Letter From Mexico: The Privatization of PEMEX

We wrote recently to IN‘s “man in Mexico” to ask him how he analyzed the recent privatization of PEMEX, the giant oil company nationalized by the government of Lazaro Cardenas in 1938, far and away the biggest state-owned asset in Mexico. What follows is his reply.
The Editors

In 2009, the Compañia Luz y Fuerza (or LyFC, Luz y Fuerza del Centro), a semi-state company providing electricity to Mexico City and some other states in the center of the country, was disappeared on a moonless Saturday night. On that night, soldiers who had been mobilized for the “war on drugs,” some dressed as police, assaulted the central offices of the Mexican electrical workers‘ union (Sindicato Mexicano de Electricistas, SME). It was one of the oldest unions in the country, born in the heat of the revolutionary period 1910–1920, with a tradition of struggle and dissidence, partly real, partly fictitious.

On that night, the Mexican “people” were distracted, celebrating the triumph of the national soccer team (the so-called “national selection” or “el trii,” for the three colors of the Mexican flag). The assault was carefully planned. Soccer is one of the regime‘s favorite drugs for distracting people from their problems, a task carried on by the two television monopolies, Televisa and TV Azteca, two of the most powerful and noxious networks in Latin America. In the same way, the reform (privatization) of PEMEX was “approved” in Congress on the evening of December 12, 2013, the day of the Virgin of Guadalupe, the sacred rite revered by a majority of Mexicans.

On that night of October 11, 2009, 44,000 workers lost their jobs (including retired workers left without pensions). The outrage was enormous and prompted huge demonstrations which, however, wound up being diversionary tactics by the leadership of the SME aimed at heading off any actions of consequence. Of course, the facts are difficult to evaluate, and radicals argued at the time that a correlation of forces existed for serious and effective action, and not “legal” actions of the type advocated by the union leadership. Nonetheless, police and military repression was already standing by and, in the conditions of a country torn apart in a kind of low-key civil war—the so-called war on the narcotraficantes—it was clear that the government would not pull back, if push came to shove, from the ultimate consequences.

Moreover, the government used a clever tactic to divide the union, issuing an ultimatum offering a significant sum of money (but one hardly adequate for the medium and long-term prospect of permanent unemployment) to all those workers who would agree to the layoffs. Within several months, the SME‘s power was seriously diminished, having lost more than half of its members. Nonetheless, less than 20,000 workers have continued this struggle.

What kind of struggle was it? It took many forms: marches, roadblocks, legal demands, hunger strikes, confused negotiations with the government, violent but isolated confrontations as well as the identification of the union with the nationalist flags of the old PRI,[1] the PRD[2] and, above all, with the movement led by two-time former PRD presidential candidate Andres Manuel Lopez Obrador (popularly known as “AMLO”).

More recently, last December, the Mexican Congress approved the energy reform and eliminated the constitutional blockages to complete privatization of the most important company in the country, PEMEX. The concessions to private companies (both Mexican but primarily foreign) will now be extended to the production and marketing of oil, with gas and electricity having been opened up some time ago. The Mexican state argues that this reform became necessary because it lacked the financial resources to acquire cutting-edge technologies for exploratory drilling in deep waters (e.g., the reserves in the Gulf of Mexico). The reality is that the Mexican state, as the main national entrepreneur, is giving away these reserves, estimated at $3 trillion, money which could capitalize PEMEX, incorporate cutting-edge technologies and bolster the old nationalist dream of using oil as the pillar of accumulation for industrializing the country.

In this way, the Mexican state is giving up its oil rent precisely at a time when that rent is more lucrative than ever. This is the privatizing and foreign-oriented neo-liberalism of a Third World country, lacking a bourgeoisie that acts like one. Since 1982, and as a direct effect of its external debt, the Mexican government has been privatizing state industries (including railroads, automobiles, mines, fertilizers, the banks and telecommunications), filling the coffers of a handful of oligarchs (including Carlos Slim, who tops Fortune‘s list of the world‘s richest people, and another multi-millionaire produced indirectly by neo-liberalism: the narcotraficante “Chapo” Guzman, whose name had to be dropped from the list in order not to embarrass the Mexican government), as well as the coffers of foreign companies. The government had nonetheless kept—relatively speaking—the “crown jewel”: PEMEX, the company earmarked to service public finances (40 percent of all tax revenues come from PEMEX), and which has been systematically decapitalized for a double purpose: to cushion the effects of the world crisis, and to gradually destroy the public company by making it appear inefficient.

