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ISSN 1054-8890
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Volume 19, Number 41
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October 29, 2008
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Copyright 2009, Latin America Data Base (LADB)
Latin American Institute, University of New Mexico
http://ladb.unm.edu
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Editor: Carlos Navarro
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Staff Writers: Carlos Navarro
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In This Issue:
CONGRESS OVERWHELMINGLY APPROVES LEGISLATION TO REFORM STATE-RUN OIL COMPANY PEMEX
*President Calderon first offered plan in April
*Senate makes key changes to original proposal
*Analysts say plan is inadequate to meet Mexico's needs
ATTORNEY GENERAL RELEASES CONTROVERSIAL REPORT ON DEATH OF U.S. JOURNALIST BRAD WILL IN OAXACA
*Conclusions could boost tensions in Oaxaca
*Report places blame on sympathizers of APPO
*Human rights groups call conclusions inaccurate
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ENERGY & MINING
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CONGRESS OVERWHELMINGLY APPROVES LEGISLATION TO REFORM STATE-RUN OIL COMPANY PEMEX
In what many consider a historic step toward changing Mexico's antiquated petroleum sector, the Congress approved legislation to overhaul the state-run oil company PEMEX. The measure was approved overwhelmingly in both houses of Congress in October, although there was some dissent within the ranks of the center-left Partido de la Revolucion Democratica (PRD). Some members of the PRD broke with their moderate colleagues because of opposition to a provision that allows PEMEX to hire private and foreign companies for key activities in the oil sector. Another key change that allows the company more control of its revenues received overwhelming support. But some critics say the reform plan, which was diluted from President Felipe Calderon's original proposal, is insufficient to help reverse Mexico's declining production.
President Calderon first offered plan in April
The proposal to overhaul PEMEX had been in the works since April of this year, when Calderon first introduced his plan to Congress. At that time, the plan met strong opposition, with legislators from opposing parties concerned that the proposal potentially violated the Mexican Constitution (see SourceMex, 2008-04-30). Even with those concerns, Calderon pushed for the Congress to vote on the legislation to reform PEMEX in a special session during the summer months. Legislators rejected that proposal, saying they needed more time to consider an initiative with such far-reaching implications for the country (see SourceMex 2008-07-09).
As legislators were considering the various proposals for PEMEX reform, a faction of the PRD--along with allies from the Partido del Trabajo (PT) and Partido Convergencia por la Democracia (PCD)--pushed to have Calderon withdraw his plan altogether. This group, which was allied with the PRD's ex-presidential candidate Andres Manuel Lopez Obrador, opposed any form of private participation in PEMEX (see SourceMex, 2008-07-16).
Sensing an urgency to implement reforms to help PEMEX become a more viable company in the face of a sharp decline in reserves of crude oil, legislators used the start of the fall legislative session to hammer out an initiative to overhaul the company (see SourceMex, 2008-08-06 and 2008-09-24). In drafting the proposal, the Congress worked to modify Calderon's original plan to make it conform to sections of the Mexican Constitution that designate petroleum as the patrimony of all Mexicans. This would mean limiting, but not excluding, the private sector.
"No one disagrees with the participation of the private sector," Sen. Graco Ramirez, a member of a moderate faction of the PRD, said in early October. "Even the PRD recognizes that service contracts can be carried out by other companies."
The PRD party leadership and a majority of members also got behind the modified proposal developed by the Senate energy committee (Comision de Energeticos). "This is not a measure that would privatize Mexico's oil industry, and, therefore, we're going to support it," said PRD president Guadalupe Acosta Naranjo.
But the faction of the PRD that backed Lopez Obrador's position was not happy with the proposal and vowed to fight reforms, even to disrupt the voting process when the plan came up for a vote in the Senate and in the Chamber of Deputies.
There was also a difference of opinion in the PCD, one of the PRD's allies in the center-left coalition Frente Amplio Progresista (FAP). PCD Sen. Dante Delgado fully backed Lopez Obrador's position, while the party's national vice president Jose Luis Aguilera Rico criticized the former presidential candidate for not considering all sides of the argument on PEMEX reforms.
Senate makes key changes to original proposal
The Senate energy committee made several changes to Calderon's plan that made the proposal acceptable to all parties. The committee removed a plan backed by Calderon and members of his governing Partido Accion Nacional (PAN) to help finance PEMEX operations through the Bolsa Mexicana de Valores (BMV) and the country's retirement accounts (Administradoras de Fondos de Retiro, AFOREs).
