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The Outlook for Pemex Reform

December 5, 2013

by Lauren Eades

This month, Mexico’s Congress is debating the long-anticipated reform of Pemex, the country’s state-owned oil company.

This reform comes at a critical moment for Mexico’s energy industry, as oil production has declined steadily since 2004, and Pemex will need to more than double its investment to reverse the trend. The latest energy reform legislation in Congress would ease the financial pressure facing Pemex (which currently supplies one-third of the government’s annual budget), and would allow for some form of foreign investment in Mexico’s energy development.

If the bill passes, however, the results will be neither immediate nor guaranteed.

Even if Mexico’s Congress scrapes together the necessary votes to pass the bill in the coming days, the energy legislation rollout is likely to take several years. Any constitutional reform must be approved by half of Mexico’s 31 state legislatures. This process will likely take several more months, and may not be complete until the middle of 2014. At this rate, a substantial increase in foreign investment cannot be expected before 2015 or even 2016.

Then, the all-important ley secundaria (secondary legislation) will be decided, with significant implications for the types and levels of investment that the reform will produce.

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Tags: Mexico, Pemex, Mexico energy reform

Mexican Electoral Reform Opens Path for Energy Bill

December 4, 2013

by AQ Online

The Mexican Senate approved a bill on electoral reform early this morning with a vote of 106-15 and one abstention. The bill, which would strengthen the legislative branch and includes constitutional amendments to eliminate term limits for legislators and mayors while curbing the power of the executive branch, was championed by  the conservative Partido Acción Nacional—National Action Party (PAN) as a precondition to moving forward with President Enrique Peña Nieto’s ambitious energy reform plan.

The electoral reform bill, which also allows the president to opt for a coalition government, passed its first hurdle in the Senate committees on Tuesday before the overwhelming vote on the floor in the early hours this morning. It allows for Senators and Deputies to serve for up to 12 years—Senators terms are six years while Deputies are three—and eliminates the barriers to direct reelection beginning in 2018; it is expected to pass in the lower chamber this week.

The passage of electoral reform was seen as a necessary step to shore up support amongst PAN legislators, allies on of the ruling Partido Revolucionario Institucional—Institutional Revolutionary Party (PRI) on energy reform, after the leftist Partido de la Revolución Democrática—Party of the Democratic Revolution (PRD) pulled out of the cross-party pact that led to the passage of President Peña Nieto’s economic reforms last year.

The proposed energy reform, which aims to reverse declining crude output and boost economic growth, would open up the Mexican oil sector to private investment, and would allow for investors to share profits of oil exploration and production with Pemex, the state-owned oil monopoly. The reform bill would also affect the telecommunications and banking sectors. 

The lower chamber is expected to vote on energy reform on December 15 before Congress breaks for recess.

Tags: Mexico, energy reform, Electoral Reform

Mexican Senate Committees Pass Financial Reform

November 21, 2013

by AQ Online

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.

Tags: Mexico, Enrique Peña Nieto, Finance reform

El Estado de Michoacán: De Paraíso a Infierno

November 5, 2013

by Rodrigo Borja

El estado mexicano de Michoacán es famoso por sus bellezas naturales y sus hermosas ciudades. Cuna de la antigua civilización purépecha, posee importantes sitios arqueológicos y pueblos coloniales declarados como Patrimonio de la Humanidad por la UNESCO, así como fiestas declaradas también Patrimonio Intangible de la Humanidad. Sus artesanos están considerados como grandes maestros en el mundo entero, y año a año llegan a Michoacán millones de mariposas monarca provenientes de Canadá en busca de un clima más moderado para pasar el invierno.

Sin embargo, nada de esto le ha permitido a esta región sustraerse del clima de violencia provocada por el narcotráfico en su lucha con las autoridades. Buena parte de su geografía está en poder del grupo de narcotraficantes conocido como “Los Templarios,” que pelean el territorio con Los Zetas y el Cartel del Golfo. Ni el ejército ni la policía han podido impedir esto y, de hecho, la corrupción en este último cuerpo de seguridad ha propiciado que, más que defender a los ciudadanos del estado, muchos policías participen en labores de protección de los grupos delictivos.

