For those of us who live lives of relative privilege in our little Mexican bubbles, it may be hard to actually conceive of how much the country has deteriorated just over the last two years. Besides killing more Mexicans than American soldiers dead in Iraq, little Lipe's misnamed "war on drugs" (or rather, intervention in the drug market to favor certain cartels over others, as Luis Javier Garrido has it) has terrorized the population, shredded the social fabric, and created the conditions of permanent fear necessary for future bouts of "economic shock treatment," in the words of the thankfully-late Milton Friedman. His bungled response to the global economic crisis: raising regressive taxes in a time of recession and continuing to waste government coffers on profligate bureaucratic spending and salaries - upwards of $60,000 dollares a month for the highest functionaries - while the rest of the country goes increasingly hungry has led Mexico to the dubious honor of country with the worse economic growth in all of Latin America, several years running. And worst of all from the standpoint of simple justice, his government's continued violations of human rights, either actively or through turning a blind eye, as well as the maintenance in office of the likes of Ulisses Ruiz ("el gober penoso") and Mario Marin ("el gober precioso") - men with criminal pasts egregious even by the, shall we say, loose standards of Mexican politicians, cynically mocks any advances the nation had made towards rule of the law in the 1990's. And though his attempt to privatize Pemez, the crown of the neo-con strategy for turning Mexico into a backyard oil protectorate, failed in the short term through massive public movilization led by Andres Manuel López Obrador, there is no doubt that, after the mid-term elections in July, Congress will at some point try again.
What is amazing through all of this is that it has taken the American press so long to notice. A rash of negative pieces in elite publications such as Forbes at the end of last year proved themselves to be "shocked" at the country's spiraling drug violence, and a recent Pentagon report has Mexico on its watch list of potential failed states alongside countries like Pakistan, another major recipient of the dubious benefits of US military aid. Meanwhile, at the Davos Conference in Switzerland, in yet another example of breezy cynicism, former President Ernesto Zedillo allowed that the pricetag of Mexico's bank bailout, initiated under his administration, topped even that of the US's. Yes, Fobaproa, the Frankenstinian monster that sucked up 20% of Mexico's GDP to benefit the same people who pillaged and led their enterprises to ruin in the first place, then benefited from free government bailout money, then got them back with freshly-scrubbed balance sheets shining like new, then liquidated or sold them off several years later with just a few properly-targeted bribes to clear the way, capping off the greatest swindle in this nation's (and perhaps the world's, considering the relative size of the bailout to Mexico's economy) history: the conversion of the dirty, private debts of millionaries into the public debt of millions. Sound familiar? Speaking of which, meanwhile, President Obama rails against Wall Street bankers' serving themselves up nearly $20 billion bonuses in 2008 in the midst of the north-of-the-border version of bailout mania, and congratulates himself that his new Treasury Secretary succeeded in talking the Citigroup out of buying a new corporate jet. At least someone's putting their foot down (yes, there is some sarcasm in those italics). In France, two-and-a-half million people marched in protest of the Sarkozy government's decision to inject $26 billion euros into France's banking system, despite the fact that said banks ended 2008 in the black. In the US, Exxon reported a record $45.2 billion in profits for 2008 - sounds like they're ripe for a bailout, too.
Masters of finance, bingers on greed and the white-collar public dole: the whole world is watching.
Friday, January 30, 2009
Monday, December 29, 2008
The Hidden Cost of Higher Energy Costs
Every month, every week, practically every day, the cost of basic utilities is on the rise in Mexico. This week ushered in gasoline-tax increase number 33 of 2008. Electricity has risen upwards of 100% this year alone, with prospects of more ahead: the front page of today's Jornada reports that although big business will, in fact, be getting a break on energy prices in the upcoming year, this is to be paid for by giving to them the subsidies that are being taken away from the public at large. Because electricity prices are pegged to the international cost of natural gas rather than what it actually costs to produce the electricity domestically, and because the government's goal is to "harmonize" (read: increase) the cost of energy in Mexico with ever-increasing global energy costs (while at the same time doing little or nothing to decrease Mexico's dependence on imported energy), expect continued monthly increases in your electrical bill throughout 2009.
Theoretically, I suppose, businesses which see their energy bills reduced will pass that savings along to the consumer in the form of lower prices. Unless they don't - and given the uncertain (at best) economic forecasts for 2009, and given that a large part of Mexico's major businesses are monopolies or quasi-monopolies, and given that the government sure won't be forcing them into it anytime soon, don't hold your breathing waiting for any price reductions. And even in the off chance that there are, the monthly surprises tucked into everyone's electric bills will be plenty enough to wipe them out.
Raising utility costs in the midst of the greatest world economic crisis since 1929 is dumb beyond belief. Higher energy costs provoke inflation in everything else, and at a time of eroding incomes, increasing unemployment and waves of immigrants returning to Mexico from the States hungry for work that doesn't exist, it's simply fuel on the fire. It would be entirely different if the gasoline and electricity hikes were being used for a massive, national investment program in alternative energy sources that could employ a swath of those returning immigrants, and others, in very worthwhile work. I would gladly pay double or triple my light bill if I saw banks of solar panels going up on every roof and light stansion, taking logical advantage of Mexico's sun-soaked climate. Or better yet, if Mexico put all its architects and engineers to work in designing and making the next generation of cheaper, more effective panels. Before the supposed failure of the "import-substitution" model (which should fairly have been called the "self-sufficiency" model, which is what it was), before Mexico became a country of piecework maquiladoras for, and adminstrators of, foreign concerns, it showed the world - three generations ago and with none of today's technology - that it could run its own oil industry just fine after the expropriation of 1938. Why couldn't it build and design its own panels now?
Therein, I fear, lies the rub. Mexico could build and even design its own solar panels if it were to want to, if the government invested even a part of what cloudy, cold Germany is pouring into solar research. The money could be found, just as money was magically found to build an oil refinery after we were told for so long that there wasn't any. What there is not is the will. The privatization of electrical energy in Mexico is now half-complete, that of oil - as we so dramatically saw this fall - temporarily aborted but the threat ever-present, and what private companies do not want is to have to subsidize (read: make accesible) the cost of their energy for the average consumer. "Harmonization" of energy prices with the volatile and pitiless international market will ensure that these energy providers will be able to make the same profits in Mexico as in the US, France and Spain, while at the same time benefiting from lower labor costs, no-bid contracts, and the same sweetheart package of tax deductions and deferrals their sister industries in other sectors benefit from now. Genuine national sovereignty can only result from genuine energy self-sufficiency, and a sovereign nation is one that is capable of making uncoerced decisions in its own national interest. And Mexico's national interest does not lie in making consumers pay more to subsidize (subsidies in this direction are apparently okay!) increasingly-privatized industries which, as time goes on, are having less and less to do with Mexico as a nation at all.
Theoretically, I suppose, businesses which see their energy bills reduced will pass that savings along to the consumer in the form of lower prices. Unless they don't - and given the uncertain (at best) economic forecasts for 2009, and given that a large part of Mexico's major businesses are monopolies or quasi-monopolies, and given that the government sure won't be forcing them into it anytime soon, don't hold your breathing waiting for any price reductions. And even in the off chance that there are, the monthly surprises tucked into everyone's electric bills will be plenty enough to wipe them out.
