You will recall that during the course of the visit of the Colombian Foreign Minister to Ottawa last July, Dr. Zuleta brought up the question of an exchange of diplomatic missions between Canada and Colombia. You then asked that a general review be made of our commitments to open new posts in Latin America, in order to ascertain how Dr. Zuleta's request fitted in.

2. Of those Latin-American countries with which we have not as yet exchanged missions, there remain only three to which I think we need give serious consideration: Uruguay, Colombia, and Venezuela. With Uruguay and Colombia we have already made definite commitments, whereas with Venezuela the question has been discussed without any firm promise being made on our part. The position with regard to these three countries is briefly as follows: -

I Uruguay

3. The establishment of diplomatic relations with Uruguay was approved in 1944 by the then Prime Minister after receiving an official request from the Uruguayan Government. That government was informed that "we would be glad to receive a mission from the Government of Uruguay on the understanding that we should reciprocate when circumstances permit." In April 1947 the Uruguayan government again raised the question and upon receiving an answer in similar terms proceeded with the appointment of a Minister, Dr. Cesar Momem, who presented his credentials in March 1948.

4. The case for early reciprocation can be set forth as follows:

          (a) It is now nearly two years since the Uruguayan Minister arrived in Ottawa and any further delay in reciprocation is likely to cause offence. Furthermore, it will be difficult to explain to the Uruguayan authorities our inability to reciprocate for the present either on grounds of lack of personnel or for budgetary reasons, or both, should we first exchange missions with Colombia and Venezuela.

          (b) Uruguay has a good record of democratic and progressive government, exceeding by far that of any other Latin-American country, and during the war was consistently anti-Axis in sentiment. It has always had strong sentimental ties with the United Kingdom and the Commonwealth. It has also become a home for political refugees from Argentina, and as such would be a useful post to supplement reports received from that country.

          (c) Uruguay is generally acknowledged to be, with Cuba, one of the two most important centres of communist activity in Latin America and the Soviet Legation in Montevideo the principal centre from which Communist parties in the various Latin-American countries receive their instructions, propaganda, finance, etc. A mission in this capital would therefore be valuable in attempting to keep track of such activities.

          (d) The only Canadian representative accredited to Uruguay is a Trade Commissioner who resides in Buenos Aires. His position would be greatly enhanced by according him diplomatic status in respect of Uruguay.

          (e) Canadian trade with this country has increased appreciably over the past years, as will be seen from the following figures:

In 1948, the total trade between Canada and Uruguay was greater than Canada's total trade with either Peru or Chile, with whom we already have diplomatic relations.

(f) The principal Canadian interest in Uruguay is the Royal Bank of Canada, which enjoys a good reputation in banking and commercial circles.

5. In considering the manner in which we might proceed, there are three possible courses:

         (a) Establishment of a joint mission with Argentina.

         (b) Establishment of separate post with a separate Minister, or placed initially under a Chargé d'Affaires as we did in Stockholm.

         (c) Accreditation of the Ambassador in Buenos Aires as Minister to Uruguay but with an office in Montevideo under a Charge d'Affaires, except during those periods of time when the Minister would be in Montevideo.

6. It is not felt that (a) would provide an adequate solution. When we had such a mission for Argentina and Chile, the absence of a resident officer in Santiago caused inconvenience for all concerned: The Chilean Government, the Canadian colony, the British Embassy, and the Legation itself. Moreover, when in 1944 we first agreed to an exchange of missions, we informed the Uruguayan Government that we expected to accredit the same Canadian representative to Montevideo and Buenos Aires; our intention was apparently interpreted as meaning that no office would be maintained in Montevideo and the Uruguayan Government did not view this suggestion favourably, When, in April 1947, the Uruguayan government once again raised the question, no reference was made to sharing a Head of Mission with Argentina, and shortly after Dr. Montero was appointed Minister.

7. Course (b) would, of course, be the ideal, but would involve a greater expenditure. It is estimated that a mission on this basis would cost in the neighbourhood of $50,000 annually. In addition to a Minister, the mission would require an F.S.O. I or II, two Canadian stenographers, and the usual locally engaged personnel (bilingual stenographer, messenger boy, receptionist, etc.).