La ausencia de un gobierno estatal estable ha contribuido significativamente al caos que reina en la entidad. El gobernador anterior, Leonel Godoy, del Partido de la Revolución Democrática (PRD), dejó el cargo en medio de serias acusaciones de corrupción. El nuevo gobernador, Fausto Vallejo, del Partido Revolucionario Institucional (PRI), ha ejercido de manera intermitente el poder por motivo de una salud muy deteriorada, dejando las riendas del mismo durante sus constantes ausencias en manos de Jesús Reyna, su secretario de gobierno. Este vacío de poder ha provocado un aumento en la fuerza de los grupos delictivos y ha propiciado que algunos grupos pidan que el Congreso de la Unión declare la desaparición de poderes en el estado.

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Tags: Mexico, Michoacán, Drug Cartels in Mexico, violence in Mexico

Monday Memo: Brazil’s Economy – Argentine Debt – Tropical Storm Sonia – Honduran Police Abuses – Uruguayan Marijuana

November 4, 2013

by AQ Online

Likely top stories this week: Brazil will reduce lending by 20 percent next year; Argentina wins a stay on its $1.33 billion payment; Tropical Storm Sonia Hits Mexico; Honduras’ police chief denies abuses; Brazilian delegation opposes Uruguayan marijuana legalization.

Brazil to Reduce Lending Due to Budget Deficit: Brazilian Finance Minister Guido Mantega said Friday that Brazilian development bank BNDES will reduce lending by 20 percent next year, down to about 150 billion reais ($66.6 billion) from this year's estimated 190 billion reais. The announcement came after an Oct. 31 report showed Brazil’s budget deficit widened to 3.3 percent of gross domestic product, the most since November 2009. Some experts speculate that Brazil's credit rating could be cut.

U.S. Court Upholds Stay on Argentine Debt Payment: The 2nd U.S. Circuit Court of Appeals ruled in favor of Argentina on Friday by denying a motion that would have forced the country to start paying $1.33 billion to holdout bondholders. Friday’s decision will permit Argentina to make a second appeal to the U.S. Supreme Court before it is forced to pay the $1.33 billion to NML Capital Ltd and other holdout bondholders who did not accept a debt swap in 2005 and 2010.

Tropical Storm Sonia Hits Mexican Coast: Tropical Storm Sonia hit Mexico's Pacific Coast on Monday morning near the city of El Dorado in Sinaloa. By the time the storm made landfall, it was downgraded to a tropical depression and winds had decreased to about 35 mph. Though the storm is weakening, the U.S. National Hurricane Center said it could still cause floods and landslides in the region. Mexican authorities issued storm warnings from Mazatlan north to Altata on Sunday, and the government of Sinaloa state canceled classes on Monday in five municipalities.

Honduran General Denies Role in Police Abuses: In an interview, Honduran general and police chief Juan Carlos Bonilla denied knowledge or involvement in a wave of police abuses this year in which at least seven detainees have gone missing or been killed in police custody. He also said that he was not involved in setting up death squads starting in 1998, as reported by the police department's internal affairs section in 2002.

Brazilian Delegation Concerned About Uruguayan Marijuana: Brazilian political leaders from the southern state of Rio Grande do Sul will travel to neighboring Uruguay this Tuesday to oppose Uruguayan legislation that will legalize marijuana sale and consumption in the country. The Brazilian delegation will testify before the Uruguayan Senate's health committee in an attempt to prevent the country from moving ahead with legalization.

Tags: Mexico, Honduras, Argentina, Brazil

Women in Mexico’s Workforce

November 1, 2013

by Arjan Shahani

“Women are not doing well because they want to do it all. They want to study, go out and get a job and be housewives as well. Well, that is really difficult to achieve.”

These were recent and controversial words spoken by Ricardo Salinas Pliego, president of Grupo Salinas and owner of TV Azteca, one of the two television media conglomerates in the country. Salinas made the remarks during the Mexico Cumbre de Negocios (Mexico Business Summit) on October 20-22.

Salinas went on to say that women should receive a salary from their husbands “so that their work at home as caretakers […] is monetized and better valued.”  

Unfortunately, his ignorant point of view on gender equality is not as unusual in Mexico as some may think. Even in this day and age, many talented Mexican women face such myopic views as an obstacle to their professional development. 

