WesWorld

"The Long administration's response to the Mexican nationalization of their oil industry was decidedly low key compared to the outrage around the world and in the American media. President Long reportedly began laughing loudly when he read a transcript of President Cardenas' announcement and even sent him a congratulatory telegram, a fact that remained a secret for the rest of his administration. Still, it was a major loss to the US to have some of its largest businesses potentially loose their massive investment in Mexico and Long could not ignore it considering the delicate political balance in Washington. Despite his hatred of the oil industry and how they had treated their workers in Mexico and in his home state of Louisiana, he had to find some way of compensating them for their losses. After several weeks of tense negotiations between the US government, the Mexican government, and the oil industries, a compensation plan was agreed to which would have Mexico pay for some of the losses suffered by American oil companies, an amount of about twenty-four million dollars. The oil companies didn't like the deal, but with no support from the White House it was the best they could hope for. While outright sabotage of equipment was rare, when Mexico took control of the former American fields they found much of the equipment useless through widespread neglect.
The largest reaction to the nationalization was a near overnight halt to most business and industrial projects by American companies in Mexico and a virtual embargo by the vast majority of American businesses as fears grew of further nationalization of other industries. Plans to expand the power grid in southern Mexico were canceled and three large hydro-electric plants along the Mexican Canal were left incomplete. Within a few months almost all American investment in Mexico not directly connected to the canal project had dried up. American companies working in the canal zone also began to hire fewer local workers and began to ship in workers from the United States and other countries in Central America and the Caribbean, despite protests by the Mexican government and condemnation by the Long administration. Several violent protests broke out in cities along the canal as thousands of Mexicans suddenly found themselves replaced by foreigners and several people were killed and dozens injured. The total loss in investment was in the billions and would set back parts of rural southern Mexico for years and would severely tarnish what had been generally excellent relations between the United States and Mexico."

Quoted

Originally posted by ShinRa_Inc

Has Kirk had any say on this move, which would explain why the US have been given a deadline (And the option to remove and retain their equipment and property), while the Dutch have instead just been rounded up and ejected?

OOC : Actually I've been very busy and kinda missed all this. I log in and check for PMs. scan the subject of the new threads and move on. I saw the poll, but didn't dig further. Somebody PM'd me on this (thanks) so I'm just now getting to it.

Foxy's reply to Shin-Ra is indeed correct, while Mexican Eagle is a Dutch-owned company, anything I do with it within Mexico would only be with the consent of the Mexican player, he has ultimate say with what occurs within those boundaries and does not need to discuss even radical changes with me the player unless they effect "Mexican Eagle" assets outside of Mexico. On the other hand..-as an extreme example- I could not in spite type that the Mexican Eagle Dutch engineers sabatoge those wells without first consulting with Foxy.

This isn't a new issue, came up in the early 1930s, as did the who exports how much oil issue, so Royal Dutch has seen this coming. However, having made it through two pages of posts, I'm low on time, I'll try to respond further tomorrow.

To clairfy, my original inquiry was more as to trying to figure out why there was a drastically different reaction to the Dutch and American interests. I was wondering if Foxy had tried negotiating something with you, and was flatly told there would be no negotiating.

While it is, indeed, entirely Foxy's decision on what to do with his played country and the territory it holds, in cases such as this it's usually expected that the various players involved be consulted and come to some agreement on the matter. For example, it stands to reason that if the Dutch equipment and wells are being outright seized in the manner Foxy has implied, the Dutch would not leave without 'forgetting' to properly set certain saftey equipment, conveniently forget to leave behind manuals and other documentation, and similar acts that would make a smooth transition near impossible.

Very true, I don't expect any well to be operational within a month's time, 'cept for those few that where fully Mexican owned previously.

As to the difference of reaction, its simple. The problem was between Mexico and the oil companies, not between Mexico and the nations where those companies lay. It was a way of saying to the US 'the problem was with the companies only, and Mexico is willing to negotiate'. The Dutch being AEGIS, would get a different message.

.....and without giving adequate compensation to the Dutch company's, Mexico could face some serious political and economic reprocussions.

OOC : I am going to address this in two means- a current reaction and a rehash of the past for those not there then.

Past history :
From statements in 1930, 1932, the Mexican Eagle subsidiary does exist and is owned by Royal Dutch & Shell with regular tanker traffic. Since the 1919 purchase predates AANM that makes sense. The subsequent alliance with Iberia and the hostility of the Mexico-Iberia relationship probably precluded substantial further Royal Dutch & Shell investments.

As an aside, in prior discussions, Japan did come up
Walter : “Despite that Mexico was the #1 Oil exporter, Japan got its oil from the US and the DEI as I indicated and it would probably be the same in the Wesworld.”