"The Constitution is very clear in this regard. It states that the nation owns the subsurface resources," said Sen. Francisco Labastida, who chairs the energy committee (Comision de Energeticos) in the upper house. "Those entities that are entirely Mexican, including AFOREs, do not represent the nation; they represent a group of workers."
In the end, the committee settled on an alternative to funding PEMEX through the markets by allowing the company to sell "citizen bonds," which would pay dividends based on the performance of PEMEX. This proposal met some resistance from legislators from the PRD and the PT.
The committee also nixed a proposal contained in Calderon's original plan that would have allowed production-sharing contracts. In addition, private companies will not be permitted to build and own refineries or participate in transporting oil within Mexico.
The most important proposal by far was the move to give PEMEX financial autonomy and the flexibility to make its own decisions, rather than rely on the Secretaria de Energia or on the Secretaria de Hacienda y Credito Publico (SHCP) for direction. The energy committee approved a proposal to expand the PEMEX board of directors by adding four members, with the intention of fostering greater transparency and improving corporate governance.
Supporters of the reforms also highlighted the provisions that allow PEMEX to hire private companies to conduct exploration and production activities, which give the company access to new technology and capital.
On Oct. 23, the Senate overwhelmingly approved the committee's proposal. But the vote was held at an alternate site rather than on a Senate floor to avoid Lopez Obrador's threats to disrupt the process. "Despite the opposition from Lopez Obrador, the national leadership of the PRD agreed to back the energy reform that was about to go to the Senate floor," the official news agency Notimex said on the day of the vote.
Lopez Obrador turned his attention to the Chamber of Deputies, which was scheduled to vote on the issue on Oct. 28. The PRD leader requested a meeting with Deputy Cesar Duarte, president of the Chamber of Deputies, ahead of the vote to press his demand that the lower house drop the provision allowing private companies to participate in exploration and production activities. Duarte and other leaders agreed to the meeting.
"There was no negotiation," said Duarte, a member of the Partido Revolucionario Institucional (PRI). "I simply complied with the request from some parties in Congress to hold this meeting. I think the meeting was important because it helped reduce tensions."
Even so, a handful of PRD and PT legislators decided to take over the podium, causing some minor disruptions and a delay in the vote. In the end, the Chamber of Deputies overwhelmingly approved without changes the same legislation that was passed in the Senate.
Lopez Obrador vowed to press ahead with his plans to organize nationwide protests against the plan approved in Congress. The PRD leader said he had also put together a legal team to bring the issue to Mexico's high court (Suprema Corte de Justicia de la Nacion, SCJN).
Lopez Obrador said he also wanted to bring the issue to the international arena. "We want to exchange experiences with countries where the oil sector has been given away to private companies," he said.
Analysts say plan is inadequate to meet Mexico's needs
The reform has attracted criticism from analysts who say the changes are insufficient to attract the type of private participation that would help Mexico expand its reserves of crude oil. Pablo Hiriarit, a columnist for the Mexico City daily newspaper Excelsior, described the changes as "bland gelatin." He placed the blame squarely on the shoulders of the PAN. "Because of fear of becoming isolated or suffering a defeat in Congress, the PAN backed a reform that does not solve our problems."
"It's fairly apparent that, as an effort to address rapidly declining oil production and a lack of new discoveries, the legislation is not enough to reverse the ominous trends for Mexico's oil industry," Jeremy Martin, head of the energy program at the California-based Institute of the Americas, told Reuters.
Even though the new law fell short of the changes the Calderon government originally sought, the president attempted to put a positive spin on the changes, saying the reforms were the best that could be hoped for. "[The reforms] allow us to reorganize the petroleum sector, promote economic growth, and expand our supply of affordable energy," Calderon said shortly after the lower house approved the changes.
Energy Secretary Georgina Kessel said the reforms provide PEMEX with more flexibility to contract out work to private companies, which, in turn, could result in creating as many as 300,000 new jobs.
Similarly, PEMEX director Jesus Reyes Heroles said the changes would help PEMEX become a more efficient company. "This is the start of a new phase of development that commits directors and workers to improve their efficiency and operate with greater transparency," said Reyes Heroles.
Some analysts said the biggest achievement was the cooperation among the major parties in approving the reforms. "It's not the most desirable, but it's the most politically feasible reform," Enrique Bravo, a Latin America analyst for New York-based Eurasia Group, told the Los Angeles Times. "This is not a minor achievement."
