On October 18, 1945, the officers directed simultaneous uprisings at major barracks.

Victory was assured when the rebels gained control of

the air force--much of which had been provided by the United States

under lend lease aid--to bomb loyalist strongholds and distribute

propaganda.7 Like most Venezuelans, Medina could hardly believe that a violent coup was underway.

By that evening, either from realism, lack

of nerve, or as the President claimed, "patriotic desire to avoid a civil war,"8 he surrendered and was imprisoned.

With virtually no

civilian involvement, socialist Accion Democratica, only four years old, was suddenly thrust into power.

To it fell the task of transforming a

barracks uprising into the October Revolution. The new government was designed to give Accion Democratica general

control of Venezuela while allowing the army unofficial veto power.

A

seven-member Junta would function as a plural executive until a Constitution was drawn up and free elections held.

Only two members of

the Junta were Army officers, and they were very pro-civilian.9 Another member was politically independent, while the remaining four were

adecos, including Romulo Betancourt, the designated Junta President. The new government immediately proclaimed its intention to create

democracy in Venezuela, remove the army from politics, and improve the quality of life for the masses.

Yet no one knew what to expect.

Thirty-seven year old President Betancourt had been a first-term

member of the Caracas City Council.

Dismissed by many as a fringe

leftist, he lacked the background associated with political power in Venezuela.

He had led a student revolt against Gomez in 1928, been

exiled, and had briefly joined Costa Rica's Communist Party.

Back in

Caracas after Gomez' death, he had labored to establish a socialist party, but by 1937 had once again been exiled for "Communist activity."

He did not return to Venezuela until the Medina administration s political liberalization, when he helped form Accion Democratica in

1941.

For the next four years, he worked to consolidate the party,

basing support upon industrial and agricultural workers.10

The American Embassy in Caracas, surprised by the events of October

18, spent the following days struggling to identify the rebels.

Several

of embassy officials had established contacts among Accion Democratica leaders in previous years, but the party had generally received little

attention.

When Betancourt visited Washington months earlier, he had

been virtually ignored by the State Department, and complained that the United States treated him "like a leper."11 Now that he was in control, both he and the Embassy had reason to fear and suspect one another.

Yet precisely because both sides valued the relationship between the

nations so much and worried about the future, they were determined to avoid immediate confrontation.

To the new regime, the Embassy, which

represented a government unrivaled in global power, and the companies,

which controlled the local economy, were indistinguishable.12 The

5 nervous Embassy and oil companies, for their part, perceived too great a

stake in collaborating with the government to prejudge the situation.

They waited hopefully for the Junta's moves.

Corrigan's first

communications to the State Department noted that Accion Democratica "is a left wing political party of democratic principles,

and well-intentioned, but inexperienced," leaders.

with

honest

As the new

relationship began, then, the Junta, the Embassy, and the large oil

companies all decided to exercise restraint to overcome mutual suspicions. The open-mindedness was soon rewarded, for from the start, the

insecure revolutionaries sought United States support.

When Corrigan

sent an emissary during the revolt to demand they keep trigger-happy forces from "using the Embassy as a shooting gallery,"15 the Venezuelans

publicized the visit, as if it conferred recognition and approval from the United States government.

This first interaction already hinted at

a disparity between public statements and the actual situation which

would come to characterize relations between socialist Venezuela and the

United States.

Betancourt shrewdly believed that quick action on the petroleum front would defuse concern in the United States.16 On his first day in office,

he convened the foreign oil company representatives to reassure them that the government sought cooperation.

He asked them to inform the

Embassy that it "could report" his regime contemplated no radical moves regarding oil.17 With a tenuous hold on power, Betancourt was anxious to avoid the hostility he anticipated from the companies he had once denounced as "imperialist octopi."

He thus agreed to their suggestion

6 not to tamper with the oil law of 1943.

While he pointed out that

Accion Democratica was committed to improving the condition of labor, he

stressed that he would respect all existing concessions and taxes.

Much relieved, the president of Creole, (the world's leading oil producer) promptly informed Ambassador Corrigan that he and the heads of Mene Grande and Shell were willing to "concede everything reasonable at

once instead of having measures forced on them later."19 Since Corrigan could not maintain contact with the regime before it was officially

recognized by the United States government, he was strongly influenced

by the companies' outlook.

By the 26th, he cabled the State Department

that the "anxiety of the Junta to please is almost pitiful.

Their

attitude to oil company representatives- has been cordial and conciliatory," and that "American interests have nothing more to fear

from...the Junta than a few relatively light concessions to labor."20 The Embassy tried discreetly to play up its meager contacts with

Accion Democratica.

The Cultural Attache, speaking unofficially, told

the Minister of the Interior that the Junta "had many friends in the

Embassy as individuals, from the Ambassador down...all of us were liberals and sympathized thoroughly with their program."

Embassy

officials thus presented themselves as New Dealers to the reformist

Venezuelan regime.

Since the Minister intended to proclaim his faith in

the liberalism of the United States, he responded enthusiastically.

The

Junta sought legitimacy by means of speedy recognition by the United

States government.

"We must have recognition from the United States,'

the Minister announced "to help us get back to normalcy.

recognition comes, the easier it will be for us..."21

The sooner

7 Betancourt from the start showed great skill in approaching Americans, for he instinctively understood what they wanted to hear.

He

compared Medina's government to "Tammany bossism" and insisted that "all legitimate foreign interests will be recognized and protected" (emphasis

added).22 He portrayed himself as an anti-Fascist committed to eradicating the legacy of Gomez, and he claimed that Venezuela would

be

governed as other liberal democratic nations, like the United States, by the truly representative will of the people"23 (emphasis added).

