Needed: A Point One

U.S. businessmen have long been warning the Administration that a Point Four program to develop backward countries can't work unless there is also a Point One to guarantee the safety of U.S. investments abroad. Last week came the latest proof that they are right.

Since 1933, Ultramar Petroleum, a joint subsidiary of Socony-Vacuum and the Texas Co., has been refining crude oil shipped into Argentina from Colombia and the Gulf of Mexico area, and marketing the finished products through 1,500 affiliated outlets. But when Juan Peron, who has never encouraged foreign investments in Argentina, refused to let Ultramar take out its profits in dollars, it had no incentive to improve the property. The refinery (Argentina has only 17 others) became obsolescent, and millions of dollars were needed to modernize it.

Rather than throw good money after bad, Socony and Texaco notified Argentina that they planned to liquidate the company. Belatedly, Argentina began offering some concessions to Ultramar. The owners replied that they would rather sell the plant for scrap than continue operating it. Last week, Argentina agreed to buy the refinery from Ultramar for 75 million pesos (some $5,360,000), about three-fourths the original investment. But the companies, barred from converting pesos into dollars, are now trying to find something to do with the money in Argentina. Said one oilman ruefully: "Instead of having a refinery which was earning no money, Ultramar now has pesos which are earning no money."

Last week Socony, the only U.S. producer in Egypt, gave that government a lesson of the same sort. Socony, which is producing 11,000 barrels of crude daily on the Sinai Peninsula, also maintained a branch to hunt for more oil, which Egypt needs. But Egypt has forbidden any new oil leases to foreign companies unless they are 51% owned by Egyptian nationals. Rather than set up a new company, Socony stopped drilling in Egypt.