Bucareli Treaty
The Bucareli Treaty (), officially the Convención Especial de Reclamaciones (Special Convention of Claims), was an agreement signed in 1923 between México and United States. It settled losses by US companies during the Mexican Revolution. The treaty sought to channel the demands of US citizens for alleged damage to their property caused by internal wars of the Mexican Revolution from 1910 to 1921. The meetings were held in Mexico City and were conducted in a building owned by the federal government of Mexico at 85 Bucareli Street, hence the treaty's nickname. Negotiations began on May 15, 1923 and  ended on August 13. The treaty was signed by Mexican President Álvaro Obregón, primarily to obtain diplomatic recognition from the US government, led by President Warren G. Harding, but were never formally approved by the Congresses of both countries. The Bucareli Treaty was canceled shortly afterward by Mexican President Plutarco Elías Calles. Background. The situation in Mexico was marked by political instability and constant military revolts. Part of the relative weakness of President Álvaro Obregón's government came from the fact that the United States had not recognized the postrevolutionary regime. The 1917 Mexican Constitution, with its strong socialist and  nationalist influence, had hurt many US interests, which made US President Warren G. Harding refuse to recognize Obregón as legitimate. The US also demanded the repeal of several articles of the Mexican Constitution of 1917 or at least their exemption for the US. For Obregón, US recognition of his government was a priority to avoid the constant threat of war. Barely nine years earlier, the US had occupied Veracruz. Also, recognition would weaken his internal enemies, who also sought US support. The devastation and the disorder caused by the Mexican Revolution made Obregón consider foreign direct investment to be necessary  to rebuild the Mexican economy, but the US conditioned its recognition of Obregon with a treaty by which Mexico would guarantee the rights of property of US citizens living in Mexico and US oil companies operating in Mexico. The oil problem stemmed from Article 27 of the Mexican Constitution, which stated that Mexico was in direct control of everything on Mexican soil. That affected possession and extraction of oil by US and European oil companies. The low-profile negotiations that led to the treaty took place from May to August 1923 in a venue on Bucareli Street, in Mexico City . The following conditions were demanded by the US to the Mexican government: The Mexican Supreme Court of Justice granted and determined that Article 27 would not be retroactive for the oil industry. As for the resumption of external debt payments, Obregón tried to obtain funds by new taxes on oil, but the oil companies opposed the increase, stopped production, and forced the government to repeal the tax. Terms. The Bucareli Treaty was signed by Álvaro Obregón on August 13, 1923 reached an agreement with the following terms: Claims had to be met for a period of two years and processed  within five years from the signing of the treaty. However, the treaty lacked legal validity because it was not approved by the Congresses of both signatory countries. It was in a gentleman's agreement that bound only Obregón, not his successors. However, his government was recognized by the United States. The amount of money paid to Americans under Obregon is still unknown. The former interim president, Adolfo de la Huerta, who was in Obregon's cabinet as Secretary of the Treasury, asserted that the treaty violated the national sovereignty and subjected Mexico to humiliating conditions. De la Huerta accused Obregón  of treason against the nation but was accused of incompetence in the performance of his duties and was made responsible for Mexico's financial plight. De la Huerta resigned and moved to Veracruz, where he launched a manifesto that set off the Delahuertista rebellion in December 1923. A common myth in Mexico is that the treaty forbade Mexico to produce specialized machinery (engines, aircraft, etc.) and so delayed for many years Mexico's economic development. It has been argued that from 1910 to 1930, civil wars, military coups, and rebellions devastated the industries in Mexico and stopped higher education, research , and technological development and that the social and political instability also drove off the foreign investments. The revolution did not actually destroy the industrial sector, factories, extractive facilities, or industrial entrepreneurs and so once the fighting had ended in 1917, production resumed. The full text of the Bucareli Treaty was published after it had been signed and shows no prohibition on technology. Cancelation. When Plutarco Elías Calles took office on December 1, 1924, one of the main points of contention between the United States and Mexico remained oil. Calles quickly rejected the Bucareli Treaty and began drafting a new oil  law that strictly fulfilled the Article 27 of the Mexican Constitution. The US government's reaction was immediate. The US ambassador in México, James Rockwell Sheffield called Calles a "communist," and the US secretary of state, Frank Billings Kellogg, issued a threat against Mexico on June 12, 1925. US public opinion turned against Mexico after the first embassy of the Soviet Union in the world had opened in México. Also, the Soviet ambassador said that no country in the world had more similarities to the Soviet Union and México. Then, members of the US government considered to Mexico was the  second Bolshevik country on earth and began to call it "Soviet Mexico." The debate on the new oil law was in 1925, with US interests opposed to any initiative. On 1926, the new law was enacted. On January 1927, the Calles government canceled permits to oil companies that did not meet the law. Mexico managed to avoid war by a series of diplomatic maneuvers. Soon, a direct telephone hotline was established between Calles and US President Calvin Coolidge. Also, Sheffield was replaced by Dwight Morrow. On March 18, 1938, after a series of contempt for foreign oil companies, Mexican President  Lázaro Cárdenas del Río decreed the Mexican oil expropriation, creating PEMEX.