[Sources: Milenio Diario, 09/03/08, 10/14/08; The Wall Street Journal, 10/22/08; Los Angeles Times, Financial Times (London), The New York Times, 10/24/08; Spanish news service EFE, 10/22/08, 10/26/08; Reuters, 10/03/08, 10/23/08, 10/25/08, 10/28/08; Notimex, 10/13/08, 10/16/08, 10/23/08, 10/24/08, 10/27/08; Bloomberg news service, 10/07/08, 10/23/08, 10/28/08; La Cronica de Hoy, 10/28/08; El Sol de Mexico, 09/03/08, 10/14/08, 10/24/08, 10/27/08, 10/29/08; La Jornada, 09/03/08, 10/14/08, 10/16/08, 10/23/08, 10/24/08, 10/27-29/08; Excelsior, 10/14/08, 10/21/08, 10/23/08, 10/24/08, 10/28/08, 10/29/08; Reforma, 10/20/08, 10/24/08, 10/26/08, 10/29/08; Associated Press, 10/23/08, 10/29/08; El Universal, 10/23-25/08, 10/27/08, 10/29/08]
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HUMAN RIGHTS & SOCIOECONOMIC ISSUES
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ATTORNEY GENERAL RELEASES CONTROVERSIAL REPORT ON DEATH OF U.S. JOURNALIST BRAD WILL IN OAXACA
Federal authorities threw gasoline on the fire with a report concluding that US journalist Brad Will was killed in Oaxaca state two years ago by sympathizers of the protest group Asamblea Popular de los Pueblos de Oaxaca (APPO). Will was filming a confrontation between APPO members and pro-government demonstrators when he was shot. The common theory following Will's death was that members of the state police or paramilitary units sympathetic to Oaxaca Gov. Ulises Ruiz fired the shots that killed Will. The government's conclusion that APPO protestors or sympathizers actually fired the shots led human rights advocates and APPO to accuse the federal and Oaxaca state governments of engaging in a cover-up.
Conclusions could boost tensions in Oaxaca
APPO had battled with Ruiz since the governor, a member of the Partido Revolucionario Institucional (PRI), took office in 2004. Ruiz won a highly controversial election, defeating coalition candidate Gabino Cue by a very narrow margin (see SourceMex, 2004-08-04). Ruiz initially locked horns with the local chapter of the teachers union (Sindicato Nacional de Trabajadores de la Educacion, SNTE) regarding pay raises and other labor-related issues. The SNTE took over the main plaza of Oaxaca city to express its displeasure (see SourceMex, 2006-08-02 and 2006-09-13). Several civic, labor, and political organizations later joined the SNTE in the protest, eventually forming APPO.
APPO held a series of protests throughout Oaxaca, insisting that the organization would not back down until Ruiz resigned from his post. Ruiz responded to the situation by cracking down violently against the protestors.
It was during one of the APPO protests when two bullets killed Will as he filmed the clashes for the New York chapter of the Independent Media Center (Indymedia). The journalist had been in Oaxaca recording the protests for four weeks (see SourceMex, 2006-11-01).
Will's death brought widespread condemnation from Mexican and international human rights advocates and journalist organizations like Reporters sans frontieres (RSF). Facing strong pressure to look into the case, the Procuraduria General de la Republica (PGR) launched a long investigation.
In October 2008, two years after the incident, the PGR released the results of its investigation, but a report from the federal authorities did not offer the conclusions that many advocates had sought: that the Oaxaca state government or its accomplices had conspired to murder Will. One of the theories mentioned most often before the report was released was that members of paramilitary units or state police officers fired the shots that killed the US journalist.
Report places blame on sympathizers of APPO
Instead of confirming that theory, prosecutors concluded that the killers were members or sympathizers of APPO who were standing near Will. The PGR said the US journalist was filming confrontations between APPO and police from the municipality of Santa Lucia del Camino.
To back their theory, PGR investigators cited forensic evidence that the shots were fired at close range, perhaps at 2 meters from the victim. Furthermore, the PGR pointed to Will's video, in which an unidentified voice was demanding that he stop filming.
"The expert's report indicates that the shots against Will were intended to deprive the journalist of his life," said deputy attorney general Victor Emilio Corzo Cabanas, who was in charge of the investigation.
Following their investigation, authorities arrested Juan Manuel Martinez Moreno and Octavio Perez, whom they identified as sympathizers or members of APPO. According to the investigation, Martinez fired the shots that killed Will, while Perez was an accomplice who helped cover up the crime.