Raising utility costs in the midst of the greatest world economic crisis since 1929 is dumb beyond belief. Higher energy costs provoke inflation in everything else, and at a time of eroding incomes, increasing unemployment and waves of immigrants returning to Mexico from the States hungry for work that doesn't exist, it's simply fuel on the fire. It would be entirely different if the gasoline and electricity hikes were being used for a massive, national investment program in alternative energy sources that could employ a swath of those returning immigrants, and others, in very worthwhile work. I would gladly pay double or triple my light bill if I saw banks of solar panels going up on every roof and light stansion, taking logical advantage of Mexico's sun-soaked climate. Or better yet, if Mexico put all its architects and engineers to work in designing and making the next generation of cheaper, more effective panels. Before the supposed failure of the "import-substitution" model (which should fairly have been called the "self-sufficiency" model, which is what it was), before Mexico became a country of piecework maquiladoras for, and adminstrators of, foreign concerns, it showed the world - three generations ago and with none of today's technology - that it could run its own oil industry just fine after the expropriation of 1938. Why couldn't it build and design its own panels now?
Therein, I fear, lies the rub. Mexico could build and even design its own solar panels if it were to want to, if the government invested even a part of what cloudy, cold Germany is pouring into solar research. The money could be found, just as money was magically found to build an oil refinery after we were told for so long that there wasn't any. What there is not is the will. The privatization of electrical energy in Mexico is now half-complete, that of oil - as we so dramatically saw this fall - temporarily aborted but the threat ever-present, and what private companies do not want is to have to subsidize (read: make accesible) the cost of their energy for the average consumer. "Harmonization" of energy prices with the volatile and pitiless international market will ensure that these energy providers will be able to make the same profits in Mexico as in the US, France and Spain, while at the same time benefiting from lower labor costs, no-bid contracts, and the same sweetheart package of tax deductions and deferrals their sister industries in other sectors benefit from now. Genuine national sovereignty can only result from genuine energy self-sufficiency, and a sovereign nation is one that is capable of making uncoerced decisions in its own national interest. And Mexico's national interest does not lie in making consumers pay more to subsidize (subsidies in this direction are apparently okay!) increasingly-privatized industries which, as time goes on, are having less and less to do with Mexico as a nation at all.
Sunday, December 14, 2008
Banamex and Citigroup: The Great Double Swindle
1. Beginning in 1995, the Mexican government bailed out the recently-privatized Banamex (Banco Nacional de México, italics obviously mine) to the tune of 79 billion pesos (seven and a half billion dollars) - a total which ascended over time to 104 billion pesos (ten billion dollars) in real value - as part of the giant Fobaproa bank bailout. Fobaproa, the costs of which were subsquently transferred to the Mexican taxpayer, saved Banamex from certain bankruptcy.
2. In 1998, the Citigroup came into being, assisted by the repeal the following year of the Glass-Steagall Act, a New Deal era law separating deposit banking from investment banking. The chief promotor of the law's repeal was Robert Rubin, Bill Clinton's Treasury Secretary, soon to become a director and senior advisor at Citigroup.
3. In 2001, Banamex was sold to the Citigroup for 125 billion pesos (12 billion dollars). This was done via a stock-market transaction (tax free, in Mexico), allowing Banamex to avoid paying the 12 billion, 500 million pesos it would otherwise have owed.
4. Citibank had long been the Mexican elite's bank of choice for spiriting money, drug money included, safely out of the country. Most famously, Raul Salinas, brother of former president Carlos Salinas de Gortari, laundered $80-$100 million dollars through Citibank to Swiss accounts.
5. In 2007, Banamex bought the airline Areomexico with just a fraction of the Fobaproa monies it continued receiving as late as 2006. The buy, moreover, was a steal: a mere $249 million dollars, barely the price of one new airplane. Bidding for the airline was prematurely cut off, preventing other bidders from getting involved and the price from going any higher. This transaction was widely seen as a payoff by Felipe Calderon to Roberto Hernandez, ex-director of Banamex and current member of the boards of both Banamex AND Citibank (and Televisa, for that matter), for favors received during the presidential campaign of 2006.
6. In November, 2008, the US Government announced that it was bailing out the Citigroup as part of the $700 billion bailout passed the month before. This includes the direct injection of capital as well as a government guarantee of $300 billion dollars of Citibank assets. The government further guaranteed to protect Citigroup against future losses over and above the first $29 billion. This despite a New York Times exposé (see: http://www.nytimes.com/2008/11/23/business/23citi.html?pagewanted=1) that shows that the Citigroup, through lax oversight and mismanagement, has only itself to blame for, among other things, getting over-involved in collateralized debt obligations (C.D.O.'s): bundles of sub-prime mortgages and other bad debt, as it turned out.
7. Robert Rubin, who was involved in this Citigroup strategy from start to finish, is now a key economic advisor to President-Elect Barrack Obama. He is unapologetic about his stint at Citibank, which has lost 70% of its shareholders' value this year and, in the same week as its bailout became news, announced 52,000 more layoffs, the "second largest job cut ever undertaken by any company on record" as Crain's new york business.com reports.
(http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20081117/FREE/811179995/1048/INFORMATION)
Conclusion: the Mexican taxpayer bails out a previously-privatized asset that is then sold to an American banking group without the payment of a dime in taxes. Said group uses a fraction of that money to buy one of Mexico's privatized airlines in a pre-arranged, favor-swapping firesale as well as to engage in risky investment practices which lead it to the point of collapse. Not to fear, for where the Mexican taxpayer leaves off, the American taxpayer comes in, allowing Banamex-Citibank, in the space of little over a decade, to benefit from massive bailouts on both sides of the Rio Grande. Who says globalization ain't great?
2. In 1998, the Citigroup came into being, assisted by the repeal the following year of the Glass-Steagall Act, a New Deal era law separating deposit banking from investment banking. The chief promotor of the law's repeal was Robert Rubin, Bill Clinton's Treasury Secretary, soon to become a director and senior advisor at Citigroup.
3. In 2001, Banamex was sold to the Citigroup for 125 billion pesos (12 billion dollars). This was done via a stock-market transaction (tax free, in Mexico), allowing Banamex to avoid paying the 12 billion, 500 million pesos it would otherwise have owed.
4. Citibank had long been the Mexican elite's bank of choice for spiriting money, drug money included, safely out of the country. Most famously, Raul Salinas, brother of former president Carlos Salinas de Gortari, laundered $80-$100 million dollars through Citibank to Swiss accounts.
5. In 2007, Banamex bought the airline Areomexico with just a fraction of the Fobaproa monies it continued receiving as late as 2006. The buy, moreover, was a steal: a mere $249 million dollars, barely the price of one new airplane. Bidding for the airline was prematurely cut off, preventing other bidders from getting involved and the price from going any higher. This transaction was widely seen as a payoff by Felipe Calderon to Roberto Hernandez, ex-director of Banamex and current member of the boards of both Banamex AND Citibank (and Televisa, for that matter), for favors received during the presidential campaign of 2006.
6. In November, 2008, the US Government announced that it was bailing out the Citigroup as part of the $700 billion bailout passed the month before. This includes the direct injection of capital as well as a government guarantee of $300 billion dollars of Citibank assets. The government further guaranteed to protect Citigroup against future losses over and above the first $29 billion. This despite a New York Times exposé (see: http://www.nytimes.com/2008/11/23/business/23citi.html?pagewanted=1) that shows that the Citigroup, through lax oversight and mismanagement, has only itself to blame for, among other things, getting over-involved in collateralized debt obligations (C.D.O.'s): bundles of sub-prime mortgages and other bad debt, as it turned out.
7. Robert Rubin, who was involved in this Citigroup strategy from start to finish, is now a key economic advisor to President-Elect Barrack Obama. He is unapologetic about his stint at Citibank, which has lost 70% of its shareholders' value this year and, in the same week as its bailout became news, announced 52,000 more layoffs, the "second largest job cut ever undertaken by any company on record" as Crain's new york business.com reports.