To the

foreign press, Betancourt emphasized Venezuela's "great need for foreign

capital," and assured that "the democratic tradition is safe in our hands."24 The revolution, thus, proclaimed a decidedly

anti-revolutionary attitude towards Washington.

Public opinion in the United States viewed the revolt in Caracas with guarded optimism, somewhat confused since Medina had been considered

democratic by Latin American standards.

During World War II,

Fascist-inspired coups in a number of other republics had greatly disturbed interested Americans, creating suspicion towards the uprisings

of junior officers.25 The Washington Post wrote that The program announced by the provisional President, Romulo Betancourt, sounds promising enough...if it is carried out, it should propel Venezuela further along the road to real democracy...whether Betancourt will be able to hold in check the military elements remains to be seen. Certainly it would be tragic if the progress which Venezuela has made towards a normal political life since the death of Gomez is not cont inued.2 6

In general, the American media ignored this most recent Latin American

military coup, and the unexpected twist, the delivery of power to leftist civilians, failed to excite public opinion.

8

Venezuelan events were inevitably linked with two important developments in Latin American affairs the same week--an uprising in Argentina which brought anti-American Colonel Juan Peron into power, and the confirmation of Spruille Braden as Assistant Secretary of State for

American Republics Affairs.

Peron, who had openly clashed with Braden

during the latter's tenure as Ambassador to Argentina, represented to Americans the neo-Fascist, anti-democratic forces which the war had

sought to eradicate.

His ascent was contrasted to the apparently

liberal and democratically-inclined new regime in Caracas.

The activist

Braden channelled his obsession with Peron into a broader commitment to spread democracy throughout the Hemisphere.

He emphasized the Wilsonian

strain within the Good Neighbor policy,- and consciously symbolized

Washington's dedication to get the Hemisphere in line with its worldwide democrat ic crus ade.2 7 With the public exhibiting little interest in Venezuela, the State

Department was the only branch of the government actively involved in making decisions about Venezuela at this stage.

Braden's new bureau,

American Republics Affairs, (A.R.A.) was responsible for United States policy towards the whole of Latin America, and focused some attention on

Caracas.

Within this office, the Division of North and West Coast

Affairs (N.W.C.), was more directly in charge of Venezuela.

The only

other area of the State Department which manifested a strong interest in Venezuelan affairs was the Economic Bureau, particularly through its

Petroleum Division. While the official response in the State Department to the Venezuelan revolution was cautious ("we are trying to get together all the

9 information we can"),28 a sympathetic tone emerged as reports of the Junta's pronouncements filtered in from Caracas.

The new regime's

leftist orientation never became a point of contention among the State Department officers which who controlled Latin American affairs, for

they viewed Fascism as the primary threat.

The assumption that the

American New Deal had validated moderate reform led most A.R.A. staffers to favor similar strategies throughout the Hemisphere.

Some officials

even began to picture the new regime as a harbinger of the democratic

trend the United States was trying to sponsor around the globe.

In a period when radical change was the norm all over the world, the State Department was not unduly concerned by events in Venezuela. Accion Democratica

"is inclined to be distrustful of this country and

is strongly opposed to big business," an A.R.A. official decided four

days after the coup, but "it is not unfriendly towards the United

States...it is generally believed within the party that nationalization of the oil industry is not practicable."29 Following the tradition of consultation over such an issue, Braden met with several Latin American envoys in Washington on October 25, assuring them that he was "favorably

impressed" by the new Junta.38 In reality, though, the future course of events in Caracas was far

from clear.

Ambassador Corrigan warned that "possibility foreseen of

eventual dissention between Army and civilian elements in Junta,"31 and Accion Democratica's background certainly did not augur a conflict-free

future.

Once fundamental assurances had been received, however, United

States policy-makers did not feel compelled to explore every possible

ramification of the coup.

10

While the oil company representatives in Venezuela had encouraged rapid recognition in the wake of the Junta's encouraging words, their

home offices proved somewhat less enthusiastic about the new regime. The Presidents of Standard and Gulf Oil proposed that the State

Department instruct Ambassador Corrigan to request a written promise of Betancourt's assurances in exchange for recognition.

A.R.A., however,

dismissed this rather undiplomatic suggestion and instead wrote Corrigan "as soon after recognition as may be convenient... to thank Sehor

Betancourt for assurances mentioned."32 The small oil companies had never never approved of the 1943 oil law,

and viewed the coup as an opportunity to encourage change in Venezuelan oil policy.

They did not share the inclination of the large companies

to appease the government, and opposed an early recognition.

William F.

Buckley, President of Pantepec Oil Company, cabled Secretary of State

James Byrnes to defer recognition of the Junta until pledges were made

to revise the "burdensome" law, which had been accepted "under

compulsion by the Venezuelan government and our State Department."

"if

recognition is accorded without a clear understanding on the oil law, ' Buckley warned, there will follow agitation and attempts to invade the property rights of American oil interests, which the American government will be powerless to withstand since after recognition the Venezuelan government will give little or no consideration to representations by the State Department.3 3

Buckley's telegram was carefully filed away. Although the United States waited several more days before extending

recognition, the decision was never seriously questioned.

For while the

coup had been unexpected, the new regime seemed to represent all that

11 the Department of State hoped for in the governments emerging throughout

the world in 1945--a "sane" nationalism, liberal and apparently deferential towards United States.

The prospect of United States

business interests being harmed did not worry officials as long as the threat was not too serious.

On October 27, Ambassador Corrigan was

instructed to deliver a note of recognition to the Junta on October 30. Without much deliberation, the United States government had accepted the

socialist challenge.

Chapter II

1946: THE POLITICS OF EDUCATION

The Junta's first year constituted a period of learning both for the leaders of Venezuela and for Americans.

