Fast Track Energy “Reform” Approval Pushes Mexico Closer to Authoritarianism
William S. Stone

Reversing one of the most courageous and transformative decisions in Mexican history, the 1938 expropriation of foreign energy holdings,  current President Enrique Pena Nieto’s government has pushed through an energy “reform” that leaves the country wide open to  massive foreign investment of its lucrative oil resources. Untilthe early 1980’s when the neo-liberal technocrats took control of the country, this expropriation was highly regarded by most Mexicans.  In fact, March 18th, the day that the expropriation took place, became a national holiday when Mexicans celebrated President Lazaro Cardenas´ defiance in refusing to bow to pressures from countries and corporations particularly from the United States.   It was a source of great pride that these energy resources belonged exclusively to Mexico and Mexicans.

In a matter of five days in December 2013 all that changed.  Appearing to the outside world to be abiding by traditional “democratic” processes, Pena Nieto and his supporters forced energy reform through both legislatures in record time making it seem that the majority of the Mexican people were in favor of this radical “reform”.  Nothing could be further from the truth.  The two major opposition groups, Morena (The National Regeneration Movement) and the left of center political party PRD (The Democratic Revolutionary Party) each collected approximately two million signatures of registered voters demanding that a national consultation be held before the energy reform bill could be submitted to congress.  Unsurprisingly, that demand was given no credence.  It could well have been because the “reform´s” sponsors realized what the results would be. A national poll conducted by the Centro de Investigación y Docencia Economica (The Center for Research and the Teaching of Economics) revealed that 65% of Mexicans rejected outright any foreign capital investment in the Mexican oil industry.  (El Correo de Oaxaca, January 6, 2014, p.5).  Completely ignoring the will of the Mexican people, the energy “reform” was passed overwhelmingly:  in the Senate 95 to 28 and in the Chamber of Deputies 354 to 134.  These lopsided results occurred after a paltry four days of discussion in the Senate and only 20 hours in the Chamber of Deputies.

With so much popular opposition to this reform, why then didn´t the congressional votes reflect that opposition?  First and foremost because of the PRIAN, the alliance between two of Mexico´s strongest political parties, the PRI (The Institutional Revolutionary Party), the party now in power, and the PAN (The National Action Party), the right wing party that ruled Mexico from 2000 to 2012. This alliance represents the wealthiest Mexicans with a close connection to the United States. The PRIAN also garnered the support of two minor parties, the PVEM (The Green Ecological Party of Mexico) and the PANAL (The New Alliance).  It is equally likely that the US$50,000 which was purported to have been given to each legislator who voted affirmatively could well have influenced the final results.  (John M. Ackerman, Proceso, December 15, 2013, p.45).  The two major news sources, TELEVISA and TV Azteca, representing the same moneyed interests as the PRIAN, continually filled the air waves with misleading favorable propaganda.  According to that propaganda, foreign investment would bring an untold number of new jobs to Mexico and would dramatically lower the cost of energy, in particular, gasoline and electricity.

Those legislators who voted in favor clearly have short memories.  Despite Mexico´s bitter experience with the privatization of its telephone system (TELMEX) which created one of the world´s most expensive telephone services as well as the world´s richest man (Carlos Slim), persistent assurances of the glories of privatization succeeded in diminishing more widespread opposition. In addition, the energy reform´s most vocal opponent, Andres Manuel López Obrador, twice denied the presidency (2006/2012) due to electoral fraud, suffered a severe heart attack which kept him on the sidelines throughout this critical period.

Because Articles 25, 27 and 28 of the 1917 Mexican constitution specifically prohibited foreign investment in Mexican energy resources, the wording of those articles had to be changed before the energy “reform” could become valid.   For the constitution to be legally modified, the legislatures of at least 17 of the 31 states had to approve such changes.  In those states where the PRIAN was in the majority, approval of this 300 page document was rammed through with virtually no discussion or debate.  In some cases, the vote was taken after only 20 minutes. In the State of Querétero, approval came after just 10 minutes. (La Jornada, December 14, 2013, p.1)  Clearly, most of those who voted affirmatively did so without having read, much less pondered, the changes.  But, Pena Nieto and his supporters were in a hurry.  They weren´t about to let democracy take its natural course.  They wanted the energy “reform” to be signed, sealed and delivered to their multinational corporate overseers as rapidly as possible. 

