- What was the oil expropriation in Mexico?
- Background to the oil expropriation in Mexico
- The oil expropriation
- The end of the conflict
We explain what the oil expropriation in Mexico was, its background, protagonists and how the conflict was resolved.
What was the oil expropriation in Mexico?
In the history of Mexico, is known as the oil expropriation to the nationalization process, that is, forced purchase by the Condition, of all the goods and assets of foreign companies engaged in the industry oil, which took place during the presidency of the Mexican military and statesman Lázaro Cárdenas del Río (1895-1970).
It is an event of the utmost importance in the contemporary history of the nation Mexican. It was produced through the application of article 27 of the Mexican Constitution and the execution of the Expropriation Law of 1936, through a presidential decree announced on March 18, 1938, the date on which it has commemorated since then.
The oil expropriation was motivated, in principle, by the existing labor conflict between the unions from workers Mexican oil tankers and the numerous Business dedicated to the exploitation of this item. These included affiliates and subsidiaries of Royal Dutch Shell, Standard Oil Company of New Jersey, Sinclair Pierce Oil Company, Mexican Sinclair Petroleum Corporation, and many others.
The breaking point was the failure of these companies to comply with the ruling of the Federal Board of Conciliation and Arbitration, later ratified by the Supreme Court of Justice of the Nation, which granted salary improvements to Mexican oil workers.
Background to the oil expropriation in Mexico
Claims for improvements in working conditions and for greater state control in the oil industry had a long history in the history of Mexico, since the end of the so-called Porphirate, the regime of Porfirio Díaz (1830-1915), whose Law of Petroleum of 1901 exempted the oil companies from the payment of taxes and granted them a series of privileges for the investment and import of equipment.
When the governments The following, of a Revolutionary court, tried to modify the tariff agreements, foreign companies managed to exert diplomatic pressure and started the conflict.
Certain reforms were achieved with the Oil Law of 1926, decreed by President Plutarco Elías Calles (1877-1945), despite the fact that Mexico was immersed in the Cristero War (1926-1929) and under great foreign pressure. Little changed during the “Maximato”, But President Abelardo Rodríguez (1889-1967) created the state-owned company Petróleos de México S. A. (Petromex) in 1934 to compete with foreign corporations.
In 1935, President Cárdenas formed an alliance with the oil workers and advocated for the creation of the first unified union of oil workers, the Sindicato de Trabajadores Petroleros de la República Mexicana, despite opposition from the companies, who preferred to have separate unions. with which to negotiate.
This was the first step towards the negotiation of a collective contract, and was accompanied by the enactment in 1936 of the Expropriation Law that allowed the State to take properties considered to be of public interest, and set a term of 10 years to compensate the owners.
The following year, despite concerns expressed by US diplomats about recent changes in the law, the General Administration of National Petroleum (AGPN) was also created, which responded directly to the executive power and absorbed the functions of Petromex.
The oil expropriation
Thus we come to 1938, the year in which the labor conflict reached its climax and the oil expropriation granted the State direct and legal control over weapons, facilities, equipment, buildings, refineries, distribution stations, ships, pipelines, and all assets. furniture and real estate in general of foreign oil companies.
This measure had immense popular support, expressed in mass demonstrations in which the people themselves made donations to help pay compensation to the owners of the companies. Even the Catholic Church and other conservative sectors, generally opposed to the government, agreed with the expropriation.
On the other hand, the diplomatic protests of Great Britain, the Netherlands and the United States did not wait, refusing to recognize the expropriation and demanding the payment of compensation. The three countries also demanded payment not only for the seized assets, but also for the unextracted fuel in the subsoil, something to which the Mexican government refused, considering it a heritage of the Mexican people.
Diplomatic relations between Mexico and Great Britain were suspended. Although the negotiations with the United States were more amicable, soon the three countries and their oil companies began a commercial boycott against Mexico, to prevent it from accessing the machinery and petrochemical inputs necessary for oil refining.
Mexican oil assets deposited in European and United States ports were seized, and the Latin American nation managed to sell only a tiny part of the fuel that these companies formerly exported, through negotiations with other United States transport companies, such as Davis & Co. and later with others. refining companies such as Eastern States Petroleum Co.
Eventually, the companies were forced to recognize Mexican sovereignty over their oil, and a series of unsuccessful negotiations resumed. The corporations wanted to resume a work scheme similar to the one they already had, involving the Mexican State as a shareholder, but they never accepted the full recognition of oil as the exclusive property of Mexico.
The end of the conflict
Roosevelt preferred to have Mexico in the war rather than protect the oil companies.The advent of the WWII (1939-1945) put an end to the conflict over Mexican oil, since US President Franklin Delano Roosevelt (1882-1945) was more interested in having Mexico's presence in the antifascist alliance, than in protecting the interests of the expropriated oil companies .
In 1941 the Good Neighbor Agreement (Good Neighbor Agreement) and that same year, relations between Mexico and Great Britain were normalized. Lacking diplomatic support, the oil companies had no choice but to negotiate the payment of their respective compensation.
The total severance debt to Standard Oil Company was settled in 1947 and amounted to $ 30 million at the time. On the other hand, in 1962 the entire compensation to Shell, corresponding to 81.25 million dollars at the time, was settled.