Mexican Politics and Economics, Opinions Worth Sharing

The Big Cramp

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Antonio Navalón

The visit of U.S. Ambassador Ken Salazar to the National Palace is something that, given our history – and above all the enormous impact of our bilateral relationship – is always of greater importance than the visit of any other diplomatic representative. The more than three thousand kilometers of the common border and our condition of being at this moment the main commercial partners of the United States make this closeness that goes beyond the territorial and even reaches the ideological, making the relationship between Mexico and the United States something inevitable, necessary, although also in many occasions problematic and even undesirable.

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Since the signing of the USMCA, it was clear that sooner rather than later, the energy issue would end up being a time bomb. The USMCA did not repeal by law – although not by fact either – the consequences inherited by the administration of President López Obrador but also by the U.S. administrations of Donald Trump and President Joe Biden of the effects of the so-called Peña Nieto Reform.

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As the former head of the Presidential Office, Alfonso Romo once said in the face of this matter – undoubtedly a delicate and important one – and the situation has a decisive role in how our relations will be from here on. Romo’s formula was straightforward: “comply with contracts.” There are investments, contracts, laws – or there were, or other laws that are being changed – and at this point, it is necessary to mention that no one denies countries their political changes according to formations or as a result of elections. Each nation has the power to elect – by its own decision or by imposition – who owns the power—those who, with their vote, decide the future of both the citizens and the nation. But, at the same time, it is evident that the contentious situation that has been created was bound to lead to a scenario such as the one that we saw last week.

The United States of America – defending its interests, the spirit, and the wording of what was signed in the USMCA – is worried about the evolution and what the approval of the energy counter-reform could mean.

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In many terms, it has a simplification that is presented in a certain sense as the noble objective of recovering sovereignty over the principle of redrafting an electric reform in which the situation could be rearranged. A fact that would lead, for example, to the Federal Electricity Commission (CFE) becoming not only the first generator – of course, assuming it had the money and the financial and even technical capacity – but above all, with the counter-reform, there would be a complete abortion of what up to now have been the main lines of, first, the pulling apart of each and every one of the alternatives of the so-called clean energies. And secondly, and more importantly, in the concentration of all decision-making power, not in terms of control or management, but in terms of total decision-making to establish an electricity model where private companies will not be entrusted with the possibility of doing the impossible, but instead of establishing a viable and functional model. A model in which, beyond betting on renewable and clean energies, it would be able to satisfy the energy demand of our country and – incidentally and as far as possible – counteract all the environmental damage caused by so many generations. It is time that Mexico dares to leave aside the monopoly of distribution and generation – especially electricity – and dares to go behind the hegemony of fossil fuels and take a leap forward to a new world. It is an unknown world in which, without the Mexican State losing sovereignty over energy control, it could find more benefits than losses.

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Beyond the arbitrations and lawsuits – in which we will undoubtedly end up involved if this reform is approved – the most important thing is not only that the deals with the companies that bet on the protection of the current legal framework will not be fulfilled. No, what matters is that the specialties and the definition of the energy model have undergone such changes that – contrary to international and world trends – we have opted for the first thing we have to do to guarantee the State’s hyper-dominance is to eliminate the intermediate regulatory instruments.

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Nobody needs an Energy Regulatory Commission or intervening factors to order an unwanted market, that nothing is going to be done to bring it about and that – in any case – is already born with established unique rules of the game in the hands of the person in charge that CFE may have from now on.

Regardless of the simplification of the recovery of sovereignty that everyone roughly understands, this is a subject that politically and technically has so many complexities that in the end, it is necessary to find a way to know not why the presidential decision to impose it with blood and fire is so important, but why the fact that if that happens, it will mean a radical change in our conditions in relation to our role and the real possibility of maintaining the agreements established in the USMCA.

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If we don’t get it right, we run the risk of electrocuting the whole of the relationship. But, in addition – and supposing that CFE is worth throwing away a treaty such as the USMCA – let us assume that despite everything, we decide to commit suicide on the model we have. We bet everything on the letter of the presentation sent by CFE, that is to say by the Government, to the Chamber of Deputies. The big problem we will have in this case is that with this decision, we not only put a stick in the wheel of the so-called clean energies, but we condemn the other two member countries of the Treaty – Canada and the United States – to live in a permanent contradiction of complaints. And the fact is that, although the power plants are indeed in our territory, it is also true that the air can lead to the ecological destruction that we cause by our choices to consume certain fossil elements to generate electricity, transferring the error, our choice or the contradiction of going head-on against clean energies to each and every one of the forests, territories, seas, and cities through the air of our neighbors.

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Nobody knows what will happen. We know that we are already beginning to understand that the solution will not be easy, but, of course, no one should expect a resounding victory as a result of this. Above all, it is essential not to believe that this will result in a triumph in terms of recovering sovereignty through the energy counter-reform, first, because this is not true; second, after all, this recent discovery of sovereignty will cost us Mexico’s role in the global market and its decision-making power in North America.

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In the meantime, and since everything is good for something in politics, there is a company that – apart from the state-owned company – has achieved the highest levels of generation, Iberdrola, which is good for us to adjust kilowatts and history. At the same time that we order and expel them de facto from the national energy map, it is as if we were taking the opportunity to begin to collect the outstanding account of that afternoon when Hernán Cortés dared to kidnap Moctezuma.

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