The Embassy, major oil

companies, and the Junta regime all wanted to cooperate, but perceived that they were making sacrifices to do so, and thus a tense relationship evolved under a facade of amity.

The advent of the socialist regime in

a country where Americans had such extensive interests caused them to

re-evaluate their economic, strategic, and political aims, and the

petro-liberal approach developed.

While pursuing a course radical in relation to the rest of Venezuelan history, the Junta continued through 1946 the strategy of conciliating the United States which it had adopted in the uncertain days following the coup.

Pleased by the positive reaction of the American government

and large oil companies, Betancourt made friendly relations a foundation of his government.

He craved United States support to undermine

conservative opposition, as well as to gain international prestige and possibly material benefits.1 He consulted closely with the Embassy on a broad range of issues, in effect transforming it into a major political

actor.

Yet the Betancourt regime remained fundamentally socialist, and was committed to overhauling Venezuela into a nationalist welfare state, which by necessity would require infringing upon the overwhelming

12

13 American presence.

Adecos

envisioned a dominant role for the state in

development and industrialization, for Venezuela was a

semicolonial,

semifeudal country, a country tied to economic, fiscal, and political

imperialism."2 Despite their desire to attract capital, they proposed a reorientation of the economy along nationalist lines, whereby foreign investment would no longer support the entire system. With ambitious programs and a urge to build up popular support

rapidly, Betancourt's government moved in all directions at once. Miraflores became a "decree machine" as radical reforms were instituted in education, public health, land distribution, government

administration, and social welfare.

to enact its plans.

Naturally, the regime needed money

The obvious, and perhaps only, means of financing

its domestic policies was to revise the relationship with the foreign oil companies, which contributed sixty percent of government revenue.

The architect of the government's oil policy, Minister of Development Juan Pablo Perez Alfonzo, envisioned a fifty-fifty split of profits with

the companies as the government's fundamental goal.

He rejected the

company-sponsored notions that oil was a buyer's market, that Venezuela

could not affect prices, and that the government and the companies held

identical interests.

(Fourteen years later, he was to be the driving

force behind the formation of a producer's association, OPEC.)3 Perez Alfonzo's doctrines were considered extremely radical by both

Americans and Venezuelans.

While ideologically committed and

financially tempted to rein in the oil companies, Betancourt was

convinced that nationalization at that point would be a "suicidal leap into space."4 The United States might be alienated with unforeseeable

14

consequences, and in fact, few Venezuelans understood the industry in detail.

Betancourt He downplayed the potential for conflict with the

companies, publicly proclaiming that they "have a conciliatory outlook, and a desire for an understanding with the Government.

Nevertheless, the regime began to move "in a piecemeal fashion to

establish the framework for a system of petroleum development that would

ultimately replace the foreign concessions."6 In December, 1945, the

Junta imposed a retroactive windfall profits tax on the companies set to bring in almost $30,000,000 in revenue.

The regime exhorted them to

build refineries within Venezuela (most oil was refined in the nearby

Netherlands Antilles), and to undertake internal improvements--building

roads and pipelines and widening the entrance to Lake Maracaibo. industries, the adecos

In all

encouraged unionization (over 500 unions were

formed in 1946 alone), and sponsored negotiations which provided workers with greater wages and benefits.7 While the government claimed that

these were merely "suggestions," most executives believed they would

ultimately be forced to undertake these projects if they failed to do so

"voluntarily." The socialists combined these moves with expressions of support for

the principles of economic nationalism.

Accion Democratica

called for

"a progressive increase in purely Venezuelan production," and protection...for national industries."

customs

It asserted that the government

should assure "an increasingly equitable participation by Venezuela in the enjoyment of its natural sources of wealth managed by foreign capital."8 The regime announced an intention to create a National

Economic Council to formulate coherent plans and a Venezuelan

15 Development Corporation to bring the state actively into the field of

economic development.

Even the establishment of a national oil company

was envisioned as a first step towards control over the vital non-renewable resource.

These economic policies, not surprisingly, distressed virtually all the Americans involved--the oil companies and other businesses as well as the Embassy in Caracas and the State Department.

Economic

nationalism was regarded as a major threat, not only on a material level, but on the level of ideology--Americans believed that protectionism had contributed to the Depression and War, and saw free trade and low customs barriers as foundations for postwar stability and

prosperity.

They insisted self-righteously that infusions of capital

and technological assistance would help Venezuela, and that choking off

American profits would lead the government to hurt itself as much as the

United States. Nevertheless, relations between the two nations remained friendly

through 1946, for the Junta offset its curtailment of foreign economic

interests with a conciliatory approach towards the United States government.

The Junta's conduct, thus, never became controversial in

the United States, and Ambassador Corrigan retained enormous leverage in

setting the American reaction.

While he hardly approved of the regime's

economic policies, he declined to respond to the challenge with threats,

and instead patiently sought to channel Betancourt's deliberate friendliness to the advantage of the United States.

For while economics formed a crucial part of the relationship, Corrigan was also deeply concerned with political and strategic factors.

16 Since the regime was popular, and Corrigan believed it had a good chance

of retaining power, he sought to maintain dialogue and keep relations at least superficially warm.

Strategic imperatives indicated the wisdom of

a policy of conciliation.

The United States needed a steady and

reliable source of petroleum in Venezuela, and a feud between the two governments or between the Junta and the oil companies could imperil

production.

The Ambassador sympathized with the regime's political

goals, and sought to protect the United States' essentially conservative

interests by cooperating with the progressives.

Venezuelan liberalism

was fine, but it should be swayed not to impair the vital American petroleum interests.

