The Mexican Senate voted 95 to 28 to pass President Enrique Peña Nieto’s signature energy reform bill Wednesday morning, just one week after the body approved the electoral reform bill that the conservative Partido Acción Nacional (National Action Party—PAN) set as a precondition to bringing the controversial measure to the Senate floor. If passed by the Chamber of Deputies, the bill would loosen the state’s control over the oil industry.
President Peña Nieto has advocated for various reforms since he took office in 2012, including telecommunications and education laws, but the energy reform bill has been seen as the centerpiece of his efforts to boost the Mexican economy. If passed, the bill would allow for private investment, exploration and profit sharing with the state-owned Pemex. Those actions were banned 75 years ago when President Lazaro Cardenas nationalized the oil industry.
While the alliance between the PAN and the ruling Partido Revolucionario Institucional (Institutional Revolutionary Party—PRI) has majorities in both chambers, there has been vocal opposition to the passage of the bill. Legislators from the leftist Partido de la Revolución Democrática (Democratic Revolution Party—PRD) interrupted debate on the measure on Tuesday in an effort to keep it from passing before the end of the year. The PRI and PAN have been accused of “treason” by PRD members for championing the bill that would inject private capital into the industry that seen a downward trend in recent years.
Despite the opposition, the Chamber of Deputies is expected to pass the energy reform bill before the winter recess on December 15. It would then need to be approved by more than half of Mexico’s 31 states and the federal district.
Likely top stories this week: Xiomara Castro leads her supporters in protest against last Sunday’s election results; Juan Manuel Santos visits the United States; petroleum exploitation moves ahead in Ecuador; Mexicans protest as President Peña Nieto completes his first year in office; a fire engulfs the Latin America Memorial in São Paulo.
Honduran Election Result Sparks Demonstrations: Thousands of Hondurans marched in Tegucigalpa on Sunday after the country’s electoral authority declared Juan Orlando Hernández the winner of last Sunday's presidential elections. Challenger Xiomara Castro de Zelaya, who is demanding a vote-by-vote recount at all Honduran polling places and an investigation of the elections by the attorney general, called on her supporters to march peacefully to protest the results. Salvador Nasralla, another candidate, is also challenging the results. On Sunday evening, Honduras’ election tribunal said it would be willing to let LIBRE (Liberty and Refoundation party—Liberdad y Refundación) review the electoral record but declined to say whether it would consider a full recount.
Santos Visits the United States: Colombian President Juan Manuel Santos arrived in the United States on Sunday for a three-day visit that will include a meeting with U.S. President Barack Obama. Santos will also make an appearance at the University of Miami on Monday before traveling to Washington D.C. for visits with Nancy Pelosi, John Boehner, and a meeting at the OAS, among other activities. The purpose of Santos' trip is to encourage additional U.S. investment in Colombia and to discuss Colombia's peace negotiations with the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia—FARC).
Correa Announces Petroleum Exploitation in Ecuadorian Amazon: Despite major protests by Indigenous and environmental groups, Ecuadorian President Rafael Correa announced Saturday that Ecuador would permit the exploitation of 13 petroleum blocks in the Ecuadorian Amazon near the border with Peru and on the edge of Yasuni National Park. Correa said that Chilean Ambassador Juan Carlos Lira and a businessman were injured in the protests last Tuesday. Ecuadorian Minister for Non-Renewable Natural Resources Pedro Merizalde said that the first three blocks up for action could hold as much as 1.5 billion barrels. So far, Spain's Repsol YPF, Chile's ENAP, Belarus’ Belorusneft, and China's Andes Petroleum have presented offers for four of the petroleum blocks.
Protests as Peña Nieto Completes First Year of Presidency: Thousands of Mexicans protested in the streets of Mexico City on Sunday as Mexican President Enrique Peña Nieto celebrated the completion of his first year as president. Protesting teachers, union workers, and self-declared anarchists marched in opposition to Peña Nieto's recent education, tax and energy reforms. According to a poll released Sunday by Reforma newspaper, 48 percent of respondents disapproved of the president's job performance—up from 30 percent in April.