(http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20081117/FREE/811179995/1048/INFORMATION)
Conclusion: the Mexican taxpayer bails out a previously-privatized asset that is then sold to an American banking group without the payment of a dime in taxes. Said group uses a fraction of that money to buy one of Mexico's privatized airlines in a pre-arranged, favor-swapping firesale as well as to engage in risky investment practices which lead it to the point of collapse. Not to fear, for where the Mexican taxpayer leaves off, the American taxpayer comes in, allowing Banamex-Citibank, in the space of little over a decade, to benefit from massive bailouts on both sides of the Rio Grande. Who says globalization ain't great?
Friday, November 21, 2008
Three Minutes Sixteen Seconds / PRD R.I.P./ We're not Paying for Your Crisis
Three Minutes Sixteen Seconds
The following from Rocio Ortega, newly-unemployed radio producer, Oaxaca: "This past November 6th, the program 'Music Non-Stop' (which I was the producer of on 96.9 FM) had on as its guest the artist and curator Olga Margarita Dávila for its segment, 'Biographies and Personalities'...In order to put into context the founding of 'La Curtiduria,' a space devoted to promoting contemporary art and taking in artists from all over the world, Olga cited the Oaxaca conflict of 2006 in the following manner:
And amongst all the ups and downs life has provided me with, one of them has been to come to Oaxaca and work here thanks to Demian Flores at the Curtiduria, which is a contemporary space for the arts, for artist's residences, for projects and workshops, education. It's a space that was born out of the movement of 2006 as an inclusive space, as a response to everything that moved this great conflict, this great force, this big, little transformation that we all experienced, even more those who were behind the barricades and involved in the whole process. This allowed the Curtiduria ['The Tannery'] to be named what it was: in an abandoned space in the old tannery area on 5 de Mayo Street in Jalatlaco, we inaugurated this space in 2006 with the help and logistics and strength of a large community of creators and artists who...asked what can we do and how can we do it, who are we as artists and what are we to do with this occupation of life, and we decided to open this space. And I joined in at the end of 2006, the beginning of 2007 intermittently at first, coming and going, I had commitments in Los Angeles and Tijuana, and little by little I kept getting more involved until, starting in the middle of last summer, I began to stay in La Curtiduria and began to make Oaxaca my home. Now I have been living in Oaxaca definitively for the last six months, with a great deal of pleasure, and tranquility....
"This audio segment lasted 3'16", and preceded some music that the guest shared with our listeners. The listeners, however, were not able to hear it. On orders from Mercedes Rojas Saldaña, director of CORTV, the transmission was interrupted and music was broadcast with the excuse of technical problems, thus censuring the program's content.
"If this were not enough, and without any reasons, the head of programming informed me by phone that I was being suspended (on the 11th, one week later), that my programs would not be going on the air anymore and that my professional relationship with the station was being terminated. He alleged they had tried to contact me to tell me that the people invited onto Music Non-Stop 'weren't Oaxacans' and as well that the program's music 'didn't convince them.' Along with this the program 'Music para Respirar' (Music for Breathing), which I am also the producer of, will be taken off the air - a progam devoted to genres such as world beat, new age, ambiental and hetero...
"If this is not to be seen as a lack of ethics and professionalism, a demonstration of ignorance and incompetence, a brazen and high-handed act, an attack of free speech and fundamental rights perpetrated by the director of a station paid for by our taxes, I demand an explanation and make a call to the support, friendship and gratitude of those who that afternoon, on this station, could not and now will not be able to hear me any longer.
Rocio Ortega,
Oaxaca, Oaxaca November 18th, 2008
If two radio progams can be pulled from the air and a producer fired for comments as innocuous as Olga Margarita Davila's, if people are being kidnapped in broad daylight only 7 blocks away from where the Governor is gearing up for his State of the State message (http://www.noticias-oax.com.mx/index.php?option=com_content&task=view&id=15502&Itemid=31), is it not clear that Oaxaca is suffering through the worst of both worlds: on one hand, the arbitrary repression of a police state, and on the other, the lack of any state-provided security whatsoever?
(Spanish speakers can read the full text of Rocio Ortega's comments at:
http://www.arteven.org/profiles/blogs/carta-de-rocio-ortega-a)
PRD R.I.P
Friends, please break out your mourning clothes to attend the political wake of the year (no, not Mouriño): the PRD is dead, cut down in the flower of its youth at only 19 years old. The party, founded by Cuauhtemoc Cardenas and the coalition of parties that had supported him in the 1988 presidential elections, died last week when the Federal Electoral Tribunal - the same one that installed electoral deliquent Felipe Calderon into the presidency of the nation, installed electoral delinquent Jesus Ortega into the party presidency of the PRD. The decision, an unprecedented meddling in internal party affairs which flagrantly overruled a wise internal party decision to simply annul the damned thing, was made even with the Tribunal itself admitting that a mere 22.88% (!) of precincts contained anomalies, and in grand Mexican style, included in its final count the results of polling places which were never set up on the day of the election! As I understand it, the high-minded ethical reasoning of the Tribunal goes thus: even if Ortega did do what they say he did, as long as what he did didn't "change the final results" (however circumlocuitously those are gotten at), his little shenanigans - oh you, Chuy! (slap slap) - are A-okay in the ledgers of justice. Kant is dead: there are no wrong acts as such, only wrong results...er, results subject to change.
With this, the circle is closed, and the party is pulled off the life support it had been on since its circus-like internal elections earlier this year. Felipe Calderon, with the help as always of his state-level surrogates (namely the governors of Oaxaca, Chiapas and Veracruz, from whence came the phantom results from inexistent precincts) have succeeded not only in installing their own man in the presidency of the PRD - one who will make a "modern" left that "Mexico can be proud of" (I can see the 30-second spots now), but in converting the party, born in the aftermath of one electoral fraud and toppled by another, sixteen years later, into yet another co-opted organ of the state. The clear intent is to remove any institutional channels for the mass popular movement led by López Obrador, and by attempting to marginalize him within his own party, make him look even more extreme and that much more cut-off from the normal political life of this grand, inclusive republic. With Jesus Ortega and his new-left "chuchos" in control of the party's apparatus, expect a bland and innocuous slate of compromised candidates for next year's legislative elections, absent any Lopez-Obradoristas or other rabble rousers. Expect, too, a sound thrashing for the PRD at the polls, not only due to the pre-announced (Garcia Marquez style) defeat of the left by the right (he who controls the electoral mechanisms controls the votes), but due to massive defections of the what was formerly the base of the PRD brand in favor of the other two members of the Broad Progressive Front: Convergencia and the Worker's Party (PT). For what it's worth (a bag of chips? cup of watery decaf?), this blogger, for one, will be voting PT/Convergencia.
We're Not Paying for Your Crisis
The three-time Berlusconi government in Italy (talk about electoral masochism) has recently introduced an educational counter-reform which, among other enlightened measures, slashes elementary school class time, eliminates up to 100,000 teaching positions, reduces the number of degree programs offered at the college level, and opens up the university system to privatization by stealth by allowing them to create "foundations" to traffic in private dollars for supposedly public ends. The massive protests stemming from this (surrounding the Senate building a la Mexicana, among other things - we should send over the Adelitas as back-up) have as their rallying cry: "We're Not Paying for Your Crisis."
