711.12/1588a: Telegram

The Secretary of State to the Ambassador in Mexico (Daniels)

196. Please seek an early appointment with President Avila Camacho and say that the Department feels that satisfactory and rapid progress is being made in the preparations for the early successful termination of the general negotiations. As to the specific problems, you may make the following observations:

Claims. Since the two Governments appear to be substantially in agreement, the differences between our original proposals and the Mexican counterproposals of February 17 should be readily adjusted.

Defense. This Government has been favorably impressed by the progress made in joint discussions and by the adoption of the Convention relating to military aircraft.

Oil. Very confidentially and informally this Department has been exploring through oil experts of the Interior Department who are in touch with a representative of Petróleos Mexicanos the possibilities of arriving at a formula for the solution of the oil controversy. Progress in the studies is being made about as rapidly as could be expected and it is hoped they may lead to a satisfactory formula. The oil question appears to be the most difficult of those under consideration.

Foreign Debt. While this Government has not been a party to negotiations involving past agreements, the Department has been interested to learn of resumption of discussions between Señor Suárez and Mr. Lamont, and it is hoped that they will work out a mutually [Page 384] satisfactory solution of this problem. If the Department can assist in this matter it will be glad to exercise its unofficial good offices.

International Waters. This difficult question has been given much careful thought. The following statement is strictly confidential but you may convey it to President of Mexico for his own information: We have been endeavoring in confidential conversations with certain United States interests to find a solution and expect to have a response from these interests soon.

Economic Cooperation. Arrangements have already been made for Treasury Department experts to begin discussions possibly in the near future with Mexican representatives concerning mutual monetary problems with specific reference to stabilization and silver.

Quota for Importation of Mexican Oil. It will be difficult to approach this problem before the two countries enter upon negotiations for a reciprocal trade agreement.

Highway Construction. We expect to be prepared soon to discuss the matter of cooperating in financing of Mexican highway construction.

Trade Agreement. Our present feeling is that public notification of intention to negotiate should be deferred until a formal solution of the oil expropriations matter has been found. Our preliminary studies have virtually been completed. It is suggested Mexico likewise prepare for later discussions on this subject.