Memorandum of Conversation, by the Chief of the Petroleum Division (Eakens)


Subject: Concluding Meeting For The Time Being on PeMex Proposal for U.S. Government Financing

Participants: Senator Antonio J. Bermudez, Director General, Petroleos Mexicanos (PeMex)
Señor Jose Colomo, PeMex
Señor Ortiz Mena, PeMex
Señor Rafael de la Colina, Mexican Ambassador
Señor Justo Sierra, First Secretary, Mexican Embassy
Mr. Thorp—E
Mr. Reveley—MA
Mr. Malenbaum—ED
Mr. Eakens—PED2

Mr. Thorp began the meeting by asking Mr. Eakens to summarize the developments since the first meeting in his office with the Mexican group on March 15. The following developments were noted: At a meeting on March 16 Senator Bermudez discussed the revised PeMex proposal with representatives of Commerce, Interior, Eximbank, NSRB, and State. Following that meeting Senator Bermudez presented to the Department several copies of a statement3 setting forth the revised PeMex proposal, which calls for U.S. Government financing of $203,430,000.4 Copies of this report were delivered to the agencies that participated in the March 16 meeting. On March 24, Messrs. Reveley, Cady5 and Eakens of the Department discussed the report [Page 672] and various aspects of the problem with Senator Bermudez and the Mexican group. At the last of these meetings the Mexican group was informed that the proposal for $203,430,000 of Government financing of oil projects in Mexico raised some very large issues that would require time for their resolution. The issues mentioned were the question of the availability of private capital for projects of this kind, the fact that loans have not previously been made on a large scale for oil development projects since it was considered that such projects represented an appropriate field for private capital, and that the loan suggested is, with the exception of the loan to France, as large if not larger than any loans made by the Eximbank.

After the summary of developments, Mr. Thorp then took up the question of the procedure to be followed in the future. He expressed the view that since the problem is one requiring consideration not only by the Department but also by other agencies of the Government, and considering the fact that high officials of some of the agencies concerned will be engaged in other important matters in the immediate future, developing a U.S. Government view will be a matter of several weeks. Both Senator Bermudez and the Mexican Ambassador emphasized the importance of an early decision on this question and implied that Senator Bermudez’s stay in Washington would be determined by the time required for the Department to give him a reply. In commenting on the time it will take to handle the problem, Mr. Eakens suggested six to eight weeks as a minimum, and Mr. Malenbaum concurred in this time period for the balance-of-payments and other economic questions involved. Mr. Reveley, however, said that he thought the policy aspects of the problem might separately be resolved in a shorter period. When it was apparent from the comments that an early statement of the U.S. attitude toward the Pemex proposal was not obtainable, the Mexican Ambassador suggested the possibility of an exchange of notes or a statement to the press indicating that this and the previous discussions had taken place and that the Pemex proposal is being sympathetically considered by the U.S. Mr. Thorp indicated the danger, both from the standpoint of the U.S. and Mexico of any statement at this time that might be misinterpreted. The matter was left that the Department would see what it could do about a statement which would state the facts in a completely objective way but at the same time show that there has not been any failure on the part of Senator Bermudez’s discussions during his present visit.6

Mr. Thorp referred to the question of the claims of American citizens arising out of the expropriation which as yet have not been compensated. Without giving any support to claims that are not valid, he said that if there are valid claims that have not been compensated [Page 673] this might well be a source of opposition to consideration of the Pemex proposal. Senator Bermudez said that Pemex intends to pay all such valid claims, is paying them as they are established, and that about half of such claims already have been settled. In the discussion the Sabalo Transportation Company case was the only one receiving specific mention.7

There was some discussion of the statement which has been submitted setting forth the revised Pemex program. This discussion was with reference to the adequacy of the statement from the standpoint of the relationship of the various projects, the feasibility of the program, and its general economic aspects. It was indicated that although the relationship of the various projects as such is reasonably clear, some additional information regarding the Priority of the projects would be useful, that a breakdown of the program into quarters for the three-year period would also be useful and is needed in order to show just what materials, equipment and money would be required on a running basis, and that considerable economic information on the contribution the program would make to the Mexican economy and how it would affect the Mexican balance of payments, including the feasibility of the loan from the standpoint of its repayment in foreign exchange, is needed. Senator Bermudez indicated willingness to supply any additional information which might be desired and said that he could supply it while in Washington on his current trip. He was informed later, however, that an effort would be made to resolve the general aspects of the problem without any further information at this time. It was indicated that the Department appreciated the urgency of the matter and would proceed with it as rapidly as possible.

  1. Respectively, Willard L. Thorp, Assistant Secretary of State for Economic Affairs; Paul J. Reveley, Chief of the Division of Mexican Affairs; Wilfred Malenbaum, Chief of the Division of Investment and Economic Development; and Robert H. S. Eakens, Chief of the Petroleum Division.
  2. Not printed.
  3. In a letter, not printed, to Mr. John R. Steelman, Assistant to President Truman, dated March 25, 1949, Mr. Thorp indicated that the proposal made by PeMex in August 1948 had called for a loan of $470,000,000 (812.6363/2-2549).
  4. John C. Cady, Assistant Chief of the Division of Investment and Economic Development
  5. For the text of a statement issued by the Department of State on March 31, see Department of State Bulletin, April 10, 1949, p. 466.
  6. For information on the Sabalo case, see the letter, dated September 16, 1949, from Secretary of State Acheson to Congressman John Kee, Department of State Bulletin, October 10, 1949, p. 553.