Mexico readies for battle on oil privatization

The right-wing government of President Felipe Calderon is about to present a plan which opponents fear will entail the privatization of Mexico’s government-owned petroleum industry. Battles are already developing within and between the major political parties about how to respond to this governmental plan.

Calderon, counting on the support of legislators from his own National Action Party and many from the formerly ruling Revolutionary Institutional Party, has been aggressively promoting a free trade, neo-liberal agenda of privatizing public entities, weakening labor law and attacking civil liberties. He evidently expected to have clear sailing for his idea of privatizing oil production under another name. Some caution would be necessary, because nationalization of foreign oil production in the 1930s by the revered President Lazaro Cardenas is considered a heroic episode in Mexican history, and oil is considered a sacred national patrimony.

First came a propaganda barrage in which it was alleged that government-owned PEMEX was going bust because lack of capital was keeping it from drilling new wells, while the old ones were going to run dry. This, Calderon alleged, proved the need for partnership with foreign private capital. Some oil experts questioned this, claiming that enough government capital was available.

It appears that the shell of the state oil company, PEMEX, would be preserved while one function after another is contracted out to major international monopolies. This way Calderon could claim he is not privatizing PEMEX, just partnering with outside private enterprise to expand and modernize its operations — while in reality privatization goes ahead full blast.

Earlier, Mexicans were shocked to hear that huge contracts to carry out central functions of PEMEX have been contracted out to the U.S. monopoly Halliburton, including drilling of new wells and maintaining pipelines. One reason Mexican public opinion has opposed privatizing PEMEX is the fear that this would be the foot in the door for yet more foreign interference. The entry into Mexican oil business of such a politicized corporation as Halliburton is bound to heighten those fears.

Now comes a new scandal. The left-center candidate in the 2006 presidential elections, former Mexico City regional governor Andres Manuel Lopez Obrador, revealed that he has copies of a number of contracts with PEMEX that Juan Camilo Mouriño, Mexico’s just-appointed Secretary of the Interior (Gobernacion), had signed with private contracting companies.

Before becoming president, Calderon was Secretary of the Interior, with jurisdiction over PEMEX for the previous president, Vicente Fox, while Mouriño was Calderon’s chief aide. Yet evidently Mouriño not only continued to own stock in family companies doing business with the Mexican government — a huge conflict of interest in itself — but was so much a part of these corporations that he was handling their government outsourcing contracts while simultaneously occupying a government position directly involved with the same contracts.

In most other countries such mind-boggling conflict of interest would have led to immediate resignation and perhaps prosecution, but Calderon is defending Mouriño.

Meanwhile, opposition to the privatization plans in Congress is coming from the left-center Revolutionary Democratic Party, the PRD, and two smaller allied parties. But at this moment a battle royale is going on within the PRD over elections to leadership.

The PRD was founded in 1989 by diverse political currents, including many former activists of the Communist Party of Mexico (PCM) and also defectors, “stage left,” from the then-ruling Revolutionary Institutional Party (PRI). With such a heterogeneous origin, it is not surprising that the PRD has had many internal conflicts from the start.

A left-right split manifested itself strongly in the March 16 internal PRD leadership elections, for which a definitive result has not been announced.

One candidate for party president, former PRD General Secretary Jesus Ortega, is supported by the more centrist “New Left” (Nueva Izquierda) faction. The other, Alejandro Encinas, who briefly succeeded Lopez Obrador as Mexico City regional governor, has the support of the “United Left” (Izquierda Unida), which takes positions further to the left and is closer to Lopez Obrador himself. Many “United Left” activists worry that the “New Left” faction will be willing to make deals with the Calderon administration on issues like the PEMEX nationalization. There is even a possibility the PRD might split.

Whether Calderon’s plans to hand over Mexico’s crucial energy industry to foreign capital is defeated or not now depends on the unity and mobilization of popular opposition both in and out of Congress.