Conquering the future: the dangers of PEMEX privatization

20 Sep

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Big Oil is salivating over one of biggest exporting countries to the US. The reason is that President Peña Nieto’s administration has proposed the privatization of PEMEX or Petróleos Mexicanos, a state-owned company which manages the nationalized oil industry. This is despite the fact that President Nieto has said: “Pemex will not be privatized nor sold, in any way.” Ministry of Energy secretary Pedro Joaquín Coldwell tells us that PEMEX “deserves the opportunity to partner up and maximize its production.” George Baker, an analyst of the oil industry, says that Mexican President Peña Nieto is “setting the table for someone to put in legislation that could be attractive to an Exxon, BP and the rest of them.” Rupert Murdoch’s Fox “News” writes that, according to analysts, the reforms “make it more likely that U.S. oil companies will become the main beneficiaries of a new oil and gas boom south of the border.” A former American ambassador to Mexico, Tony Garza who is not an attorney for a multinational law firm (White & Case) told the Dallas News that “there’s every reason for optimism, but we’d be wise to temper it. It’s a fairly challenging political environment…It doesn’t necessarily have to be a duck, but if it looks and talks and quacks like one, then I think companies will go for that.” Alex Perez, part of a firm that is a consultant for energy companies in Mexico and the US said that some established businesses may have a “great deal of experience in horizontal drilling and hydraulic fracturing, which could help turn the Mexican energy industry around.” Despite all of this, opening up PEMEX to foreign oil companies carries with it a number of dangers including likely higher oil prices for Americans & Mexicans.

The business-friendly Nieto really wants to open up the oil industry of the country to the multinational corporations. He said recently that “Mexico is facing a historic opportunity. The country has the possibility of starting an Energy Reform, able to transform and elevate the quality of life for all Mexicans….Therefore, the spirit of this reform recovers the best of our past, to conquer the future. This constitutional reform bill will be first step to have an energy sector according to the [21st] century, competitive and efficient to accelerate the country’s development” and so on. But this neoliberal rhetoric of ‘competition,’ and ‘efficiency’ means that the workers will get screwed. As Luis Espinosa Cházaro, a leftist congressperson with the Democratic Revolutionary Party, is quoted as saying in the Washington Post: “Why share Mexico’s riches? We know there is a long line of investors waiting for these reforms…but we need this money for hospitals, for schools. We don’t agree to share these riches because Mexicans can’t do it; Mexicans can do it.” In part this is a similar argument that is used by American anti-war groups against wars in foreign lands, and is inherently nationalistic. In a sense this makes sense because, as a political analyst puts it, “for Mexicans, Pemex is like the Virgin of Guadalupe — it has the magic of symbolism. It’s like apple pie for Americans.” But there is something deeper that irks Mexicans about this attempt at privatization.

The global business community, especially those tied to the big oil companies, may want such a plan of inciting foreign investors, but the people do not. The American business magazine, Forbes, had an article back in June, in which they cited a poll by a research institute, Centro de Investigación y Docencia Económicas or CIDE, showing that 65% of Mexicans are against the “reforms.” CIDE continued on, noting that “Energy particularly oil, continues to be the stronghold of Mexican nationalism…many Mexicans are skeptical. They believe that a better alternative would be for the government to stop taking such a high tax from Pemex —40% of total government revenues — to allow it to reinvest instead of leaving it struggling to fund investment…Opposition politicians are conditioning talks on the oil overhaul to the government cracking down first on high level corruption.” However there is something even further explaining the reasoning that must be noted. A recent story on the Real News Network noted that protesting “teachers have connected President Peña Nieto’s desire to privatize Mexico’s national oil company, Pemex, to the education reform, saying they both invite transnational companies’ investment at the expense of Mexican citizens. Large mobilizations against the privatization of oil are scheduled for this weekend, and the teachers union has joined the call.” Outside the country in St. Paul, Minnesota, the Movement for National Regeneration or MORENA held a protest outside the Mexican consulate asking to end the privatization plan which resulted in a consulate official telling them he’d convey their comments to his superiors. As a member of the Minnesota Chapter noted, “MORENA-Minnesota protested today at the consulate in defense of Mexico’s petroleum and Mexican families’ economic well being. Enrique Peña Nieto’s PRI government wants to open Pemex up to the large multinationals, many of which were expelled from Mexico in 1938 by the nationalist government of Lazaro Cardenas del Rio. We feel that the protest was a complete success, which had a big political impact on the Mexican government’s diplomats in Minnesota.” Fight Back News! adds that the “scheme to privatize Pemex…would allow it to be sold off to multinational corporations [and] be a bonanza for the multinationals and would deprive the Mexican budget of huge amounts of resources, leading to inevitable cuts to social programs and services.”