The PGR said that Will's death was intended "to bring international attention" to APPO's causes, which could have the end result of forcing Gov. Ruiz from office.
But some critics questioned this theory. "The presence of the US cameraman Brad Will in Oaxaca was convenient for APPO and was a source of discomfort for the government," said the Mexico City daily newspaper La Jornada.
Other critics said APPO benefited greatly from the reports Will and Indymedia filed from Oaxaca, which exposed the abuses perpetrated by the Ruiz government and other PRI officials. "There was no reason for APPO to seek Brad Will's death," said Adrian Ramirez, president of the Liga Mexicana de Defensa de los Derechos Humanos (LIMEDDH). "There were many more reasons for the government of Oaxaca and the PRI to seek this outcome."
Still, some officials were cautious about the link between the suspects and APPO. "We cannot be sure that they belong [to that organization]," said Alberto Orellana Wiarco, who is in charge of the PGR's office that investigates crimes against journalists.
Orellana took great pains to emphasize that the arrests should not be viewed as an indictment of APPO. "Independent of this action [the homicide], we are not judging this group but rather are investigating people who might be linked to the group."
Human rights groups call conclusions inaccurate
The PGR's conclusions drew strong protests from APPO, Will's parents, and human rights advocates, who accused the PGR and Oaxaca state investigators of conducting a biased investigation.
Insisting that Moreno and Perez were innocent, APPO spokespersons said paramilitaries were the ones who fired the shots that killed the US journalist. "These detentions are part of a wave of government aggressions against APPO," said Florentino Lopez, a spokesperson for the organization.
Similar comments came from Will's parents, who spoke to reporters from their home in Chicago. The slain journalist's mother, Kathy Will, said she had no doubt that paramilitaries sympathetic to the Ruiz administration were responsible for her son's death. "It's been two years of the same thing," said Kathy Will. "They are absolutely determined to pin it on somebody nearby."
The Wills, who have hired a lawyer in Mexico, criticized President Felipe Calderon for failing to speak out on this incident and allowing the Ruiz government to continue to act with impunity.
The semi-independent Comision Nacional de Derechos Humanos (CNDH) said the PGR's probe contained many deficiencies, irregularities, and omissions, which resulted in a report that was not impartial. For example, said the CNDH, the PGR and the Procuraduria General de Justicia de Oaxaca (PGJO), which assisted in the probe, chose to ignore information provided from Physicians for Human Rights (PHR), which, through an investigation conducted by its International Forensic Program, provided evidence that the bullets that killed Will might not have been shot at close range.
The CNDH contends that the bullets that killed Will might have been shot from a distance of 35 to 50 meters, meaning that Moreno and Perez probably were not the killers. Furthermore, said the commission, independent investigations suggest that the bullets entered Will from the side, which contradicts official accounts that the US journalist was shot from in front.
Nationally syndicated columnist Jorge Zepeda Patterson disputed the government's interpretation of the data obtained from the footage in Will's camera. "The delay between the sound of the gunshots and Will's anguished cries indicates that the bullets were shot from a distance," said the columnist.
Others said the process of gathering evidence is still deficient in Mexico, which has contributed to the less-than-satisfactory conclusion. "There were many mistakes," said Edgar Cortez, secretary-general of the coalition Red Todos los Derechos para Todos (Red TDT). "A long time transpired between the incident and when the evidence was collected, which left it open to manipulation."
Cortez raised concerns that the PGR's conclusions give Gov. Ruiz a free pass to continue his government's use of impunity and violation of human rights. "It appears that we won't get justice in this case," said the human rights advocate.
The international journalists organization RSF also criticized the Mexican government for its conclusion, which has the effect of exonerating the Oaxaca authorities. RSF called the probe "a botched investigation" that was intended solely to relieve Gov. Ruiz and his collaborators of all culpability.
[Sources: Associated Press, Spanish news service EFE, 10/17/08; The New York Times, 10/18/08; Noticias, Voz e Imagen de Oaxaca, 10/19/08; Notimex, Radio Formula, 10/20/08; Milenio Diario, La Cronica de Hoy, 10/18/08, 10/21/08; El Universal, 10/17/08, 10/19/08, 10/21/08, 10/22/08; E-Consulta, 10/22/08; Spanish news service EFE, Excelsior, 10/24/08; Fuerza Informativa Azteca, 10/27/08; La Jornada, 10/18-21/08, 10/23/08, 10/28/08]
Latin American & Iberian Institute