Foreign Relations, 1977–1980, Volume XXIII, Mexico, Cuba, and the Caribbean

163. Central Intelligence Agency Intelligence Information Cable¹

TDFIR DB–315/14414–79

Washington, August 15, 1979

COUNTRY

• Mexico

SUBJECT

• Reasons for the Decision of President Jose Lopez-Portillo To Break Off Gas Negotiations With the United States Government. (DOI: [less than 1 line not declassified] August 1979)

SOURCE

• [3 lines not declassified]

1. (Field Comment: On 9 August 1979, negotiations between representatives of the United States and Mexican Governments over the purchase of Mexican natural gas were broken off because of a last minute decision by the Mexicans to substantially increase the selling price for the gas. The decision to raise the price was made on orders of President Jose Lopez-Portillo after he had previously agreed to sell the gas at U.S.$3.40 per thousand cubic feet. [4 lines not declassified]

2. Lopez-Portillo’s decision to raise the selling price for Mexican natural gas was made in order to forestall any agreement with the United States Government at this time. The underlying motive for this decision is Lopez-Portillo’s belief that the present U.S. administration is politically finished for all intents and purposes and that it will not be in office after January 1981. Lopez-Portillo wishes to reassess the Mexican position to determine if he can better exploit the weakness of the U.S. administration to Mexico’s advantage. He also believes that there is a good chance that he can obtain better concessions in terms of economic investment, trade, or immigration, from either Democratic or Republican interests which may replace the present administration.

3. Although Lopez-Portillo is now restudying the Mexican position, the door is not closed to any kind of agreement with the United States concerning natural gas sales or even Mexican accession to the General Agreement on Tariffs and Trade (GATT).

4. (Source Comment: A limited gas agreement with the United States is still possible. But the Mexican terms or conditions for such an agreement have not yet been decided. In approaching this subject, the President has stated that he would never sign any gas or GATT agreement which would tie the hands of the Mexican Government or do anything to limit the options of his successor, since, in the President’s own words, “my responsibilities extend beyond 1982.” Lopez-Portillo has also not gone completely to the left. Miguel de la Madrid Hurtado, newly-appointed Secretary of Programming and Budget, is probably the most pro-business and pro-U.S. Secretary in the Cabinet and he is gaining strength with the President on domestic matters.)²

5. ACQ: [1 line not declassified]

6. Field Dissem: [less than 1 line not declassified]

7. Washington Dissem:

To State: Exclusive for the Director, INR

To Treasury: Exclusive for the Special Assistant to the Secretary (National Security)

To DOE: Exclusive for the Principal Assistant Secretary for International Affairs

1. Source: National Security Council, Carter Intelligence Files, Subject Files, F–R, Mexico, Box 26. Secret; Wnintel; Noforn; Nocontract; Orcon. A cover memorandum from Carlucci to Brzezinski reads, “1) We received a report this morning [less than 1 line not declassified] on the reasons behind President Lopez-Portillo’s decision to break off gas negotiations with the U.S. We are attaching a copy of the report which contains comments critical of the U.S. Administration. In the report as received the critical comments referred specifically to President Carter but were altered in the disseminated version to refer to the U.S. Administration. We regret that the report was disseminated in this manner rather than in the more sensitive memorandum format. 2) We will not carry the information in any of our publications, including the President’s Daily Brief. You may therefore wish to discuss the report personally with the President.” An August 17 handwritten note by Denend on Carlucci’s memorandum reads, “Paul Henze only has seen this letter from Carlucci before forwarding it to you.”
2. A final round of natural gas discussions was held in Mexico City August 29–30. (Telegram 14866 from Mexico City, August 31; National Archives, RG 59, Central Foreign Policy File, P840175–2441)