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PEMEX privatization, DOA

13 May 2008

There’s no question that PEMEX has been badly managed in the past, and needs to restructure.  While I think some of the more recent problems PEMEX has had (or it is claimed the paraestatal has) might be self-inflicted wounds — it’s no secret that the previous and present administration had “energy reform” (meaning privatization) as a goal, and the politically-appointed management may have paid more attention to the political agenda than to the company’s long-range needs.  There’s nothing novel in that, and it’s hardly a complicated plot.  Ronald Reagan’s administration in the U.S. was openly appointing cabinet officers with a brief to close down their departments.

Whether PEMEX’s cash problems are ideological or not, assuming the ONLY solution was to privatize the paraestatal was bad logic.  You don’t start with a premise (private ownership is better) and then work backwards to find the arguments.  It’s how the U.S. got itself stuck in Iraq — Iraq’s government is “evil”… therefore, Saudi Arabian religious fanatics who attacked New York were connected to the radically anti-clerical government of Iraq, for example.

PEMEX’s need for technical support and equipment upgrades (including new refineries) was, in itself, no reason to expect a smaller, private oil company (like ExxonMobile) was the only possible resource… or that by acquiring the resources PEMEX required, it HAD to go private.

Anyway, with PRI leader Beatriz Paredes now saying her party is opposed to privatization, I’ll bet three things are going to happen.  The American press (unable to see anything but corporate ownership as “normal”) will start talking about the “failure” of the Calderon Administration.  You will start to read about “leftists” sabatoging “needed reforms” — overlooking the fact that 2/3rds of Mexican voters chose socialist or social democratic candidates when they go to the polls, and that the “needed reforms” and privatization are two different things.  Parades — the “Ms. Clean” of PRI — has been working to burnish her party’s image, and — still being Mexico’s largest single party — to return it to what it was intended to be:  the party upholding what the Mexican Revolution instituted.  The PRD, despite their “circular firing squad” leadership, did manage to delay PAN’s attempt to ram privatization through Congress long enough to give PRI time to return to their normal position.  And they have…  PEMEX will be restructured, and it may be smaller, but it’s not going to turn into a subsidiary of some U.S. company.

I’m guessing that some of PEMEX’s social services will be folded into other federal programs (there’s no particular reason PEMEX hospitals need to be separated from IMSS hospitals, for example), and Calderon’s Administration already won the battle to change the tax codes — which in theory opens up new resources for PEMEX.  It’s the right, the left and the middle who are changing PEMEX to fit Mexican realities, not a cadre of hardcore followers of some European ideology. 

And — privatization is dead.

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One Comment leave one →
  1. 27 May 2008 7:32 pm

    I can’t believe I haven’t commented on this article yet. I have said and written for years this exact same thing, that the purposeful underfunding of PEMEX by the Mexican federal government was specifically to ensure that at some point there would be a score for the politician who could pull off the privatization.

    More power to the political party which reverses this focus and trend. The folding of PEMEX controlled services back into the main programs will be a start towards increasing efficiency overall.

    PEMEX has the potential to be a “Cash Cow” for Mexico in the future couple decades, and should not have this potential squandered to a few individuals. I have high hopes for a good outcome from this.

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