Evening star., 1951-05-31
Iran Lifts Page From Mexican History
By creston B. Mullins

Tor W0flQ peace, pubs ~ Is spy uO 1acdLtS
precedent and may not be the last
such case.
In many ways Trans action Is repe-
tition of what happened In Mexico In
1888, when the government OF President
Lazaro Cardenas. pursuing q program Of
radical reforms for the benefit Of labor
and peasantry, decided to take over the
foreign oil industry.
The Mexican oil appropriation. like
Trans nationalization grew out OF labor
discomfort and demands for wage in
creases and other concessions. But
whereas the Iranian disturbance has
behind 1t powerful element Of Soviet
intrigue and conspiracy to throw the
Western powers out Of their Middle
Eastern oil sources. the Communist ele-
ment In the Mexican case was not so
evident and there was no threat of a
world war over 1t.
On March 18. 1888, President Car
denas announced the appropriation of
II foreign oil companies, IL Of them
American, the rest principally British.
The action followed decision Of the
Mexican Supreme Court granting the
workers demands for raises, pensions
= and participation in management. It
was based on provision of the 1917
constitution which placed ownership OF
the subsoil rights in the state.
The American properties were esti-
mated by the owners to represent In
veStments of 5000 million. The British
put the value Of their investments at
$3.50 million. The Mexicans held that
the assets Of the companies could not
be over $40 million
The appropriation matter dragged on
for i've years-until 1943. when the
United States and Mexico found them
selves fighting war together. The
United States never challenged the right
OF the Mexican government to expro-
pirate the oil properties according to
Mexican law. although the American
and British oil firms did contend that
they held valid concessions granted be-
fore the, 1917 constitution was adopted.
The United States insisted on ade-
quate compensation Of the oil COM
panies for their properties.
The ranks of the oil companies broke
when one large American interest, Sim
clair. reached separate agreement with
Mexico in 1910. accepting compensation
Of $8.5 million. to be paid over three
years. Sinclair also was to purchase 20
million barrels Of crude oil annually for
four years.
The Sinclair settlement was followed
the next year by an agreement for the
appointment Of American and Mexican
experts to place value on the American
properties. Mexico. like Iran. had refused
to submit to arbitration. contendlng that
appropriation was domestic matter.
The American government did not press
the point
The American and Mexican experts
arrived in September, 1s43. at q value
of almost $24 million for the American
properties, to be paid by September. 1947.
with 3 per cent interest retroactive to
1898. Mexico paid on on that basis.
Mexico has not done too badly, ac-
cording to United States oil experts, In
the operation Of her own industry, in
spite OF labor difficultieS and q need
of funds for expansion. At the time
Of the appropriation, the foreign-owned
oil firms were taking out 10000 to $4,000
barrels day. After appropriation this
figure declined II per cent and was not
brought back to pre-expropriation fig-
ures for nine years. Since then pro-
duction has risen to nearly 200 900
barrels day, approximately what 1t was
In the prosperous '20s.
Mexico has been able to carry on con-
siderable exploration work. and recently
discovered the potentially rich Colombo
field on the Isthmus Of Tehuantepec. In
spite Of the great increase in Mexican
nil rrrOfaafNtfOy1 Mnvian noastl
not replace Trans production II 1t were
lost to the Western world.
Iran undoubtedly has looked to Mexi-
co.'s success as guidepost for its own
naturalization, but the disparity in size
Of the industries and in conditions under
which oil is extracted and marketed may
cause Iran to fall on its face in an
attempt to carry on II the British are
kicked out.
In the first place Trans oil industry
is vastly larger operation than Mexi-
co.'s. Anglo Iranian Oil Co. produces
100000 barrels Of oil a day. making Iran
the worlds fourth largest oil-producing
nation. OF that total. $4,000 barrels
day are put through the Abadan re-
finery. The rest Of the crude oil goes
to Bandar Mashur for shipment abroad.
mostly to Europe. It takes q fleet of
200 tarkers, many Of them owned di-
rectly by Anglo-Iranian, to move the re-
finery products and the unrefned crude
oil to world markets.
This scale Of production requires q
large body of skilled technicians, as
well as supervisory personnel of high
order. II Britain is forced out of Iran,
without some agreement for manage
ment and operation, Iran will be left to
carry on as best she can without the
technical skills required to keep 100000
barrels Of oil moving daily.
Britains position, starting out hard.
has softened a good deal. Like the
United States, she does not challenge
the right Of naturalization, for her
Socialist government has done good
bit Of that itself. She does challenge
the unilateral character Of the violation
Of the 1888 contract between Iran and
the oil company, which is controlled by
the British government. She does chal-
lenge Trans ability to operate the oil
industry and still keep its products dow-
ing to Western markets She does
therefore. challenge Trans ability to