The Times TUESDAY, MAY 17, 1938. Mexico and Britain

Manawatu Times, Volume 63, Issue 114, 17 May 1938, Page 6

The Times TUESDAY, MAY 17, 1938. Mexico and Britain

( Mexico s decision to break oft’ diplomatic relations with Great Britain is a sensational sequel to the expropriation of the properties of 17 foreign oil companies in Mexico. Just what this will ultimately lead to is difficult to forecast. Had such drastic action been taken a generation—or even a decule ago, Britain’s retort might have been disastrous for President Cardenas, but in the present tangled state of world politics even tile most powerful o± nations finds it necessary to move cautiously, and the Mexican Government is more likely to be dealt with through the devious channels of international'finance than by the more direct methods of coercion which found favour ill pre-war days.

The hastily-conceived expropriation has obviously presented the Mexican Government with the most difficult administrative problem which it has faced in recent years. The measure, which was taken as the result of the companies’ refusal to award to labour* a collective contract which had been approved by Government boards and the Supreme Court, was one for which the Government was admittedly unprepared. It was decided upon short notice and when announced, left oil officials and the public amazed at the audacity of the move and wondering how the Government could operate the industry.

Since the exploration and exploitation of petroleum products is one of the most highly technical industries in the world, this phase of the problem presented the first problem. The marketing of the product, which is a matter involving international finances and, to a large degree, politics, presented the second major difficulty.

Nothing- daunted, President Cardenas set to work organising special boards for the purpose of supervising the oilfields and marketing the product. These boards represent a union of Mexico’s best financial and administrative talents which, working with President Cardenas, have to date achieved what is considered to be a miracle of organisation and of handling with calmness and discretion a situation which might well have been explosive.

The first element to be brought under control by the Government in the crisis was labour. Oil workers had been promised extraordinary salary increases and social benefits under the collective contract granted them, but when the Government took over the industry such increases were cancelled. Because of the difficulty of marketing oil, and because of the lack of technicians immediately available, production in all fields was reduced to a minimum. This resulted in field workers being laid off and greatly diminished activities in all camps. Although some discontent among Labour was reported from various sources, ho major demonstrations took place. This calm was achieved through-personal appeals of the President to Labour to niaintain discipline, arid through the power of the unions controlling the fields. With oil accumulating in Mexico’s camps and ports, and with storage capacity known to be limited, Mexirto is faced with a grave marketing situation. The most important factor in the entire network of national and international complexities in the situation is that Mexico has oil and that oil is a commodity in almost universal demand to-day. The great armament programmes being carried on by major nations of the world demand Oil as one of their primary necessities and in the struggle to get this oil immediate antagonisms may go by the board.

The contending purchasers for Mexican oil may he grouped roughly into Fascist and Democratic. It is common knowledge that Germany, Italy and Japan, representing the former group, have bCCn attempting to buy Mexican oil, which, until the expropriation, Was controlled by the United States and British companies, representing the Democracies. The present position is that Mexico has regained control of its vast petroleum wealth, and should it keep control, then a hitherto comparatively unimportant, povei'ty-stricken and backward nation may become a vital factor in world affairs in the not very distant future.