Given the growing number of women with advanced graduate degrees in Mexico—currently 50.4 percent, according to a recent study by the Asociación Nacional de Universidades e Instituciones de Educación Superior (National Association of Universities and Higher Educational Institutions—ANUIES)—forward-thinking companies have begun to understand the need to tap into a talent pool they didn’t used to, given prejudices in hiring and professional development processes.

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Tags: Mexico, women in the workforce, Gender Equality

PRI Supports Tax Increase on Junk Food

October 24, 2013

by AQ Online

Mexico’s ruling Partido Revolucionario Institucional (Institutional Revolutionary Party—PRI) announced its support on Wednesday for an opposition proposal to increase the 5 percent tax on junk food set out in President Enrique Peña Nieto’s fiscal reform plan. The tax would be applied to purchases of high-calorie foods including chocolates, sweets, puddings, potato chips and ice cream, but would not be applied to hamburgers or tacos.

Last week, the lower house of Congress approved the fiscal reform package with a 5 percent tax on junk food, and Armando Rios Piter, a Senate finance expert from the Partido de la Revolución Democrática (Democratic Revolution Party—PRD), proposed increasing the tax to 8 percent. On Wednesday, PRI Senate leader Emilio Gamboa said that his party would “undoubtedly support” the tax increase. If Piter’s plan is formally adopted, the reform bill would go back to the lower house, before being sent to the Senate for a final vote.

If the bill is passed by both chambers with the 8 percent tax provision included, the reform will contribute nearly 2.7 percent of GDP to government coffers by 2018 according to Deputy Finance Minister for Revenue Miguel Messmacher. The tax reform bill is a key part of the President Peña Nieto’s Pacto por México, a series of reforms agreed upon by Mexico’s three main political parties in 2012 that range from education and energy to security and telecommunications.

 

Tags: Mexico, Partido Revolucionario Institucional (PRI), junk food

Mexico Announces Drop in Organized Crime

October 11, 2013

by AQ Online

Secretary of the Interior Miguel Ángel Osorio Chong announced yesterday that organized crime in Mexico declined by over 26 percent from December 2012 to September 2013. In a speech to the Mexican Senate, Osorio Chong also said homicides were down 16 percent, and burglaries and car thefts dropped by 5 and 9 percent, respectively.

Of the 122 individuals deemed high-priority criminal targets, the current administration has arrested 58 and killed 9, according to Osorio Chong, while limiting gangs’ operational and logistical capabilities. In his speech, the secretary explained that "the only way to deliver results” on organized crime was to first understand that security is "a shared responsibility” among the federal government, states and municipalities. One reason for the drop in crime is the creation of five regional information and intelligence centers to promote cooperation and  will be accessible to local security authorities for the first time—two of which are currently in operation.

The secretary was appointed by President Enrique Peña Nieto in December 2012 to deliver on the president’s campaign promise to reduce violent crime nationwide. Over 70,000 people were killed due to organized crime during former President Felipe Calderon’s administration from 2006 to 2012. Despite these efforts, violence and organized continue to plague Mexico.  Acapulco, one of the country’s primary tourist destinations, now ranks as the second most violent city in the world and claims a murder rate of 142 homicides per 100,000 inhabitants, which is 28 times higher than the average for the United States.

Tags: organized crime, Mexico

The Bright Side of the Venezuelan Exodus

October 4, 2013

by Andreina Seijas

World leaders and migration experts met in New York this week to participate in the UN General Assembly High-Level Dialogue on International Migration and Development. Participants discussed the growing impact of migrants’ contributions to the economic and social realities of member countries and the need to include migration as a key topic in the development agenda.

The recent world economic crisis led to a new socio-economic landscape—particularly in Latin America, where intra-regional migration flows increased significantly as a result of fewer employment opportunities and tighter immigration policies in Europe and the United States. Countries like Argentina, Brazil, Chile, and Uruguay became popular destinations for international migrants.

All countries in the region are greatly benefiting from an increased commercial and demographic interconnectedness, except for one: Venezuela.

For many years, Venezuela was a very popular migrant destination. Particularly between 1940 and 1970, thousands of immigrants from Europe and other countries in Latin America—particularly Colombia—saw Venezuela as an ideal place to escape from civil wars, dictatorships and economic crises. Back then, the South American country had a vibrant economy and was one of the most politically stable nations in the Western Hemisphere.