A history of PEMEX itself is important to contextualizing the privatization effort. A commentary piece in Globe and Mail by Amelia Kiddle gives some of this history: “in recent years, Pemex’s oil production has slipped markedly…Most recently, a fatal explosion at the Mexico City headquarters of Pemex raised questions about crumbling infrastructure and a questionable safety record….Oil revenues account for more than a third of the government’s budget. Industry changes have a drastic effect not just on production and sales, but also the country’s ability to provide a social safety net for its people. Rather than paying dividends to private shareholders, Pemex pays its dividends to the Mexican people. The decision to expropriate the oil industry came when the Mexican subsidiaries of Royal Dutch Shell and Standard Oil refused to be bound by the Mexican Supreme Court’s decision against the companies in a labour conflict…Mr. Cardenas took swift and decisive action that was rewarded with an outpouring of nationalist support. The expropriation is still seen by many Mexicans as a heroic act in defence of national sovereignty in the face of economic imperialism.” Wikipedia’s article on the expropriation says basically the same thing, corroborating what this commentary says.Also see this history telling the detailed background of the expropriation by @carlosbravoreg. In light of these accounts, it is important to focus on President Lázaro Cárdenas, as in his term of office he had already overseen a radicalization of the land reform program and after “labor disputes with international oil companies, he announced the nationalization of Mexico’s petroleum reserves and the expropriation of all foreign companies’ equipment” as noted by Oxford University Press. The speech justified the takeover of the oil industry and part of it is as follows:

“For many years throughout the major period of their existence, oil companies have enjoyed great privileges for development and expansion, including customs and tax exemptions and innumerable prerogatives…These organizations…are charged with innumerable outrages, abuses, and murders…Comfort for the foreign personnel; misery, drabness, and insalubrity for the Mexicans…Another inevitable consequence of the presence of the oil companies…has been their persistent and improper intervention in national affairs…They have had money, arms, and munitions for rebellion, money for the anti-patriotic press which defends them, money with which to enrich their unconditional defenders…they rely on their pride and their economic power to shield them from the dignity and sovereignty of a Nation which has generously placed in their hands its vast natural resources…it was therefore necessary to adopt a definite and legal measure to end this permanent state of affairs in which the country sees its industrial progress held back by those who hold in their hands the power to erect obstacles as well…abuse their economic strength to the point of jeopardizing the very life of a Nation endeavoring to bring about the elevation of its people through its own laws, its own resources, and the free management of its own destinies…we wish to assure that the expropriation now decreed has as its only purpose the elimination of obstacles erected by groups who do not understand the evolutionary needs of all peoples…who would themselves have no compunction in selling Mexican oil to the highest bidder.”