8. Course (c) might provide a temporary solution, but in view of Uruguay's previous attitude it would be desirable, if you agree, to make an approach through the Uruguayan Minister here in order to ascertain whether this course would be acceptable, emphasizing that this arrangement would be but a temporary one and that for the moment it would not be possible to appoint a resident Minister. Such an arrangement, which would call for an F.S.O. Ill or IV as Charge d'Affaires (with one Canadian stenographer and locally engaged staff), it is estimated would cost approximately $32,000 annually.⁷

II Colombia

9. Colombia first requested an exchange of diplomatic missions in 1942. After receiving repeated requests, the Prime Minister agreed in November 1947 to the establishment of a Colombian diplomatic mission in Ottawa on the understanding that no assurance could be given with regard to the date of the establishment of a Canadian mission in Bogota. This invitation was communicated to the Colombian Government. A further request made in the form of a telegram from the President of Colombia to the Prime Minister was received in February, 1948 and in replying we reiterated our previous invitation and added that insofar as reciprocation was concerned, this "may prove feasible sometime in 1949". The Colombian Government took no action with regard to (his renewed invitation but apparently have not lost sight of the matter, since Dr. Zuleta raised the question in the course of his conversation with you. You replied to the effect that you hoped it would be possible for us to make arrangements to establish a mission in Bogota in the near future. Since Dr. Zuleta's visit to Ottawa, we have again been approached by him through our Ambassador in Washington. On that occasion, Mr. Wrong replied in the same vein.

10. When the question of an exchange of missions with Colombia was previously considered, it was suggested that we establish a joint mission with Venezuela. Discreet inquiries, however, revealed that Colombia and Venezuela would only be willing to share an Ambassador provided he were to reside permanently in their respective capitals. It is therefore assumed that we should only consider a separate mission in Bogota. The case for this mission may be stated as follows:

         (a) Colombia ranks as the fourth largest nation in Latin America and until recently had a good record of internal stability and democratic government. At the present moment, in common with other Latin-American nations, it is facing serious economic difficulties stemming principally from the shortage of exchange, inflation, and high living costs. However, observers are generally agreed that once these difficulties have been overcome, the country will develop rapidly and in the long run will rank next to Argentina and Brazil among the leading Latin-American republics. During the war, Colombia had a consistent anti-Axis record and was among the first South American republics to sign the United Nations Declaration.

         (b) Canada has substantial economic interests in Colombia. Canadian firms operating in this country include the Tropical Oil Company, a subsidiary of the International Petroleum Company of Toronto, the Royal Bank of Canada (four branches), the Confederation Life Assurance Company, the Pato Consolidated Gold Dredging of Vancouver, capitalized at $5,000,000, and the Nechi Consolidated Gold Dredging of Vancouver, capitalized at $4,000,000.

         (c) Canada's trade with Colombia in 1948 totalled over $16,000,000, more than double our total trade with both Chile and Peru. In this respect, Colombia ranks seventh as a Latin-American market. The Department of Trade and Commerce consider that Colombia will eventually prove a more important market for Canadian goods than Cuba, Chile and Peru. As a whole, Canada's trade with Colombia in recent years has shown a substantial increase, as the following table will show:

The principal commodity which Canada imports from Colombia is coffee. The principal Canadian exports are newsprint, aluminum products, machinery and wheat.

          (d) There are approximately 250 Canadian citizens resident in Colombia. The majority of these are employees of the firms mentioned in (b) above.

          (e) Of late, there has been a considerable increase in consular work, which in the absence of a Canadian diplomatic mission has to be handled by the British Embassy (the Trade Commissioner's office, however, handles passport work). An additional burden is therefore being placed on the British Embassy which is already short of staff.

          (f) There is a great deal of goodwill for Canada in Colombian business and governmental circles. III part, this goodwill stems form a long historical attachment to Great Britain and the British Commonwealth; it also arises from an admiration of Canada's war effort by a population only a little larger than Colombia's. The office of the Trade Commissioner in Bogota is repeatedly being called upon to answer queries concerning Canada and requests for assistance in placing students in Canadian schools and universities. At the present moment there are approximately 125 such students in Canada.

