Monday, September 23, 2013

Energy reform debate opens in Mexican Senate, with grave warnings of "foreign takeover" of PEMEX

"We're facing the grave reality that the foreign petroleum producers which were expropriated in 1938 - now with new names - may return to manage the industry, and to decide who will be the long term beneficiaries of Mexico's vast hydrocarbon deposits" - Cuauhtémoc Cárdenas, today in Mexico City

Guadalajara -
Cuauhtémoc Cárdenas, the 79 year old son of the man who seized foreign oil company assets and nationalized Mexico's petroleum industry three quarters of a century ago, today told a legislative committee in Mexico City that "call them whatever you want to call them, but the administration's energy reform proposals are a privatization plan."

The committee began public hearings this morning on a proposal by the 10 month old Institutional Revolutionary Party (PRI) administration of president Enrique Peña Nieto to amend articles 27 and 28 of the federal constitution, which grant the government a strict monopoly in the hydrocarbon industry.

Cárdenas is the son of former Mexican president Lázaro Cárdenas del Río (in office 1934-1940), who on March 18, 1938 nationalized Mexico's entire petroleum industry and expropriated all assets of foreign oil companies in the country. PEMEX was born as a result. In 1989 Cuauhtémoc was one of the founders of the left wing Democratic Revolution Party (PRD), and is often referred to as its "moral compass." He is intransigently opposed to any change in the structure of PEMEX which might result in a loss of Mexico's sovereign ownership and control of the enterprise, especially to foreign investors.

But PRI administration officials contend PEMEX is a moribund institution incapable of carrying out the exploration and development of Mexico's abundant oil and natural gas reserves. Last week the federal secretary of energy told an audience that in 2012, the U.S. opened 137 new deep water wells in the Gulf of Mexico, while Mexico opened six. He attributed the difference to the lack of private investment capital in PEMEX, noting that in the United States dozens of private enterprises participate in energy exploration and investment.

Without energy reform, Mexico will need more than half a century to reach U.S. output, secretary Pedro Joaquín Coldwell said. "By then it will be too late for Mexico."

Energy experts frequently point out that gasoline in Mexico costs the consumer considerably more than it should, because the nation buys about 50% of the fuel from abroad, mainly the U.S. Mexico must rely heavily upon foreign refineries because its own petroleum infrastructure is underdeveloped.

Today Cuauhtémoc Cárdenas, who served as the PRD governor of Mexico's Federal District from 1997 to 1999, told legislators that president Peña Nieto's ultimate plan is to hand over the entire energy sector to private investors. From the well of the senate chamber, Cárdenas said Mexico is confronting "a national emergency," equivalent to that occasioned by the massive earthquake which struck the capital city in September 1985.

"It's critical that our energy industry not only be used rationally, but that oil production retake the leading role in Mexico's growth and national development," Cárdenas argued this morning.

Last week the influential Mexican Institute of Financial Executives said the economy will grow a scant 1.5% in 2013, while press sources reported that key government pension funds are virtually bankrupt, including PEMEX and Mexico's federal and state workers' social security. Mexico is in full recession, say business executives.

With a clear reference to his long dead father, Cárdenas told legislators: "We are facing the grave reality that the foreign petroleum producers which were expropriated in 1938 - now with new names - may return to manage the industry, and to decide who will be the long term beneficiaries of Mexico's vast hydrocarbon deposits."

The "conscience" of Mexico's leftist PRD also claimed the new PRI government has offered no proof that natural gas, electricity and gasoline prices would drop if PEMEX is opened to private investment.

"There are no statistics to back up the claims, much less an integrated, coherent national energy policy which has been offered," said Cárdenas today. And he argued that the proposed constitutional amendments might eventually be applied in such a way that the federal government would completely be kicked out of the energy sector, essentially eliminating the purpose and duties of PEMEX and the Federal Electric Commission.

According to Cárdenas, the plan and purpose of the pending reforms is to turn over the entire energy sector primarily to foreign producers, who hold more ready capital than domestic investors, he said.

Andrés Manuel López Obrador, leader of the far left MORENA party and bitterly opposed to the proposed legal changes, was also invited to address today's high profile legislative session but refused. He said late last week that the constitutional amendments have already been approved behind the scenes, and predicted they will be officially passed on Oct. 15. Calling this week's hearing a "farce," López Obrador said that "only citizen mobilization" can derail the Peña Nieto government's plan. "The fix is in" on energy reform, says AMLO.

The two time presidential candidate is calling for yet another national strike, and has scheduled major demonstrations for this Wednesday and again on Oct. 2, some of which may be carried out jointly with the striking teachers' union CNTE. The syndicate is now in its sixth week of a work stoppage which has closed over 13,000 schools and idled more than a million school age children in Oaxaca and Chiapas states.

Over the weekend López Obrador also called upon Peña Nieto to schedule a national plebiscite on PEMEX's future before pressing ahead with a legislative vote. In the same speech he accused the president of "stealing the election and defrauding the Mexican people" in last year's election. López Obrador calls 2012 election "very dirty, a national shame."

Oct. 7 - López Obrador calls for campaign of protest and civil disobedience over PEMEX reforms
Sept. 21 - Andrés Manuel's vision for Mexico
Sept. 19 - Mexico's Left determined to shackle the nation to the past

Cuauhtémoc Cárdenas and López Obrador at a recent political rally. Opposition to education and energy reforms supported by PRI and PAN unite them, as does anything to the right of very far left.

© MGRR 2013. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.

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