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La Semana: Sunday, Jan 30
The week in energy policy, press freedom and "mega-projects"
Welcome to the Sunday edition of The Mexpatriate. In today’s newsletter:
Energy reform initiative under scrutiny
Mexican journalists under fire
The embattled Tren Maya changes course…again
Please send me your comments, feedback and questions, and feel free to forward this to anyone who may be interested. You can always find all sources (with links) at the bottom of the email.
Energy reform initiative under scrutiny
President López Obrador is taking his show on the road. He announced on January 27 that he will travel the country to “share my point of view” with the people of Mexico regarding his proposed electricity reform. “It is completely unjust and unfair for citizens not to be informed, the right to information must be guaranteed,” he asserted, referencing prior administrations’ legislation, which “the people did not [know] anything about.”
The president and his MORENA party assert this reform will undo much of the privatization of Mexico's electricity and energy markets
While this constitutional amendment is being debated in congress, U.S. Secretary of Energy, Jennifer M Granholm, issued a statement regarding her meetings with López Obrador and other senior officials in Mexico on January 21. In diplomatic language, the letter contradicted the image of a “successful” bi-national encounter as presented by AMLO.
“...We expressly conveyed the Biden-Harris Administration’s real concerns with the potential negative impact of Mexico’s proposed energy reforms on U.S. private investment in Mexico. The proposed reform could also hinder U.S.-Mexico joint efforts on clean energy and climate.”
They are not the only ones who are worried.
“Mr. López Obrador's plans are a grave threat, not only to the economy but also to the rule of law,” warns an article in The Economist from January 8. The IMCO (Mexican Institute for Competitiveness) think tank described the initiative as an “historical regression” that would raise costs for both Mexican households and businesses.
Monserrat Ramiro, former director of the National Energy Regulatory Commission stated before Mexico’s Congress on January 18: “The initiative under discussion today will have profound implications for Mexico and its place in the world, its business and environmental agreements, but above all, its ability to provide the Mexican people with the conditions for development not just today, but in the future.”
Why is this bill inspiring such bleak rhetoric? The president and his MORENA party assert this reform will undo much of the privatization of Mexico's electricity and energy markets (or “commercial slavery” as described by the Secretary of Energy, Rocío Nahle) brought about by landmark reforms in 1992 and 2013, marking a return to energy “sovereignty”. To which detractors say: “yes, exactly our point.”
The Federal Electric Commission (CFE) is Mexico's state electric utility company, founded in 1937. Today, the CFE both generates and distributes electricity to Mexican homes and businesses. According to a report in Animal Político, the CFE currently generates 38% of the electricity consumed in Mexico, which means that the rest is generated by private plants. For the “suministro básico” (distribution to smaller consumers such as residences and small businesses) the CFE is the only option, but for larger commercial and industrial consumers of electricity, there are currently other choices in a competitive market.
The bill would mandate that a minimum of 54% of all electricity consumed in Mexico be generated by the CFE. The law would also prohibit any other entities from selling electricity directly to consumers in Mexico, they could only sell to the CFE. In order for the CFE to meet this electricity demand in Mexico, it is estimated that costs would inevitably go up. In a 2019 audit, it was reported that CFE electrical plants are on average more than thirty years old, while the average age of privately owned plants is twelve years, making it more expensive and less efficient for the CFE to generate electricity. It’s also “dirtier”: the CFE depends on fossil fuels to generate 67% of its electricity, while private generators have installed infrastructure to produce 62% of their electricity from renewable sources (wind and solar). AMLO has declared that there are plans to invest heavily in hydroelectric infrastructure and in a large solar panel installation in Sonora, but no details appear in the CFE’s 2021-25 business plan.
Foreign investment in Mexico has been unsteady during AMLO’s term, worsened of course by the economic fallout of the pandemic in 2020. If the amendment is approved, the government will have the right to retroactively void contracts with private companies who have invested millions of dollars in the Mexican energy market.
“Imagine you are playing soccer and you’re 20 minutes into the game. At the beginning of the game, the rules are explained, and then suddenly, someone says ‘we’ve changed the rules, but you have to keep playing. Oh and there isn’t a referee anymore.’ Well, most likely, many of the players will leave the game.” This is how economist Valeria Moy explained the situation faced by private companies if the reform becomes law in an interview on the Ciberdiálogos podcast.
Another key piece of the bill relates to independent oversight: the management of the grid would be completely controlled by the CFE, dissolving the existing regulatory agencies.
The president’s morning press conferences (“mañaneras”) and upcoming speeches around the country are sure to appeal to patriotic sentiment and to the undeniable injustices experienced by many Mexicans in the wake of globalization. AMLO’s populism plays this instrument beautifully, invoking nostalgia and indignation in equal measure. And yet, as the leader of the self-described “cuarta transformación” or “fourth transformation”, an historical moment of tremendous change on par with independence from Spain, the separation of church and state during “la reforma”, and the revolution of 1910, shouldn’t López Obrador be more forward-looking than backward-yearning? Perhaps it is inevitable in someone suffering from a bad case of “ideological necrophilia”, as memorably described by commentator Denise Dresser.
