The MacNeil/Lehrer Report; Interview with Jose Lopez Portillo

ROBERT MacNEIL: Tonight, from the Presidential compound in Mexico City, Los Pinos, the views of President Lopez Portillo on oil pricing and his relations with the United States.

Good evening. Energy chickens came home to roost for the United States with a vengeance this past week. First there was the blow of further increases in the price of imported oil, imposed by OPEC: on top of that came the accident to the Three Mile Island nuclear power plant, which has riveted the nation`s attention and anxieties ever since. While that appears to be cooling down tonight, one obvious consequence of the anxiety will be a far more searching look at the safety of the nuclear program, which now produces thirteen percent of this nation`s electricity. Any reduction of nuclear power generation would mean even greater immediate reliance on oil or gas. Whatever happens, this country`s fortunes may be tied increasingly to Mexico, the often neglected neighbor to the south, which happens to have oil reserves which may rival those of Saudi Arabia.

But so far, efforts to strike a deal between their oil and our needs have been bedeviled by a certain prickliness between the two countries. To explore the Mexican thinking further, Jim Lehrer had the first inter view with President Portillo since Jimmy Carter`s strained visit in February. They spoke in the library of the Presidential compound.

JIM LEHRER: Good evening, Mr. President. It`ll probably come as no surprise that I`d like to talk to you about oil to begin with.

JOSE LOPEZ PORTILLO: Not at all surprised. This is what we have every day.

LEHRER: Mexico has decided to follow the lead of OPEC and raise the prices on oil, is that correct, sir?

LOPEZ PORTILLO: We operate within the world market, and therefore we have to increase or lower the price in accordance with the prevailing prices on the world market. Our oil is sold to any nation in the world that wishes to buy it. But these are serious negotiations, we negotiate with all our clients and we want to establish permanent relationships with these clients. We do not enter the speculation market; we do not have any spot sales.

LEHRER: The price that Mexico has announced is even a little bit higher than the OPEC price, is it not?

LOPEZ PORTILLO: Only for reasons of transportation. We are now trying to determine what the price shall be, and the director of the Mexican Petroleum Company will give me a report in a few days. But this has been the structure of sales that we have followed for a long time.

LEHRER: Mr. President, Mexico is not a member of OPEC. Why do you feel that you are bound to also raise the price when OPEC raises its price?

LOPEZ PORTILLO: Because the market conditions are established by the countries that offer the greatest amount of oil, and these are the OPEC countries. If we`re selling on the world market, it would be absurd for us not to go along with the price that has been established.

LEHRER: But there would be nothing to prevent you from charging a cheaper price; people charge cheaper prices all the time for products, do they not?

LOPEZ PORTILLO: I would like to know who sells at a cheaper price so that I could purchase these products at a cheaper price.

(Laughter.)

LOPEZ PORTILLO: There is really, sir, an enormous disorder in all of these things. There is an enormous amount of disorder in all of these aspects, in all of these things, and that is why I spoke about this with Mr. Carter and I also referred to this problem when Giscard was here on his state visit. I mentioned the fact that some order should be put into this situation in order to avoid these sudden moves that bring about an imbalance in the economic situation of the world. I`m perfectly aware that price at this moment is only a temporary advantage for the oil-producing countries and the countries that sell oil, but that after that we will have the impact of the inflationary wave; and the price is only an illusion.

LEHRER: Well, there are economists in the United States and elsewhere in the Western world who are already saying that this one price increase could cause such inflation that it could seriously harm the economies in most of the major countries in the Western world. Do you agree with that?

LOPEZ PORTILLO: Of course I agree with that. I remember the impact of the oil crisis of 1973-74, but the developed countries have ways of taking care of themselves, because they have other products that they can sell at higher prices. The countries that are harmed the most are the underdeveloped countries that do not have oil. These are the ones that worry me the most, and that is why we have insisted once and again that we should set up a system that would bring some order into all the alternate sources of energy.

LEHRER: But back to my question of a moment ago: until this system is created, is Mexico not also contributing to this serious inflation problem in the world when it also follows OPEC`s lead and raises its oil prices?

That`s the question I was asking a moment ago.