Nationalization was discussed in 1934 and is not a shock.
On March 3rd, 1934 Royal Dutch & Shell released the following statement :

Quoted

In response to pressure to speak regarding the recent announcements of the Mexican government regarding potential nationalization of the Mexican Eagle Petroleum Company, Royal Dutch and Shell CEO van Seelst issued this statement :

This company has invested a great deal in our Mexican infrastructure and exploration program. We believe we have an acceptable relationship with the Mexican government and people, and we treat our workers well. Wagescales are significantly above the market rates for comparable job skills.

However, we are aware that for internal reasons, foreign companies are not in favor, with the apparent exception of Standard Oil, which as always is simply to big. The listing for Shell on the London exchange has already dropped in anticipation of potential nationalizations and we have a great number of investors in England who are worried about their investment.

We shall be preparing statements reflecting the projected valuation of the Shell company and it’s future prospects, which are quite good even without the inclusion of Mexican Eagle. We continue to believe that the synergy of Royal Dutch and Shell makes for a stronger company more capable of continuing to explore and operate on a global scale.

I should also note that the Dutch Royal Family is a substantial investor in Royal Dutch & Shell, which is one ( of several) reasons the Queen is a billionaire and well known in the area of high finance.

Quoted

Originally posted by Desertfox
June

Dutch Oil, Oil Well #6 (repeated at all Dutch wells)

"Mr Miejer? I have been instructed to tell you that you and your team has two days to pack up and leave the well. Any attempt by anyone to sabotage or remove equipment, outside of personal belongings, will be met by force, and the person charged with willful destruction of government property..."

Statement by Royal Dutch & Shell :
“We are disheartened by the actions of the Mexican Government in seizing property and violating lawful contracts. When this issue arose four years ago we defended our record in Mexico as a creator of high quality jobs and a provider of revenues. This appeared to satisfy the matter, since that time no allegations of misbehavior have been lodged, no attempts at negotiation of better contract terms, indeed no further discussion on this issue in the past four years.

Royal Dutch & Shell employees and Mexican Eagle employees have been instructed to fully cooperate with the Mexican Government. All physical plant will be retained. Only personal effects and corporate papers will be removed, and all employees not of Mexican nationality

For our corporate picture, this will have a moderate impact. Tensions with the Mexican government have been elevated since the Netherlands joined AANM, and have long factored into planning efforts. The possibility of Nationalization has been a factor in planning since 1934. A series of holding companies have long been established in Paramaribo, Dutch Guiana, to allow separation of Mexican Eagle assets from those of Royal Dutch & Shell. All international assets of Mexican Eagle are held through these companies. Due to the threat of Nationalization, exploration in Mexico has only been done utilizing the revenues generated by Mexican Eagle. Operations between subsidiaries have been held on a hard currency basis with Mexican Eagle only holding funds for 90 days of operations. As a result of these measures, we believe the Mexican Eagle operations to be effectively isolated from those of the larger company and the effects of their loss has been minimized, though still painful.

Investments in additional refinery capacity has been restricted to Dutch Guiana. This investment in physical plant and the tankers which serve it will be retained and transferred to the parent corporation. Obviously these facilities in Dutch Guiana will now lack for petroleum products to transfer, but with the fields coming into service in Saudi Arabia, we believe we can transfer much of the capacity to that Kingdom in coming years. Given the large size of the Mexican fields, we expect some disposal or mothballing of assets will be necessary, to be brought on line in the future as new fields are found elsewhere, or possibly sold.

Moving forward, we intend to seek what legal remedies are available to us.“

I’ll do a Dutch Govt. response later, got to run.

Quoted

As an aside, in prior discussions, Japan did come up
Walter : “Despite that Mexico was the #1 Oil exporter, Japan got its oil from the US and the DEI as I indicated and it would probably be the same in the Wesworld.”

Yes, mentioned that some time back. I thought about it recently with this oil thing coming up again. Seems obvious that the Dutch would use this to keep the Japan part of SATSUMA on a leash. Should Japan take action against a SAER member, the Dutch would then cut the supply line and the Japanese war machine would slowly grind to a halt.

Looks like Japan can finally get a friendly supplier (in Mexico)

Yes and no. Either I get oil from a nation that was only one of two nations that was allowed to trade with Japan during the Edo period but is a potential enemy, or I get oil from far away from a nation of thieves...

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Originally posted by Rooijen10
Yes and no. Either I get oil from a nation that was only one of two nations that was allowed to trade with Japan during the Edo period but is a potential enemy, or I get oil from far away from a nation of thieves...

The Chilean commodities-broker firm of Ferrostaal Chile SAC offers to serve as middleman, having excellent contacts with an independent company possessing a modern tanker-fleet (SONAP) that is willing to do business across the Pacific...

It's still oil from thieves, even if it is indirectly via Chile...

