The Secretary of State to the Ambassador in Mexico (Messersmith)70
Sir: Reference is made to the Department’s instruction no. 6794 of December 28, 1944,71 regarding the carrying out of negotiations concerning Mexican petroleum matters. You were instructed, with respect to the interests of foreign oil companies in Mexico, to continue on the same basis as theretofore your conversations with the Mexican Government with regard to the possibility of equitable arrangements between that Government and foreign oil companies whereby the latter might participate in the development of Mexican oil economy. You were instructed that the Government of the United States will be unable to arrange for a loan by any institution of this Government in favor of the Government of Mexico or any instrumentality thereof for the development of the Mexican oil industry in its commercial phases; and finally you were instructed to say that your Government continued to be deeply interested in the possibility of the development of oil reserves in Mexico for common and for continental defense, such reserves to be, essentially, under the control of this Government; and that your Government would be prepared to discuss the possibility of a loan to explore and to develop such reserves.
It is the Department’s understanding that shortly thereafter because of developments in the political situation in Mexico, you deemed it inopportune and impracticable to continue these conversations and that your opinion was later confirmed by the Honorable Manuel Tello, Acting Secretary of Foreign Relations.
The Department appreciates your reasons for desiring to defer further discussions with the Mexican Government concerning the arrangement [Page 1162] with that Government for the reentry into the Mexican oil economy of foreign oil companies and approves of your decision to defer these discussions. The Department hopes, nevertheless, that a situation will develop in which you may find it opportune in the near future to reopen your conversations on this subject.
Upon further consideration of this general question, the Department has reached the conclusion that it would be preferable to withdraw that portion of your instructions directing you to take the initiative with the Government of Mexico regarding the establishment of the proposed oil reserve for use in continental defense should such use become necessary. The Department is of the opinion that it would be unsound at the present time to take this initiative. In the event, however, that the Government of Mexico should again take up with you the general subject of a petroleum loan, you are authorized to state that, while your Government regrets its inability to consider a loan for the rehabilitation or further development of the commercial phases of the Mexican oil policy, your Government would be willing to discuss the possibility of setting up oil reserves in Mexico for possible continental defense use and would be willing to consider the possibility of such technical or financial assistance as might be necessary for the establishment of these reserves. In any conversation which you may have with the Mexican Government, you will, of course, make clear that this Government is still unable to entertain any consideration of a loan for the development of commercial phases of the Mexican petroleum resources.
It is also understood that, from time to time, the possibility has arisen that some one foreign firm might reach an agreement whereby it might be granted by the Mexican Government a position of exclusive monopoly. Should such a situation come to your attention, you may, in your discretion, express to the Government of Mexico the concern of your Government and its trust that, if the participation of American or other foreign oil companies or other legitimate private interests in the Mexican oil economy again becomes a possibility, it will be upon a basis of equal opportunity for each such foreign company.
It will be recalled that, in your representations, you have not limited your conversations to participation of United States private concerns, but have also included other foreign companies. Because of the vast areas in other parts of the world in which American companies have either potential or actual interests, the Department does not wish a situation created such that it would encounter retaliatory measures elsewhere against American interests and in favor of interests of other countries, and, for this reason, it wishes once again to confirm the correctness of the approach you have used.
Very truly yours,