The Empire Trap by Maurer Noel

Author:Maurer, Noel
Language: eng
Format: epub, azw3, mobi
Publisher: Princeton University Press
Published: 2013-03-24T16:00:00+00:00

Table 7.7

Value of Mexico’s final settlement with foreign oil firms, dollars

Source: In addition to the sources mentioned in the text, see U.S. Department of State. “Compensation for Petroleum Properties Expropriated in Mexico.” The Department of State Bulletin, Vol. 6, April 18, 1942, p. 351, Tables 5 and 10.

Note: Compensation was valued by converting all payments into 1938 dollars using the U.S. GDP deflator and discounting them back to 1938 using the 3.2% rate at which the U.S. government lent to Mexico in 1943. (This rate was approximately equal to a 3.1% rate on 10-year corporate bonds in the United States.) The second column assumes that the additional payments were divided among the receiving corporations in proportion to their share of the original deal.

Second, Mexican Eagle’s Poza Rica oil fields were most emphatically not in decline at the time of nationalization (see figure 7.6). They were expected to produce significant income in the future. Mexican Eagle risked losing a substantial option value on those properties.

Third, in 1938, the U.S. government had few reasons to care about protecting British investors in Mexico—in fact, rather the opposite. In 1941, the United States weakened Britain’s bargaining position by explicitly requesting that the United Kingdom reestablish relations with Mexico. Eden decided not to ask for anything from the Americans in return. The reason was that Eden wanted to secure future American cooperation against Hitler. The United States, he believed, would be more amenable if Whitehall refrained from bargaining over Mexico.147 The United Kingdom therefore reopened relations with Mexico on October 21, 1941. Charles Bateman, the new British minister to Mexico City, privately wrote that Eden had made a grave mistake, since it would now be impossible (he believed) for the Mexican government to make a better offer to a British company than it had made to American ones.148

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