This was the core of the petro-liberal

approach--the conviction that cooperation with the socialist regime

could ultimately benefit the United States, and that by provoking confrontation, all would lose.

Indeed, the tags "liberal" and

"conservative" exercised little importance at this juncture.

Corrigan

consulted closely with Betancourt, developing a much more intimate relationship with this government than he had enjoyed with its

conservative predecessors. For the first time, an ideological factor entered American-Venezuelan

ties, and the encouragement of democratic development became a major dimension of Corrigan's approach.

He was heartened by the democratic

orientation of the new government, a remarkable departure from the rest

of Venezuelan history.

The Ambassador was willing to make economic

concessions to assist the regime's consolidation, and through 1946 he perceived that he was making a liberal trade-off between economic and

political objectives.

The result was a dynamic interplay of cooperation

17 and conflict, not only between Venezuela and the United States, but

among Americans. The Embassy was by no means a unilateral bloc.

By March, the

Commercial Attache, Charles Knox, complained to Ambassador Corrigan that

"within the Mission there is an increasing tendency on the part of some staff officers to be highly, and vociferously, critical of the economic policy of the present regime."

He stressed that Betancourt had been as

reasonable and moderate as could be expected, mentioning the Junta's openness to advice from the Embassy and pointing out that the situation was not dissimilar from "that which is going on in the United States at the present time."9 Pro-Junta Counselor Dawson ratified this memorandum, stating that

"the problems are not really our business but we have tried to help [the

regime] unselfishly."10 Ambassador Corrigan, though he was pleased by the regime's political character, was, nevertheless, disturbed by the

emergence of economic nationalism, "I must still disagree with cheap demagogy," he annotated Knox's memorandum, "it all adds up to being a

good time to mind our own business and hope for the best."11 Yet the Embassy could not escape from involvement in the economic controversies, for it perceived as part of its business the protection of American

interests. The temptation to become engaged in Venezuelan politics was great.

With a vacuum of authority in Caracas, both the leaders of the

revolutionary regime and its conservative opposition looked to Americans

for guidance and support.

After loudly proclaiming non-interventionism,

Embassy officials proceeded to influence the regime to benefit the

18

United States.

Yet they did not see promotion of their interests as

inherently inimical to the liberal spirit--the United States desired oil

and fought economic nationalism to defend democracy and to help Venezuela.

The major oil companies adopted the same conciliatory approach towards the leftist regime as did Ambassador Corrigan.

Creole, the

industry giant, (tagged by Fortune as "perhaps the most important outpost of U.S. capital and know-how abroad")12 had made tremendous

profits in previous years and had long since amortized its original

investment.

Its president, Arthur Proudfit, was the quintessential

petro-liberal.

He had worked in Venezuela since the first oil fields

were developed, understood local attitudes and aspirations, and

sympathized with Accion Democratica's social programs.

He was convinced

that the industry must cooperate with the regime, and that conciliating the socialists would defuse the more alarming threat from Communists and

other hard-line anti-American elements.

He worried about the effects of

economic nationalism, but instead of using threats, he complied

gracefully and tried to convince the regime that such policies were not in its long-term interests..13 Proudfit enjoyed close ties to the United States government, and his

views on a broad spectrum of Venezuelan issues were frequently both

sought and expressed.

The similarity between his outlook and that of

Corrigan is probably not coincidental.

He called at the Embassy often,

and had developed a close relationship with the Ambassador.14 Proudfit also frequently visited Washington to brief an Assistant Secretary or

Undersecretary of State.

Far from forming an unholy alliance against

19 Betancourt; the oil executive practically served as the Junta's

lobbyist, presenting its views on a range of issues independent of petroleum.

While Corrigan wrote the State Department shortly after the coup that

"so long as relations between oil companies and Junta are good, I feel that Embassy should keep out of forefront of oil picture,"15 he quickly

assumed an active role when this relationship was brought into question. As conflict arose in 1946, he indicated a desire to fulfill a role

similar to that of the United States government in the New Deal--an "honest broker" between capital (the companies) and labor (the

Venezuelan regime).16 He considered it vital to avoid serious controversy which might lead to a curtailment of production damaging to

both sides and to the economic and military security of the United

States.

While Corrigan thus believed he should maintain a neutral

attitude, he also perceived that his job mandated responsibility for the

companies, and he defended their interests more forcefully than his statements would indicate. Not all Americans with economic interests in Venezuela were as

flexible as Proudfit.

The small companies had very different stakes,

and resented the Creole president's unofficial role as industry

spokesman.

The Junta had frozen the distribution of oil concessions, a

policy which hardly hurt the large companies busily exploring the generous 1943 grants, but one which threatened to ruin the smaller

companies which were looking forward to expansion.

With much smaller

profits, concessions and starting-up costs, the newcomers to the

Venezuelan petroleum scene rejected appeasement of Accion Democratica.

20

As Corrigan wrote the State Department, "oil companies other than

profit-fat Creole seem inclined to let the future take care of itself,

but knowing what is in Accion Democratica minds, Proudfit refuses to

adopt an ostrich-like attitude."17 Most American businessmen in Venezuela, in fact, remained unconvinced

by the Junta's assurances.

They grew increasingly hostile towards

Betancourt in 1946, unnerved by his domestic radicalism and support for labor.

In mid-July, fifty representatives of companies from General

Motors to Proctor & Gamble sent a letter to Ambassador Corrigan complaining that the regime was ruining them.

They warned that

Betancourt, cooperating with the Soviet Embassy, was encouraging the

growth of the Communist Party. The publication of this letter not surprisingly provoked an uproar in

Caracas.

Venezuelan distrust and resentment of United States economic

domination, latent at all social levels, briefly exploded.

