Volume 6, Number 13, Page 1

Popular and Political Resistance to Privatization in the Mexico Energy Sector

By Roger Nunn

Editor’s Note: Recent issues of the Trade Report have included a number of articles and news summaries related to the proposed privatization of the Mexico Energy sector. Such material has primarily focused on legislative efforts towards privatization (such as the Zedillo Administration’s proposal for the privatization of the electrical sector). Included below is Roger Nunn’s succinct analysis of political and popular resistance to energy sector reform followed by an address given by Rosendo Flores Flores, Secretary General of the Union of Mexican Electrical Workers. As Mr. Nunn notes in his introduction, the address exemplifies the kind of resistance that has prevented energy sector reform in the past. We include Mr. Nunn’s comment and Mr. Flores’ address to shed light on the obstacles facing the movement toward privatization.

Ordinarily, MEI does not provide subscribers with translations of documents bearing on Mexico’s energy sector that happen to be in languages other than English. Generally, it is sufficient to provide a guide to the contents and a summary of key points; for details, most subscriber organizations have bilingual staff. Alternatively, we are available by telephone or e-mail to respond to queries. The attached translation of a short address given by the head of one of Mexico’s two labor unions in the state electric power sector is therefore an exception to a general policy. The language and argumentation used in the address, delivered in Geneva to an annual meeting of the International Labor Congress, are so striking that an executive summary seemed inadequate.

What is striking is the apparent depth of feeling associated with a point of view in Mexico that, in the past five years, has derailed repeated attempts by Pemex and the Government to privatize the state petrochemical industry. It is a point of view that would certainly be invoked at any future moment in which the Government might follow the recent example of Brazil in holding international tenders for production blocks. It is a point of view that could derail the Zedillo Administration’s proposal for the restructuring and privatization of the electric power industry.

The main argument is that nationalization of a strategic industry creates an irreplaceable public good, one that strengthens national sovereignty by providing the State with revenues available for social programs and by providing a workforce loyal to national values and development goals. By implication, attempts to undo, reverse or in any fashion dilute the force of such a nationalization damages national sovereignty and is bad both for the economy and for the country’s low-income classes. Expressed this way, the main argument relies largely on interlocking definitions; it does not admit of empirical data that might challenge its assumptions or conclusions.

A secondary argument is that market-oriented economics breeds poverty and fails to address the needs of the impoverished masses for food, health and education. (Oddly, environmental damage is not listed as one of the sins of capitalism.) By implication, the needs of the market and the needs of the lower classes (euphemistically referred to as “desarrollo social”) are best served by a State-owned industry in which international competition is categorically excluded. It is understood that the labor force of the state-owned industries in the oil and power sectors are unionized and represented by speakers like the one at the podium. There is, therefore, a self-serving subtext of public addresses such as this one that appeal to public authorities to respect the Constitution, respect the role of state labor unions and keep out private companies that would order massive layoffs of padded payrolls. In the present case, the speaker’s very union would be abolished in the restructuring proposal; the SME would be folded into the larger SUTERM.

There is also a cynical element in the subtext: the moral and political force of such arguments at home derives in part from the very lack of education in the audiences for whom such appeals are intended. The value in reading such addresses is that it opens a window directly onto the verdant, anti-market landscape in Mexico.

Address to the 87th International Labor Congress
Geneva, June 1999
Rosendo Flores Flores
Secretary General
Union of Mexican Electrical Workers

I come to carry out a mandate: to give voice in this international forum to the thousands of electrical workers and hundreds of thousands of Mexican citizens, who, in word and deed, struggle to maintain a [set of] national values: the development of a strategic industry, one that fosters economic growth and service to low-income consumers. This industry operates without the damage caused by international competition, an industry that exists with international independence and autonomy, thereby [strengthening] national sovereignty.

The countries of Latin America, including ours, in their history have been bled from offering its natural resources to the full play of market forces. The result is clear: dependency and underdevelopment.

