Mexico’s Senate voted June 19 to ratify the USMCA trade agreement, making Mexico the first of the three North American countries to reach this milestone. The vote of 114 in favor to five against demonstrates the firm support for free trade on the part of Mexican President Andrés Manuel López Obrador (AMLO) and his Morena party, which holds more than twice as many Senate seats as the largest opposition party. Interestingly, four of the five votes against the USMCA came from members of the president’s own party, further underscoring the broad support for the deal across the political spectrum. With Canada seemingly moving ahead toward ratification, concern in Mexico appears to be focused on internal political struggles in the United States that could potentially derail ratification in the region’s largest economy. Continue reading Mexican Senate ratifies USMCA
The presidency of Andrés Manuel López Obrador (AMLO) is already starting to feel like a slog, and it hasn’t even begun yet. López Obrador was elected in July and is set to begin his six-year term on December 1, but it certainly feels like he’s president already and an embattled one at that. Memory can be hazy but it seems to us that in prior transition years, the president-elect maintained a far lower profile during the five-month period between election and inauguration and took care not to overshadow the sitting president. That may be because in the past the transitions were largely between PRI administrations, or between the PRI and the PAN, which aren’t much different anyway. Continue reading Willy nilly Morena rattling nerves and markets
Following marathon legislative sessions last week, the Mexican Congress finally approved the long awaited secondary laws associated with President Enrique Peña Nieto’s energy reform, clearing the way for implementation of the reform. Once President Peña signs the laws into effect today, August 11, 2014, we may become a monkey’s uncle, since that is what we have always said would happen if Mexico’s energy industry was opened to the private sector. We are astonished this is occurring in our lifetime.
Of course, no one, starting with Mr. Peña himself, knows exactly what will happen now. One thing we do know will not happen, however, is that national oil company Pemex will be “privatized,” as professional tear-factories and guardians of the national mythology such as Andrés Manuel López Obrador and his allies on the far left customarily wail. Pemex won’t be privatized, not because Peña and his allies in the right-wing opposition PAN wouldn’t do it if they could, but because no for-profit, private-sector oil company would want to buy Pemex. The value is in the oil and gas, not in the shamefully dysfunctional national oil company, and if you can drink the milk without buying the cow, well, you know. And Pemex is one hideous, bloated, corrupt and inedible cow.
So there is the challenge to the stewards or our national development and prosperity, and in this, the left may yet be proven right. The Mexican government must permit incentive-based contracts, concessions, partnerships or whatever they will be called to obtain the private sector capital and technology that will allow for the explotiation of the country’s energy resources. We are hoping this will result in a new Scandanavian-model dawn that will bring us cheaper energy and greater revenue for the national coffers while foreign oil companies receive a profitable return on their investments. If the foreign oil companies pollute the environment and make sweetheart deals with corrupt politicians, well, then nothing really will have changed. But if the nefarious foreign capitalists make a fortune off our oil in exchange for increased national oil revenues, updated technology and infrastructure development, then at least the nation will be receiving some benefit from our national resources. At present, all we have is the indignity of being the laughing stock of the Petroleum Workers Union and the political parties as they gorge themselves at the trough that is Pemex.