The leader

of Venezuela's Communists indignantly declared that the estimation of his strength was far too optimistic.

Betancourt, however, dismissed the

affair, stressing the "interdependence" which his government had

established with foreign business.

While the incident blew over

quickly, it revealed the potential for trouble in the fragile relationship.18 As if to demonstrate his good intentions towards United States

capitalism, Betancourt developed a close relationship with the epitome of the American financial establishment, Nelson Rockefeller.19 In early 1946, when Rockefeller visited Venezuela, Betancourt proposed a number of ventures, including a supermarket chain, a dairy industry, and

21 fishing projects.

The American set up the Venezuelan Basic Economy

Corporation (VBEC), to supervise these projects and others.

Many

Venezuelan businessmen were alienated, claiming they were victims of

their own government's attempts to appease the United States.

But

Betancourt successfully played up these ties (and Rockefeller s valuable connections in American public and private circles) to demonstrate his sympathy for free enterprise and foreign capital.

The well-publicized

Betancourt-Rockefeller links symbolize the flexibility possible in relations between the United States and the socialist regime.

Betancourt furthermore cooperated enthusiastically with the United States on matters which were relatively painless for him to pursue.

He

liquidated the formerly pro-Nazi German -interests which the Medina

government had been slow to dismantle.

On international issues, he

followed the American line closely, partly out of sympathy for the

United States' aims to support democracy worldwide, and partly to win the American goodwill which his domestic program threatened.

He

supported United States policies in Europe and Asia, its position against the Soviet Union, and Braden’s crusade against Peron.21

Thus, while economic matters dominated the bilateral agenda, civilian Embassy officials still had a basis for enthusiasm towards the

democratic ideals of the Junta.

In February, Counselor Dawson wrote

Washington that

while the present Venezuelan government has taken steps adversely affecting American business interests, its economic measures are result of nationalistic and soak-the-rich complex, not anti-Americanism per se. It feels these are popular steps of help to it in forthcoming elections at which illiterates will vote. Junta has been friendly to our international policies. There are lots of things wrong with the Junta including its slowness in reestablishing constitutional government, but it is

22

nonetheless a better and friendlier government than most in Latin America.22 There was a belief, then, that the Embassy should tolerate the inconveniences of economic nationalism and persistent political instability in return for moves towards democratization.

Embassy

officials were not unduly disturbed by the dichotomy between the superficial friendliness of relations and the tension which actually

plagued ties. such a game.

Indeed, they proved perfectly willing to play along in Far from being alienated by Venezuela's new socialism, the

officials considered it a challenge, and attempted to transform it into an asset.

They defended the regime within the United States government,

constantly identifying it with Britain's Labor government, with which the United States was then cooperating closely.

This analogy, however,

was somewhat forced, for traditional United States hegemony in Venezuela

hardly reflected the relationship with Great Britain. The Embassy even intervened directly in Venezuelan politics to bolster the Junta.

In July of 1946, rumors that conservative

ex-President Eleazar Lopez Contreras contemplated launching a

counter-revolution motivated Betancourt to ask Corrigan to intercede. The Junta claimed the old General had received biased information

regarding its activities, and warned that his plans might lead to a

civil war.

In making such a request, the Junta obviously considered the

Ambassador to be an ally, and Corrigan immediately agreed to help.

He

viewed the entire affair as a "family matter," and wanted to prevent a civil war damaging to all.

He sent Allan Dawson to Colombia to talk to

Lopez Contreras, explaining to the concerned State Department that "this

Embassy is in the best possible position to act as a friend of both

23 parties in the matter."23 By defusing the threat from rebellious

conservatives, the United States actually allowed the socialist Junta to consolidate.

Not all of the opposition to the regime came from exiles, however.

The Venezuelan army's uneasiness at the volatile political situation and distrust of Accion Democratica led to coup rumors by March of 1946.

In

April, a First Secretary of the Embassy cabled Washington that the army

wanted to take over, "being disgusted with the situation existing.

Two

things worry the army, 1) bloodshed and 2) the question of recognition by the United States."24 While the United States policy was developed in

an ad hoc fashion, it averted the danger to the Junta from the

Venezuelan right.

In the unsettled atmosphere of Venezuelan politics, Betancourt was

compelled to conciliate his own army.25 When military leaders informed him they wanted part of the United States postwar arms surplus and an American military Ground Mission, he felt obliged to comply.

If

Betancourt were to maintain a credible image of United States support,

he would have to produce some tangible results of American goodwill.

He

stressed to the Embassy that a plentiful shipment of arms and a good training mission from the democratic United States would provide

Venezuelan soldiers with a model, keeping them out of politics and strengthening the regime materially and psychologically.

Yet the issue

of military supplies sparked controversy between the two nations as well as within the United States government.

Despite the distrust of Accion Democratica, the United States

military supported the Junta's requests, for it believed that

24

strengthening the Army would bolster pro-American elements.

The Army

Attache warned that Venezuela might seek arms from Europe or Canada if the United States denied them, a move which would undermine an arms

standardization program envisioned as the basis of Inter-American defense cooperation.

American officers consulted closely with their

Venezuelan colleagues, advising them on how much of what to order and describing the benefits of training with an American mission.

Officials in A.R.A. proved far less enthusiastic than the American military about providing unstable Venezuela with increased weaponry and military missions.

They feared that the aid would be manipulated for

the wrong ends, strengthening "the hand of whoever controls the planes."26 While Corrigan and Dawson acknowledged a need for the equipment, they warned that its arrival in the prevailing tense

atmosphere "might encourage the setting up of a military dictatorship."27 Corrigan wanted to delay sending potent offensive

weapons until a freely elected constitutional government had been established.

