Mexico's President Seizes State-Run Electric Co.

Mexican President Felipe Calderon has seized the state-run electricity company in the capital and fired some 50,000 unionized workers. Calderon says the utility was inefficient and corrupt, and a drain on the national treasury. Labor leaders say he's playing with fire.

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STEVE INSKEEP, host:

Let's go next to Mexico, where the president is facing criticism for how he handled a crisis, an economic crisis. Last weekend, Felipe Calderon took over the country's electric utility and fired almost 50,000 employees. President Calderon's decision drew harsh criticism from labor unions. The Mexican president said it was time to end waste and corruption. NPR's Jason Beaubien reports from Mexico City.

JASON BEAUBIEN: The seizure of the electric company spurred fears of massive power outages in the capital and caused chaos outside the utility's locked offices. Ahead of the announcement, police surrounded power plants and took over the headquarters of Luz y Fuerza del Centro. The government-run utility provides power to Mexico City and the surrounding states.

On Monday, Adela Morales(ph) was standing outside a locked electricity office with her latest power bill that was about to come due. The 76-year-old says it's inexplicitly six times higher than normal.

Ms. ADELA MORALES: (Spanish spoken)

BEAUBIEN: Morales is thrilled that President Calderon is liquidating the electricity company. She says it was time to put an end to the abuses. The utility was run by a bunch of crooks, she says. I'm counting pennies, while they were making millions.

The state-run company had become a significant drain on the federal treasury. The government was pumping more than $3 billion a year into the firm, or almost as much as Mexico spends annually on its army. In announcing the takeover, President Calderon said that in these difficult times, Mexico can't continue to prop up inefficient public enterprises.

President FELIPE CALDERON (Mexico): (Spanish spoken)

BEAUBIEN: For example, President Calderon said, one-third of the electricity generated by Luz y Fuerza was being lost to corruption and inefficiency, and this while Mexico is being battered by the global economic downturn.

Pres. CALDERON: (Spanish spoken)

BEAUBIEN: Today, we must change what doesn't function in this country, Calderon said. We have no other options. Resources are almost gone. Fundamental change is the only alternative.

(Soundbite of crowd chanting)

BEAUBIEN: But labor unions and left-leaning political parties have vowed that they'll reverse Calderon's liquidation of the company. Thousands of former workers from the utility took to the streets to denounce the move.

Unidentified Man: (Spanish spoken)

BEAUBIEN: The head of the National Electric Worker's Union, Martin Esparza, declared we can't let them privatize the company. President Calderon and his announcement of the seizure of Central Light and Power said the public utility will not be privatized. He says the 47,000 former workers will be given, on average, two-and-a-half years of severance pay. But labor leaders say they're planning a huge demonstration later this week to condemn Calderon's seizure of the utility.

Jason Beaubien, NPR News, Mexico City.

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