Nonetheless, the oil rent is so high that PEMEX has continued to be one of the most profitable firms in the world, more profitable than some of the transnationals before which it now is bowing out and in spite of being systematically decapitalized by the governments of the PAN and the PRI, both used to winning elections by buying votes and keeping the trade union mafias in tow, along with a voracious bureaucracy. One detail says everything: in more than two decades, not a single refinery has been built, allowing Mexico to export oil, in order to import gasoline from the United States (!) as well as, once again, to portray PEMEX as inefficient and unviable.

Unlike the movement of the electrical workers, the oil workers‘ union has shone by its absence. Unbelievably, and in spite of the layoffs and the loss of labor rights, the oil workers remained silent about their future. Decades of trade-union containment, combining privileges with repression against the slightest attempt at dissidence, have given the government what it wanted: the immobilization of the workers in the most important sector of the Mexican economy.

In this scenario, with an absent proletariat, opposition to the energy reform has been mounted by MORENA (Movimiento de Regeneracion Nacional), a recent split from the PRD, which it accuses of faltering in the defense of national interests and in the face of the neo-liberalism of the PRI and the PAN. The name “MORENA” (which means dark in Spanish) adds a racial element to the nationalist ideology of this party, injecting the dose of bitterness which has always characterized social conflicts in Mexico, between a mestizo majority and predominantly (but not exclusively) white elites.

How do we evaluate the stakes of this struggle from a communist perspective?

  • How shall we characterize a (Lumpen) bourgeoisie which renounces the very role of a bourgeoisie—a role which only the state can play, as a collective bourgeois, given the weakness of the native bourgeoisie and the pressure of the imperialist bourgeoisie?
  • How shall we define a communist position vis-à-vis the nationalism of the left, itself in reality a bourgeois nationalism (and which could be defended even by a fascist bourgeoisie: property and profit from its own assets, used to promote a virulent nationalism)?
  • How shall we define a communist position when privatization means unemployment and the degradation of the situation of both workers and the majority of the population?

As for the Trotskyists, whom despite their minoritarian presence we have to recognize as practically the only communist voice in the national arena, their positions have divided into two: between those who call for joining ranks with AMLO and with MORENA (and even for reorienting the PRD), and those who call for a break with AMLO but who issue fantasy-ridden calls for general strikes and workers‘ control of the factories (this is the radical version of Trotskyism which simultaneously defends corrupt union leaders no longer of use to the bourgeoisie and who have thus been imprisoned).

To contribute to a clarification of an authentically communist position in these situations, I continue with the following thoughts:

  1. The most immediate element is the degradation of working conditions; the disappearance of the company and of the union (which still exists, but now with no company and thus no jobs) means the disappearance of collective bargaining, reduction of benefits, wage levels, social security and retirement. In short, a direct attack on working conditions. Any communist has to support this kind of struggle, even if it remains strictly on the terrain of labor relations and has nothing revolutionary about it. On this level, the task is one of denouncing the maneuvers of the union leadership, a task made all the more difficult because the workers look to the union and the broader union movement as the sole protection of their existence in the individualistic void of capitalist society. On the other hand, any call for radical measures (i.e. those put into practice and not merely as a leaflet) implies becoming a target for massive repression, and what is even worse, for selective repression, which consists simply in disappearing from the face of the earth and probably turning up as a cadaver in a river or in a garbage dump on the edge of the city. The union and the state are the enemies of any economic struggle carried to this level. It is a confused struggle, involving the need to support but also to differentiate oneself, where the path is neither clear nor easy to find. This is not the case for idealist organizations like the ICC (International Communist Current[3]), for whom struggles emerging within unions are lost causes and moreover favorable to the interests of the bourgeoisie, which , for its part, carefully writes out the script for such struggles in advance. On this score, we cannot deny the political “wisdom” of the ICC. What remains unexplained is how to approach real events as they emerge in the concrete.
  2. The political level of this struggle is determined by the whole situation and can be summed up as follows: nation or world revolution?

