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Mexico's capital, 9 states vote on ailing oil industry

The opposition PRD seeks to rally support against President Calderon's plan to enlist private help.

July 28, 2008|Marla Dickerson | Times Staff Writer

MEXICO CITY — A bitter debate on how to rescue Mexico's troubled state-owned oil company went directly to the people Sunday as residents of the capital and nine states voted in a nonbinding referendum on President Felipe Calderon's plan to open some portions of the petroleum industry to outsiders.

The vote, organized by the opposition Democratic Revolution Party, or PRD, has no official bearing on energy legislation making its way through Congress. But opponents of Calderon's reforms hope a decisive "no" vote will force legislators to back off.

The balloting was the first of three so-called Citizen Consultation referendums over the next month that will eventually cover Mexico's 31 states and federal district. Organizers were gearing up for as many as 2 million people to cast ballots in the capital alone Sunday, although a light turnout was reported at some polling places.

Mexico City's historic center was bustling with poll workers wearing T-shirts emblazoned with "I decide," the referendum's slogan. A six-piece band performed "The oil isn't for sale," a popular refrain among Mexicans wary of privatizing Pemex, the state oil company.

A mix of urban youth, working people and seniors, some wearing sombreros and traditional garments, lined up at the outdoor polling stations. Some said they viewed participation as a civic duty.

"The petroleum . . . belongs to the people and to the Mexican nation," said Rafael Mendoza Villeda, an agricultural consultant. "We are defending the oil that's at the heart of the country."

Shoemaker Jose Picon Fuentes said he doubted that Mexico's industry could be strengthened with more private-sector help. "The people want the oil to stay in the hands of the state," he said.

Foreigners "are going to obtain the earnings and take them all," he said.

The PRD has promoted the referendum as an exercise in direct democracy and a way for ordinary citizens to have a voice in a vital issue.

Critics have dismissed the event as political theater directed by leftist Andres Manuel Lopez Obrador, the PRD candidate who lost to the conservative Calderon by a razor-thin margin in 2006. Many voters in Mexico City were expected to be party members or employees of the capital's PRD-controlled government. Media reports suggested some were being pressured by their bosses to participate.

The wording of the two questions on the ballot was drafted by academics from respected Mexican universities. But Calderon's National Action Party has charged that at least one of the questions is structured in such a way as to elicit a "no" response from voters.

Pemex is the world's No. 6 oil producer, a major supplier to the United States and the Mexican government's largest taxpayer. It's also a powerful symbol of national sovereignty.

Mexico annually celebrates the 1938 nationalization of its petroleum resources. Booting foreigners from its oil patch, chief among them America's Standard Oil, was one of the country's proudest moments.

But legislators for decades treated Pemex like a cash machine, siphoning its revenue while reinvesting little in exploration and development. Now Mexico has less than a decade's worth of proven reserves remaining. Pemex lacks the expertise and capital to drill deep-water wells, which can cost more than $100 million.

Through the first six months of this year, Mexico's total oil production averaged 2.86 million barrels a day, the lowest output since 1996.

Calderon in April introduced legislation that would allow Pemex to team up with foreign oil companies to extract Mexico's undersea oil. His plan also calls for more private investment in areas such as refining and storage. Opponents say Calderon's real objective is to privatize Pemex, a charge the president denies.

PRD lawmakers paralyzed the House and Senate chambers with a two-week sit-in to prevent a speedy vote on Calderon's reforms. They were helped by brigades of working-class women who camped outside the buildings to prevent legislators from rival parties from entering.

A pro-Calderon group countered with television spots comparing Lopez Obrador to Hitler, Mussolini and the Chilean dictator Augusto Pinochet, who shut down their nations' legislatures.

The standoff ended with an agreement to hold hearings in which dozens of experts testified on many issues related to Pemex. The public remains deeply divided. A poll conducted this month by the national daily Reforma showed that 48% of those surveyed supported Calderon's legislation, while 52% were either opposed or undecided.

The Institutional Revolutionary Party, or PRI, which ruled Mexico for seven decades, has come forward with its own energy reform proposal. The plan puts stricter limits on the role of the private sector than the president's version.

Analysts say the PRI's involvement is a sign that a compromise will probably be reached when lawmakers return from their summer recess. But some doubt that any reform crafted to appease bickering politicians will be enough to turn around Pemex.

And at a time when other Latin American governments are asserting greater control over natural resources, persuading Mexicans to loosen their grip on their petroleum won't be easy.

"Everyone in Mexico knows that Pemex needs to change," said Enrique Bravo, Latin America analyst at the Eurasia Group, a New York-based risk consulting firm.

But with oil selling near record prices "it's hard, politically speaking, to convince people that they should share it with private companies," Bravo said. "That's a tough sell."

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marla.dickerson@latimes.com

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Times staff writer Deborah Bonello contributed to this report.

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On latimes.com

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For news, observations and links about Latin America by Times correspondents, go to latimes.com/laplaza.

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