The economic boom lasted until the 1980s, when the collapse of oil prices crippled the Venezuelan economy. Venezuelans’ living standards fell dramatically as a result of failed economic policies, increasing corruption in government and a rise in poverty and crime. It was in this period that, for the first time, a significant number of Venezuelans decided to look for better opportunities abroad.

But the Venezuelan exodus did not attain its current dramatic proportions until the Hugo Chávez era. Between 1999 and 2013—the fourteen years of Chávez’ presidency—Venezuela witnessed unprecedented human capital flight. Though there are no official records of the exact number of Venezuelans living abroad, some experts estimate that about 1 million Venezuelans have fled their home country, 3.5 percent of the country’s population. This includes the emigration of half of Venezuela’s Jewish community—a constant target of the regime—by the time Hugo Chávez died in March 2013.

Due to geographic and cultural proximity, Colombia is the quintessential destination for Venezuelan migrants in Latin America. Some believe that Colombia’s current oil boom can be directly attributed to a rare breed of experts: the thousands of high-skilled Venezuelan oil professionals that were barred from working in the industry following the 2002-2003 Paro Nacional, or national strike. Besides Colombia, Venezuelans have congregated in Miami, Panama City and Madrid, and are increasingly sighted in less conventional places, such as Sydney, Calgary and Santo Domingo.

One of the characteristics of this exodus is that Venezuela is now exporting much more than gray-haired oil professionals. For some time, students have been the country’s main exports, as they have greatly benefitted from Venezuela’s twisted currency control regime known as the Comisión de Administración de Divisas (CADIVI). Thousands of Venezuelan students have decided to enroll in universities abroad as a means to escape the Bolivarian drama. With CADIVI dollars at a preferential rate—currently 6 times lower that the parallel black market rate—many students pursue not one, but two and sometimes three academic degrees, an expensive crusade to postpone the hardest decision of all: going back home. 

But there is a bright side to the drama and the brain drain. According to Michael Clemens, a Senior Fellow at the Center for Global Development in Washington DC, emigration has many overlooked benefits for countries of origin. In a recent report about skilled migration and development, Clemens says that “even if migrants do not return to their countries of origin, they transfer money, skills, technology, and even democratic ideas; their stories can inspire investments in education in sending countries; and they expand their own life opportunities in ways not possible without moving.”

This and other studies reveal that, besides being a fundamental source of remittances, migrants can also promote entrepreneurship and transfer knowledge and skills that are crucial for the growth and well-being of their countries of origin. Venezuela’s diaspora has traditionally been comprised of high-skilled professionals. And if we add the thousands of younger Venezuelans—who, in the past 14 years, have attained a high-level education overseas—we end up with a solid professional base with unbelievable potential. So how can we capitalize on this human capital in ways that benefit Venezuela?

An engaged diaspora is the sine qua non to development in countries where the number of emigrants is very high. We don’t have to go too far to find examples. Mexico—a country that, unlike Venezuela, has a long history of migration—has discovered the secret ingredient: connecting migration to development. Mexico’s Institute for Migrants Abroad (Instituto de los Mexicanos en el Exterior—IME) coordinates a long list of initiatives through its broad consular network aimed at strengthening the ties between Mexican citizens: those living in Mexico and abroad. Through the “3x1 program”, for instance, Mexicans living in the U.S. can directly invest in their communities of origin. For every Mexican peso provided by migrants, the federal, state and municipal governments contribute an additional peso.

Venezuelans abroad are already moving in this direction. VenMundo, a non-partisan network of Venezuelans in Canada, Chile, the U.S., and Spain, has drafted a set of proposals that include a comprehensive census of the Venezuelan migrant population and an incentive program for returning migrants. However, greater resources and political will are still missing to get these ideas off the ground.

In a recent speech in Doral County, Miami—the largest Venezuelan immigrant community in the United States—opposition leader and Governor of Miranda State Henrique Capriles Radonski asked the Venezuelan community to continue pushing for change in the country they left behind. “I’ve come to take you home,” he said. “The best country in the world is called Venezuela.”

 

Tags: migration and development, Venezuela, Mexico, Venezuelan migration, Henrique Capriles Radonski

El significado de las Reformas Educativa y Fiscal en México

September 20, 2013

by Rodrigo Borja

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.

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Tags: Mexico, education reforms, Enrique Peña Nieto

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