AMLO outside the Senate, Monday, October 26

Worker's Party Deputy Mario di Costanzo Tears Apart Carstens Economic Plan

Saturday, March 29, 2008

A Walk Down Privatization Lane

Why are at least 70% of Mexicans opposed to the privatization of the state-owned oil company PEMEX? Why, after twenty-five years of Mexican governments extolling the virtues of privatization while at the same time privatizing everything they could get their hands on short of their wives and children, is the Mexican public not swallowing the pill of bliss that will sweep them right into the first world of their dreams?

Let's take a walk through a typical Mexican day.

I get up and go to work, if I am lucky enough to have a job. Despite 25 years of privatization, Mexico's growth rate lags behind the rest of Latin America, including those countries that refuse to accept the privatization doctrine as obediently as Mexico. Immigration to the United States has soared since the signing of the North American Free Trade Agreement. The minimum wage remains less than $5 US dollars a day. The country is stagnant.

I begin working. If I am truly lucky enough to have a job with benefits, those benefits no longer include a government-provided pension that will allow me to retire any time before I'm dead. Thanks to the reform of the IMSS (Mexican Institute of Social Security) law in 1997, pensions were replaced with individual retirement accounts known as AFOREs, which are administered by the nation's banks, which have also been privatized in the intervening time. The interest paid by the AFOREs is measely, amounting to a whopping 9% annual, with more than 3% of that disappearing in commissions. A good deal...for the banks. In my personal case, when I resigned my job last year after working at what, in Mexican terms, was a fairly well-paying job for seven years, I had saved up all of $6,000 US dollars in my AFORE, the equivalent of....six whole months of salary. Last year's ISSSTE (Institute of Social Security for Government Workers) reform law pulled a similar maneuver for government employees, with the added bonus of the pension funds being controlled discretionally by the Machiavellian head of the teacher's union, Elba Esther Gordillo, instrument of the electoral fraud of 2006.

I go out and buy something with my credit card. Woe be to me if I don't pay off the card in full every month. Credit cards in Mexico charge interest rates up to five times more than the same cards in countries like the US and Spain - up to 80 and 90% - not to mention the tidy annual fee they practically all charge just for the right to rack up such astronomical debt. The profits of the banks in Mexico who emit these credit cards are substantially higher than those of the mother bank in their home countries.

Mother bank? Home country? Yes. All but one of the major Mexican banks have been sold off over the last ten years, but not before being bailed out at taxpayer expense in the infamous FOBAPROA bailout. Banamex, the country's largest bank, is a prime example. Roberto Hernández, the then-head of Banamex, was one of the largest beneficiaries of FOBAPROA, the large majority of whose proceeds went, not surprisingly, to people who did not need them. Fresh with government-infused cash, Hernández turned around and sold the bank to Citigroup, for which transaction he paid the grand total of....$0 in taxes. Oh, perhaps you didn't know - sales of shares on the Mexican stock market are not subject to taxation of any kind. No capital-gains tax. Well, maybe the Mexican people will get a tiny portion of that back in some highly-publicized philanthropy. Private giving substituting government programs, you know. And just try doing something as simple as going to your local branch and making an address change on your Banamex account. Go ahead - I dare you.

I make a telephone call, if I'm lucky enough to have a phone line - there are often "no new lines" when you try to go and get one installed. Mexico's national telephone company, TELMEX, was sold off during the administration of Carlos Salinas de Gortari to one Carlos Slim, then an unknown who has risen to become one of the top three richest men in the world, at times topping the scales as the richest. TELMEX maintains a virtual monopoly of Mexican land-line service, and charges the phone rates to match. By the way, Slim also owns the largest cell phone company, Telcel, whose profits in Mexico are more than in any other Latin American company where it operates. It controls most of the Mexican cell-phone market, and also charges the rates to match. Did anyone say "anti-trust?" Slim's stock profits, of course, are not subject to taxation: see above.