11. On the basis of current costs, it is estimated that the annual expenditure necessary for an Embassy in Bogota would be approximately $55,000. The establishment would be made up of a head of Mission, 1 F.S.O. I or II, two Canadian stenographers, 1 locally engaged stenographer, 1 locally engaged clerk, and a messenger boy.

III. Venezuela

12. Venezuela has been particularly pressing in its request and in July 1946 the Prime Minister authorized a circumstantial communication to the Venezuelan Government, stating that "it would be much more convenient from the point of view of the Canadian Government if the opening of the Venezuelan mission might be delayed for a short time, The Canadian Government will then be in a better position to receive a mission from Venezuela-the appointment of which it would cordially welcome and which the Canadian Government would wish to avail itself of an early opportunity to reciprocate."

13. On the occasion of the inauguration of President Gallegos of Venezuela in February last year, Mr. Strong, as Special Ambassador, on instructions assured the Venezuelan Foreign Minister that "we have Venezuela very much in mind" and that "we sincerely hope that 1949 might find us in a position to consider definite action."

14. The case for an exchange of missions with Venezuela may be set forth as follows:

          (a) Canada has substantial economic interests in Venezuela. The Royal Bank of Canada operates three branches. There are also local offices of the Confederation Life Assurance Company of Canada, and the Crown Life Insurance Company. In the field of petroleum, International Petroleum has a share interest in properties operated by the Mene Grande Oil Company, a subsidiary of Gulf Corporation. Canadian mining companies which own concessions are Guayana Mines Limited (Ventures Limited of Toronto), the International Nickel Company, the Asbestos Corporation, the Patrick Mining Company (New York and Toronto). In addition, the C.A. Energia Electrica de Venezuela is controlled by Canadian capital and there is a large Canadian capital investment in the Industrial and Development Corporation of Venezuela.

          (b) There has been a substantial increase in the volume of trade for the past ten years. It is not expected in the predictable future that Venezuela will encounter any exchange difficulties. Venezuela as a result has become Canada's best export market in Latin America. The modus vivendi signed in 1941 has now expired and it is possible that the Venezuelan Government will ask for the establishment of diplomatic relations as one of the conditions for its renewal. At the present moment Venezuela is Canada's principal supplier of petroleum. Following are comparative trade figures:

          (c) Owing to the latent discordance between Colombia and Venezuela, it would be desirable to establish diplomatic relations with both countries at the same time. These two countries are equally proud of their position in the Latin-American economy and of their recent material progress.

          (d) The fact that we already have a Consulate General in Caracas has served to identify Canada as an independent nation, but the Consul General as such does not of course enjoy the same status or facilities as would the head of a diplomatic mission, and is therefore unable to conduct negotiations with the Foreign Office as would be desirable.

15. It is estimated that the annual cost of an Embassy in Caracus would be approximately $90,000. The establishment would include in addition to the Head of Mission, an F.S.O. I or II, two Canadian stenographers, and the usual locally engaged personnel. 16. Recommendations

          (a) Since the Uruguayans have already opened a Legation in Ottawa, I think we have a prior obligation to reciprocate with them before establishing relations with either Colombia or Venezuela.⁸

          (b) While a case might be made for opening up more or less simultaneously in the three capitals, there are certain political reasons in favour of leaving over the question of establishment of relations with these two countries for reconsideration in six months' time.⁹ At the present moment, Venezuela is governed by a three-man military junta which, while not wholly reactionary, is certainly not liberal in its policies and attitudes. It imposes, for example, a strict censorship of the press and Congress does not function. Recent developments in Colombia-declaration of a state of siege, the imposition of censorship and the closing of Congress and so forth-are of such a nature that I do not think this would be a propitious time to announce the establishment of relations. Such a postponement would also enable us to consider both countries simultaneously as would be desirable, once we have been able to regularize our position with regard to Uruguay.

17. I should be grateful to know whether you agree with the above recommendations and particularly whether you think the Uruguayan Minister should be approached along the lines indicated in paragraph 6.

A.D.P. H[EENEY]

⁷ Note marginale:/Marginal note:
I think we should try this LB P[earson]

⁸Note marginale/Marginal Note: Yes

⁹ Note marginale/Marginal note: Yes