Expropiación petrolera

The "Expropiación Petrolera" ("Oil expropriation") is one of the Fiestas Patrias of Mexico, celebrating the date when the President, General Lázaro Cárdenas, declared that all oil reserves found in Mexican soil belonged to the nation, following the principle stated in the Article 27 of the Constitution of 1917.

This measure caused an international boycott of Mexican products in the following years, especially by the United States, the United Kingdom and the Netherlands.

Background

In 1935, all companies in the business of extraction, processing, and exporting of oil in Mexico were foreign companies with foreign capital. These companies attempted to block the creation of labor unions and used legal and illegal tactics to do so. However, the creation of individual unions within each company was made possible, but work conditions differed from one another.

On December 27 1935, the Sindicato Único de Trabajadores Petroleros was created, despite the legal opposition in the states of Tamaulipas and Veracruz. On January 29, 1936, this union joined the Comité de Defensa Proletaria ("Committee of Proletarian Defense") which would become in February the Confederation of Mexican Workers (CTM). On July 20, the union celebrated its first convention, in which it was proposed a project of general contracts for each oil company and it was decided on a strike to push towards an agreement.

Lázaro Cárdenas intervened between the union and the oil companies in order to force an agreement on the contract. The strike was delayed for six months, but the companies never agreed to the contract and on May 28, the strike took place. The entire country was paralyzed for 12 days, with consumers unable to buy gasoline. Cárdenas convinced the union to end the strike until a decision by the companies could be made. However, the companies declared themselves unable to meet the demands because of financial problems. Cárdenas ordered an investigation and on August 3, the findings were that the Mexican oil industry produced higher returns than the U.S. oil industry.

Legal conflicts

After the publication of the findings, the oil companies threatened to leave Mexico and take all of their capital with them. The government entity in charge of the conflict between these companies and the union, the Junta Federal de Conciliación y Arbitraje (Federal Conciliation and Arbitration Board), was not able to make a decision quickly and the union declared a 24-hour strike in protest on December 8.

On December 18, the Arbitration Board declared in favor of the union. The oil companies had to pay 26 million pesos of wages lost because of the strike, but they appealed to the Supreme Court. The Supreme Court then rejected the appeal and ordered them to raise salaries and improve working conditions for the union members. The oil companies protested this decision and General Cárdenas mediated a compromise; the union would accept 26 million. Cárdenas offered to end the strike if the oil companies paid the sum. According to witnesses of this meeting, representatives of the oil companies asked the President "Who can guarantee that the strike will be over", to which the President replied "I, the President of the Republic." After the businessmen asked with sarcasm "You?" President Cárdenas ended the meeting saying "Sirs, we are finished!".

As a result, Cárdenas decided to expropriate the oil industry and create a national oil company.

March 18 1938

On March 18, 1938 President Cárdenas embarked on the expropriation of all oil resources and facilities by the state, nationalizing the U.S. and Anglo-Dutch operating companies. Two hours before informing his cabinet of his decision, he made the announcement on the radio to the rest of the country. Five days later, a crowd of 100,000 (according to the press) rallied in support of Cárdenas (see [http://www.imp.mx/petroleo/expropiacion/img/respaldo.jpgphoto] ).

On April 12, 1938, a crowd of thousands of women gathered in front of the Palacio de Bellas Artes to make donations to pay the debt to foreign companies. Donations varied from chickens to jewelry, since the women encompassed all social classes.

On June 7, 1938, President Cárdenas issued a decree creating Petróleos Mexicanos (PEMEX), with exclusive rights over exploration, extraction, refining, and commercialization of oil in Mexico. On June 20, PEMEX started operations.

Opposition

International

In retaliation, the oil companies initiated a public relations campaign against Mexico, urging people to stop buying Mexican goods, and lobbying to embargo US technology to Mexico. Many foreign governments closed their markets to Mexican oil, hoping that PEMEX would drown in its own oil. Between 1938 and 1939, PEMEX survived by trading oil for money and machinery to European countries with fascist governments. In spite of the boycott, PEMEX developed into one of the largest oil companies in the world and helped Mexico become the world's fifth largest oil exporter.

During World War II, American and British governments blocked Mexican oil exports to their allies and dependencies. The US stopped buying Mexican silver for the Treasury.

Local

Saturnino Cedillo, a "cacique" from San Luis Potosí and former Secretary of Agriculture, showed the strongest opposition to Cárdenas' measures. Cedillo had in the past supported Cárdenas in a conflict with ex-President Plutarco Elías Calles, but disagreed with his plan of reforms. On May 15 of the same year, the state congress of San Luis Potosí issued a decree where it refused to recognize Cárdenas as President and declared that the "expropiación petrolera" did not benefit the economy of Mexico. Cárdenas did not consider this a serious threat and minimized efforts to suppress the rebellion, instead choosing persuasion. The US government did not support the rebellion because it was more concerned that fascist and communist movements from Europe would spread to Mexico.

The key to the success of the measures taken by Cárdenas was not just to control the opposition, but to keep afloat an industry in the absence of qualified personnel. The government had to depend on the Sindicato de Trabajadores Petroleros de la República Mexicana (STPRM, or the Union of Oil Workers of the Mexican Republic) to resolve disagreements over the management of oil resources, and deal with threats of strikes and sabotage. In spite of these and technical challenges, local workers who replaced the foreign technicians were successful in making the new nationalized oil industry work. Josephus Daniels, U.S. ambassador to Mexico, explained to President Franklin D. Roosevelt and Secretary of State Cordell Hull that Cárdenas' reforms could not be undone, since his position as president and the position of PEMEX were secure.

ee also

* Nationalization of oil supplies
* Oil in Mexico

References

* [http://redescolar.ilce.edu.mx/redescolar/act_permanentes/historia/html/expropiacion/oposicion.htm Opposition to the Expropiación Petrolera] at red escolar.
* [http://www.imp.mx/petroleo/mexico/historia.htm History of the Expropiación Petrolera] at the Instituto Mexicano del Petróleo ("Mexican Oil Institute").
* [http://www.imp.mx/petroleo/mexico/dec18mar.htm Presidential decree] .
* [http://www.emayzine.com/lectures/mex8.html The Cardenista Utopia: 1934-1940] .