This level is all the more complex in that it poses many questions:

While it is absolutely clear that national emancipation is not a communist demand, it is also certain that the issue is by no means simple; Marxism and Marx have been sources of inspiration for both nationalist reformism and revolutionary internationalism. The Marxist theory of revolution, based in the necessity of “objective” conditions for its existence, prompted the Bolsheviks to argue for the necessity of a national capitalist development making possible the communist revolution in Russia, through a democratic- proletarian dictatorship (or something of the sort) realizing the tasks of capitalist development which the nascent Russian bourgeoisie could not achieve. In 1848, the Marxist position was to push the proletariat to push the bourgeoisie to realize the bourgeois revolution, while maintaining its political independence. From this perspective flowed articles, writings and journalistic analyses, of which I cannot give a balanced account, and in which one could see as progressive the Irish cause against Great Britain, but not that of the Balkan nations against the Ottoman Empire, and still less that of the Mexicans, faced with US invasion and the loss of half of their territory, given that the momentum and historical and economic progress at that time belonged to dynamic American capitalism and not to backward, nascent and conservative Mexican capitalism, which had resulted from a hybrid between the decadent feudal past and an impotent Spanish capitalism. In 1871, a “more mature” Marx warned the Paris Communards against the unviability of a revolution, basing his analysis on adverse “objective” conditions (a growing capitalism), while nonetheless making common cause with them, criticizing them politically while learning from their practical lessons.

The revolutionary wave of 1919–1921, as a product of the world conflagration, clarified this discussion: capitalism had reached its peak on a world scale, communist revolution was a necessity on the agenda of the day, and the level of development attained by each country was not important (and on this point we have to thank the ICC, at least in the Mexican case, for clarifying the history of capitalism and the revolutionary movement globally).

We know the subsequent history: the world revolution was strangled, Soviet Russia managed to build a dictatorship based on the necessities of survival in the most adverse conditions (war communism) as a initially highly efficient state capitalism but one totally inadequate for confronting US imperialism. This development challenged historical materialism to come to terms with a kind of forced development, which in one case led to a defeat, the USSR, and in another case to an emerging and successful capitalism, as in China.

During this trajectory, in the Third World, the world of the colonies and of the countries which, while formally independent, were economically subjugated, the national question took different forms of the struggle for national liberation, so that they could either remain under bourgeois anti-fascist governments on Moscow‘s orders (the Popular Front) or throw themselves into guerrilla wars of the tri-continental variety (Asia, Africa, Latin America).

In real terms, the problem had no solution, as the authentically proletarian world revolution remained in the past, suspended in time, and there was no way to connect with it. World revolution was reactivated as a living agenda by the permanent crisis that opened up at the beginning of the 1970s. But here we find ourselves stuck; the proletariat has not imposed its perspective, and the bourgeoisie, the ICC tells us, has not managed to get out of the quagmire. This is a thesis to be taken seriously and probably interpreted as one of the scenarios Marx called a mutual standoff between social classes, leading to the exhaustion of social and historical energies. Decomposition as a higher phase of the ICC‘s concept of decadence, a theory which led (in their case) to repeated internal crises and divisions but which we can also recognize as a general crisis and as the expression of unease inside communist groups confronted with an economic crisis and lack of social definition now lasting more than 40 years. In this situation the laws of physics are no guide, and for every action there is not a corresponding reaction of equal and opposite magnitude! The proletariat is not responding in the same form and with the same magnitude as the forces attacking it!

This being the case, does it therefore mean that these 40 years (1970s to the present) have been neither a lost time nor a mere stagnation, but rather a period in which, in the absence of a working-class response, capitalism has been preparing the conditions for a new stage of expansion? Does this mean that the operative law is one of perpetual motion and that nothing can persist in a situation permanently lacking definition?

This being the case, we should not accept, once again, the rudimentary, simple and unilateral theory of decadence of the ICC (which we criticize repeatedly here as a point of reference for theoretical clarification and to pinpoint the critique of that organization). This means that the development of capitalism in the post–World War II era was not solely based on capabilities facilitating the reconstruction of Europe and Japan (i.e., the expansionary wave of 1945–1968/70). This means that crises do not result from the lack of “realization” (à la Rosa Luxemburg) of excess surplus value and that their solution does not take place solely through the artificial and temporary stopgap of credit, but that they have their roots in the lack of “creation” of surplus value (à la Grossmann and Mattick), and their solution emerges from a restructuring of the conditions of accumulation (e.g., the cheapening of variable capital and of constant capital, for example, and other countervailing tendencies).

If capitalism is able to regenerate and relaunch itself on a world scale, it will do so through the economies that have taken the lead in this process, and the current, long crisis will not have been a global, terminal crisis of civilization with no exit in capitalist terms, but will be reduced to a crisis of hegemonic accommodations which may or may not require a Third World War. If we communists cannot demonstrate (as the ICC does in its rudimentary way) that a national capitalist development is neither possible nor viable, then nationalist options of such development, and the cases of Lula‘s Brazil, of Korea and the other Asian tigers and dragons, not to mention the best example of all, China, emerge as the sole “real” alternatives to the now-diluted specter of communism. In this case, the working class might as well align itself with the current “progressive,” simultaneously nationalist and globalizing bourgeoisies, neo-liberal or statist as the case may be, instead of continuing to dream of illusory world revolutions.

