Wednesday, August 20, 2014

painting with red oils

Mexico is on the cusp of a major change economically.

That sentence is filled with several landmines.  Any time a nation veers off of its customary economic course, there is political Hell to pay.  Britain's industrial nationalization after the second world war.  America's de-regulation of airlines during the Carter years.  Red China opening its markets to western companies.

For Mexico, the issue is oil.  I will write an historical piece on how the political issue of oil has become so explosive.  That can wait.  Suffice it to say that most Mexicans see their country's oil assets as a matter of national pride.  Messing with it is like throwing a match on tinder.  And there are plenty of politicians standing around flicking their Bics.

Mexico has long been an oil producer.  But, after a major find in 1976, it became a major oil player.  Sixth in the world.  Second in the Americas -- after The States.  And since 1938, the whole process has been nationalized and is now completely controlled by the government company PEMEX.

That 1976 discovery changed Mexico.  By selling its oil on the open market and providing subsidized low-cost oil to its internal businesses, Mexico launched itself into the ranks of middle income countries. 

The revenue from oil sales made up a large percentage of the Mexican federal budget.  Without the sale of its oil, Mexico would now be a far more-impoverished country.

But oil, like any other natural resource, will come to end when it is used up.  And that is what is currently happening with Mexican oil reserves.  Less oil means less revenue -- and less taxes to run the central government.

Experts suspect that Mexico has vast reserves of oil.  But they are in the deeper portions of the Gulf of Mexico.

That is where the dilemma comes in.  Mexico does not have expertise in deep-sea oil exploration.  It has never needed to seek that option.  And because PEMEX is a government monopoly, it has no competition to make it innovative.

The Mexican government in that last year has passed a series of amendments to the constitution to allow foreign companies to assist Mexico in finding these deep-sea reserves.  I will confess that I am a bit confused about what the amendments allow.  The press reports are contradictory.  And none of the politicians can be trusted to fairly describe what the language does.

But something big is happening.

You can tell that because the political opposition on the left has come to life.  Not surprisingly.  Opinion polls show that a majority of Mexicans are opposed to the changes.  For Americans, it would be like tampering with the Second Amendment.

Last month I told you that San Patricio was visited by one of the favored leaders of Mexico's left (dr. l
ópez obrador has a cure for you) -- AMLO.  He was here to announce his new party.  Morena.

AMLO would like to be president.  He has been running continuously for the position for at least eight years.  And, even though the presidential election is still four years away, his party has already indulged in a political tradition here in Mexico -- painting the sides of buildings with party slogans.  Think of it as Mexican muralism on the cheap.

If there is any doubt what AMLO is up to, the slogans make it clear.  He intends to ride barrels of oil into the presidential palace.

And it will be a contentious fight.  I showed this photograph to two Mexican acquaintances.  The first said: "Finally, someone is fighting for the people."  The second hissed through clenched teeth: "Communist bastard."

It appears that Americans are not the only people in the world whose political views are severely divided.

I am going to enjoy reporting this one from the front lines.

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