Mexico’s capitalist parties capitulate to U.S., agree to sell off energy resources

While 3,500 heavily armed police surrounded the building housing the Mexican Senate, a majority of that body approved an “energy reform” bill at midnight on Dec. 11. The sweeping legislation passed with only 10 hours of discussion. It will open the road to privatization of the country’s most valuable asset: the energy sector, including oil, natural gas and electricity.

Several hours later the bill was approved by the lower house, the Chamber of Deputies, and sent to the 31 states of the Mexican republic for confirmation. Before this law can be finally enacted, it must get the approval of 17 states because it requires a change of several articles in the Constitution. As of Dec. 16, 16 states have already endorsed it.

This law will have vast negative consequences for the masses of people, and its passage has already aroused mass opposition. The only way it could get passed was through the “fast-track” process, which allowed some deputies only 10 minutes to cast their votes, combined with the heavy police presence. In some areas senators and/or deputies were escorted to the chambers in police trucks. Last-minute changes of agenda often prevented opposition party deputies from voting.

The “reform” will allow private investment, both national and transnational, in the energy sector, which has been owned and controlled by the Mexican state through the state oil company, Petroleos Mexicanos, or Pemex. It will give ample rights to private companies for exploration, extraction, refining and sale of oil and natural gas. It will also completely eliminate the five seats occupied by the oil workers’ union on the 15-member Pemex board.

Those promoting privatization try to justify it by claiming that Pemex does not have the resources to extract oil in the deep waters of the Gulf of Mexico where there are significant deposits — estimated at 50 percent of the country’s untapped oil resources. They also say it needs technological upgrades in order to be “more competitive.” The privatizers claim Pemex will be bankrupt in 20 years without the changes. (Jornada.unam.mx)

Potential impact

Pemex provides Mexico’s largest single source of revenue. According to Manuel Bartlett, an opposition senator from the leftist Workers Party (PT), “The resources that Petroleos Mexicanos pay the treasury would go from 68 percent today to 55 percent in the best of cases, and to only 27 percent in the worst case scenario, depending on the type of contract in question.” (jornada.unam.mx, Dec. 13) Pemex currently helps fund many social services and programs like education and health care.

Under the reform, the resources that now pay for these services would be shifted to private hands, mostly outside the country and away from the Mexican people who need it most. According to the Commission for Latin America and the Caribbean, Mexico right now is the only country in Latin America where poverty has been increasing. A recent study showed that the number of Mexicans living under the poverty line has grown to 60 million out of a population of slightly over 112 million. Tellingly, Mexico State has the greatest poverty. The current president of the country, Enrique Peña Nieto, was governor of Mexico State from 2005 to 2011.

Non-economic impacts like potential destruction of the environment and cultural devastation are also predicted.

Pemex’s wealth

La Jornada, newspaper of the prestigious National Autonomous University of Mexico, in an article entitled “Oil companies will have access to $3 trillion,” rebutted the claim made by reform theory authors that Pemex is bankrupt. Citing Mexican economists, Israel Rodríguez writes, “The most conservative estimates indicate that Mexico has proven oil reserves of 14 billion barrels. For shale oil, crude resources in Mexico are 13 billion additional barrels and for natural gas reserves, 545 trillion cubic feet.”

He continues, “Pemex remains the world’s fifth-largest oil producer, is also the fifth-largest exporter and the Mexican reserves are located in thirteenth place worldwide. Its extraction costs are the lowest: $6.84 per barrel as compared to $7.55 for Statoil, $9.55 for Exxon or $13.62 for Petrobras. Its earnings before interest, taxes and amortization rose from $71 billion in 2008 to $88 billion in 2012. During the last three years it has maintained an average investment of $22 billion, while companies like Exxon or British Petroleum made ​​global investments of $36 billion. Besides, its debt payments amount to 6.4 percent of its operating capital, making the claim that it lacks resources to meet new challenges highly questionable.”

Who’s behind the reform

President Peña Nieto belongs to the right-wing Institutional Revolutionary Party (PRI), which ruled the country for decades until 2000. When it regained power a year ago, after a widely corrupted election, he promised a thoroughly neoliberal plan disguised as a plan to “save the nation.” Called the Pact for Mexico, it encompassed big reforms in education, finances, telecommunications, security and more.

These reforms have been a direct road to privatization and anti-union policies. The three main parties supported the Pact: the PRI; the National Action Party (PAN), which under Peña Nieto’s predecessor, Felipe Calderón, militarized the country and unleashed terrible violence; and the Revolutionary Democratic Party (PRD). The PRD has since separated itself from the Pact, mostly in opposition to the reform.

Basically, both the PRI and the PAN want to impose a neoliberal agenda on behalf of the wealthy and the transnational corporations. They both serve as proxies for U.S. imperialism in Mexico and in the region as well.

First to praise passage of the reform were Washington and the major U.S. corporate media. The opposition has pointed out since the beginning that the reform was drafted by and on behalf of Exxon Mobil, Chevron and other major energy corporations. Imperialist domination will advance in Mexico with terrible consequences.

The Mexican opposition sees the energy reform as the most devastating development in recent history, equal to passage of NAFTA in 1994. It signals the end of Mexican sovereignty in the energy sector. It was in 1938, when foreign oil companies were stealing the Mexican people’s oil and other natural resources, that then-President Lázaro Cardenas moved to secure it through legislation that nationalized the oil industry. Now, 75 years later, U.S. oil companies have finally, after many attempts, succeeded in opening up Mexico’s most important natural resources for further exploitation.

The opposition

The energy reform, as well as other anti-people measures regarding education, transportation and more, have been opposed by left-wing senators and deputies, unions and social movements. Efforts to stop the legislation were made by the PT, the Civic Movement and the National Regeneration Movement, whose founder, Andrés Manuel López Obrador, was robbed of the presidential election in 2006 by the machinations of the institutional right-wing parties. However, the overwhelming police presence and the speed of the proceedings prevented a successful and timely fightback.

Militarization and state violence have played a major role in preventing an effective struggle. Repression and even assassination of political activists are common in Mexico. The state has passed new legislation curtailing public demonstrations in the capital, going so far as to prohibit marches that make demands on the city or federal government.

The progressive forces have made several attempts to unite for a more concerted struggle. Many mobilizations have taken place, called by various organizations. A united front is in the works organized by the PT, PRD, Civic Movement, National Union of Workers, and unions of telephone and university workers, among others. Artists have joined to oppose the reform in a collective called “El Grito Más Fuerte” (The Loudest Shout).

Names are being collected on a petition for a plebiscite to repeal the law.

Dissatisfaction is mounting. No agreement can succeed if the people unite to fight back. The progressive movement in the United States should assist the progressive forces in Mexico in every way possible to expose the cruelty and hypocrisy of the U.S. capitalist government, which not only has failed to pass comprehensive immigration reform that would help Mexican immigrants, but will now move to crush them in their own country through the intensified exploitation of Mexico’s resources.