I loved that. We're not paying for your crisis. The world financial system, by means of rampant speculation, disproportionate greed and sheer, deregulated stupidity, has dug itself into the biggest hole it has managed since 1929, and already, the cuts are coming everywhere to compensate it all. But not where the cuts should be made - in the boardroom - but in the living room, the classroom, and the lecture hall. This is also, in Naomi Klein's paradigm, the use of a "shock" (world financial crisis) to force through draconian cuts in education which, just as in Mexico, has the goal of dismantling one of the last functions of government (with its accompanying unions) that hasn't been privatized or sold off. Now I am no fan of public education as it exists in any country I know of - where the main goal has historically been that of producing docile capitalist cogs rather than questioning, creative human beings - but the practical matter is, public education and teacher's unions are pretty much the last thing standing the way of the final dismantling of many nation-states, and thus must be disposed of when the shock is right. Hence, Mexico's Alliance for Education, the closing of the normal schools, the ongoing war against dissident sections of the national union.
All this not to mention the twenty-some-odd increases in the gas tax this year in Mexico and the application of the flat-rate, regressive 16.5% IETU tax, which has nailed those of us who actually try to be honest and declare our earnings with the Revenue Department (que pendejos somos...!). We're not paying for your crisis. You broke it, you clean it up.
The following from Rocio Ortega, newly-unemployed radio producer, Oaxaca: "This past November 6th, the program 'Music Non-Stop' (which I was the producer of on 96.9 FM) had on as its guest the artist and curator Olga Margarita Dávila for its segment, 'Biographies and Personalities'...In order to put into context the founding of 'La Curtiduria,' a space devoted to promoting contemporary art and taking in artists from all over the world, Olga cited the Oaxaca conflict of 2006 in the following manner:
And amongst all the ups and downs life has provided me with, one of them has been to come to Oaxaca and work here thanks to Demian Flores at the Curtiduria, which is a contemporary space for the arts, for artist's residences, for projects and workshops, education. It's a space that was born out of the movement of 2006 as an inclusive space, as a response to everything that moved this great conflict, this great force, this big, little transformation that we all experienced, even more those who were behind the barricades and involved in the whole process. This allowed the Curtiduria ['The Tannery'] to be named what it was: in an abandoned space in the old tannery area on 5 de Mayo Street in Jalatlaco, we inaugurated this space in 2006 with the help and logistics and strength of a large community of creators and artists who...asked what can we do and how can we do it, who are we as artists and what are we to do with this occupation of life, and we decided to open this space. And I joined in at the end of 2006, the beginning of 2007 intermittently at first, coming and going, I had commitments in Los Angeles and Tijuana, and little by little I kept getting more involved until, starting in the middle of last summer, I began to stay in La Curtiduria and began to make Oaxaca my home. Now I have been living in Oaxaca definitively for the last six months, with a great deal of pleasure, and tranquility....
"This audio segment lasted 3'16", and preceded some music that the guest shared with our listeners. The listeners, however, were not able to hear it. On orders from Mercedes Rojas Saldaña, director of CORTV, the transmission was interrupted and music was broadcast with the excuse of technical problems, thus censuring the program's content.
"If this were not enough, and without any reasons, the head of programming informed me by phone that I was being suspended (on the 11th, one week later), that my programs would not be going on the air anymore and that my professional relationship with the station was being terminated. He alleged they had tried to contact me to tell me that the people invited onto Music Non-Stop 'weren't Oaxacans' and as well that the program's music 'didn't convince them.' Along with this the program 'Music para Respirar' (Music for Breathing), which I am also the producer of, will be taken off the air - a progam devoted to genres such as world beat, new age, ambiental and hetero...
"If this is not to be seen as a lack of ethics and professionalism, a demonstration of ignorance and incompetence, a brazen and high-handed act, an attack of free speech and fundamental rights perpetrated by the director of a station paid for by our taxes, I demand an explanation and make a call to the support, friendship and gratitude of those who that afternoon, on this station, could not and now will not be able to hear me any longer.
Rocio Ortega,
Oaxaca, Oaxaca November 18th, 2008
If two radio progams can be pulled from the air and a producer fired for comments as innocuous as Olga Margarita Davila's, if people are being kidnapped in broad daylight only 7 blocks away from where the Governor is gearing up for his State of the State message (http://www.noticias-oax.com.mx/index.php?option=com_content&task=view&id=15502&Itemid=31), is it not clear that Oaxaca is suffering through the worst of both worlds: on one hand, the arbitrary repression of a police state, and on the other, the lack of any state-provided security whatsoever?
(Spanish speakers can read the full text of Rocio Ortega's comments at:
http://www.arteven.org/profiles/blogs/carta-de-rocio-ortega-a)
PRD R.I.P
Friends, please break out your mourning clothes to attend the political wake of the year (no, not Mouriño): the PRD is dead, cut down in the flower of its youth at only 19 years old. The party, founded by Cuauhtemoc Cardenas and the coalition of parties that had supported him in the 1988 presidential elections, died last week when the Federal Electoral Tribunal - the same one that installed electoral deliquent Felipe Calderon into the presidency of the nation, installed electoral delinquent Jesus Ortega into the party presidency of the PRD. The decision, an unprecedented meddling in internal party affairs which flagrantly overruled a wise internal party decision to simply annul the damned thing, was made even with the Tribunal itself admitting that a mere 22.88% (!) of precincts contained anomalies, and in grand Mexican style, included in its final count the results of polling places which were never set up on the day of the election! As I understand it, the high-minded ethical reasoning of the Tribunal goes thus: even if Ortega did do what they say he did, as long as what he did didn't "change the final results" (however circumlocuitously those are gotten at), his little shenanigans - oh you, Chuy! (slap slap) - are A-okay in the ledgers of justice. Kant is dead: there are no wrong acts as such, only wrong results...er, results subject to change.
With this, the circle is closed, and the party is pulled off the life support it had been on since its circus-like internal elections earlier this year. Felipe Calderon, with the help as always of his state-level surrogates (namely the governors of Oaxaca, Chiapas and Veracruz, from whence came the phantom results from inexistent precincts) have succeeded not only in installing their own man in the presidency of the PRD - one who will make a "modern" left that "Mexico can be proud of" (I can see the 30-second spots now), but in converting the party, born in the aftermath of one electoral fraud and toppled by another, sixteen years later, into yet another co-opted organ of the state. The clear intent is to remove any institutional channels for the mass popular movement led by López Obrador, and by attempting to marginalize him within his own party, make him look even more extreme and that much more cut-off from the normal political life of this grand, inclusive republic. With Jesus Ortega and his new-left "chuchos" in control of the party's apparatus, expect a bland and innocuous slate of compromised candidates for next year's legislative elections, absent any Lopez-Obradoristas or other rabble rousers. Expect, too, a sound thrashing for the PRD at the polls, not only due to the pre-announced (Garcia Marquez style) defeat of the left by the right (he who controls the electoral mechanisms controls the votes), but due to massive defections of the what was formerly the base of the PRD brand in favor of the other two members of the Broad Progressive Front: Convergencia and the Worker's Party (PT). For what it's worth (a bag of chips? cup of watery decaf?), this blogger, for one, will be voting PT/Convergencia.
We're Not Paying for Your Crisis
The three-time Berlusconi government in Italy (talk about electoral masochism) has recently introduced an educational counter-reform which, among other enlightened measures, slashes elementary school class time, eliminates up to 100,000 teaching positions, reduces the number of degree programs offered at the college level, and opens up the university system to privatization by stealth by allowing them to create "foundations" to traffic in private dollars for supposedly public ends. The massive protests stemming from this (surrounding the Senate building a la Mexicana, among other things - we should send over the Adelitas as back-up) have as their rallying cry: "We're Not Paying for Your Crisis."
