The Showdown Over Mexican Oil

By Kent Paterson

Mexico City

Only blocks from the Starbucks and Wal-Mart-owned outlets in downtown Mexico City, a renewed spirit of nationalism stirred in the old Zocalo plaza so important in Mexican history. Wrapping themselves in Mexican flags and holding banners that slammed gringo intervention, tens of thousands of protestors gathered on March 18, the 70th anniversary of Mexico’s expropriation of foreign oil companies, to hear former 2006 presidential candidate Andres Manuel Lopez Obrador of the center-left PRD party declare that the national oil company, Pemex, was not for sale.

Citing threats to national independence and constitutional guarantees, the self-proclaimed “legitimate president” of Mexico charged that the administration of President Felipe Calderon was attempting to dupe the public into believing that foreign money is needed to rescue Pemex. A business empire with nearly 147,000 workers, Pemex earned close to $104.5 billion in 2007, according to the Spanish news agency EFE.

“It’s clear that behind the intention to privatize Pemex is the greed of capricious minorities and corrupt functionaries,” Lopez Obrador said.

In recent weeks, government-sponsored spots proclaimed the need to drill for a “treasure” (oil) deposited in deep waters located in the Gulf of Mexico. Many reserves are located near the boundary that separates Mexican and US waters, and some voices are urging going for Mexico’s share of the black gold before the gasoline-crazed gringos suck dry the last of a non-renewable resource.

Arguing that Mexico’s proven oil reserves will expire in less than ten years, the Calderon administration contends that foreign capital, technology and partners are needed to tap into the deep-water oil. Since polls show the Mexican public opposed to de-nationalization, the federal government has been very careful to couch its Pemex reform proposals as merely partnering with deep-pocketed, capable associates rather than privatizing a national patrimony.

Lopez Obrador contends that the presence of foreign capital in the national oil industry will diminish profits and cheat social services funded by Pemex’s revenues, but Georgina Kessel, Calderon’s energy secretary, holds the country’s future spending on social programs depends on exploiting the deep-water “treasure.”

“It’s up to the executive and legislative branches, as well as society, to make decisions to determine what we want to do with these resources,” Kessel was quoted in the press. “Do we want to turn them into wealth, growth and health or do we leave this richness at the bottom of the sea?”

Other political actors are weighing in on the issue, too. President Calderon’s conservative PAN party is in favor of opening the door to foreign investment, while leaders of the former ruling PRI party appear split on the issue. Muddying the debate, until now, is the lack of specific legislation aimed at reforming Pemex. Pro-Calderon legislators were expected to introduce a bill in the Mexican Congress in March, but they delayed action after Lopez Obrador’s followers took to the streets.

Stoking the controversy is the scandal over Interior Minister Juan Camilo Mourino’s association with a family-owned company, Transportes Ivancar. While serving as a government official during the Fox years in 2003, Mourino signed contracts with Pemex on behalf of Ivancar. Mexico’s lower house of Congress has appointed a commission to investigate the legal proprieties of Mourino’s dealings, but Lopez Obrador demands an audit of Pemex and its dealings with Mourino, foreign companies and other government officials; the embattled Interior Minister denies any wrong-doing.

In an important sense, the Mourino brouhaha touches on a key point that is often glossed over in the wider debate: many of Pemex’s functions are already privatized and outsourced. For instance, the familiar Pemex gas stations are usually franchised to politically-connected individuals. A story in Proceso magazine reported that Pemex and the National Electricity Commission have awarded more than 3,000 contracts to private companies. The contracts cover infrastructure, transportation and maintenance services. Busy milking the oily cash cow are Halliburton, Repsol, Lewis Energy, Baker Hughes, China Petroleum and Mexican billionaire Carlos Slim’s ICA company, among others.

Reportedly, 30 US companies are ready to invest in Mexican oil if the the Calderon’s pending legislation to expand private sector contracts and joint agreements somehow makes it through the Mexican Congress.

Still feeling cheated by the disputed election of Calderon in 2006 and increasingly sensitive to Washington’s hand, an important segment of the population has no confidence in reform proposals coming from Los Pinos, the Mexican White House.

“I think the propaganda campaign about the ‘treasure’ that Calderon is conducting is an idiocy,” said Beronice Salvador, a Mexico City university student who attended the March 18 rally. “What Calderon represents to us is a fraud, and that’s why we can’t trust anyone like Calderon.”

To defend Mexico’s oil, the pro-Lopez Obrador camp has come up a civil disobedience plan that involves cutting the nation’s transportation corridors and surrounding the national congress with a human “wall.” According to Mexico’s leading opposition politician, volunteer brigades, led by women, have been organized in all 31 of Mexico’s states and Mexico City to ensure Pemex remains nationally-owned. In late March, university students in Ciudad Juarez organized a protest against privatization at the US Consulate. Giving moral legitimacy and voice to the movement is a new national commission made up of prominent intellectuals including internationally-acclaimed novelist Elena Poniatowska, cultural analyst Carlos Monsivais and historian and political commentator Lorenzo Meyer.

Lopez Obrador, insists on a non-violent campaign. “We don’t want violence. We’re going to peacefully transform Mexico,” he vows.

Kent Paterson is a freelance journalist who divides his time between Mexico and the US Southwest.

From The Progressive Populist, May 1, 2008

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