Afraid of sparking a regional arms race by supplying

different countries with more weapons than others, A.R.A. wanted to delay delivery until after the Rio Inter-American Conference scheduled

for the following year, "which, it is to be hoped, will lessen the desire for such equipment."28 The Pentagon's allocation of weapons for Venezuela was therefore slashed and delivery postponed.

By late 1946, A.R.A. officials shifted their emphasis, worrying about the economic and political ramifications of the delays they had

encouraged.

The Chief of N.W.C. wrote Corrigan, "I feel that I should

stress that in the light of developments in the Russian situation it

25

would be extremely unwise for us to risk irritating the Venezuelan Government to the point where they might take an unfriendly position with regard to our oil companies."29 Ultimately, the Venezuelans

received about half the weapons they had requested, and the military missions were established late in 1946.

Venezuelan requests for non-military supplies also led to

bureaucratic conflict in the United States.

To fulfill his social

promises and to foster industrialization, Betancourt desperately needed

foodstuffs, iron, and steel.

Despite some intercessions by A.R.A., the

Commerce Department, attempting to meet heavy global demand in the wake of the war, did not give the requests very high priority. In June of 1946, Betancourt confided to liberal American labor leader

Serafino Romualdi that "reactionary influences" in the United States had "greatly slowed down to an insignificant trickle the export from the

United States of war surplus farm implements and machinery."30 Venezuelan frustration and confusion at not receiving the desired

supplies fueled mistrust until American shortages eased in 1947. While the "reactionary" forces to which Betancourt referred were in reality only Commerce Department officials worried about shortages of

machinery in Europe, there was a sector of the United States government increasingly hostile to his regime.

The military, both in the War

Department and the Attache's Office in Caracas, had little sympathy for Accion Democratica, and took an increasingly interventionist stance through 1946.

Primarily interested in assuring access to the country's

oil, the military assumed the role of champion of American private enterprise overseas.

Lacking the commitment to democracy and

26 conciliation of Ambassador Corrigan and Arthur Proudfit, it saw the

leftist regime as a grave threat to the American national interest.

The

Attaches exaggerated the danger of the unstable political situation, the

conflict between the government and the oil companies, and the growth of Communist subversion.

While Colonel Luebberman in late 1945 had claimed only that "Betancourt is equally as radical as the Communists,"31 by April of 1946, the Acting Military Attache, Colonel Gordon Wagner, was branding the President a "Trotskyite," and dwelling on his Communist past.

Betancourt "follows the exact methods used in the Soviet Union," Wagner cabled the War Department, and soon "Accion Democratica will at least

form a partnership and working agreement-with the Communists, both parties following an identical course."33 Betancourt's current moderation was pictured as an opportunistic ruse to fool the United

States "for fear of the possible action of Assistant Secretary Spruille

Braden," while the Communist Party was being readied for power.34 The

War Department soon became a nucleus of anti-Junta rumors, receiving reports from various sources of abductions, assassinations, and

terrorism by the Venezuelan regime.35

These reports, not surprisingly, unnerved readers.

Robert Patterson,

Secretary of War, wrote Secretary of State James Brynes in June of 1946 that

it is reported that the oil companies feel that the United States Government representatives are not taking necessary steps to counteract Soviet influence [in Venezuela] and that the United States Government's representatives will not back them in a strong stand against the unreasonable and impossible demands of the unions.36

27

Proudfit would have dismissed such a statement, although the small oil

companies did desire a stronger American government stand against

Betancourt.

coApich Civilian^-militaryvwithin the Embassy in Caracas had been mounting throughout the year.

Charge Dawson affirmed that the Military Attache's

telegrams presented a biased and inaccurate representation of the

situation "typical of his hysteria, lack of judgment and failure to consult Embassy in times of stress."37 He successfully lobbied

Ambassador Corrigan to replace Colonel Luebberman, who "does not know enough to separate the wheat from the chaff,"38 but Acting Military Attache Wagner was even more virulently anti-Junta.

His wild

accusations eventually reached Betancourt, and the President asked Corrigan to transfer him. The mid-level State Department career Latin Americanists were

horrified by Wagner's attitude, for they still clung to the Good Neighbor rhetoric of the 1930s, even at the height of Spruille Braden's Hemispheric crusade for democracy.

A May N.W.C. memorandum about Wagner

revealed the State Department's views: "He thinks we should inform

American oil companies where to hold the line against excessive labor demands, and take a firm hand to stabilize the political situation in

that country.

I fear he will not be easily persuaded that we do have a

policy for the Betancourt regime, and that that policy involves such a

thing as non-intervention in the internal affairs of that country."33 Yet suspicion of the Venezuelan socialists was established in the

United States government.

No single incident was responsible for

increasing misgivings about the Caracas regime; they simply accumulated

28

through the year within the American bureaucracy.

Many

factors--economic nationalism, failure to move rapidly towards

democracy, unease with Accion Democratica's radical domestic programs, military alienation--led towards an unmistakable drift of relations from warm to correct.

As the political situation in Venezuela failed to

stabilize despite the elections for the Constituent Assembly in October, 1946, Ambassador Corrigan cooled towards the regime in private, while

still maintaining cordial relations with its leaders.

Notwithstanding Betancourt's efforts and the cooperation established with the Embassy, Venezuelan opposition forces, both civilian and

military, never identified the United States with the radical regime.40

They sought to exacerbate American distrust of Accion Democratica and instill doubt over the party's intentions.

The opposition apparently

met with some success, as the political situation bogged down by late 1946, and Embassy telegrams began to question the sincerity of the

Junta's commitment to democracy.

Those championing its democratic

orientation, such as Counselor Dawson, found themselves on the defensive

and felt obliged to concede the regime's faults.