Fire Latest Accident to Hit São Paulo: Less than a week after a construction crane collapsed at São Paulo's Itaquerão stadium and killed two workers, the city's iconic Latin America Memorial—a landmark building which hosts an art gallery, an auditorium and other facilities— was engulfed by a fire on Saturday. The memorial and cultural center was built in 1989 by legendary Brazilian architect Oscar Niemeyer, who died last year at age 104. It is still unclear how the fire started, but it appears no members of the public have been injured in the blaze. Meanwhile, construction workers returned to Itaquerão stadium on Monday to address the damages caused by last week’s accident.
An overhaul of Mexico’s private-sector lending system was approved by four key Senate committees on Wednesday, moving President Enrique Peña Nieto’s financial reform one step closer to passage. The housing, public credit, justice, and legislative studies committees all voted to pass the bill, following its passage in the Chamber of Deputies. The full Senate will discuss the 70 provisions of the bill today, with an expected vote on Tuesday. If any major changes are introduced, the bill would go back to a lower chamber for approval. Otherwise, it will go to President Peña Nieto to sign into law.
The bill, part of the Pacto por México (Pact for Mexico) reforms agreed upon by President Pena Nieto's Partido Institucional Revolucionaria (Institutional Revolutionary Party—PRI) and the country's main opposition parties, would increase lending among Mexico’s banks, lower interest rates on loans and make credit more accessible to small and medium enterprises. The governor of Mexico’s Central Bank, Augustín Carstens, said in May that the proposed reform could help grow the economy by 0.5 percent over the next two to three years.
President Peña Nieto, who will reach his one year anniversary in office next month, has staked significant political capital in the Pacto por México reforms, ranging from education and energy to security and telecommunications. The most controversial reform thus far has been the proposed privatization of Petróleos Mexicanos (Pemex), the state-owned petroleum company to help attract investment and technology to Mexico’s ailing energy sector.
September has been a difficult month for U.S. policy toward Latin America. Between the crisis in Syria and the NSA surveillance disclosures, U.S. Secretary of State John Kerry cancelled an address to the annual CAF conference, Vice President Joe Biden cancelled a trip to Panama, and Brazilian President Dilma Rousseff cancelled a state visit to Washington DC.
The sole exception to the raft of cancellations was the launch of the U.S.-Mexico High Level Economic Dialogue (HLED), which still took place on September 20 in Mexico City, in the presence of Biden and several U.S. cabinet officials.
That the Mexico trip was planned at all testifies to the importance of the economic relationship with our third-largest trading partner. That it happened according to schedule says a great deal about Biden’s emerging role as an envoy to the Americas, and about the Mexican administration’s pragmatism and diplomatic maturity.
Biden first outlined the Obama administration’s commitment to deepening engagement with the Western Hemisphere at the Council of the Americas’ 43rd Washington Conference on the Americas in May. Soon after, he traveled to Brazil, Colombia, and Trinidad and Tobago. He also hired Juan S. González, a well-respected Latin Americanist as his Special Advisor on the Western Hemisphere (a first for his small foreign policy team). This week, he is scheduled to meet with Uruguayan President José Mujica as well as with members of U.S. Congress for a wide-ranging conversation on the region. Previous presidents have appointed special envoys for the Americas, but in Obama’s second term, the vice president himself has emerged as the de facto—and much more powerful—emissary for U.S. interests to Latin America’s rising economic and diplomatic powers.
Of those powers, Mexico is the clear priority. “The Western Hemisphere has always mattered to the United States, but I think it matters more today because it has more potential than any time in American history,” Biden pronounced at the conference in May. Last week in Mexico, he was explicit about the primacy of economic interests with our NAFTA partner: “There is no relationship that we value more, there is no economic relationship that we think holds the most promise and there is no part of the world that has the opportunity to do as much to generate economic growth over the next 20 or 30 years in the hemisphere.”
Casi desde el principio de su período, el presidente Enrique Peña Nieto comenzó a presentar una serie de reformas que—de acuerdo con el discurso oficial—permitirán que México avance. Las dos primeras, las reformas laboral y bancaria, suscitaron grandes controversias y provocaron la oposición de algunos segmentos de la población, aunque muchos otros no se dieron por enterados. En la laboral, se estableció el pago por hora, y en la bancaria, decidieron penar con cárcel a los deudores de los bancos, entre otras cosas más.
