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Mexican President Reveals Controversial Energy Reform Plans

[All links lead to Spanish language pages except where indicated]

The President of Mexico, Enrique Peña Nieto [en], publicly presented his plans to reform the country’s oil industry with particular emphasis upon the operations of the semi-public Petróleos Mexicanos (Mexican Petroleum). Mexican Petroleum, or PEMEX, was created by presidential decree on 7 June 1938, the same year that the country expropriated oil [en] then being pumped by various private companies.

The proposal was announced at the President’s official residence of Los Pinos [en] on 12 August 2013. President Nieto’s plan includes changes to specific articles of the Constitution of Mexico (those relating to monopolies and state ownership of natural resources), but this first has to be debated by representatives and senators before it can be passed.

The President’s announcement, however, came as little surprise to groups both inside and outside Mexico who have been anticipating the news for many months. The Mexican website Revolución tres punto cero (Revolution three point zero) broke the news after the annual meeting of the World Economic Forum in January:

Durante una mesa redonda del Foro Económico Mundial que se lleva a cabo en Davos, Suiza, el titular de la Secretaría de Hacienda, Luis Videgaray, afirmó que se prevé que la Reforma Energética esté lista para la primera mitad de este 2013.

Dicha reforma comprendería cambios en Petróleos Mexicanos (Pemex) para permitir mayor participación de empresas privadas.

Para Emilio Lozoya Austin, director de Pemex, quien también participó en dicha actividad, los cambios generarán “más valor” y, según afirma, no habrá privatización en los energéticos nacionales: “modernizar Pemex no implica privatizar ni que el Estado pierda la rectoría del sector energético”.

During a round table at the World Economic Forum taking place in Davos in Switzerland, the current Finance Secretary, Luis Videgaray, stated that it was thought that the Energy Reform would be ready by the first half of 2013.

This reform would involve changes to PEMEX in order to allow for greater participation by private companies.

According to the director of PEMEX, Emilio Lozoya Austin, who was also present at the meeting, the changes will generate “more value”, and that national energy will not be privatized: “modernizing PEMEX does not imply privatization nor that the state will lose control over the energy sector”

Days before the proposal was presented by President Peña Nieto, Victor Hernández from Blog de Izquierda (Leftist Blog) commented:

Foto de Matthew Rutledge  en Flickr (CC BY 2.0)

Photo by Matthew Rutledge on Flickr (CC BY 2.0)

La privatización de Pemex de Enrique Peña Nieto ya inició desde antes de que se presentara la reforma energética.

Empezó con la venta del 48% del complejo petromquímico de Pajaritos, en Coatzacoalcos, Veracruz. El acuerdo se hizo a principios de año y finalmente se publicó en el diario oficial de la federación el 30 de julio.

La promesa del PAN [Partido Acción Nacional] y del PRI [Partido Revolucionario Institucional] de que no se vendería un solo tornillo de Pemex resultó falsa. No vendieron sólo un tornillo, sino LA MITAD de una de las petroquímicas más importantes de Pemex.

Para que se den una idea de lo importante que es el complejo de Pajaritos, en el sexenio de Vicente Fox el ejército mexicano compró lanzamisiles para protegerlo.

The privatization of PEMEX by Enrique Peña Nieto started long before the presentation of any energy reform proposals.

It started with the sale of 48% of the petrochemical complex in Parjaritos in Coatzacoalcos, Veracruz. The agreement was made at the start of the year and finally made public on 30th July.

The promises made by the National Action Party [en] and the Institutional Revolutionary Party [en] that not a single part of PEMEX would be sold turned out to be a lie. In the end what they sold was HALF of one of PEMEX’s most important plants.

Just to get an idea of how important the Pajaritos complex is, during Vicente Fox’s six year term the Mexican army bought missile launchers to protect it

John M. Ackerman (@JohnMAckerman), who is a supporter of Andrés Manuel López Obrador [en], a firm opposer of the current government, commented that the president’s proposal (which he believes is seeking the privatization of PEMEX) would not be able to trick Mexican society:

Afortunadamente, ya no existe posibilidad alguna de engañar a la sociedad con una privatización light vestida con las sedas de un supuesto “pragmatismo”. Con la propuesta del PAN se transparenta la ambición desmedida de los grandes empresarios nacionales y extranjeros en su búsqueda de quedarse con una tajada aún más grande de la riqueza nacional. Y con las constantes denuncias de Andrés Manuel López Obrador se evidencian las mentiras escondidas detrás de la idea de que una mayor “participación” de Exxon-Mobil y Halliburton automáticamente beneficiará al pueblo de México.

Fortunately there no longer exists the chance of misleading society with a privatization made to look more attractive by so called “pragmatism”. The proposal made by PAN (National Action Party) exposes the gross ambition of big national and foreign companies to get themselves an even larger slice of the national wealth. And after the constant denunciations of Andrés Manuel López Obrador we now see the lies lurking behind the idea that greater “involvement” by Exxon-Mobil and Halliburton will automatically benefit the Mexican people

Ackerman adds:

Enrique Peña Nieto ha sido rebasado por la coyuntura. Pospuso una y otra vez la presentación de su iniciativa con la esperanza de poder tejer previamente las alianzas necesarias para que la naturaleza privatizadora de su propuesta no se evidencie de manera tan desvergonzada. Por ello el presidente incluso se atreverá a recurrir a la engañosa táctica de utilizar la histórica figura del mismo general Lázaro Cárdenas para dar la impresión de que su iniciativa tendría el aval de este gran mexicano. Como colofón de esta puesta en escena, el presidente del PRI, César Camacho, ha amenazado con “defender hasta en las calles” la propuesta energética de su partido.

Enrique Peña Nieto has been left behind by the situation. Time and time again he postponed presenting his initiative with the hope of being able to string together the alliances needed to make sure the privatizing nature of this proposal wouldn’t be exposed in such a shameless manner. The president even dared to resort to the dishonest tactic of using the historical figure of General Lázaro Cárdenas [en] to give the impression that his initiative would have the endorsement of this great Mexican. As a climax to this mise-en-scène, the president of the PRI (Institutional Revolutionary Party [en]), César Camacho, has threatened to “defend in the streets” his party’s energy proposal.

On Twitter the username Arroz (@roxmgs) shared the following opinion regarding the reform:

I view the energy reform as necessary but in a different way: Redistribution of earnings from oil and don’t hand them over to PEMEX

A day before the proposal was announced, the researcher Miguel Carbonell (@MiguelCarbonell) mentioned one of the things that worries Mexicans most:

50% of the oil that we consume in Mexico we have to import. We’re doing something wrong #reformaenergetica

As is common among some Mexican analysts, the academic Luis Pazos (@luispazos1) could not resist comparing what is happening in Mexico with what is happening in an undeniably more advanced country:

In Norway, with private partners in state owned petrol companies and less employees than PEMEX, they produce more

Verónica Calderón (@veronicalderon), who followed the president’s speech, summed it up in the following way:

Speech by @EPN finishes in which he tells how incredibly important we are and how great Mexico is. One minute of applause. #Pemex

Much more important will be what is said in the coming days about the proposed reform presented by the president, however, the most important thing will be to first of all understand it in detail before issuing a value judgement. Similarly, it is worth highlighting that this proposal has been made within a political system based on distributed power meaning that the proposal will have to go to congress which will have the final say.

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