SHOWDOWN COMING IN MEXICO OVER PRIVATIZATIONpart twoby David Bacon
The proposal for privatizing electricity brings back bad memories to older Mexicans of the era before nationalization. According to then-President Cardenas, independence from the colossus of the north meant prying the hands of US owners from the main levers of the country's economic life. In 1936, he defied the US government and bought out the US owners of the oil industry.
In 1960, the electrical industry was nationalized as well. The then-private, foreign owners of Mexico's power system wanted a big rate hike. To pressure the government to agree, they threatened to stop investing in bringing lines into rural areas and in building new generating capacity. Instead, President Gustavo Diaz Ordaz nationalized the industry. Diaz' action was very popular.
National ownership of electricity is not just a matter of rates and jobs, but a symbol of Mexico's independence from the US, especially economic independence.
The first crack in the nationalization of electricity came in 1979, when the technocrats bent on bringing market reforms to the Mexican economy began to become the dominant force in the federal government. In cooperation with Dow Chemical President John Connally, they envisioned a "North American Energy Project," that would connect the electrical grids of Mexico, the US and Canada.
George Bush Sr later supported the idea.
Popular opposition prevented the inclusion of the electrical and oil industries in the NAFTA negotiations, but in 1992, President Carlos Salinas de Gortari opened the door further. He announced that private companies, including foreign ones, could build and operate plants in Mexico so long as they consumed or exported all the energy they produced, or sold it to the Federal Electricity Commission.
According to Jesus Navarrete, head of the movement opposing privatization in one of Mexico's electrical workers union, SUTERM, almost all new construction of national power plants was halted after 1992. Meanwhile, private plant construction surged ahead. In addition to Enron, Sempra and Intergen, 23 other foreign companies have been granted licenses for plant construction.
"The industry could be self-financing if it weren't for the government's policy of disinvestment," says JosE Luis Hernandez of the other Mexican electrical workers union, the SME. "What they really want to do is enrich some of their favorites by selling it off at deflated prices." And further down that road is the other crown jewel, heretofore untouchable because nationalist feelings remain high. Most observers believe it's only a matter of time before Mexico's national oil company, PEMEX, itself is sold off.
A knowledgeable authority on the US side of the border is also concerned. Carl Wood, member of the California Public Utilities Commission, says "it's crazy for Mexico to be doing this. Mexico is blessed with lots or energy resources. But this proposal accomodates the needs of the large consumers without meeting those of the public, and sticking the cost of old technology with consumers. That was always the root of California's deregulation problems."
Nevertheless, current President Fox's privatization arguments swayed not only his own party, the conservative National Action Party, but also the leaders of the Party of the Institutionalized Revolution (PRI), which governed Mexico for 71 years before Fox's election. Both Diaz and Cardenas, who nationalized electricity and oil, were PRI stalwarts. The aboutface by the party's present leaders not only stood that history on its head, but also defied positions it defended earlier this year.
In May, the Mexican congress passed a resolution opposing any changes in the Constitution to make privatization possible, and the PRI itself took a similar position in its own national meeting. But after Fox invited PRI leaders Roberto Madrazo and Elba Esther Gordillo to the presidential residence of Los Pinos for a late night snack and talk, they were only too happy to announce they'd give his proposal serious consideration. The PRI has 40 percent of the votes in the Chamber of Deputies and the Senate, and Fox's National Action Party another 40 percent. If Madrazo and Gordillo can hold their members, Fox's scheme has more than the required two-thirds majority.
But that's a big if. Some of the PRI's most conservative, but nationalist leaders, including its former chair Manuel Bartlett, have organized vocal opposition. "Look at the energy chaos in California," he declared. "Do they want to sell the American failure to us?" Bartlett introduced an alternative bill to Fox's, that would ban any increase in the ten percent of current generation that is presently done by private companies.
The SME charges that Fox plan is a giveaway to the one percent of Mexican users, almost all big private companies, who consume 70 percent of the nation's energy. That should be familiar to Californians. In 1995, the original plan drafted by Pacific Gas and Electric and some of the state's largest corporations (grouped together in the Californians for Competitive Electricity) proposed to allow the largest power consumers to opt out of the system, leaving residential users and small businesses holding the bag.
The bitter California experience prompted San Diego congressman Bob Filner to travel to Mexico City in July to denounce the deal. Filner was especially critical of the Sempra and InterGen border plants, which are expected to produce 3000 tons of air pollution annually. Although US air quality controls won't apply to them, Imperial Valley residents a few miles north will wind up breathing the plants' effluents.
"These are the same companies that robbed and defrauded people in the US," he told the daily La Jornada. "The question, therefore, is why should Mexicans trust them not to do the same here?"
Whether Mexicans find the political strength to reject the proposal is a question bound up with the changes in the country's labor movement. The slow disintegration of the old union structure, which refused to mount any defense against neoliberal government policies, created a political opening. As an alternative, a new union federation, the National Union of Workers (UNT), was formed and declared open opposition to the economic reforms.
One of the most important structural changes implemented by the new federation was scrapping the old requirement that workers belong to the governing party in order to hold their jobs and maintain their union membership. The formation of the UNT helped to create an atmosphere in which opposition gained strength and legitimacy.
In 1999, splits began to develop in the SUTER electrical union. On May 22, 3,000 of its members defied their national leaders and marched in the capitol, openly allying themselves with the SME, which has no requirements for members to join the governing party. Another demonstration on August 28 brought out 5,000, and a national coordinating committee was set up, representing 15,000 workers.
The battle over privatization was internationalized when the SME hosted a conference in Mexico City which featured delegations from many Latin American countries. Further conferences brought together the Worker's University of Mexico (UOM), the National Association of Democratic Lawyers (ANAD), the left-wing Party of the Democratic Revolution, along with union representatives, academics, NGO's, and other political parties.
To defeat Fox, an alliance of the SME, Mexico's new independent union confederation, the National Union of Workers, the left-wing Party of the Democratic Revolution, and nationalist elements in the PRI have all vowed to cooperate in mass protest. The political temperature will get very hot this year.
Two separate and very different ideas about economic development and workers rights have emerged in Mexico. The differences are deep, over whose priorities will prevail--those of workers or those of investors with a stake in the free-trade based economy. According to Harley Shaiken, director of the Center for Latin American Studies at UC Berkeley, "the Mexican government has created an investment climate which depends on a vast number of low wage-earners. This climate gets all the government's attention, while the consumer climate--the ability of people to buy what they produce--is sacrificed."
"We have seen the consequences of deregulation in the electrical sector in the state of California which has been detrimental to the interests of the electrical workers and of the population," says a statement signed by leaders of both Mexican electrical unions. "In Mexico, the people rightly think that the electrical industry and the petroleum industry should be public property and that such public property is the fundamental basis for their nation's existence and of their national sovereignty."
For people on both sides of the border, privatizing electricity and oil is a watershed decision. Either the Fox government will succeed in finally burying the last and biggest remnants of Mexico's old nationalist development policy, or he will suffer a defeat which may make it possible to recover a road toward national economic independence.
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