Pero fue la presentación de la reforma educativa la que detonó una seria oposición de parte de los maestros agrupados en la llamada CNTE (Coordinadora Nacional de los Trabajadores de la Educación) y de algunos segmentos de los maestros agrupados en el SNTE (Sindicato Nacional de los Trabajadores de la Educación), quienes se han manifestado en diversas ciudades del país, pero especialmente en la ciudad de México, donde permanecieron en el Zócalo por varios días hasta que fueron desalojados el viernes 13 de septiembre por la policía federal, después de haber sufrido un linchamiento mediático sin precedentes por parte de las dos televisoras del país.
Pero, ¿qué es lo que reclaman los maestros? De acuerdo con la reforma, se establece un sistema de evaluación que ellos deberán cumplir para continuar desempeñando sus labores. Hasta aquí, todo bien. El problema viene en la forma en que dichas evaluaciones se llevaran a cabo, pues más bien parece que con ello el gobierno busca recuperar el control del magisterio, pues fuera de la evaluación, no cambian en nada las condiciones en que se imparte la educación en México.
Mexican Foreign Minister José Antonio Meade arrived in Cuba yesterday to discuss a new bilateral agenda—the first visit to Cuba by a Mexican minister under the Enrique Peña Nieto administration.
The two-day visit follows a formal agreement in January between Peña Nieto and Cuban President Raúl Castro in Santiago de Chile to work toward promoting bilateral relations. Meade’s trip will include meetings with high-level Cuban officials to discuss trade and investment, as well as matters such as “tourism, migration, cooperation, education, culture, health, [and] energy.” Officials also plan to discuss the two countries’ participation in the Association of Caribbean States (ACS) and the Community of Latin American and Caribbean States (CELAC).
Mexico’s move to reinvigorate diplomatic ties with Cuba comes after bilateral relations suffered tensions under President Vicente Fox (2000-2006) and President Felipe Calderón (2006-2012).
Under Fox, diplomatic ties were nearly severed over disagreements on human rights and accusations that Cuban diplomats had interfered in Mexico’s domestic affairs. In 2004, Fox recalled the Mexican ambassador to Cuba and reduced relations to charge d’affaires status.
Seeking to ease relations, Calderón assigned a new ambassador to Cuba in 2007, but tensions arose again when Cuba stopped commercial flights to Mexico for a month during the peak of the swine flu outbreak in 2009. Calderón was the last Mexican president to visit the island, during a trip in April 2012.
Peña Nieto’s majority party, the Partido Revolucionario Institucional (Institutional Revolutionary Party—PRI)—which governed Mexico continuously from 1929 to 2000 and returned to power in December 2012—has had historically amicable relations with the Caribbean nation. Notably, Mexico was the only Latin American country to maintain diplomatic ties with Cuba throughout the Cold War.
The first nine months of Peña’s administration have kept the press busy and all of the country’s eyes and ears focused on what will happen next. He’s been characterized as bold, action-oriented and dynamic but clearly, not a team player.
He was celebrated by many (yours truly included) in February when he presented an ambitious and much needed education reform but disappointed just as many after having this effort easily thwarted by militant and disgruntled unionized teachers from the Coordinadora Nacional de Trabajadores de la Educación (CNTE), which has taken Mexico City hostage in the last week to avoid needed secondary laws to enact the reform passing through Congress.
The inability to prevent and the lack of resolve to disperse a non-justified blockage of Congress as well as a blockade of the city’s main arteries—including those giving access to the airport and the Zócalo—has proven once again that political leaders are making decisions not based on the greater good, the rule of law or the citizenry’s interests, but on a political agenda serviced by interest groups holding more power than they should and unable to cooperate with each other.
Mismanagement of this situation could soon spark violence and create a larger-than-ideological divide. The affected citizenry in Mexico City will only stand so much. In a recent poll by BCG-Excelsior, 52 percent of Mexicans stated that they are so fed up with the CNTE’s irrational resistance to the education reform and their militant actions that they would justify use of public force to disperse the picketers.
And while the teachers take to the streets, both Peña Nieto and the city’s government cower from taking necessary action because of the political cost it would imply. Mexico City is not the only thing that’s paralyzed because of this—a broken education system puts the nation’s future talent pool at risk.