Quoted

Originally posted by Rooijen10
It's still oil from thieves, even if it is indirectly via Chile...

Given current relations with Mexico, I assume they're not offering to be intermediaries for them, but rather for another supplier.

Example: The Chilean commodities broker buys oil from the DEI or Malaysia or another supplier, loads it on tankers, and sells it to Japan. I profit by being the middleman, DEI profits by selling more oil, and Japan profits by not having to pay the higher transport costs to ship Mexican oil across the Pacific.

RA's pointed out before that there's really no market for oil-trading as it started in the 1960s and beyond; so, let's start it!

DEI oil directly is cheaper than oil via a middleman. Also, I expect that company to be in big trouble if they were to sell DEI/Malaysian oil to Japan in case of war between SAER and SATSUMA.

Yes, they'd go out of business, likely.

Four quick topics OOC, then back to work

1. DEI- Japan.
While the possibility of denial of oil in wartime has of course been considered, the Dutch have never emplaced restrictions on peacetime purchases, so Japan has probably built up a strategic reserve.

Beyond that, Dutch foreign policy has generally focused on India as the corrupting influence on Japan (and China/Fillipinos )(ok, somewhat wishful thinking) which is based in the long trade tradition, and keeping the traditional trade routes moving would be desirable so prices should be good.

It should be noted that OTL, the Dutch did have a segregated society in DEI, but the Japanese were accorded 'Western' status. Here it is more egalitarian as the Queen has been more effective.

Japan most likely also obtains tin and rubber from the DEI, as well as Malaysia. There was something else as well, but I'm not recalling it atm.

2. Chilean Middlemen
Since the Dutch are happy to sell to Japan at reasonable cost, there isn't much gain in adding an additional merchant.

3. Dutch sabotage
Not likely. The technical manuals are in Dutch, and will aquire the signatures of thier owners, and the lead engineers and technical experts will all leave. However, RD&S has little to gain by actively sabotaging facilities, and that would destroy any hope of regaining them, while reducing the chance of monetary repayment. Further it could have repercussions on other Dutch traders.

4. Mexican exporting.
One of the things that seems to have been glossed over about the Royal Dutch & Shell release was the reference to tankers and refineries.

With the history of hostility of the Mexican government since AANM formed, there was little reason to invest further in those facilities IN Mexico. So they would have put them in Dutch Guiana.

I view the situation as similar to the OTL refineries for Venezualian oil being in Aruba, or modern Iran needing to import gasoline while exporting oil.

So, the Mexican Govt gains the oil wells, minus the managers and technical experts, a means of transporting the oil overseas, or enough refinery capacity to actually process all of it into other forms than crude oil.

We're not in the great depression, so there is not alot of excess capacity out there. Which means they will loose exports unless they want to contract with somebody with extra capacity to handle that oil...which would now be Royal Dutch & Shell since they just lost access to some fields ... in which case RD&S will be wanting some compensation.

edit : I do apoligise for missing the original post in May, but thats when my prior project was due. Now I'm cranking to wrap things up on the current project before I go on vaction...

Even a strategic reserve has a limit when it cannot be replenished.

sorry for the delay, been very busy

Official Netherlands Response 1938
"The Netherlands views respect for patents and upholding of contracts as crucial for the maintenance of international trade. The Netherlands will at this time bar the import of goods originating with companies owned, operated, contracted, franchised, or otherwise licensed by the Government of Mexico. These are interim measures. Consultations will be made with the members of the Pan European Trade Alliance, members of AEGIS and the United Kingdom. Should Royal Dutch & Shell and the Mexican government come to a equitable resolution, these matters will be reconsidered

Follow Up Royal Dutch & Shell press release late 1938

"Royal Dutch & Shell has failed to secure compensation from the Government of Mexico for the nationalization of facilities located in that Nation. Royal Dutch & Shell has signed contracts between this corporation and the Government of Mexico which have been violated. Royal Dutch & Shell will pursue legal measures against the Government of Mexico in breach of contract lawsuits in several venues. These include the United Kingdom and the United Kingdom of the Netherlands. Favorable resolution of these legal efforts will allow Royal Dutch & Shell to place liens on possessions of the Mexican Government held overseas, including profits made from sale of oil.

Royal Dutch & Shell has finalized plans to disassemble a refinery in Paramaribo for shipment to Jeddah, in the Kingdom of Saud. Surveyors will establish the feasibility of plans for a pipeline from the Kingdom of Saud to the Red Sea coast town of Al Hudaydah, and the potential placement of a refinery there. This is mainly expected to follow the Sana'a - Ridyah-Jeddah road. Additionally, the Koninklijke Marine has offered to subsidize six tankers to be placed in reserve. The additional tankers idled by the Mexican Eagle losses will be mothballed at company expense, until further fields are developed. "