It is disconcerting that it was President Enrique Pena Nieto who succeeded in steam rolling the energy “reform” through the Mexican congress when no other neo-liberal president was able to do so.  It is particularly frustrating knowing that Pena Nieto bought his way into the presidency, the PRI having purchased at least three million votes to get him elected.  How that complicated purchase was transacted is described in an article co-written by this author and Kurt Hackbarth published by Op-Ed News on August 20, 2012:  Follow the Money:  Understanding the 2012 Mexican Electoral Fraud. Despite a plethora of convincing evidence revealing the magnitude of this fraud, the Mexican judicial system lined up solidly behind Pena Nieto by letting his fraudulent election stand.

It is ironic that Pena Nieto´s party, the PRI, is the reincarnation of Lazaro Cardenas´ party, the PRM, the Mexican Revolutionary Party.  Until the 1980’s, the PRI consistently lauded Cardenas´ energy expropriation as one of that party´s most significant and enduring accomplishments.  The neo-liberal ascendency to PRI leadership caused that to change dramatically.  Since the early 1980’s, the PRI rarely mentioned March 18 and what it signified.   When it did, it was with hesitancy and/or embarrassment.

Along with Lopez Obrador, one of the strongest opponents of energy privatization has been Cuauhtemoc Cardenas, son of Lazaro Cardenas, who was founder of the PRD, mayor of Mexico City and three times a presidential candidate.  Similar to Lopez Obrador in 2006 and 2012, Chuahtemoc was kept from assuming the presidency in 1988 under suspicious circumstances.  He has compared Pena Nieto’s rush to privatize Mexican energy resources to a return to the Porfiriato, the 35 Year Porfirio Díaz dictatorship.  (la Jornada, December 10, 2013, p.7) Others have been less charitable accusing Pena Nieto of “betraying” the Mexican people.  John Ackerman, law professor and researcher at the Universidad Nacional de México (UNAM), essayist and columnist goes so far as to call Pena Nieto´s actions as “high treason” (Proceso, op.cit., p.45)

Privatization is especially puzzling since PEMEX, (Petroleos Mexicanos), the sole Mexican oil producer since 1938, was recently ranked as the third most profitable of 100 major oil companies, right after Indonesia´s Z&P and Holland´s EBN.. PEMEX profitability was far ahead of Russia´s Rosneft and USA´s Exxon.  (César Martinez Aznaraz, El Universal, January 7, 2014)  In addition, according to CEPAL, the Economic Commission for Latin America, more oil and natural gas were produced in Mexico since 2012 than in any other Latin American country including Venezuela. (La Jornada, January 31, 2014, p.25)  The reader should note that this information about PEMEX´ successes was not disseminated by the pro-government media until AFTER the vote in congress.  Throughout the energy debate, the one consistent argument presented for privatization was how incompetent and corrupt PEMEX was.  Mexicans were assured that all that would change with foreign investment.

Mexico´s high ranking and unparalleled oil production in Latin America were achieved even though since 1982 the neo-liberal governments have deliberately refrained from investing in PEMEX hoping that its eventual decline would strengthen its justification for privatization.  PEMEX´ achievements occurred despite well publicized incidents of corruption and inefficiency, incidents which the PRIAN persistently used to justify privatization. As an indication of how profitable PEMEX´ resources actually are, PEMEX provided the Mexican treasury with one billion, 17,920 million pesos in 2013 one of the largest amounts recorded in the last 13 years. (La Jornada, January 30, 2014, p.27) To hear the government talk, however, PEMEX was on its last legs and desperately needed foreign investment to move forward.  After realizing how viable PEMEX really is, opening its lucrative oil resources to foreign investors makes little sense unless, of course, privatization advocates benefited personally from that move.

Because the Pena Nieto administration is now poised to sell the “goose that laid the golden egg”, it has had to compensate for the loss of future oil revenues.  As a result, new taxes, most highly regressive, have been imposed upon the Mexican people and more are expected.  It was no surprise, then, that inflation has skyrocketed.  During the first two weeks of January, 2014, after the new taxes were implemented, Mexico had the highest inflation rate in four years. The Mexican peso also dramatically declined vis-a-vis the US dollar. (La Jornada, January 24, 2014, p.23).

An area that is particularly suffering from inflation is  the Mexican/US border.  The value added tax (IVA), applied to all goods and services, had been deliberately lower (11%) in cities and towns along the border.  For the rest of the country a 16% IVA was applied.   As of January 1, 2014, however, the border IVA was raised to 16% like the rest of the country. This sudden 5% raise came as a shock and generated an exodus of Mexican shoppers to the United States accompanied by a dramatic  income decline for border businesses. (Enrique Galvan Ochoa, Noticias MVS con Carmen Aristegui, January 30, 2014.)

