Agreement to Agree

Dr. Francisco Castillo Najera, Mexico's Ambassador to the U.S. and a good chess player, was playing the biggest diplomatic game of his career. On the international chessboard in Washington were some powerful pieces--oil, silver, the Good Neighbor policy. One afternoon last week, at an hour usually sacred to siesta, Chess Player Castillo Najera played all his pieces and played them well.

> First move was silver. When the Cardenas Administration grabbed U.S.-owned oil properties in 1938, the U.S. quit direct buying of Mexican silver. In Secretary Morgenthau's office Mexico's Finance Minister Eduardo Suarez signed the agreement that started the U.S. buying again--6,000,000 ounces a month at 35-c- an ounce, or some $25,000,000 a year--to bury in the vault at West Point.

> Next move was the peso. The U.S. agreed to make available to the Banco de Mexico $40,000.000 to stabilize the peso.

> The Export-Import Bank agreed to put up $30,000,000 in credits--at the rate of $10,000,000 a year--for roadbuilding.

> Ambassador Castillo Najera won all these moves. Now he lost a small one. U.S. citizens have claims against Mexico--aside from oil--totaling $40,000,000. In Secretary Hull's office, Mexico agreed to pay these in full by 1956, put up $3,000,000 on account (Mexico has already paid $3,000,000 on agrarian claims), will pay off the rest in $2,500,000 installments.

Next Ambassador Castillo Najera moved his queen--oil. Mexico needed money, trade stabilization, a general economic overhauling. The U.S. needed a powerful demonstration of hemisphere solidarity. President Manuel Avila Camacho needed a big deal to back up his strong anti-Axis stand, his appeals for U.S. collaboration. His Minister of Foreign Affairs, suave Dr. Ezequiel Padilla, known as Narciso Negro (black narcissus) for his elegance, needed a triumph to swing Mexico's foreign policy back to close relations with Britain and the U.S. One thing stood in the way--oil. Between the $175,000,000 at which the oil companies are reported to have valued their seized properties and the $11,500,000 that Mexico said they were worth, there was a gulf too wide for even the best of neighbors.

When Ambassador Castillo Najero left Secretary Hull's office, he had an agreement on oil. Technically, it did not end the oil dispute. It was merely an agreement to agree in the future. By its terms each country will appoint one expert to determine how much the U.S. oil interests will be paid for the expropriated property. The experts will report before April 20, 1942, and there can be no appeal from their decision. If they do not agree, diplomatic negotiations begin, pledged to a settlement within five months, or the whole deal is off. The settlement, in so far as there was a settlement, had been made at the expense of the oil companies' claims and position. A strong case could be made that the U.S. had been outtraded, outmaneuvered, outargued, and that Mexico had won a total victory with no commitment at all.

That case would leave out Mexico's astonishing reaction to news that barely made a stir in the U.S. During the long negotiations Mexicans were saying cynically: "Estan haciendose la barba" (They are rubbing each other's cheeks).

But when news hit Mexico City that an agreement had been reached, Mexicans were jubilant. From all over the Republic congratulatory telegrams poured in to Foreign Minister Padilla. Former President Cardenas sent his hearty radical blessings to moderate Avila Camacho. Minister Padilla--who was being toasted by the British for having resumed British-Mexican relations--found himself the man of a Mexican hour. Avila Camacho was hailed in the Senate as the liberator of his people. Businessmen expected increased confidence, an influx of foreign capital, an era of prosperity, a boom. Economists said that Mexico's industrialization would now begin. (U.S. editorialists calculated that the agreement would discourage investment in Mexico.) Mexico's enthusiasm was a remarkable revelation of how much Mexico had wanted a settlement--some kind of settlement--all along. Undeniably the U.S. had paid a high cash price for intangible good will. But if half of what Mexicans expected from the settlement actually happened, it would produce a substantial return in hemisphere prosperity.

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