I loved that. We're not paying for your crisis. The world financial system, by means of rampant speculation, disproportionate greed and sheer, deregulated stupidity, has dug itself into the biggest hole it has managed since 1929, and already, the cuts are coming everywhere to compensate it all. But not where the cuts should be made - in the boardroom - but in the living room, the classroom, and the lecture hall. This is also, in Naomi Klein's paradigm, the use of a "shock" (world financial crisis) to force through draconian cuts in education which, just as in Mexico, has the goal of dismantling one of the last functions of government (with its accompanying unions) that hasn't been privatized or sold off. Now I am no fan of public education as it exists in any country I know of - where the main goal has historically been that of producing docile capitalist cogs rather than questioning, creative human beings - but the practical matter is, public education and teacher's unions are pretty much the last thing standing the way of the final dismantling of many nation-states, and thus must be disposed of when the shock is right. Hence, Mexico's Alliance for Education, the closing of the normal schools, the ongoing war against dissident sections of the national union.
All this not to mention the twenty-some-odd increases in the gas tax this year in Mexico and the application of the flat-rate, regressive 16.5% IETU tax, which has nailed those of us who actually try to be honest and declare our earnings with the Revenue Department (que pendejos somos...!). We're not paying for your crisis. You broke it, you clean it up.
Saturday, November 8, 2008
Why Obama and not Obrador?
For this blogger, the festivities and rejoicing of last Tuesday night, where Barack Obama swamped John McCain in the electoral college and the Democrats picked up decisive majorities in both Houses of Congress, came with a bittersweet edge. Watching the returns at an election party, surrounded by cheers and clapping as the networks projected an Obama victory and the epicenter of the global party erupted in Chicago's Grant Park, I turned to my wife and said: "Mexico deserved this two years ago." At that moment, applauding along with the rest, part of me was back on that infamous night of July 2nd, 2006, watching the networks, and then the President of the IFE, proclaim the race to be too close to call, watching the helicopter shot from above following Lopez Obrador's car as it wound its way through the Mexico City night, watching as he arrived in the Zocalo to ensure his puzzled and mystified supporters that he was not going to accept the doctored results being offered up by official channels, that the fight would go on. The next morning, July 3rd, all of us got up to see that Obrador had taken a decisive lead in the district-by-district vote count, one he maintained throughout the entire day, only to lose it at 3 AM in the morning as the yellow and blue lines crossed on the chart and Calderón was annointed with a virtual victory of one-half of one percent. Losing honestly, disappointing though it would have been, would not have been a problem; it was having the thing snatched away through dead-of-night machinations that hurt so much.
So what did Obama do that Obrador didn't? First off, it is important to point out that the similarity between the two men is substantial. In general terms, as Jaime Aviles pointed out in yesterday's Jornada, "Both [of them] - the 'legitimate president' of Mexico and the president-elect of the United States - agree that, in order to reduce the devastating effect of the crisis amongst the most vulnerable sectors of the population, it is necessary to strengthen the role of the state, revive the internal market, stimulate the creation of jobs and rescue the poor." That last one may be a bit of an overstatement: whereas it was Obrador who made a focus on the poor the centerpiece of his campaign ("For the well-being of all, the poor come first"), Obama's campaign, with its obsessive focus on the middle-class (read: swing voters) ignored the poor just about as much as the McCain camp did. Nevertheless, the platforms of both the Democratic and PRD candidate were strikingly alike in a series of key areas: Obama: tax cuts for the middle class to be paid for by tax increases for those making over $250,000; Obrador: lower gas and electricity costs for individuals and businesses to be paid for by having the rich actually pay taxes instead of deducting and deferring them away. Obama: energy independence through alternative energies and increased domestic oil production; Obrador: energy independence through increased oil production and the construction of three new refineries. Obama: an immediate stimulus package including money for public works, extended unemployment benefits and aid to state and local governments; Obrador: an immediate stimulus package including money for public works, a modern train link to the US, and a national public pension for those 70 and over. And so on.
Obama and Obrador are also alike in another very important way: both have attempted to create a political structure independent of the traditional party system, Obama through his website, network of donors, and community organization, and Obrador through the "redes ciudadanas," the "citizen's networks," before the election and the several million-member strong "legitimate government" after it. It is in the differing successes of these networks, in fact, that a large part of the differing fortunes of the two men can be pinpointed. Obama succeeded in raising tremendous amounts of money through his network within a plutocratic elections system that heavily favors the haves over the have-nots in terms of campaign cash. In the US, public financing, and the limits associated with them, are optional. In Mexico, public financing is obligatory, as is, theoretically, the spending limits associated with them. Obama's network, inspired by the candidate's charisma, succeeded in identifying large numbers of new voters and getting them to the polls. Obrador's network, inspired as well by its candidate's charisma, motivated a large number of voters, but failed in organizing sufficient oversight of the actual voting and vote-count processes, and, like Gore in 2000 and Kerry in 2004, did not succeed in racking up a large-enough advantage to counteract the shaving-off of votes through identical means of electoral fraud: the purging of voter rolls, the manipulating of ballots and the untoward interventions of the US Supreme Court, on one hand, and Mexico's Federal Electoral Tribunal on the other. To this should be added two more important factors: the identical negative campaign tactics which Obama was more successful in both utilizing and neutralizing, and which I believe American voters have become more inured to after seeing them in use over and over again, year after year. In Mexico, these tactics, especially the 30-second attack ad, are much newer on the scene, and consequently had a much more visceral effect. And lastly, the economic crisis, which detonated just in time for Obama this past October. Would he have won, or won as handily, in July of 2006?
Overall, though, it must be admitted that Lopez Obrador had to fight a much more uphill battle, with more against him. In the US, for example, the Clintons grumbled and groaned, but did eventually get out and campaign for Obama. How much of a difference would it have made here, for example, if Cuathemoc Cardenas could have put his ego just a couple of inches aside and hit the hustings for his party's candidate. Plus, Obrador had Mexico's absolutely hermetic, all-powerful political, financial and media elite to contend with. As José Agustin Ortiz Pinchetti writes:
"The election of Barack Obama induces us to make some unpleasant comparisons. Let's compare the evolution of American society with our own over the past 40 years. In 1968, Martin Luther King was assassinated and the Mexican government ordered the slaughter at Tlatelolco. Since then, Americans have succeeded in dismantling white hegemony and banning racism without a civil war breaking out. Obama's triumph is symbolic; for many years, racial minorities have opened a breach in the elite due to a system of meritocracy. We, meanwhile, have founded in a decadence that now threatens us with collapse. Our racism has only become more acute, without our being capable of admitting it. A minority of Creoles that doesn't represent even 5% of the population continues to impose an economic dictatorship on the rest of the classes and castes. Control over the media provides a soporific effect while poverty and destitution increase. The American crisis detonated our own, but we have neither their resources nor their flexibility. Our country has not grown in 25 years because 50 groups control the market and prevent competition. Whereas Amercian democracy has just demonstrated its vigor, our own democratic transition has been shipwrecked."
Agree or not with all of Pinchetti's black-and-white comparisons made in the glow of this past Tuesday - and I do not see America anywhere near as rosily as Pinchetti paints it here - it is a fair assessment of Mexico, and by extension what Lopez Obrador in his campaign, was and continue to be up against. This does not excuse Obrador his campaign's failings, but fraud is fraud, and one can only hope that Mexico will only need one 2006, while the United States needed both a 2000 and a 2004, to realize that "Yes, we can."
