Enrique Pena Nieto: Mexico is Open for Business Phillippe Diederich - VOXXI
go to original October 18, 2012

Mexico’s President Elect, Enrique Peña Nieto, has assembled his transition cabinet and is signaling to the U.S., Spain and other countries that Mexico is open for business. He says that under his administration, government-owned concessions, might be up for grabs. Peña Nieto will be taking office on December 1st.

While in Spain on Monday, Peña Nieto claimed Mexico was enjoying a stable political, economic and social period, and offered support to some of the leaders of Spanish industry, so that Spain might work its way out of one of its worst economic crisis. Many of the largest Spanish firms have investment ties to Mexico. Nowhere in his comments did he mention Mexico’s own crisis and the approximately three million unemployed and the rising cost of living.

Private investment into Mexico’s oil business?

According to news reports, Peña Nieto spoke of the great opportunities in investing in Mexico, including in the energy sector, but did not elaborate on plans for the state-owned oil industry Petroleos Mexicanos, or PEMEX. He indicated that the state will continue to own and manage PEMEX, but that he has plans to make it more competitive and efficient.

Peña Nieto did say he would be adjusting the strategy Felipe Calderon’s administration has been using to combat the violence that has plagued Mexico since 2006. Without elaborating, he said he would implement short and long-term plans to cut the violence.

But according to Bloomberg News, Peña Nieto is seeking to find ways to break up the state’s oil monopoly without changing the constitution, something that would require a two-thirds majority vote in Congress. Peña Nieto’s plan is to break up the exploration and refining sector of PEMEX. He said he wants to bring in private investment into Mexico’s oil business, which has been in decline since production peaked in 2004, and to possibly make shares available to the public.

Changing the system is not as easy as it seems. When Mexican president Lazaro Cardenas expropriated Mexico’s oil industry on March 18th 1938, all the companies involved in the exploration and extraction, processing and exportation of oil in Mexico were foreign companies. Despite corruption and bad management at PEMEX though the years, many Mexicans consider the oil industry a national treasure.

Privatization of state-owned companies in Mexico has not worked to the advantage of the Mexican people or created competitive markets that stimulate the economy. In 1982, as Mexico was beginning to pull out of a deep financial crisis, the IMF and the World Bank made a series of loans to the country under the conditions it would privatize over 1000 state-owned enterprises, and opened up to foreign investment. Unfortunately, only a small number of conglomerates were involved in purchasing these state-owned enterprises. Under president Carlos Salinas de Gortari, the number of billionaires in Mexico rose from two to 24.

Mexico’s economy ranked 13th in the world

According to the World Bank, Mexico’s economy ranks 13th in the world, yet much of the power remains in the hands of monopolies, which were sales of government companies like Telefonos de Mexico purchased by Carlos Slim, now the richest man in the world. Slim was given a sweet deal and the World Bank provided a $22 million technical assistance loan. Today, Telmex owns 90 percent of the landlines in Mexico, and it’s sister company, Telcel, also owned by Slim, accounts for 80 percent of the cellular market. Both companies were bought by another one of Slim’s companies, America Movil, one of the largest corporations in the world, servicing 246 million mobile subscribers in 18 countries.

When Peña Nieto takes office in December, the PRI (Institutional Revolutionary Party) returns to power with him after a decade-long absence and 71 years as the ruling party. Mexico is enjoying favorable yet moderate economic conditions. Peña Nieto’s campaign platform focused on structural changes in the energy sector, tax system and the labor markets. He has six years to show the world he’s not just a pretty face.

We invite you to add your charity or supporting organizations' news stories and coming events to PVAngels so we can share them with the world. Do it now!