The other current hot topic in the president’s agenda is energy reform. As recently described by Christian Gomez on AS/COA, “the proposal includes constitutional changes that would open up Pemex, the 75-year-old state oil monopoly, to profit-sharing contracts and foreign investment.”
This new notion of natural resources no longer belonging exclusively to the nation poses a huge shift in paradigm. Reactions from the nation’s Left include accusations related to autonomy, national patrimony and the role of government vs. private investors in extraction and having access to revenues from one of the nation’s most important sources of income. The opposition understands that PEMEX’s inefficiencies and the plague of corruption need to be addressed, but they propose that a problem should not be fixed by creating another one.
One of the most respected voices from the Left, Cuauhtémoc Cárdenas, has recently stated that both PEMEX and CFE (federal electricity company) can become highly productive without having to edit the Constitution and without allow foreign and/or private hands in the nation’s riches. If national patrimony is challenged due to reforms to articles 27 and 28 of the Mexican Constitution, Cárdenas has warned he would call for nationwide protests and he would even take to the streets along with López Obrador’s Morena (National Regeneration) movement.
Given its current party composition, Peña can easily get approval for the energy reform in Congress but he would be naïve to think that this is the only hurdle he needs to jump and he is doing a terrible job at trying to get public buy-in to this proposal through vague infographics on TV.
If there is a possibility for effective energy reform, an open and inclusive debate needs to take place. This topic is not one that his team should be discussing behind closed doors and the hard questions will require real answers, not 20-second TV spots.
Peña’s government has been characterized by a “my way or the highway” attitude, which is an easier temptation to fall into than trying to build consensus in a country as complex and fragmented as Mexico. This dictatorial style is only possible because of the fact that PRI has a stellar position both in Congress and in the State governments to push its agenda forward, something neither former Presidents Fox nor Calderón had. However, Peña would do well in understanding that his constituency is not limited to the political parties or even the power elites.
Organized teachers have already proven what they can do in Mexico City given enough motivation. Sparked by national patrimony rhetoric, larger, non-organized social mobilizations could easily flare up in different key cities in Mexico and cause larger havoc. As former U.S. Ambassador to Mexico Tony Garza recently wrote, “these red flags, so to speak, are especially relevant given the influence and disruptive potential of many of today's social movements. The eruption of mass street protests in Brazil is just one recent example of a government being forced to change direction on a policy initiative and find a way to rapidly and constructively respond to the desires, often inchoate, of a newly emboldened and empowered population. It's a cautionary tale that begins with frustration and finds expression in mass action.”
Even when theoretically, Peña could powerball his reforms forward, both him and the PRI need to wake up and understand that they cannot be the only voice to determine the nation’s destiny. Vargas Llosa sarcastically called the previous PRI era “the perfect dictatorship” but today’s Mexico will not stand for a return of that so-called “perfect” model. Peña needs to learn to play well with others.
Mexican President Enrique Peña Nieto revealed a set of reforms to the country’s energy sector on Monday which would open Mexico's energy sector to foreign investors and allow private firms to access profit-sharing contracts with state-run oil monopoly Pemex. The reform package will be presented to the Congress this week and—if enacted—it will mark the largest private sector opening of Mexico’s energy sector since the industry was nationalized in 1938.
Mexico is the world's 10th-biggest producer of crude oil, and has the third largest oil reserves in Latin America after Venezuela and Brazil. For the past 75 years, the industry has been dominated by state oil firm Pemex, which supports about one third of the government’s income. As a result, the industry’s capacity to invest in new exploration projects has been limited and domestic production has dropped from nearly 3.4 million barrels per day in 2004 to 2.5 million barrels per day in 2012. If new projects cannot be developed, Mexico might become an energy importer by 2020.
The reform plan proposed this week calls to amend two key articles in the constitution that make oil, gas, petrochemicals and electricity the sole preserve of the state. Though private companies can currently be awarded service contracts within the oil industry, the reform goes further by allowing them to take part on the risks and profits of developing new fields, and offering permits in association with Pemex to refine, transport and store hydrocarbons and petrochemicals.