Since a decade ago, a “new model” is proposed and applied to make us rise up from the rubble of the crisis of the 1970s. Worldwide, it is called “neoliberalism.” It encourages the flow of capital throughout the globe and it stimulates the growth of the macro [economic] indicators. It reduces to the minimum the presence of the State in the national economy as well as in the delivery of public services. It is said that in the end, we will arrive at a state and a society of equals. Such is the present and such is the future of nations.

We say this is false.

In the entire world, but especially in the Third World, unemployment, poverty, and misery grow without restraint. In these times of globalization when technically everyone could be fed, malnutrition is increasing. Today, when technically, parasitic diseases could be controlled, cholera is re-appearing. Today, when there exist the means and methods to raise the average educational level, the number of illiterates multiplies. Neoliberalism provokes desolation of a segment of society that grows wider each day. Neoliberalism polarizes society, imposes a greater social inequality. Each year there are more poor people in the world.

In Mexico, neoliberalism was achieved by cruel advances. Workers are ambushed, their rights are diminished as well as their potential and their presence in the economy and in society. Privatizations generate unemployment, dissolve and violate collective contracts. In this way, a global trend is applied: it is capital that determines conditions [of work] and imposes its interests, ignoring the worker and limiting its vital necessities.

In Mexico, a constitutional reform is being promoted and encouraged to open the electric industry to market forces––an industry that has been nationalized since l960. The questionable just operation, the lack of a federal budget, takes the form of a threat: choose between social programs for the poor, or the development of the electric industry. There is no social dialogue. The workplace is neither seen nor heard.

In December [1999], the Mexican Union of Mexican Electrical Workers will celebrate its 85th anniversary of its founding. We formed at the time of the [Mexican] revolution [1910-1920], the first in this century. We are the oldest recognized labor union in Mexico. With patience and care, we negotiated one of the best collective bargaining agreements since 1930 when the company was still a foreign-owned company. We have struggled since 1914 incessantly to promote union democracy and full participation in the design and planning of the company. For years we argued for the nationalization of the industry. When the Mexicans achieved nationalization, we conceived of it as an integral and strategic [element] for economic growth and social programs––in just the way as it is framed in Article 27 of the Constitution.

With this perspective, and in the framework of globalization, we recognize a necessity: achieve a social dialogue [at home] and international solidarity. We want to find ourselves and to take a course that is global. Consolidate and join arms with the International Union. The worker solidarity perspective will permit identifying issues, share experiences and create alternatives with which to confront “neoliberalism,” doing so with a diverse social stance and an integral vision of the workplace.

In Mexico, public policy changed in 1992 permitting investment of private capital in power generation, but excluding power transmission, distribution and marketing. Power was seen as a public asset. In this way natural monopolies were avoided. [Today], they insist that the constitutional amendment will be “for the benefit of the people for the harmonious development of the economy and with full respect to the rights of workers.”

This is false. The effects of privatization and the requirements of the market are clear: massive layoffs, rupture of collective bargaining agreements and amnesia regarding labor rights. In many countries in which the electric industry was nationalized, the only labor right that was respected was a termination indemnity.

Against all of this we are struggling in Mexico. We propose adherence to the Constitution in two senses: absolute respect for each and every labor right, and clear respect for the strategic industries defined in it. We have elements we could be able to reorganize the Mexican electric industry, as there exist substantive proposals to achieve it––from administrative restructuring to new electric tariffs that respond both to the marketplace and to the social structure of the country. In this way, we will achieve economic growth with something essential, something that this Congress analyzes and proposes: market solidarity with full employment.

If there is work, there will be consumption. [We ask for] elementary rights of the human being: “decent and productive work in conditions of liberty, equity, security and respect for human dignity.” [We ask for] work and sovereignty in Mexico, nothing more, but also nothing less.

Thank you.

Source: Proceso (Mexico City), No. 1180 13 de junio 1999, p. 49; translated from the Spanish by George Baker. Roger Nunn and George Baker are with Baker & Associates, an Energy Consultant Firm with offices in Houston, Texas and Mexico, D.F. The above material first appeared in Mexico Energy Intelligence, a publication of Baker & Associates.