The Prize: The Epic Quest for Oil, Money, and Power

by Daniel Yergin

Regan said, “You really have a problem.” “No, Mr. Secretary,” replied Silva Herzog, “we have a problem.” The Mexicans and Americans started working on Friday afternoon and continued virtually nonstop until the early hours of Sunday morning. They put together a multi-billion-dollar package of loans and credits, as well as advance purchases of Mexican oil for the United States Strategic Petroleum Reserve. But then, at around 3:00 A.M. Sunday, it seemed that the negotiations were about to break down. Silva Herzog had discovered a $100 million service fee buried in the agreement and was told by one of the Americans, “Well, when someone is in very serious difficulties, and you lend to them, they have to pay a fee.” Silva Herzog was furious. “This is not a business transaction,” he snapped. “Sorry, I cannot accept this.” He called López Portillo, who angrily said to terminate the discussions and return to Mexico City immediately. Later in the day, Silva Herzog was glumly eating a hamburger at the Mexican embassy, preparing to leave, when a call came from the United States Treasury saying that the $100 million fee had been rescinded. The Americans could not risk a collapse. Who knew what the effects would be on Monday? And, with that, the Mexican Weekend concluded, with the first part of the emergency package now in place. Silva Herzog flew back to find Mexico City in an uproar. He went on television for forty-five minutes with a blackboard but no written speech to explain what w...