Bucareli Treaty


The Bucareli Treaty, signed on 1923, was an agreement between the countries of México and United States. It was officially called "Convención Especial de Reclamaciones", for losses sustained by US citizens or companies by 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 Álvaro Obregón's government came from the fact that the US had not recognized the postrevolutionary regime. The Constitution of 1917, with a strong socialist and nationalist influence, had hurt many US interests which made US President Warren G. Harding refuse to recognize Obregón as the legitimate president. The US also demanded the repeal of several articles of the Mexican Constitution of 1917 or at least the 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 the recognition of Obregon, with a treaty in 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 is 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.
These conditions were demanded by the US to the Mexican government:
The Mexican Supreme Court of Justice of the Nation|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 to the increase, stopped production, and forced the government to repeal the tax.

Agreement

The Bucareli Treaty was signed by Álvaro Obregón on August 13, 1923 reached an agreement with these 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 but not his successors. However, his government was recognized by the US. 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 Rebelión Delahuertista in December 1923.
A common myth in Mexico is that the treaty forbade Mexico to produce specialized machinery and so Mexico would have delayed for many years its 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 the social and political instability 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 ended in 1917, production resumed.
The full text of the Bucareli Treaty, published after it was signed, shows the absence of prohibitions on technology.

Cancelation

When Plutarco Elías Calles took office on December 1, 1924, one of the main points of contention between the US and Mexico still was 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 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 UD government considered to Mexico was the second Bolshevik country on earth and they 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. México 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.

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