241. Memorandum From the Secretary of State to the President1
SUBJECT
- Reported French Loan for Mexican Petroleum Development
Some days ago you inquired about this “PEMEX” loan problem and notably whether the French in their present financial condition could afford this financial venture. I have delayed response in order to get the current views of our Paris Embassy.
Petroleos Mexicanos, S.A., the Mexican Government petroleum monopoly, was reported to have accepted a $50 million loan from the Credit Lyonnais and a group of French banks. According to the Director General of PEMEX, Senator Antonio Bermudez, he and the President of Mexico agreed to accept the loan for a period of seven years, at five percent interest, 60 percent of the proceeds to be used to purchase material and equipment in France, or, when satisfactory French purchases could not be made, in the United States. Senator Bermudez expressed the opinion the greater part of the loan would be spent in the United States.
After consultation with the French Ministry of Finance, which in turn consulted the Credit Lyonnais, our Embassy at Paris has reported that no plans for such a French loan to Mexico are under consideration. In view of the present payments difficulties of France, the Ministry indicated that it would, before approving such a loan, scrutinize carefully any agreement containing a clause permitting the borrower to use proceeds to make purchases in the United States rather than in France.
[Page 746]These conflicting reports seem to point to an effort on the part of Mexican authorities to stimulate a review of United States policy with regard to public loans for projects for which private capital is obtainable on reasonable terms. I believe our policy against such loans is sound and should be continued.2