Mexico’s Energy Reform Will Be Controlled By NAFTA

By 4 diciembre, 2013 Sin Comentarios

La Jornada: Alejandro Nadal*

A long list of irregularities marked Peña Nieto’s arrival at the Presidency. He took office by making a demagogic speech. The record of his first year in office is negative on all issues, particularly economics and security. Now he seeks, by all means, to impose on the country one of the most tragic reforms in our entire history: the delivery of oil to multinational interests. Impartial analysis of the government’s approaches to its energy reform shows that it involves the privatization of hydrocarbons. You can dress it up all you want, but Peña Nieto and Joaquín Coldwell, Secretary of Energy, will be delivering these strategic national resources to foreign domination.

In its advertising campaign, the government says that permitting PEMEX to sign profit-sharing contracts is not privatization and that the oil “will continue to belong to Mexicans,” because Article 27 of the Constitution so provides it. But that obscures a fundamental fact. The North American Free Trade Agreement (NAFTA) defines foreign investment as that in which there is ownership by an investor in territory of one of the parties to the treaty, or when remuneration depends substantially on the production, revenues or profits of an enterprise (Chapter XI, Section 1139).

This is precisely the explicit goal of the energy reform: to allow multinational companies to invest in exploration, extraction, refining and petrochemicals, and to maintain remuneration schemes such as those named in NAFTA. This means opening up the oil sector to direct foreign investment, which has serious implications since the previously cited Chapter XI of NAFTA grants more protection to companies than to governments. (For proof, see Chapter XI, Section B.)

The argument that the energy reform will generate growth is false. Owing to its own contradictions, the neoliberal model that has been implemented in Mexico for twenty-five years does not favor growth. NAFTA’s prohibition of performance requirements [such as linkages to domestic industry suppliers] is precisely one of the obstacles that will prevent the transmission of dynamic momentum from foreign investment in the energy sector to the Mexican economy (the same way that domestic industry is disconnected from the assembly plants [maquiladoras]). In addition, the proposed changes will not change the fact that the macroeconomic framework will continue to be subordinated to financial capital. In short, Peña Nieto’s energy reform does not change the framework of the economic policy that has been failing for more than two decades. All it will do is close out even more of Mexico’s options. Spanish original