Events in December of 1946 seemed to crystallize these changes. Despite the government's claim that the excess profits tax of the

previous year would be a one-time affair, it imposed a new tax on the oil industry.

Proudfit, the Embassy, and the local American business

community were angered, and they wondered if indeed Betancourt had been

insincere all along. At the same time, several young Venezuelan officers staged an

uprising which nearly toppled the government.

The persistent

29

instability of Accion Democratica was underscored.

After a year of

constant upheaval, rumors, and conflict, the future seemed more

uncertain than ever. In the first week of 1947, Betancourt mentioned to Charge Thomas

Maleady "he [Betancourt] is [a] realist and aware [the United States]

may have no particular sympathy for him personally or even as head of government, but he felt sure we do not approve civil war, this for

loftier reasons than that we need Venezuelan oil."*1 Even liberal Venezuelans, thus, seemed willing to believe their worst suspicions of the United States, despite Washington's assurances and progressive rhetoric.

The learning process was more complicated than expected.

Chapter III 1947: THE POLITICS OF AMBIVALENCE

The normally sedate Venezuelan Constituent Assembly witnessed a dramatic confrontation in early 1947.

A Communist Assemblyman, Juan

Bautista Fuenmayor, attacked the United States, charging "Yankee Imperialists" with supporting ex-President Lopez Contreras as part of a reactionary "Truman Plan" in Latin America.

Suddenly there was a

commotion in the balcony and Ambassador Frank Corrigan noisily stalked out.

The Assembly thereupon burst into appreciative applause, and its

President hurried to escort the Ambassador to his car.1 Corrigan's presence at the session as well as his abrupt departure and the reaction it provoked are symbolic of United States relations

with Venezuela during the Junta's second year.

The United States

continued to be actively involved in Venezuelan politics, nurturing democratization.

Yet there were limits on the extent to which the

superpower was willing to tolerate elements within that democratic

process which it perceived as threats.

While Accion Democratica was

highly sensitive to United States attitudes, its actions did not always

agree with American objectives.

While 1946 had been a year of dynamic

adaptation in the relationship between a liberal giant and a regime of

pragmatic socialists, 1947 marked a consolidation of petro-liberal trends and a shift in concerns.

Both sides had become accustomed to

compromise and much of the initial apprehension had eased, but

30

31

increasing American concern with Communism and the Juntas growing self-confidence changed the tone of the relationship.

The United States

had learned to live with a radical regime, but that relationship

remained fundamentally unstable. In attempting to overhaul Venezuela in one year, the Junta had gained

the enmity of numerous domestic sectors and had lost much of its initial

appeal.2 The Assembly, mired in the task of writing a constitution, had become identified with past rubber-stamp Congresses.

The government's

increased social spending had set prices on an inflationary spiral, stripping many workers of new bonuses.

The Junta suspended

constitutional guarantees in mid-1947, tacitly acknowledging the

limitations of idealistic democracy in a-climate of uncertainty.3

Amidst this discontent, American disillusionment with Accion Democratica increased.

Since no crises between the nations erupted,

however, the Embassy in Caracas retained almost exclusive control over relations.

Enthusiasm for the regime's democratic orientation faded as

the Presidential election was postponed.

Embassy officials worried over

the Junta's capacity to provide stability as they began to believe many

of the rumors spread by the opposition.

Telegrams to the State

Department in early 1947 assumed, for instance, that Accion Democratica

was stockpiling arms and organizing clandestine civilian militias.

Corrigan speculated that perhaps "the right hand knoweth not what the left hand doeth;"4 suspecting members of Accion Democratica were acting without the Junta's authorization.

As Corrigan grew uneasy about Accion Democratica through early 1947, he informed the State Department that he was trying to extricate himself

32

from the political situation.

Yet the United States was so deeply

involved in Venezuela that absolute non-intervention was unthinkable.

The Ambassador could not overlook the importance of American strategic

and material interests in Venezuela, and he was well aware of the importance which the Venezuelans themselves assigned to American attitudes.

Non-intervention in Venezuela would have defied many factors

which encouraged involvement.

Corrigan resolved this dilemma by masking

significant involvement in local politics under proclamations of non-intervent ion.

"it is disheartening," Corrigan wrote the State Department in early 1947, "to look at the picture and see preventable chaos develop without being able to do anything about it."

While the Ambassador acknowledged

the constraints that he faced, he was both committed and expected to fulfill an active role.

"Although it is not our responsibility," he

continued, "we cannot ignore the fact that the evil consequences of a civil war place our people in danger and will undoubtedly have serious effects upon our very great economic, strategic and political interests in this area"5 (emphasis added).

The United States had no option other

than intervention. The Embassy decided that Venezuela's democracy could best be

strengthened by a centrist, two-party system.6 Throughout 1947,

Ambassador Corrigan worried about the failure of conservative parties to agree on a candidate for President, lest the Communists emerge as Accion Democratica's only serious rival.

When Betancourt's conservative

Foreign Minister resigned to protest Accion Democratica's radical domestic policies, Corrigan hoped that he intended to run for the

33 Presidency.7 When he failed to enter the race, the Embassy encouraged the new conservative Catholic party, COPEI, to run a candidate.8 While

these actions seemed to suggest a challenge to Accion Democratica, their motivation was not dislike for the party, but the establishment of a

safety valve to decrease the chance of revolution. Corrigan's cautious strategy of indirect intervention mandated that

the United States avoid being manipulated by any Venezuelan sector.

Distance was established from conservative General Lopez Contreras, who was eager to visit Secretary of State Marshall and President Truman. A.R.A. and the Embassy counseled the Secretary "to take no notice...at

all,"9 stressing the enormously destabilizing impact such a meeting might have upon Venezuelan politics.