So what did Obama do that Obrador didn't? First off, it is important to point out that the similarity between the two men is substantial. In general terms, as Jaime Aviles pointed out in yesterday's Jornada, "Both [of them] - the 'legitimate president' of Mexico and the president-elect of the United States - agree that, in order to reduce the devastating effect of the crisis amongst the most vulnerable sectors of the population, it is necessary to strengthen the role of the state, revive the internal market, stimulate the creation of jobs and rescue the poor." That last one may be a bit of an overstatement: whereas it was Obrador who made a focus on the poor the centerpiece of his campaign ("For the well-being of all, the poor come first"), Obama's campaign, with its obsessive focus on the middle-class (read: swing voters) ignored the poor just about as much as the McCain camp did. Nevertheless, the platforms of both the Democratic and PRD candidate were strikingly alike in a series of key areas: Obama: tax cuts for the middle class to be paid for by tax increases for those making over $250,000; Obrador: lower gas and electricity costs for individuals and businesses to be paid for by having the rich actually pay taxes instead of deducting and deferring them away. Obama: energy independence through alternative energies and increased domestic oil production; Obrador: energy independence through increased oil production and the construction of three new refineries. Obama: an immediate stimulus package including money for public works, extended unemployment benefits and aid to state and local governments; Obrador: an immediate stimulus package including money for public works, a modern train link to the US, and a national public pension for those 70 and over. And so on.
Obama and Obrador are also alike in another very important way: both have attempted to create a political structure independent of the traditional party system, Obama through his website, network of donors, and community organization, and Obrador through the "redes ciudadanas," the "citizen's networks," before the election and the several million-member strong "legitimate government" after it. It is in the differing successes of these networks, in fact, that a large part of the differing fortunes of the two men can be pinpointed. Obama succeeded in raising tremendous amounts of money through his network within a plutocratic elections system that heavily favors the haves over the have-nots in terms of campaign cash. In the US, public financing, and the limits associated with them, are optional. In Mexico, public financing is obligatory, as is, theoretically, the spending limits associated with them. Obama's network, inspired by the candidate's charisma, succeeded in identifying large numbers of new voters and getting them to the polls. Obrador's network, inspired as well by its candidate's charisma, motivated a large number of voters, but failed in organizing sufficient oversight of the actual voting and vote-count processes, and, like Gore in 2000 and Kerry in 2004, did not succeed in racking up a large-enough advantage to counteract the shaving-off of votes through identical means of electoral fraud: the purging of voter rolls, the manipulating of ballots and the untoward interventions of the US Supreme Court, on one hand, and Mexico's Federal Electoral Tribunal on the other. To this should be added two more important factors: the identical negative campaign tactics which Obama was more successful in both utilizing and neutralizing, and which I believe American voters have become more inured to after seeing them in use over and over again, year after year. In Mexico, these tactics, especially the 30-second attack ad, are much newer on the scene, and consequently had a much more visceral effect. And lastly, the economic crisis, which detonated just in time for Obama this past October. Would he have won, or won as handily, in July of 2006?
Overall, though, it must be admitted that Lopez Obrador had to fight a much more uphill battle, with more against him. In the US, for example, the Clintons grumbled and groaned, but did eventually get out and campaign for Obama. How much of a difference would it have made here, for example, if Cuathemoc Cardenas could have put his ego just a couple of inches aside and hit the hustings for his party's candidate. Plus, Obrador had Mexico's absolutely hermetic, all-powerful political, financial and media elite to contend with. As José Agustin Ortiz Pinchetti writes:
"The election of Barack Obama induces us to make some unpleasant comparisons. Let's compare the evolution of American society with our own over the past 40 years. In 1968, Martin Luther King was assassinated and the Mexican government ordered the slaughter at Tlatelolco. Since then, Americans have succeeded in dismantling white hegemony and banning racism without a civil war breaking out. Obama's triumph is symbolic; for many years, racial minorities have opened a breach in the elite due to a system of meritocracy. We, meanwhile, have founded in a decadence that now threatens us with collapse. Our racism has only become more acute, without our being capable of admitting it. A minority of Creoles that doesn't represent even 5% of the population continues to impose an economic dictatorship on the rest of the classes and castes. Control over the media provides a soporific effect while poverty and destitution increase. The American crisis detonated our own, but we have neither their resources nor their flexibility. Our country has not grown in 25 years because 50 groups control the market and prevent competition. Whereas Amercian democracy has just demonstrated its vigor, our own democratic transition has been shipwrecked."
Agree or not with all of Pinchetti's black-and-white comparisons made in the glow of this past Tuesday - and I do not see America anywhere near as rosily as Pinchetti paints it here - it is a fair assessment of Mexico, and by extension what Lopez Obrador in his campaign, was and continue to be up against. This does not excuse Obrador his campaign's failings, but fraud is fraud, and one can only hope that Mexico will only need one 2006, while the United States needed both a 2000 and a 2004, to realize that "Yes, we can."
Tuesday, October 21, 2008
The Great Temptation: Oil in Mexico, Part II (translation)
Today, the conclusion of my two-part translation of excerpts from Andrés Manuel López Obrador's The Great Temptation, available in Mexico from Grijalbo.
The Great Temptation: Oil in Mexico
by Andrés Manuel López Obrador
translated by Kurt Hackbarth
“The Gangrene of Corruption”
This entire disaster in the nation’s energy sector has been fed by the corruption that reigns in the government, Pemex and in the Federal Electricity Commission. This is the evil that most afflicts Pemex and torments the nation. Though the examples of corruption are endless, I will limit myself here to a few of the most current cases which I consider relevant.
The first contract for multiple services [contrato de servicios múltiples] which was granted – in violation of the Constitution – to a foreign company was signed when Felipe Calderón was Secretary of Energy and President of Pemex’s Administrative Council. On November 14th, 2003, without any other company having participated in the bidding, a contract for $2 billion 437 million dollars was awarded to Repsol of Spain to explore natural gas deposits in the Burgos Basin (Cuenca de Burgos).
In the annex to this multiple-services contract with Repsol, entitled “Catalog of Maximum Prices,” it is shown how the costs of the services contracted for and their astronomical overpricing were arrived at: for the acquisition of infrastructure, an additional 120% over and above the direct cost is stipulated; in the case of maintenance services, up to 320% above the direct, daily cost. Moreover, the original per-unit price is to be applied independently of whether the contracted company uses new or used materials; it is the contractor itself that has the “absolute responsibility” to inspect, test and certify the materials, and if that were not enough, a series of additional, unforeseen expenses are added on such as import fees and tariffs, labor taxes, taxes for the acquisition of premises and permits, licenses and public registries.
The worst of it is that these contracts have proven beneficial only for the foreign companies, but unproductive and downright harmful for the national interest. Pemex agreed to pay a sum total of more than $5 billion for all of the unfair contracts it shelled out to Repsol, Tecpetrol, Petrobras, Teikoku, Schlumberger and Haliburton, among others, using the justification that natural gas production would increase by 50% in the Burgos Basin, which would have meant 500 million cubic feet per day. In five years, however, these companies have increased production by only 63 million cubic feet, going from 126 million – the level of production Pemex was obtaining when it handed the fields over – to 189 million cubic feet; an increase, that is, of 4% of the estimated production in Burgos. Over the same period, Pemex increased production in the fields it itself operated from 1 billion to 1 billion, 347 million cubic feet. In short, the multiple-services contracts have increased production only very marginally, but at an elevated cost. They have been a disaster.
“Useless Investments”
For the retooling of the Cadereyta oil refinery, the companies Sunkion Limited, Siemmens and ICA were contracted in 1997. The job was supposed to be concluded in July of 2000, but it went on more than double the amount of time agreed upon. The work was handed over unfinished, with irregularities, and with the per-unit prices paid being much higher than as originally contracted. A November 2001 audit quantified the losses, up to then, at over a billion dollars. Pemex, which had renounced jurisdiction of the national courts, was sued by the consortium in international tribunals. Due to the lack of an adequate defense, it was obliged to pay an additional $630 million dollars. Not one person has been held officially responsible, much less sanctioned, to the present day. The cumulative loss to the nation has been at least $1 billion, 630 million dollars.
