Mexican Lawmakers Hope Private Investment Will Boost Oil Industry

Mexico's congress is set to pass a controversial plan to open up the country's vast and sluggish oil industry to private investment. The move requires a constitutional amendment since Mexico forbids foreign involvement in the oil industry. Opponents of the plan say the president is selling out the country, but many experts say that without foreign investment, Mexico won't be able to tap all its oil and won't modernize.

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In Mexico, lawmakers are debating one of the touchiest subjects in the country today, whether to open up the nation's state oil monopoly to foreign investors. Ever since the oil industry was nationalized back in the 1930s, Mexico's control of this precious resource has been a symbol of national pride. But with oil prices rising and revenues down, the president has made modernizing the oil company Pemex his number one priority.

As NPR's Carrie Kahn reports, not everyone is happy about it.

CARRIE KAHN, BYLINE: The capital's tree lined Reforma Boulevard has been closed for days in front of the Senate building. Police in riot gear stand guard behind 10-foot tall metal barriers.

MINELVA QUINTARA MENDOZA: (Foreign language spoken)

KAHN: Protester Minelva Quintara Mendoza points to the line of police. We supposedly live in a democracy, she says, but when lawmakers hide behind walls and refuse to hear the people, there is no democracy. She and the hundreds who have been out in front of the building for days listen to fiery speeches about the dangers of privatizing Pemex.

UNIDENTIFIED MAN: (Foreign language spoken)

KAHN: We can't let them pass the reform, says this man.

UNIDENTIFIED MAN: (Foreign language spoken)

KAHN: If we do, only the rich corporations will benefit, not the Mexican people. This is a popular perception in Mexico, where nationalistic pride in the state oil company is strong and has long trumped calls for privatization. But this year, the plan has gained momentum and is the key reform in President Enrique Pena Nieto's aggressive economic agenda. Pemex's revenues are dismal, as oil output has dropped 25 percent since peaking in 2004. And when oil profits fund a third of the national budget, something has to give, says Juan Pardinas of IMCO, a non-governmental think tank. Pardinas says Mexico does not have the expertise or capital to go after Mexico's oil in deep waters or in its vast shale reserves.

JUAN PARDINAS: It's really hard to find in the world a country which has as closed energy sector as Mexico has.

KAHN: Pardinas says even North Korea and Cuba partner with other countries.

PARDINAS: And when Fidel Castro starts to teach you lessons on how the free market works, then you might have a problem. And we do have a problem.

KAHN: But just what the oil reform package will look like is unknown. Mexico's left, which wanted limited reforms, pulled out of the discussions. And the conservative right is pushing for a more open plan, with foreign companies given concessions. If the past is any indicator, Mexico analyst George Grayson at the College of William and Mary says it's unlikely the government will pass a reform that can revitalize the state monopoly and serve the best interests of the people.

GEORGE GRAYSON: Mexico has a long history of signing treaties, passing legislation, and yet you find, at the end of the day, that this is just a Kabuki dance, that the actual goals aren't achieved.

KAHN: That's definitely the sentiment of the protesters outside the Senate building. Angel Lopez Chorra says Mexicans have been told before they must modernize with foreign investment, only to see them shut out of the profits.

ANGEL LOPEZ CHORRA: (Foreign language spoken)

KAHN: He says there's a lot of capital here. Mexico is rich is many ways, but he says the politicians abuse those riches for their own gain. Carrie Kahn, NPR News, Mexico City.

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