Mexican journalists under fire
On Sunday, January 23, journalist Lourdes Maldonado was murdered, found shot to death in her car outside her home in Tijuana. Days before she had attended a vigil for another murdered colleague, Margarito Martínez Esquivel, who was found dead outside his home on January 17. Maldonado was the third journalist to fall victim to homicide in Mexico in 2022 (José Luis Gamboa, director of an online daily news outlet, was murdered on January 10 in Veracruz), a grim reminder of the danger faced by the press in Mexico.
“We do not allow impunity…”
President Andrés Manuel López Obrador
“I fear for my life,” said Maldonado at a press conference in March 2019. She had traveled from Tijuana to Mexico City to attend one of the president’s “mañaneras”, to ask for support and for justice. She had been in a labor dispute since 2013 with a media company owned by former governor of Baja California, Jaime Bonilla, which was finally decided in her favor four days before her murder. Maldonado had covered state politics and corruption for years and was registered in the state protection program for journalists.
Protests and vigils were held in cities all over the country last week in response to the murders. In López Obrador’s term, 28 journalists have been killed in apparent connection to their work according to free speech advocacy organization, Artículo 19. At this rate, AMLO’s “sexenio” will surpass those of his predecessors in this tragic statistic.
Between 2006 and 2021, 86% of the journalist homicide cases in Mexico remain unsolved (according to a UNESCO report), indicating there is little difference between investigation of these crimes and the hundreds of thousands of other murders and disappearances in the country. “I have given instructions to start an investigation to get to the bottom of this [Maldonado murder]…we do not allow impunity,” stated López Obrador on January 25.
When I first started The Mexpatriate as a blog in 2013, this topic was also stalking the headlines. Different president, different political party, same violence and intimidation: making the “free” press an increasingly silent one. “There are now issues in this country that no one wants to talk about because their lives could be at risk,” notes Denise Maerker on a January 26 edition of the television program “Tercer Grado”. There is also a black hole where criminal investigation should be. Jan-Albert Hootsen, the Mexico representative of the Committee to Protect Journalists (CPJ) stated: “If you allow these crimes to go unpunished for too long, you create a great incentive for those who wish to silence the press.”
The embattled Tren Maya changes course…again
One of President López Obrador’s ambitious “megaprojects” caused a scandal this week when it was announced that after one year of work (including the removal of 20,000 trees) on a portion of the train’s track in Playa del Carmen, the decision had been made to change course. The government had earmarked 522 million pesos to build an elevated viaduct there which will now remain unfinished. The reason given: it will take too long. The president affirmed last week that “come rain, thunder or lightning, we are going to open the Tren Maya by the end of next year.”
The region is undoubtedly one of the country’s richest in terms of historical and natural gems, but also the poorest in economic development
This week’s announcement echoes one from FONATUR (National Tourism Development Fund) in August 2021 when the train’s route was modified to not go through Mérida, as had originally been planned. According to officials, the decision was made for efficiency reasons, to be able to deliver the project by the president’s deadline. The sense of urgency coming from the top has been building: in a November 2021 decree AMLO allowed FONATUR to begin work on the last sections of the track without waiting for environmental impact studies. The execution of this final stage of the project has been handed over to the Department of Defense (SEDENA), in a controversial example of the president’s increased reliance on the military.
The Tren Maya is a sprawling undertaking: the plan includes 1,525 kilometers of train tracks across five states (Chiapas, Tabasco, Campeche, Yucatán and Quintana Roo) and the construction of 19 stations. The train will have both passenger and cargo cars and has been presented as a vital economic boon to the region as well as a model for sustainable tourism and development. The train will traverse nine national reserves and the “selva maya” (Mayan jungle), the second largest tropical forest in Latin America--after the Amazon--spreading over 14 million hectares in southern Mexico and northern Central America. There are currently 25 active “amparos” (constitutional injunctions) against the project, some filed by Mayan peoples living in the areas affected, others by environmental watchdogs.
“The Tren Maya project…involves many environmental impacts and risks all over southeastern Mexico, an area of great biological wealth and significance for the conservation and protection of the Mayan jungle, its aquifer and its biodiversity.” This is from a detailed statement made by CEMDA (Mexican Center for Environmental Law) regarding its position on the project in which the authors highlight six key risks: habitat fragmentation, over-exploitation and pollution of the aquifer of the Yucatán peninsula, deforestation, extinction of flora and fauna, generation of waste, and noise pollution. CEMDA and other NGOs have succeeded in putting a hold on some parts of the construction.
The region is undoubtedly one of the country’s richest in terms of historical and natural gems, but also the poorest in economic development. All five states included in the project have poverty rates above the national average (43.9% in 2020), including the country’s poorest state, Chiapas, with 75.5% of the population living in poverty. “The Tren Maya is billed as a grand opportunity for social and economic development in southern Mexico, but in reality, it fosters a mono-economy dependent on the tourism that has changed the face of the Yucatán Peninsula, with unprecedented social and environmental costs,” concludes an extensive report in Gatopardo magazine.
The article quotes Ángel Sulub, a Mayan man “with many questions about the future of the Mayan people: ‘What will happen to our land in ten or fifty years? Will our jungle disappear? Will our peoples and culture disappear? How much will this project transform us? What will our grandchildren think? How will they live?’”
Reforma eléctrica: ¿cómo llegamos aquí? (Animal Político)
Puntos clave para entender la reforma eléctrica: primera parte (Animal Político)
Puntos clave para entender la reforma eléctrica: Segunda parte (Animal Político)
Impunes, nueve de 10 homicidios de periodistas en México (El Economista)