LOPEZ PORTILLO: Mexico, the OPEC countries, and the entire world. Who is controlling inflation? It`s not only the oil that is bringing about this inflation; oil prices increase because the dollar value de creases. The dollar value decreases because there`s inflation. And here we have a vicious circle that we have not been able to break through. So we have to follow the wave as it goes.

LEHRER: Do you agree with those U.S. officials who have said that the OPEC price increase was not justified and that it was partly brought about as an attempt by Arab nations to punish the Western world for the Israeli-Egypt peace treaty?

LOPEZ PORTILLO: That might be an explanation. I have not studied in detail that very confusing matter, and it would be an enormous commitment to take to pass judgment on this situation without having studied it in detail.

LEHRER: Based on the market and Mexico`s knowledge of the international petroleum market, was this price hike justified?

LOPEZ PORTILLO: If the market price increases, we have to increase our price, too, because we could not sell our oil at a lower price. If we did so we would be subsidizing somebody, and this would not be justified. We would do this if this would mean a solution to the whole situation, but it would not be a solution. What would happen to us is that we would receive the inflationary impact without having gotten the original advantage. There is enormous world disorder, and this is the reason for the entire situation. I would like to ask those countries or people or companies that sell sophisticated equipment if they would sell it for a higher price, for a lower price, to whom, where, how?

LEHRER: I`ll ask them when I get back to the United States, Mr. President. (Laughing.) Look, has the discovery of these tremendous oil reserves in the United States -- excuse me, in Mexico...

LOPEZ PORTILLO: In the United States, too, sir. (Laughing.)

LEHRER: (Laughing.) Many years ago. The new discoveries, the oil reserves in Mexico, have they altered the relationship between the United States and Mexico in any dramatic way?

LOPEZ PORTILLO: No. They simply put to the test the principles in which both countries believe.

LEHRER: The reason I asked that is that the comment you made when the President was here was that Mexico has suddenly found itself the center of American attention, attention that is a surprising mixture of interest, disdain and fear. Who are the fearful Americans you referred to, Mr. President?

LOPEZ PORTILLO: What I am referring to, sir, is what you call the silent invasion: that is to say, the migrant workers that go from Mexico to the United States and that of course create an impact and bring about some disorder in your work market. And I have heard an American make a comment of the following nature, that the silent invasion means a greater danger even than Russia. And I believe that there are sectors of the American population that are very much afraid of a greater penetration of Mexicans into the United States. That is to say, somehow these are two parallel problems, the problem of the increase in our oil reserves and what you call the undocumented worker. This all of a sudden brought about an unprecedented interest on the part of the United States.

LEHRER: You also used the word "disdain." How have you felt disdain, sir?

LOPEZ PORTILLO: In the traditional sense of the relationship between Mexico and the United States. The image that the American has of the Mexican who sits under a tree with a big hat and has fallen asleep, and who always says, "Manana, mi amigo, manana."

LEHRER: What is the average mexican view towards the Americans, towards the United States?

LOPEZ PORTILLO: It`s a very complex mixture. These are mixed feelings into which the sociological and historical factors enter; extralogical projects. There is a certain amount of admiration, there is historical rancor. It is a very interesting relationship as neighbors.

LEHRER: Is it getting better, sir?

LOPEZ PORTILLO: I really believe it is. Particularly I feel that the basis has been laid in order to create a firmer relationship; because, as I said in another part of the speech that you have referred to, what our people want are structural, in-depth solutions and not concessions made in accordance with circumstances.

LEHRE R: Mr. President, do you feel that President Carter`s visit to Mexico was prompted by the discovery of the new oil reserves in this country?

LOPEZ PORTILLO: No, that would be too simplistic; that would be absurdly simplistic. No, it was a result of my state visit to the United States two years ago, and at that point we decided that we would meet every so often in order to talk over the machinery that has been established for our new relationship.

LEHRER: The reason I asked that was there is a lot written in the United States press about how Mexico has all this oil, so President Carter`s going to go down and see what kind of deal he can strike.

LOPEZ PORTILLO: You have touched upon a point which is a mystery to me, and that is the American press. (Laughing.)

LEHRER: (Laughing.)

