Mexico readies for battle on oil privatization

Calderon, counting on the support of legislators from his own National Action Party and many from the formerly ruling Revolutionary Institutional Party, has been aggressively promoting a free trade, neo-liberal agenda of privatizing public entities, weakening labor law and attacking civil liberties. He evidently expected to have clear sailing for his idea of privatizing oil production under another name. Some caution would be necessary, because nationalization of foreign oil production in the 1930s by the revered President Lazaro Cardenas is considered a heroic episode in Mexican history, and oil is considered a sacred national patrimony.

First came a propaganda barrage in which it was alleged that government-owned PEMEX was going bust because lack of capital was keeping it from drilling new wells, while the old ones were going to run dry. This, Calderon alleged, proved the need for partnership with foreign private capital. Some oil experts questioned this, claiming that enough government capital was available.

It appears that the shell of the state oil company, PEMEX, would be preserved while one function after another is contracted out to major international monopolies. This way Calderon could claim he is not privatizing PEMEX, just partnering with outside private enterprise to expand and modernize its operations — while in reality privatization goes ahead full blast.

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