The Mexican Embassy to the Department of State

[Informal Translation]


The Mexican Embassy acknowledges receipt of the aide-mémoire of July 6, 1949, from the Department of State, concerning the application [Page 683] of Petroleos Mexicanos to obtain from the Export-Import Bank a loan for the purpose of extending and modernizing petroleum installations in Mexico. The Embassy desires to inform the Department of State of the result of the careful study which the Ministry of Foreign Affairs, together with other agencies of the Mexican Executive, has given to said aide-mémoire.

The Ministry of Foreign Affairs regrets that the Government of the United States, in making its study and decision on the Export-Import Bank loan application—an application which had an exclusively economic and financial character—has found it necessary to take into account other aspects of a political nature which, in the concept of the Ministry of Foreign Affairs, are completely foreign to the question at hand. In this respect, it is necessary to note that the memorandum from the Department of State constitutes—within the friendship and the good neighbor policy which unite Mexico and the United States—a deviation from the principle which has guided the attitude of the two Governments in their mutual relations: to consider each matter in accordance with its individual characteristics. This principle has been especially applied to loan applications, which have been examined in the light of the intrinsic merits of the projects for the realization of which the funds were destined. Such was the case of the ten million dollar loan granted to Petroleos Mexicanos by the same Export-Import Bank under contract signed March 2, 1944, providing the funds used for the construction of the Atzcapotzalco refinery, which, together with interest, has been paid off punctually and faithfully up to the sum of seven million dollars and will be completely liquidated by August of next year, in accordance with the contract under reference.

The connection which the Department of State makes in the memorandum being replied to between two questions independent from one another (the Petroleos Mexicanos loan and the petroleum policy of the Government of Mexico) and the desire clearly expressed in that document to subordinate the granting of all financial aid to Petroleos Mexicanos to the condition that the Government of Mexico adopt or orient her policy in petroleum matters in a predetermined direction, have convinced the Government of Mexico of the uselessness of continuing negotiation for said loan, since the granting of any loan in these conditions would constitute for the Government of Mexico and for the country itself the abandonment of an elemental right: that of deciding the policy which in petroleum matters or in any other matter of an exclusively internal nature must be determined peremptorily by the Mexican Government and people.

The Government of Mexico is not unaware of the natural interest which the Government of the United States may have in the protection [Page 684] of the investments of its nationals abroad; equal concern, and if possible even greater since it has to do with questions of a more delicate nature, has the Government of Mexico in other problems pending between both countries, without, despite its great and justified interest, the Government of Mexico ever having asked from the Government of the United States any action which is not in accordance with the practices of the good neighbor policy and in concordance with International Law.

As a result of the position assumed by the Government of the United States in its aide-mémoire, the Government of Mexico withdraws, in the present circumstances, the loan application, since its desire and understanding was always that that loan be examined in the light of economic and financial considerations and taking into account the guarantees and assurances of the same character which Petroleos Mexicanos could have and, in fact, did offer.

With respect to the part of the memorandum relating to private investments, the Government of Mexico considers it is opportune to make it clear that her legislation does not exclude this type of activities as is shown by the contracts which Petroleos Mexicanos recently entered into with North American companies and those of the same type which are at present being negotiated, within the fundamental policies of Mexico and in accordance with existing legislation. Those contracts exclude the possibility of recurrence of situations such as those which took place beginning on March 18, 1938.

It is a source of legitimate satisfaction for the Government of Mexico to be able to express that the criterion which has guided her efforts to increase the country’s petroleum production has been not only to benefit her own economy but also to respond to the necessities of international cooperation, which do not appertain precisely and directly to the lucrative ends on which the history of the world’s petroleum resources is based but, on the contrary, to the community of purposes which animates the governments in their mutual relations, especially the American Governments.

The last paragraph of the memorandum under reference seems to refer particularly to the case of the Sabalo Transportation Company. This matter is at present under the decision of the Supreme Court of Justice of the United Mexican States, and no reason is seen for mixing it up even indirectly with an application for a loan to finance industrial activities. Nevertheless, the Department of State has doubtless received reports from Ambassador Walter Thurston to the effect that the Government of Mexico, long before receiving the memorandum under reference, indicated that it perceived no objection to the holding of conversations between the company and Petroleos Mexicanos for the purpose of studying conditions under which that company [Page 685] could cooperate in petroleum development in Mexico. These conversations have already begun between the Director General, Antonio J. Bermúdez, and Mr. Sam Katz, in the name of Sabalo.