According to experts, the liberalization of the Mexican oil industry could double foreign investment in the country and improve growth. However, the plan has faced severe political opposition, and a survey revealed that 65 percent of Mexicans oppose private investment in the sector. Peña Nieto has stressed that “Pemex is neither being sold nor privatized,” and the industry will remain under government control. Though able to appease some of the critics, this has raised concerns among investors as the bill does not allow for production-sharing concessions—a scheme that is possible in Colombia and Brazil.
Watch an interview with COA Vice President Eric Farnsworth on the significance of the reforms for the Mexican economy.
Desde que comenzó el gobierno de Enrique Peña Nieto en diciembre de 2012, un curioso fenómeno se ha presentado en el mundo de la política mexicana. Al parecer, nuestros dirigentes no han comprendido el enorme poder de la tecnología y la impresionante capacidad de difusión que tienen las redes sociales, mismas que escapan completamente de su poder de control. La clase política puede pactar con los dueños de las televisoras, de la radio y de los periódicos sobre la información que se puede o no se puede transmitir, pero son incapaces de imponer el mismo control sobre Facebook, Twitter o YouTube.
Gracias a eso, en los últimos meses hemos podido presenciar una serie de escándalos que desnudan a la clase política en general. Los videos subidos a YouTube que muestran a políticos mexicanos de todos los partidos en situaciones comprometedoras se han vuelto algo común en los últimos meses. La sabiduría popular los ha bautizado como las “ladies” y los “gentlemen”.
Todo comenzó cuando la hija del Procurador Federal del Consumidor se enojó porque en un restaurante no le dieron la mesa que quería. De inmediato se fue a la oficina de papi y regresó con algunos inspectores que procedieron a clausurar el restaurante en cuestión, alegando diversas violaciones en el sistema de reservaciones. Los testigos que presenciaron el acto lo comentaron en Twitter y Facebook y de inmediato se le bautizó como la “lady Profeco”. Aunque el incidente le costó el trabajo a su padre, ninguna autoridad decidió investigar el hecho de que los inspectores hayan obedecido a esta señorita si ella no era ninguna autoridad. ¿Tan sólo por ser la hija del jefe?
Después supimos de la “lady del Senado”, una senadora del Partido de la Revolución Democrática (PRD) que insultó a una trabajadora de una aerolínea después de que no le permitiera subir al avión por llegar tarde. La senadora aseguraba que ella era una autoridad y que por ello tenían que permitirle subir al avión. Poco después tuvo el descaro de pedir que se creara una “Fiscalía Especializada en la Protección de los Políticos,” pues éstos sufren del acoso de los medios de comunicación y de la ciudadanía.
U.S. President Barack Obama met with his Mexican counterpart, President Enrique Peña Nieto, in Mexico’s Palacio Nacional on Thursday to discuss trade and economic partnership between the two countries. This was Obama’s fourth trip to Mexico but his first under Peña Nieto’s tenure.
Both heads of state agreed to form a high-level working group to expand the countries’ trade agreements with Asia because of its fast-growing import and export market. “By working closely together to upgrade and revamp our trade relationship, we're also in a position to project outward and start selling more goods and services around the world,” Obama said. “And that means more jobs and more businesses that are successful in Mexico and in the United States.”
Both the U.S. and Mexico had estimated trade of up to $500 billion in 2012, are members of the North American Free Trade Agreement (NAFTA) with Canada, and are participating in the Trans-Pacific Partnership (TPP) negotiations that Japan has recently joined.
Obama briefly mentioned the U.S.’ effort to overhaul its immigration system and said that he was “optimistic that we’re finally going to get comprehensive immigration reform passed.” Obama said that the bill contains elements that he approves of, but that the bill is likely to be amended before it is passed. Peña Nieto responded by saying that “Mexico understands this is a domestic affair for the United States.”
Today, before meeting with Costa Rican President Laura Chinchilla, Obama is scheduled to make a speech at the Museo Nacional de Antropología (National Anthropology Museum) in Mexico City and meet with young people to highlight the importance of the historical and cultural ties between the U.S. and Mexico. On Saturday, Obama will meet with other Latin American leaders from the Sistema de la Integración Centroamericana (Central American Integration System—SICA), including leaders from Nicaragua, Belize, Panama, Guatemala, El Salvador, Honduras, and the Dominican Republic.
For further coverage of Obama’s visit to Latin America, visit AQ’s in-depth page.