There is something even more disturbing about Mexico’s plan to privatize PEMEX: how it fits into the Americanization of Mexico. In my time in Mexico in June and July, I observed troubling things, seeing in San Miguel de Allende that Americanization was on display. Many people of all ages and sizes wore designer clothes embroidered with the words Hollister, Aéropostale, Abercrombie & Fitch, American Eagle and numerous others. It seemed like I was back in Baltimore, seeing young people walking up and down the streets, which made me deeply unnerved. Beyond this, there were loosely enforced environmental regulations, which could be a reason for the air & water pollution. After all, a lot of people in the town bought bottled water from a subsidiary of Coca-Cola, Ciel, which had a likely boom as the water in the city was undrinkable. Despite this along with the shopping malls and growing consumerism, people had their own style. They were very resourceful with what they had, with the country’s high level of poverty (and income disparity) and everyone was kind to each other. Only to multinational companies such as Monsanto did they vent their anger (at least from what I saw). On a rainy day, this was deepened even more when I went to a meeting of Occupy San Miguel Allende mostly consisting of people in their 50s and 70s (I was the youngest there). They talked about the effects of NAFTA, planned a forum on the Trans-Pacific Partnership, discussed Fast Track, and also mentioned a sister treaty, TAFTA. This is relevant because such privatization would be continuing the corporatization and Americanization of Mexico itself.

As noted in a comment below, the situation is a lot worse than I described it:

The situation in Mexico is very bad regarding Americanization of the country, which is political code really for stating that US corporations actually run the country along with our own here in the US. Walmart Mexico is actually the biggest employer in Mexico even now, and most of us in the US know how destructive Walmart has been to our own commons (downtown areas, et al). The same has been done in Mexico by Walmart. Privatizing Pemex is only one part of a privatization American style that the Mexican elites are pushing for in coordination with the US government, that has already dismantled the previous passenger railway system of the country, the messed up the telecommunications sector, and working further to destroy the electrical power and mining sectors of the economy and rural agriculture sectors, and is now threatening to destroy the poorly functioning and poorly resourced public educational system there as well. Mexican elites have no independence from the US ruling class, nor desire to be anything much more than completely servile to the US. They think of their own country as being completely inadequate, and only desire to copy the US elites in their agendas. We can see what that has led to in how destructive their copying of the US ‘drug war’ has been to their own country.

There is something that must be done to counter this plan at “reforming PEMEX.” The revolutionaries, radicals, and others must coalesce to forcefully oppose this plan in mass protests. Some are already doing this, but there need to be more people. These don’t have to be only people in Mexico engaging in nonviolent resistance against the disastrous privatization plan, but also people in the United States as well. Building upon the second anniversary of the Occupy Movement, such resistance must put the struggle in an overall context by challenging capitalism itself, asserting that it is not only only the crisis and the problem, but that it must be abolished immediately for the sake of humanity.

*I was looking for a damn painting about Mexican oil expropriation by a Mexican muralist but I couldn’t find it. Please, if you can find it, go ahead. Use the guide of artists at the bottom of this page.

5 Responses to “Conquering the future: the dangers of PEMEX privatization”

  1. Harriet Logan September 22, 2013 at 3:10 am #

    The situation in Mexico is very bad regarding Americanization of the country, which is political code really for stating that US corporations actually run the country along with our own here in the US. Walmart Mexico is actually the biggest employer in Mexico even now, and most of us in the US know how destructive Walmart has been to our own commons (downtown areas, et al). The same has been done in Mexico by Walmart.

    Privatizing Pemex is only one part of a privatization American style that the Mexican elites are pushing for in coordination with the US government, that has already dismantled the previous passenger railway system of the country, the messed up the telecommunications sector, and working further to destroy the electrical power and mining sectors of the economy and rural agriculture sectors, and is now threatening to destroy the poorly functioning and poorly resourced public educational system there as well.

    Mexican elites have no independence from the US ruling class, nor desire to be anything much more than completely servile to the US. They think of their own country as being completely inadequate, and only desire to copy the US elites in their agendas. We can see what that has led to in how destructive their copying of the US ‘drug war’ has been to their own country.

    • interestingblogger September 22, 2013 at 9:34 pm #

      What you say is definitely true. When I was in Mexico there were a number of Wal-Marts and some other big box store the name of which I can’t remember. The Mexican elites definitely want to privatize PEMEX as part of a broader strategy. The US government is at the mercy of the big oil companies, so it works for them. Thanks for such a great comment.

    • interestingblogger October 15, 2013 at 3:24 am #

      Wait. Are you the same person as Tony Abdo… Because in my comments your email [logansafi@gmail.com] is the same as his.

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