Applying additional taxes to Mexico´s sagging economy is counterproductive. In 2013, the prediction for Mexico´s economic growth (PIB) was revised downward four times.  The last reduction assessed Mexico´s actual growth rate at 1.3% down from an initial 3.5%. (CNN Expansion, November 21, 2013) It is a miracle that the economy grew by even that amount since, according to Agustin Carstens, the governor/head of the Bank of Mexico, it had actually shrunk by 50% in 2013.  (La Jornada, February 1, 2014, p.6) According to Carstens, there has been a decline in tax collection, public and housing investment, and an overall “deceleration” of spending.  The government´s financial decisions were not in “sync” with Mexico´s reality. As a reflection of the downward economic spiral, the prices of essential staples in a poor Mexican´s food basket (canasta basica) have also substantially increased; a full percentage point above inflation. (El Financiero, October 13, 2013.)    According to El Financiero, at least 25 million Mexicans are so poor that they are unable to purchase the contents of a single canasta basica. (Ibid.) 

Although Pena Nieto inherited many of the problems facing Mexico from the Felipe Calderon administration (2006-2012), many feel that the country is worse off now than when Pena Nieto took office in December 2012.  Violence has soared so much that the latest US State Department Travel Warning (January 9, 2014) urges American citizens to avoid 20 of Mexico´s 31 states.  Of major concern is the violence, now bordering upon civil war, in the State of Michoacan. It has become a tinderbox between warring parties; i.e., organized crime (Los Caballeros Templarios) against community self-defense police forces. Recently, Pena Nieto sent in federal and military troops to pacify the situation which some think has only made the situation worse.  Violence in the State of Guerrero is not far behind. 

Yet, if Mexicans only watch and listen to reports from government biased Televisa and TV Azteca and their affiliates, as millions do, they would think that Pena Nieto was the country´s savior.  That slanted coverage invariably presents the president in a flattering light.  A balanced assessment of his presidency is totally out of the question.  Only in the national publications La Jornada and Proceso and on the MVS television and radio programs of Carmen Aristegui are any substantive criticisms articulated. 

Pena Nieto contributed to that distortion at the recent World Economic Forum in Davos, Switzerland. His cynicism reached new heights when he told reporters with a straight face that Mexico´s reforms had been accomplished due to a “…reaffirmation of our democratic mission, being a country which every day is (becoming) more democratic…” (News ESP: Radio Formula Internacional, Enrique Pena Nieto, Davos, Swizterland, January 24, 2014).

With energy “reform” now a reality, what is the Mexican left doing to turn things around?   The schism between the two largest leftist political forces (the PRD and Morena) has undermined a common strategy.  Morena .the National Regeneration Movement, is on the verge of being recognized as a political party.  It is the brain child of Lopez Obrador who split with the PRD because of its accommodation to the PRIAN.   He believes that when the PRD became a cosigner of the Pacto por Mexico (The Pact for Mexico) in collusion with the PRI and the PAN, it gave the PRIAN the green light to push through energy privatization as well as other neo-liberal “reforms”.  Even though the PRD finally  withdrew from that Pacto on November 27, 2013, the damage had been done. It was too late for the privatization momentum to be reversed.

The PRD has revealed that it will conduct a national consultation on this issue with or without the permission of congress. Articles 35 and 39 of the 1917 Constitution give the PRD the authorization to do so.   This was in response to a statement issued by the PRI senate leadership affirming that such a consultation will not be allowed. (La Jornada, January 25, 2014, p.12)

The PT (Workers´ Party) has filed a petition to the Supreme Court for an injunction (amparo) to halt the implementation of the energy “reform” due to “the violations and
grave irregularities” committed during the passage of this “reform” putting “Mexican sovereignty and independence at risk”.  Manuel Bartlett, the PT leader in the senate, proclaimed that the reform’s approval was “scandalous and shameful”. (La Jornada, Ibid. p13.)

