Political Thermometer

February 10, 2013
Political Thermometer

The political temperature of Mexico was at reasonably stable levels until the unfortunate explosion at one of the central buildings of Petróleos Mexicanos (PEMEX) (the state-owned company in charge of managing petroleum in the country), which generated substantial speculation and placed energy reform squarely on the political agenda. The explosion resulted in the death of more than 30 people in the first tragedy faced by the government of President Enrique Peña Nieto. Speculation as to the cause of the explosion ranges from sabotage by dejected groups, pressure by organized crime and even an act orchestrated by those who oppose changes in the current handling of Mexico's petroleum resources. Among the reforms announced by President Peña Nieto, energy reform is at the forefront, and it is known that Congress has additional work ahead with respect to revision, discussion and eventual approval of the guidelines that will regulate petroleum exploration and development. A significant indicator of the positive prospects for reform are the statements by leaders of the Institutional Revolutionary Party (PRI) that Mexico must revise the Bylaws and internal Action Plan of PEMEX so that such do not contravene the governmental proposal to transform the energy industry. It is foreseen that by the beginning of March, new Bylaws and an Action Plan will be approved as a result of the efforts of the PRI delegation in Mexico's Congress. On the other hand, Treasury Secretary Luis Videgaray confirmed the intent of the Mexican government to move ahead with broad energy reforms in 2013 while he attended the World Economic Forum (WEF) in Davos. Videgaray bases his statements on the Pact for Mexico agreed to by the three major parties: PRI, the National Action Party (PAN) and the Party of the Democratic Revolution (PRD). In effect, the PRI factions in the Senate and House of Representatives have expressed their agreement with the proposed reforms. It is believed that the same will occur with the senators and representatives of PAN. However, within PAN, some have expressed support for the modernization of PEMEX, while others have voiced serious doubts. This comes despite the fact that President Peña Nieto has stated on repeated occasions that the intent is not to privatize PEMEX, but rather for the Mexican government to maintain economic control. The intent is to convert PEMEX into a modern entity with greater productive capacity. Along the same lines, left-wing Mexican leader Cuauhtémoc Cárdenas called for greater administrative and financial autonomy for PEMEX. He declared that he would not agree with the privatization of oil, even though there are many sectors within the petroleum industry that are already open to private initiative. Cárdenas also supports the increase in investment in various sectors, as well as regional development and employment. For now, it is important for the investigations as to the explosion at the PEMEX offices in Mexico City to conclude, and for the public to be informed of the findings in a transparent manner in order to end all speculation.

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