I get into my car and go drive on the highway. Tolls on Mexican highways are amongst the highest in the world, for a service that is usually little more than a two-lane (one lane each way) potholed road, the only benefit being that you avoid the speed bumps that are endemic on the country's secondary roads, at least down here in the south. Mexican highways were contracted out as concessions several years back, which goes a long way to explaining the state of the roads: what private company wants to invest in maintaining roads, money which will only reduce their profit margin, when people have no choice but to use those roads anyway? Despite this, many of the concessionary companies have gone belly-up. Not to fear, though: the Fox government, clearly following its free-market philosophy to the letter, rescued those troubled highways (not the first time this has happen, either), taking them back and refurbishing them on the taxpayer dime. Then Calderón, playing Robin to Fox's Batman, contracted them back out in his first year. Privatization of the profit, nationalization of the risk - who could ask for anything more?

Exhuasted, frustrated and angry, I go home and turn on the television. Two private companies - Televisa and TV Azteca - control Mexican television channels, serving as mouthpieces for the government and fabulous venues for product placement in their programming, which tends rather more to soap operas than to anything resembling a serious debate on something of a nature as serious as oil privatization.

Not convinced? Come down and spend a day with me. We'll run some errands together.

Thursday, March 27, 2008

The PRI's Turnaround on Oil

One day after insisting that if Felipe Calderón didn't stop dithering and present his own initiative to "reform" the state-owned oil company PEMEX that they would, the PRI is now insisting that they are not going to play any part in the privatization of PEMEX. Senator Manlio Fabio Beltrones, leader of the PRI faction in the Senate, even went one step further and accused Calderón of manipulating figures and engaging in a misleading public-relations campaign ( in order to trick a hostile public into giving up the farm; one can only wonder if he was as shocked as Captain Renault about the gambling going on in Rick's Café. And to any of us who might be tempted to see this for the 180-degree turnaround that it is, Beltrones scolded the assembled media at yesterday's press conference, for the "lightness" with which many people understand things in poltics. I suppose it would, in fact, be light-headed of anyone to expect a principled position of any kind coming out of the PRI, whose main concern over the last two years, more than oil, the economy or anything else, has been rather to blackmail a weak and illegitimate Calderón into keeping in gainful employment the infamous PRI governors of ill-repute: Puebla's own pederast Mario Marín and Oaxaca's own assassin, Ulisses Ruiz. Support the "family," and it doesn't matter much what else you do in your free time.

This can only be seen as a victory for Andres Manuel López Obrador, who the day before in the Zócalo of Mexico City presented, in an impressively-organized manner, the people's brigades for the defense of PEMEX: 20 groups of 500 women each for a total of 10,000, and 36 further groups totaling 18,000 more mostly-male volunteers, all lined up and ready to go the moment that Calderón stops wringing his hands and dares to present his privatization proposal to the Congress. What does "go" mean? It means citizens' blockades of Congress, airports and highways, everything the movement could have done but chose for the sake of prudence not to do in the aftermath of the fraudulent elections of 2006. This is serious, and should be: with oil topping $100 a barrel and headed for more over the next five to ten years, there is many an oil exec drooling over the chance to stick his rig into this bonanza, not to mention the internal political elite here in Mexico just waiting to go high-on-the-hog with contracts for family businesses and friends (Calderón's Interior Minister, Juan Camilo Mouriño, has already been publicly busted by Obrador for conflicts-of-interest related to shoving PEMEX contracts at family businesses during his time in Congress and in the Energy Ministry under....Calderón himself! Expect much more of the same with privatization). Obrador, whose activism in the oil issue predates his career as an elected official, is fully aware that only massive and hard-hitting public mobilizations will have a chance at stopping the backroom deal-making and pay-offs that would, in their absence, slip the privatization proposal, disguised as "alliances," "cooperation," "participation" or what you will, quickly through Congress like the Patriot Act in the States, preferably without giving any legislator who cared enough to do so the time to read it. And the pressure exerted by these citizens' brigades, even before they have been "deployed," is already starting to pay off.