They also intervened to halt the

prosecution of the old General, implicated in an arms-smuggling plot in the United States, in order to avoid openly taking sides in domestic Venezuelan politics.10 Pursuing non-involvement required a delicate and

discreet neutrality.

When Assistant Secretary Braden acceded to a

request to meet unofficially with Lopez Contreras, he pointedly

announced he was "sure of his patriotism and that this should prevent him from indulging in any activities which were likely to disturb the tranquility of his country."11

Americans surveying the situation in Caracas in 1947 feared that the fragile Junta would be toppled by conservative forces, driving the

country into a civil war that would be bloody and inconclusive.

Most

United States policymakers assumed that in such a crisis Accion Democratica would be driven into accepting or seeking support from Communists.

The alternative to the progressive regime thus seemed to be

34

chronic instability, which would leave the United States straddled in the middle with its interests jeopardized.

While American sympathy declined, then, the United States continued to back the Junta in order to stabilize the government.

As conservative

forces within Venezuela grew increasingly assertive in early 1947, First

Secretary Thomas Maleady decided that the United States must actively bolster the insecure revolutionary government.

"Despite some faults,

the October election [for the Constituent Assembly was] conducted more

or less cleanly overall and...represents free will of people. time has come to do something"12 (emphasis added).

I feel

While the more

cautious Ambassador Corrigan added that ultimately "solution to

Venezuela's problems rests within Venezuela,"13 he recommended that the

United States government move against United States nationals smuggling arms for use against the Junta.

The Ambassador continued attempts to

mediate between Betancourt and General Lopez Contreras, but they had become irrevocably divided.14 By mid-1947, an informant told the Embassy that the Junta, subject to a possible coup from the hostile army, "has been using the argument that the present government has an excellent

standing with the United States government and with the oil companies."15 Venezuelan politics were drawing the United States into

involvement, regardless of American intentions. While the Embassy handled routine relations, the State Department occasionally intervened on important issues.

When the Assembly approved

a new constitution which allowed for the confiscation of foreign

property, A.R.A. sent an anxious telegram to Caracas.

"Profound concern

felt by Department and other agencies of this government," the message

35

read, "with respect to form new Constitution is taking, especially in regard to security of property."

It continued in a maimer revealing the

contradictions in the American attitude:

"we would be remiss in not

expressing in the most friendly and sympathetic terms our apprehension over the course events seem to be taking...please convey orally

foregoing views to President."16 When it came to safeguarding

investments, the Department was responsive, although it did not want

such interest to threaten the apparent stability which had been achieved in political relations.

While claiming to have "made every effort to

encourage United States companies to cooperate to [the] utmost with

Venezuelan authorities,"17 the disenchanted State Department was in fact

less conciliatory than Creole.

As the State Department and Embassy assumed an increasingly concerned

attitude in mid-1947, conflict with the Pentagon was defused.

The

Military Attache's Office in Caracas had been stripped of its most

outspoken officers, and had devoted itself to reorganizing the Venezuelan army.

The United States military had greater influence in

Venezuela than ever before, with the newly-established missions training

and re-equipping local forces and a record number of cadets studying in

the United States.18 A.R.A. briefed Pentagon officials on the Embassy's

close attention to Venezuelan politics, underlining its attentiveness to

military and business interests.

In July, 1947, the State Department

tried to conciliate the Pentagon by suggesting that a colonel from

military intelligence visit Caracas to evaluate the Communist threat. The emergence of Washington's obsession with Communism in 1947 to some degree altered the United States' entire foreign policy

36 perspective.

While the American military had worried about this menace

since before the end of World War II, the issue had not received a great

importance in United States relations with Latin America.

Suddenly the

strategic component of policy towards Venezuela became crucial, given the importance of its petroleum and its geopolitical preeminence in the

Caribbean.19 During 1947, the United States Embassy in Caracas elevated

the mission of eliminating Communism in Venezuela to a high priority, greatly affecting United States-Venezuelan ties.

Goodwill towards the leftist Caracas regime, however, cannot be

considered a natural casualty of the emerging global Cold War.

During

the early Cold War period, the United States had not yet equated domestic radicalism in Latin America with global Communism: progressives

and revolutionaries were not automatically targeted as enemies. Communism affected relations between the United States and Venezuela in various ways: some Americans, primarily civilians, saw Betancourt s populist liberalism as the best defense against Communism while others,

especially in the military, saw him as a fifth-columnist paving the way for Soviet control.

The Embassy believed that "the Communist Party in Venezuela is the

most important to the United States on this continent because of the importance of oil to the United States and because it has the most able leaders... though its numerical strength is not great."20 In fact, it was

estimated that in all Venezuela, the party could count on only 10,000 dedicated members. Latin American-centered Foreign Service Officers in Caracas did not

see Communism in Venezuela as part of the global Cold War, but as

37

another domestic threat to United States interests.

Non-State

Department officers in the Embassy, however, expressed far greater concern, fretting about Betancourt's inability or reluctance to crush

Communism.

"When the time comes," the Military Attache wrote in May of

1947, "the Army that hates and detests and is outspoken against Communism will take over to suppress it and therefore protect our

interests."21 The Legal Attache22 wrote in November, "the Army in

Venezuela was and continues to be anti-Communist although the government

headed by Betancourt as President of the Junta has tolerated Communism. 23 The divergent views of Americans in the Caracas Embassy about the

Communist threat reflected attitudes in Washington.

An April, 1947,

C.I.A. report endorsed by the War, Navy, and Air Force Departments

warned that "in Latin America, in particular, Soviet and Communist influence will be exerted to the utmost to destroy the influence of the United States. "2