THE OTAGO DAILY TIMES MONDAY, May 16, 1938. THE MEXICAN OIL QUESTION

Otago Daily Times, Issue 23501, 16 May 1938, Page 8

THE OTAGO DAILY TIMES MONDAY, May 16, 1938. THE MEXICAN OIL QUESTION

The action taken by the Government of Mexico in March in expropriating the properties of the large British and American oil companies in that country has already been productive of consequences which would scarcely have been predicted a few weeks ago. The latest development is that the Mexican Government has taken the initiative in withdrawing its legation from London, the effect, of course, being the suspension of diplomatic relations between Mexico and Great Britain. This procedure illustrates the extent to which Mexico is prepared to carry the obduracy manifested in its expropriative action and in its replies to representations made by the British Government in protest against its attitude. The British Government, recognising the necessity of intervening on behalf of the shareholders of the companies whose property was seized, and actuated by the conviction that the action involving their interests was contrary to equity and the rules of normal international practice, addressed successive Notes to the Mexican Government which seem, unfortunately, only to have caused irritation. The reply to the last of these Notes, handed by it to The British Minister at Mexico City, virtually gives Mr O’Malley his marching orders and a cheque covering annuity claims which were referred to in the British official communications. In its desire to stand upon its dignity the Mexican Government was prepared to go to surprising lengths. Its decision to break off diplomatic relations is attributed in a statement by its Minister of Foreign Affairs to the “ not very friendly attitude ” of the British Government towards it in connection with the expropriation of the oil companies. By way of selfjustification the argument that the unfriendliness is on the British side is unconvincing. There is no sug-

gestion on the Mexican Government’s part of recognition of the inequity, to which the British Government has strongly pointed, of the suffering imposed by the Mexican action upon the shareholders of the companies, of whom a large proportion are British. The validity of the expropriation decree in the light of the provisions of Mexican law and constitution could not be tested immediately or probably without considerable delay, but in the meantime the British Government has had every reason to make strong representations of protest because of the great damage, threatening to become irreparable, inflicted on British shareholders as an immediate consequence of the Mexican Government's action. “If the doctrine were admitted,” it has urged. “ that a Government can first make the operation of foreign interests in its territories depend upon their incorporation under local law. and then plead such incorporation as the justification for rejecting foreign diplomatic intervention, it is clear that the means would never be wanting whereby foreign Governments could be prevented from exercising their undoubted right under international law to protect the commercial interests of their nationals abroad.” The logic of this contention seems unanswerable. But whether or not President Cardenas is entirely in sympathy with it. a nationalistic movement for driving foreign capital out of the country and making Mexico “ self-sufficient ” appears to go far to explain the Mexican attitude. Yet Mexico is in no position as yet to do without the foreign capitalist and the foreign technician. Perhaps this severing of relations with Great Britain may appear to Mexican political leaders as an heroic intimation to the world of “ the re-conquest of Mexico for the Mexicans.” It demonstrates at least that Mexican policy is still a factor to be regarded as undependable in financial circles. But diplomatic relations between countries cannot be severed without the creation of certain international complications. The United States is not less interested than Great Britain in the protection of the interests of shareholders of the expropriated oil companies in Mexico. Of course, as the Manchester Guardian has pointed out, the days are past when at the call of the oil interests an American gunboat would arrive on the scene. But no more than any other can the Government of Mexico afford to under-rate the value of diplomacy.