Protection of American Citizens Abroad - Politics of protecting property abroad

Among the duties of the U.S. Consular Service, the facilitation of American trade and investment abroad has figured prominently. Since the 1920s and 1930s, however, the United States has increasingly found it difficult to safeguard American property abroad against the rise of intense nationalist feelings in Latin America, Africa, the Middle East, and Asia. Attempts to use military power in their defense, especially if the use of force assumes the character of "gunboat diplomacy," has often proven counterproductive. In these circumstances, the United States has increasingly come to depend on diplomacy.

By the 1920s, for example, Presidents Calvin Coolidge and Herbert Hoover, recognizing that military intervention was arousing the ire of Latin American nations, began a shift toward cooperation. This new line, which President Franklin D. Roosevelt publicized as the policy of the "Good Neighbor," was welcomed in the Western Hemisphere, but private interests in the United States were notably less enthusiastic.

Confirmation of the private interests' apprehensions came in the late 1930s, when Mexico ordered the nationalization of American, British, and Dutch oil companies. The American firms valued their expropriated property at $100 million and demanded that their government force Mexico to make restitution. The Roosevelt administration instead embarked on extended and difficult negotiations that ultimately produced a comprehensive settlement. It provided Mexico with economic assistance, an advantageous trade agreement, and a mechanism for settling a variety of claims. The Roosevelt administration regarded such a sweeping settlement as a major success, especially since it promised the United States increased security along its southwestern frontier at a time when the world was going to war. Administration officials also thought that American negotiators had won a substantial victory in gaining $24 million for American interests in Mexican oil. Mexico's initial intent had been to expropriate those interests, making no payment. American oilmen saw much less to praise, but they had no alternative to taking the sum offered.

After World War II, U.S. corporations faced wholesale nationalization of their overseas property in eastern Europe, Asia, the Middle East, and Latin America. The United States attempted to counter what amounted in most cases to uncompensated seizures with two steps: the negotiation of commercial treaties with guidelines for compensation for nationalized property, and passage of the Economic Cooperation Act of 1948, a measure that provided government-financed insurance for a limited range of investments. Neither the treaties nor the legislation helped much because they covered relatively few of the businesses that were taken over. In consequence, the United States sought, wherever it could, lump sum settlements on property that had been seized. These settlements were reached in the early years of the Cold War, a time when bitter U.S.–Soviet rivalries prompted competitive bidding for the friendship of "Third World" nations. Again, American investors claimed that the negotiated sums were much less than what they had lost. Moreover, the payments came in so slowly that investors suffered additional losses.