Monday, December 23, 2013
Mexico's Historic Energy Reform is Approved and on Track
By Allan Wall
The groundbreaking reform of Mexican energy
law, which allows private investment, is now the law of the land.
reforms amended the Mexican Constitution (Articles 25, 27 and 28) and therefore, after passage by Congress, required the approval
of the majority of Mexican state legislatures.
has 31 states plus the Federal District (Mexico City), and all state legislatures are unicameral. Therefore, it was
necessary for the reform to pass 17 legislatures.
That proved not to
be a problem. Within a matter of days the majority had been reached.
legislatures have approved the reform. In some of the state legislatures, the decision was unanimous.
On both the federal and state legislative levels, the reform was approved by members of the
PRI and PAN, and opposed by the PRD.
However, two PRD state legislators
(Hilda Chang Valenzuela in Sonora; and Dolores Porras of Nayarit) voted for the reform, so the PRD national executive committee
is now expelling them from the party! Speaking of the Sonora legislator, a PRD functionary said that "Hilda Chang
broke ranks with the PRD" and her expulsion is being carried out "so she can't continue hurting us by voting
against our interests and those of the people."
18th, the Permanent Commission of the Mexican Congress issued its declaration of the constitutional reform.
On December 20th, 2013 President Enrique Peña Nieto, who had just returned that morning
from a trip to Turkey, formally signed the constitutional reform. The ceremony was held in the Palacio Nacional in Mexico
Constitutionally, the reform is completed. However, the next
step is to draft the secondary legislation, that is, the specific laws that will govern the new petroleum policies. And that
stage is important as well.
There is still much opposition to the energy
reform, under the argument that the oil belongs to the people of Mexico and any involvement of private, especially foreign
companies, would be taking Mexico's oil. So Mexican lawmakers need to tread carefully in this step, drafting transparent
legislation that will be fair, practicable and profitable.
some factions will never be convinced. Politicians such as Andres Manuel Lopez Obrador and Cuauhtemoc Cardenas have a vested
interest in opposing the reform. As the son of the late Lazaro Cardenas, the president who nationalized Mexican petroleum
back in 1938, Cuauhtemoc is considered a moral leader of the left, especially on this issue.
In 1938, Cuauhtemoc's father President Lazaro Cardenas nationalized Mexico's petroleum, kicked out the foreign
oil companies and founded PEMEX. This story is recounted to Mexican schoolchildren every March 18th on Oil Expropriation Day.
The belief that the oil belongs to Mexico and mustn't be privatized is deeply rooted.
Ironically, a closer look at Mexican history indicates that Lazaro Cardenas himself was not as rigid on the petroleum
issue as is commonly thought. In fact, Lazaro Cardenas allowed a role for private oil companies to partner with PEMEX.
In 1939, a year after the oil expropriation, Lazaro Cardenas and his administration altered
Mexican law to allow private companies to sign contracts with PEMEX, in which the private company assumed the risks of exploring
for oil. It was not until 1958, under President Adolfo Ruiz Cortines, that all petroleum-related activities were monopolized
by the state.
So today's opponents of private investment, including
Andres Manuel Lopez Obrador and Cuauhtemoc Cardenas (Lazaro's son), have it backwards. They invoke the saintly name of
Lazaro Cardenas to attack a policy that was supported by Lazaro Cardenas!
managed prudently, this new energy reform could bring great dividends for the Mexican economy. Not only could the country
export more oil, but Mexican petrochemical industries could be greatly expanded. Petroleum-based products such as fertilizers,
detergents, rubber, paint, dye, food preservatives and plastics could be exported, providing more needed jobs for Mexicans
The reform could also be advantageous for the United States.
I don't mean in the sense that, as the Mexican left fears, the U.S. is going to steal Mexico's oil. I simply mean
that in my view it would be better to import more oil from Mexico and purchase less from the Middle East. Hopefully this reform
will make it easier to do that.
Note: On December 17th,
2013 I was interviewed on Silvio Canto, Jr.'s Canto Talk show. We discussed Mexico's energy reform. You can listen
to the interview here or here.
A final note: I
wish all Mexidata.info readers a Merry Christmas, or as they say in Spanish, ¡Feliz Navidad!
Allan Wall, an educator, resided in Mexico for many years. His website is located at http://www.allanwall.info/.