The contracts with foreign companies in Chicontepec, Veracruz also demonstrate, at the very least, the absurdity of privatization policies. With ample reserves of oil, the extraction of which, though, was said to be technically difficult, this area saw investment increase from $2 billion, 905 million to $4 billion 871 million pesos between 2004 and 2007, practically a 70% increase. These dates coincide with the contracting of the companies Schlumberger and Haliburton for the perforation of 300 oil wells. However, production over this period only went from the equivalent of 25 billion, 223 million barrels of crude oil a day to 26 billion, 625 million barrels, an increase of 6%. In sum, Burgos and Chicontepec turned out to be great business for the contractors but a terrible one for the nation.
In 2007, the Norwegian company PetroMena, owner of deep-water perforation platforms, rented three platforms for five years: the largest, for three thousand meters deep, to Petrobras America Inc. for $750 million dollars. The medium-capacity platform, for 2,500 meters of depth, was rented to Petrobras Brasil for $645 million dollars. The lowest capacity platform, for two thousand meters of depth, went to Pemex at a cost of $940 million dollars. In other words, Pemex rented the smallest platform for $300 million dollars more.
[…] Following such a litany of fraudulent acts, it becomes clear that what lies behind the current right-wing privatization mania are the ambitions of the same group that has been doing private business behind the shield of public power, at the cost of our national heritage, for years. Over and above any technical, financial or administrative considerations, the intention to privatize Pemex is based on the interest of rapacious minorities and corrupt officials who intend to stay mounted astride the oil business.
In synthesis, it is an undeniable fact that during the period of neo-conservative sacking, the powers that be have attempted to destroy the nation’s oil industry. Over this time, Pemex has suffered from more interventionism and point-blank sacking than any other company in the world. Nevertheless, it continues to be indispensable to defend Pemex against the current onslaught that seeks to destroy it for good, for upon the salvation of the oil industry depends, to a great extent, the destiny of the country and our people.
The Great Temptation: Oil in Mexico
by Andrés Manuel López Obrador
translated by Kurt Hackbarth
“The Gangrene of Corruption”
This entire disaster in the nation’s energy sector has been fed by the corruption that reigns in the government, Pemex and in the Federal Electricity Commission. This is the evil that most afflicts Pemex and torments the nation. Though the examples of corruption are endless, I will limit myself here to a few of the most current cases which I consider relevant.
The first contract for multiple services [contrato de servicios múltiples] which was granted – in violation of the Constitution – to a foreign company was signed when Felipe Calderón was Secretary of Energy and President of Pemex’s Administrative Council. On November 14th, 2003, without any other company having participated in the bidding, a contract for $2 billion 437 million dollars was awarded to Repsol of Spain to explore natural gas deposits in the Burgos Basin (Cuenca de Burgos).
In the annex to this multiple-services contract with Repsol, entitled “Catalog of Maximum Prices,” it is shown how the costs of the services contracted for and their astronomical overpricing were arrived at: for the acquisition of infrastructure, an additional 120% over and above the direct cost is stipulated; in the case of maintenance services, up to 320% above the direct, daily cost. Moreover, the original per-unit price is to be applied independently of whether the contracted company uses new or used materials; it is the contractor itself that has the “absolute responsibility” to inspect, test and certify the materials, and if that were not enough, a series of additional, unforeseen expenses are added on such as import fees and tariffs, labor taxes, taxes for the acquisition of premises and permits, licenses and public registries.
The worst of it is that these contracts have proven beneficial only for the foreign companies, but unproductive and downright harmful for the national interest. Pemex agreed to pay a sum total of more than $5 billion for all of the unfair contracts it shelled out to Repsol, Tecpetrol, Petrobras, Teikoku, Schlumberger and Haliburton, among others, using the justification that natural gas production would increase by 50% in the Burgos Basin, which would have meant 500 million cubic feet per day. In five years, however, these companies have increased production by only 63 million cubic feet, going from 126 million – the level of production Pemex was obtaining when it handed the fields over – to 189 million cubic feet; an increase, that is, of 4% of the estimated production in Burgos. Over the same period, Pemex increased production in the fields it itself operated from 1 billion to 1 billion, 347 million cubic feet. In short, the multiple-services contracts have increased production only very marginally, but at an elevated cost. They have been a disaster.
“Useless Investments”
For the retooling of the Cadereyta oil refinery, the companies Sunkion Limited, Siemmens and ICA were contracted in 1997. The job was supposed to be concluded in July of 2000, but it went on more than double the amount of time agreed upon. The work was handed over unfinished, with irregularities, and with the per-unit prices paid being much higher than as originally contracted. A November 2001 audit quantified the losses, up to then, at over a billion dollars. Pemex, which had renounced jurisdiction of the national courts, was sued by the consortium in international tribunals. Due to the lack of an adequate defense, it was obliged to pay an additional $630 million dollars. Not one person has been held officially responsible, much less sanctioned, to the present day. The cumulative loss to the nation has been at least $1 billion, 630 million dollars.
The contracts with foreign companies in Chicontepec, Veracruz also demonstrate, at the very least, the absurdity of privatization policies. With ample reserves of oil, the extraction of which, though, was said to be technically difficult, this area saw investment increase from $2 billion, 905 million to $4 billion 871 million pesos between 2004 and 2007, practically a 70% increase. These dates coincide with the contracting of the companies Schlumberger and Haliburton for the perforation of 300 oil wells. However, production over this period only went from the equivalent of 25 billion, 223 million barrels of crude oil a day to 26 billion, 625 million barrels, an increase of 6%. In sum, Burgos and Chicontepec turned out to be great business for the contractors but a terrible one for the nation.
In 2007, the Norwegian company PetroMena, owner of deep-water perforation platforms, rented three platforms for five years: the largest, for three thousand meters deep, to Petrobras America Inc. for $750 million dollars. The medium-capacity platform, for 2,500 meters of depth, was rented to Petrobras Brasil for $645 million dollars. The lowest capacity platform, for two thousand meters of depth, went to Pemex at a cost of $940 million dollars. In other words, Pemex rented the smallest platform for $300 million dollars more.
[…] Following such a litany of fraudulent acts, it becomes clear that what lies behind the current right-wing privatization mania are the ambitions of the same group that has been doing private business behind the shield of public power, at the cost of our national heritage, for years. Over and above any technical, financial or administrative considerations, the intention to privatize Pemex is based on the interest of rapacious minorities and corrupt officials who intend to stay mounted astride the oil business.
In synthesis, it is an undeniable fact that during the period of neo-conservative sacking, the powers that be have attempted to destroy the nation’s oil industry. Over this time, Pemex has suffered from more interventionism and point-blank sacking than any other company in the world. Nevertheless, it continues to be indispensable to defend Pemex against the current onslaught that seeks to destroy it for good, for upon the salvation of the oil industry depends, to a great extent, the destiny of the country and our people.
Monday, October 20, 2008
The Great Temptation: Oil in Mexico, Part I (translation)
On September 15th, the most recent book by Andrés Manuel López Obrador entitled The Great Temptation: Oil in Mexico was published by Grijalbo. As the Mexican Congress is just now on the verge of passing a Pemex "reform" law of some kind or other, I will over the next two days be presenting here a translated excerpt of Obrador's book, from the chapter entitled "La política irresponsable," or "Irresponsible Policies."
The Great Temptation: Oil in Mexico
by Andrés Manuel López Obrador
translated by Kurt Hackbarth
"Irresponsible Policies"
The neo-conservative governments have confiscated from Pemex all of its earnings. From 2000 to date alone, while Pemex has registered accumulated sales of $6 trillion 442 billion pesos, it has paid $4 trillion 467 billion of those in taxes, which amounts to 75.8% of its sales. In contrast, direct public investment in Pemex (without including debt) over the same period came to $162 billion pesos, barely 2.5% of its total sales.