Lopez Obrador, recovered from his recent heart attack, is once again making fiery speeches against energy “reform”.  He and several of his followers filed a law suit with the office of the Mexican Attorney General (Procuraduria General) against Pena Nieto for  being a “traitor” to his country.  Although Lopez Obrador admitted that he knew that no action would be taken on the suit, he felt that he owed it to the Mexican people to file the suit symbolically. (La Jornada, February 6, 2014, p.3)

Many others in opposition, however, have given up on political parties to reverse the “reforms”.  As those parties squabble among themselves, concerned citizens have started looking for creative ways to accomplish this objective without party involvement.  On January 15, 2014, 23 former winners of science and arts awards filed an injunction (amparo) with the Supreme Court to halt energy “reform” implementation. Their justification for doing so was based upon the “unconstitutionality” of the process utilized to gain congressional approval.   Their petition to the Supreme Court states that this process “damaged society” and forced Mexico to retreat to the dangerous times of authoritarianism  They used a 2008 case in the State of Colima as a precedent when the Supreme Court invalidated several legislative decrees because of its failure to follow democratic procedures. (La Jornada, January 16, 2014, p.13)

One of the most creative of these citizen driven proposals was the Popular Congress (Congreso Popular) held  on February 5, 2014, the 97th anniversary of the 1917 constitution.  Those organizing this conference included approximately 100 intellectuals, artists, academics and journalists.  According to their press release:

It is the hour for society to exercise its power directly
by means of coordinated, peaceful and forceful actions supported
by Article 39 of the constitution.  Political groups have betrayed
the Mexican people via the daily violation of that document.

….They do not represent the Mexican people.  The institutions do not
assure that the law is respected.  The governments do not look out for
the common good….the hegemonic media don´t inform and don´t
communicate to the citizens.
…(The) electoral processes are now unreliable.  The continual defrauding
of the people´s will … in 1988 and with special clarity in 2006 and 2012, along
with the avalanche of unpopular reforms,… demonstrate the sterility of the
institutions now in existence.

As a result, the people no longer believe in political parties, the media,
failed institutions nor in … politics as usual.  In 2013, the historical
cycle of neoliberal underdevelopment hit bottom.

Due to the generalized ingovernability of the federal and local governments;
Due to the collusion between organized crime and the political and economic
classes; Due to the violence and wars against the popular classes and the growing
impunity; Due to the open violation of our Constitution and the abdication of our sovereignty; we convoke … this Popular Congress. (La Jornada, January 25, 2014, p.12)

Those representatives who attended that congress (this author included) had to demonstrate a firm conviction to defend both Mexico and the human and social rights guaranteed by the Constitution.  The Popular Congress voted to revoke the changes to the constitution and discussed possible peaceful civil resistance actions on March 18th, the 76th anniversary of President Lazaro Cardenas´ oil expropriation (Ibid.)

As encouraging as independent efforts are, and many more are likely, democracy´s future in Mexico looks bleak.  The challenge of overcoming the PRIAN´s all encompassing political control is daunting.  It is particularly intimidating since the baised judicial system consistently rules in favor of the PRIAN.  That is why the two initiatives which seek Supreme Court injunctions to halt “energy reform” are doomed to failure no matter how legitimate they are.  Since the Supreme Court nx the government work hand to hand, it´s not about to rule against it.

It is highly unlikely that a national consultation on energy “reform” will actually happen.  The two houses of the Mexican legislature are dominated by the PRIAN.  They will use that control to prevent any such initiative from ever taking place.  By the time that a national consultation  could conceivably happen, no earlier than  2015, oil privatization will have become a fait accompli.

The initiative that could have the most potential is that of the People´s Congress.  The first meeting on February 5th was a positive beginning.   It is hoped that subsequent meetings, particularly the one on March 18th, will receive the publicity they deserve and have more substantive results.

Another possibility is that the Mexican legislative process that approved these “reforms” be brought before the International Court of Justice in The Hague for review.  At the very
least, by being examined by an international judiciary body, the Mexican government would be forced to recognize  its failure to adhere to democratic processes

With the growth of violence throughout Mexico, it also is possible that most companies interested in investing in Mexico will stay away.  Much to his frustration, Enrique Pena Nieto discovered that the international representatives attending the World Economic Forum in Davos were far more interested in the violence in Michoacan than in the passage of his neo-liberal economic “reforms”. (NEWS ESP, op.cit.)  Unless a substantial reduction in that violence occurs, large scale foreign investment may not materialize.

The real hope rests in enhancing the awareness of the foreign media to what is actually transpiring in Mexico.  The last thing the Mexican government wants is negative publicity. It would be disastrous if that media were to write stories about Mexican electoral fraud and the undemocratic way that energy and other neo-liberal “reforms” were steamrollered through congress without the people´s support. It is critical, therefore, that they become apprised of the authoritarian way that the “reforms” have become the law of the land. Efforts should be undertaken to get the word out to as many people as possible.  An informed public can make a dramatic difference!