LOPEZ PORTILLO: For me, it is incredibly surprising what happened with President Carter`s visit. When I was thinking that our relations were most cordial and that there was great understanding between us, I found that the American press was saying that I was an insulting person. I was amazed at that fact; I think it`s a problem of communication that I have not yet been able to understand. I felt a little better when I read that an American journalist had said that Aristotle, whom I quoted in one of my speeches, was also a very insulting person.

(Laughter.)

LOPEZ PORTILLO: So therefore it seemed to me that there was some kind of a very mysterious problem involved that I could not comprehend.

LEHRER: Mr. President, what you`re obviously referring to were these reports from all the American press who came down here; they said that Mr. Carter was coolly received: by you, by your government, by the people of Mexico. And your position is that that`s not so, is that right, sir?

LOPEZ PORTILLO: That is not so. He was warmly received, with the same affection and the same decency and dignity with which I and my family were received in the United States. Of course, if what the American people were expecting was for President Carter to be received in Mexico as the Pope was received, that would have been a very absurd expectation. (Laughing.) If that is the point of comparison, then of course they would qualify it as a cold reception. But I have an enormous personal admiration for President Carter. I feel that he is a particularly honest man. So I could never receive coldly one of my guests, particularly when I am suggesting that we have to improve our relationship as neighbors. If I were to receive him coolly, this would be a very bad starting point. There`s something in the whole thing that I can`t understand.

LEHRER: Well, what about your remarks at the luncheon, Mr. President? You used words like "deceit," "mistrust," "hostility." Would you not agree, Mr. President, that those were not words of warmth and affection?

LOPEZ PORTILLO: It is only now that I have come to realize that the American press is afraid of words. I had thought that they would be understood in their true worth within a given context and with a given in tention. And I`m not trying to justify anything that I have said. I have since then reread my speech, and I ratify everything that was said in the speech. I continue to state that among neighbors the relationship has to be a relation of decency so that it can be a lasting relationship. And it must be fair. And something which is unfair will not be very dignified. But it seems that this interview is all being channeled and focused towards this event. Are there not other important points that we could take up?

LEHRER: Yes, sir. The question you mentioned a moment ago, what is called in the United States the illegal alien problem: what would you like for the United States to do about that? From Mexico`s point of view, what would be the solution to that problem, sir?.

LOPEZ PORTILLO: We talked about this to President Carter, and it was agreed that the Governor of Florida -- I believe Mr. Askew -- would be coming; he would be coming here and that he would look into the problem, be cause it is a problem that is not well known and it has not been set in its right dimensions. And until we`re able to know the facts and until we`re able to know reality, and until we consider reality as a problem, we cannot seek the solution to this problem. If you ask me what I want, I repeat what I`ve always said: immigration rights shouldn`t be confused with labor rights or human rights. And if a person has violated an immigration law, that person should be punished in some way. But this does not mean that his labor rights should be violated, and even less his human rights.

LEHRER: Is it your position, Mr. President, that that is what`s happening in the United States now to Mexican workers?

LOPEZ PORTILLO: Yes, on many occasions.

LEHRER: You spoke to President Carter about that, did you not, when he was here? What did he say about that particular part?

LOPEZ PORTILLO: Exactly that, that we should bring it up, that we should talk about it, that we should state the problem in its true dimensions, that we should give it due weight, that we should meet again in order to deal with the problem once more.

LEHRER: Another bone of contention between the two countries, of course, was that decision on 1977 to cancel the natural gas contract. Do you feel that problem is on the way to a solution at this point?

LOPEZ PORTILLO: It`s already been solved. The gas that was to be sold to the United States and that the United States no longer wanted, we are going to make use of that gas here in the country. The gas pipeline that was going to deliver the gas to the United States, the route is going to be changed and it will now be the main factor in the increase and improvement of our economy. However, we shall have a surplus, and we can negotiate on the gas surplus which we will have, or we can talk about the fuel that gas will substitute.

LEHRER: Mr. President, thank you very much.

LOPEZ PORTILLO: A sus ordenes.

MacNEIL: That interview was recorded on Friday. That`s all for tonight. We`ll be back tomorrow night, and we`re keeping an eye on developments at Three Mile Island and we`ll return to that story when the situation changes decisively. I`m Robert MacNeil. Good night.