These oil-obtained revenues have been used to finance the federal budget, to the point that, for every budgetary peso, forty cents (centavos) are derived from oil. Such a fiscal policy – one which bleeds Pemex to death – has been used to make up for the deficit in tax collection, in light of the fact that the large corporations in our country pay practically no taxes at all.
In 2007, for example, Pemex posted sales of $1 trillion, 134 billion 980 million pesos, and its contribution to public finances amounted to $846 billion 200 million pesos, that is, 74.6% of its sales. In this same year, according to Mexican Stock Exchange statistics, nine large corporations posted sales for $1 trillion, 209 billion 316 million pesos and paid $51 billion 325 million in taxes: 5% of their sales. Pemex, in other words, provided sixteen times more. It is necessary to add, moreover, that these corporations were allowed to defer $106 billion 296 million pesos in taxes in their balance sheets, making the fiscal credits they received amount to double what they paid in taxes. In the end, we do not know how much they really did pay because it often happens that corporations like these also wind up benefiting later from tax rebates.
The enormous corruption that is rife in the upper echelons of economic and political power in Mexico can be described by noting that a worker, a member of the middle class or a small-to-medium businessperson or entrepreneur is required to pay between 15% and 28% in income tax (ISR). However, the large monopolies linked to power, due to the privileges they receive, reduce their tax payments to a minimum, and in certain cases, pay nothing at all.
The fiscal reforms undertaken by the Fox government, and continuing to the present, have only aggravated the problem. This is confirmed by the recent report of the Federal Audit Bureau [Auditoría Superior de la Federación], which states that in 2005, “fifty large taxpayers were detected whose individual income tax payments, after deductions, were less than $74 pesos.” In the same vein, it points out that “tax rebates in the 2001-2005 period came to a total of $604 billion 300 million pesos. This generates a situation of privilege for a certain few taxpayers that goes against the principle of fiscal equity.” This situation continues unabated: during the first semester of 2008, tax rebates rose to a total of $93 billion 613 million pesos.
Finally, it is important to add that the PAN governments have had the advantage of having the highest oil prices in the history of the world. During his administration, Fox received budgetary contributions from oil revenue to the order of $335 billion dollars, and just for high prices alone, $10 billion dollars extra per year over the three-year period 2004-2006. And the disgrace was – and continues to be – that, this money, instead of going to modernizing Pemex, promoting development in Mexico and guaranteeing the well-being of the people, was squandered in top-level bureaucracy or was spilled down the drain of corruption.
Thus, in 2007, the de facto government took in $12 billion extra dollars due to the high prices of oil exports, and in 2008, it is on pace to take in $20 billion more. Let’s remember that the Chamber of Deputies [Cámara de Diputados, Mexico’s Lower House] set an estimated per-barrel price of $49 dollars in its Federal Revenue Law, and it has been selling instead at an average of $100 dollars a barrel. Since 1901 – when oil production began in Mexico – to the present, no president of Mexico has ever obtained so much money from oil as will the usurper Felipe Calderon this year. Nevertheless, just like with Fox, all of these resources have either been used to subsidize his large corporate allies, have been squandered in corruption, or have been funneled into maintaining the privileges of high-level public officials. It is worth noting that the de facto government has done nothing to reduce the enormous costs of its bureaucracy. On the contrary: in 2007, it increased it by $154 billion pesos. And it is projected to spend $250 billion more on bureaucracy in 2008. In only two years then, $404 billion pesos more. In short: ineptitude, corruption, and waste by the bucketful.
The Great Temptation: Oil in Mexico
by Andrés Manuel López Obrador
translated by Kurt Hackbarth
"Irresponsible Policies"
The neo-conservative governments have confiscated from Pemex all of its earnings. From 2000 to date alone, while Pemex has registered accumulated sales of $6 trillion 442 billion pesos, it has paid $4 trillion 467 billion of those in taxes, which amounts to 75.8% of its sales. In contrast, direct public investment in Pemex (without including debt) over the same period came to $162 billion pesos, barely 2.5% of its total sales.
These oil-obtained revenues have been used to finance the federal budget, to the point that, for every budgetary peso, forty cents (centavos) are derived from oil. Such a fiscal policy – one which bleeds Pemex to death – has been used to make up for the deficit in tax collection, in light of the fact that the large corporations in our country pay practically no taxes at all.
In 2007, for example, Pemex posted sales of $1 trillion, 134 billion 980 million pesos, and its contribution to public finances amounted to $846 billion 200 million pesos, that is, 74.6% of its sales. In this same year, according to Mexican Stock Exchange statistics, nine large corporations posted sales for $1 trillion, 209 billion 316 million pesos and paid $51 billion 325 million in taxes: 5% of their sales. Pemex, in other words, provided sixteen times more. It is necessary to add, moreover, that these corporations were allowed to defer $106 billion 296 million pesos in taxes in their balance sheets, making the fiscal credits they received amount to double what they paid in taxes. In the end, we do not know how much they really did pay because it often happens that corporations like these also wind up benefiting later from tax rebates.
The enormous corruption that is rife in the upper echelons of economic and political power in Mexico can be described by noting that a worker, a member of the middle class or a small-to-medium businessperson or entrepreneur is required to pay between 15% and 28% in income tax (ISR). However, the large monopolies linked to power, due to the privileges they receive, reduce their tax payments to a minimum, and in certain cases, pay nothing at all.
The fiscal reforms undertaken by the Fox government, and continuing to the present, have only aggravated the problem. This is confirmed by the recent report of the Federal Audit Bureau [Auditoría Superior de la Federación], which states that in 2005, “fifty large taxpayers were detected whose individual income tax payments, after deductions, were less than $74 pesos.” In the same vein, it points out that “tax rebates in the 2001-2005 period came to a total of $604 billion 300 million pesos. This generates a situation of privilege for a certain few taxpayers that goes against the principle of fiscal equity.” This situation continues unabated: during the first semester of 2008, tax rebates rose to a total of $93 billion 613 million pesos.
Finally, it is important to add that the PAN governments have had the advantage of having the highest oil prices in the history of the world. During his administration, Fox received budgetary contributions from oil revenue to the order of $335 billion dollars, and just for high prices alone, $10 billion dollars extra per year over the three-year period 2004-2006. And the disgrace was – and continues to be – that, this money, instead of going to modernizing Pemex, promoting development in Mexico and guaranteeing the well-being of the people, was squandered in top-level bureaucracy or was spilled down the drain of corruption.
Thus, in 2007, the de facto government took in $12 billion extra dollars due to the high prices of oil exports, and in 2008, it is on pace to take in $20 billion more. Let’s remember that the Chamber of Deputies [Cámara de Diputados, Mexico’s Lower House] set an estimated per-barrel price of $49 dollars in its Federal Revenue Law, and it has been selling instead at an average of $100 dollars a barrel. Since 1901 – when oil production began in Mexico – to the present, no president of Mexico has ever obtained so much money from oil as will the usurper Felipe Calderon this year. Nevertheless, just like with Fox, all of these resources have either been used to subsidize his large corporate allies, have been squandered in corruption, or have been funneled into maintaining the privileges of high-level public officials. It is worth noting that the de facto government has done nothing to reduce the enormous costs of its bureaucracy. On the contrary: in 2007, it increased it by $154 billion pesos. And it is projected to spend $250 billion more on bureaucracy in 2008. In only two years then, $404 billion pesos more. In short: ineptitude, corruption, and waste by the bucketful.
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