Returning, now, to the original point, Mexico, NAFTA and privatizations:

—The question of NAFTA is not worth much more clarification (we can pile up more and more statistics). For myself, I don‘t understand what some people do not get: Mexico is sinking into an irreversible social crisis of an enormous magnitude. Its most important expression is not to be found in economic but rather in social statistics, in violence, in migration, in recurrent political crises and in hopeless poverty. Violence has taken many forms and it is the expression of, and safety valve for, unemployment and a total lack of perspectives for large swaths of the population. This is the true result of NAFTA. We cannot think of NAFTA as an “economic” treaty separate from its “extra-economic variables,” to use the false and stupid jargon of the specialists. Although the issue of the narcotraficantes is usually treated as a form of criminality quite separate from the trade agreements, one does not have to be a Marxist to listen to the Colombian academics who have said that the disaster of the Mexican countryside, resulting from NAFTA, is the deepest cause of the growth of the drug trade. But other points converge with this one: NAFTA was previously spelled out and finalized practically through the sale of the electric and petroleum infrastructure—although increasingly in a purely formal way—in the hands of the state. Further, NAFTA was crowned by political-military treaties (of submission) through ASPAN[4] and the Plan Merida (the Mexican version of the Plan Colombia) for the purpose of creating and consolidating the security perimeter of the United States. These imply the opening up and provision of energy resources (and other raw materials) to US companies as well as to firms of some secondary imperialisms, to which the United States offered concessions in its back yard (e.g., the United Kingdom, Spain and Canada). For all this, the war on the narcotrafico has been an essential instrument for creating social paralysis through direct violence and the fear it causes (it remains to be analyzed to what extent the current war on drugs is an induced and programmed war—conspiracy theory?—and to what extent it is a natural product of the social dynamic set in motion by the crisis of capitalism; the answer might well be both, though it is not clear what proportion each element contributes).

—On one hand, NAFTA, as a springboard to restart the economies of the United States and Mexico, has had a twofold result: it has made possible the consolidation of a strategic area, the North American bloc (the United States, Canada and Mexico) vis-à-vis the regional blocs of the EU and of the Asia-Pacific zone. On the other hand, American firms have access to cheap Mexican labor and to the markets and resources of Mexico. Trade has become intra-industrial. For Mexico, this dynamism has been limited to certain sectors and regions, while the larger part of the country has lost its stability and the equilibria attained during the postwar era, up to the 1970s.

—In political and ideological terms, the privatization of PEMEX amounts to giving away the last and most valuable asset sustaining the dream of an independent Mexican capitalism. What never existed has been erased forever. This is the death of the most valuable heirloom of the Mexican Revolution and its most accomplished expression: cardenismo[5] and the nationalization of oil.

—With this, all discussion of the defense of the nation and the possibility of an independent national development has been definitively closed off.

—This scenario is of great help to Mexican communists (do they exist?): the whole prior debate has been superseded by the facts. There are no longer state enterprises of any importance, and soon any decent labor contracts will be destroyed. The situation is clear. There is no further need for a discussion having no real object. There will be no state enterprises to defend. Furthermore, the Mexican government has handed the petroleum rent to foreigners. This rent allowed it to maintain a welfare state (one increasingly on paper) and in recent years to offer crumbs in the form of social programs, as well as to buy off opposition and intellectuals. But the government coffers will be increasingly empty and the social stakes will also be closer to the bone. Fewer unions will be receiving official bribes to compromise their loyalties. Once again, the Mexican government is hoping that Uncle Sam will rescue the economy and will propel it into an economic growth creating jobs and neutralizing social conflict. This will not happen; Uncle Sam and the world capitalist economy will not reward the privatizing generosity of the Mexican government. The United States will aim solely at extracting the highest possible profits, in conformity with its nature and general mode of behavior. From now on, to close the gap between the promise and the reality, the government will have only one argument: force and repression.

—Finally, as a product of this scenario, the nationalist movement championed by AMLO or some other leader will probably gain traction.  If this happens, the discussion about economic nationalism will gain new ground; AMLO will wrap himself in the authority of Lula and Brazilian example (Chavez now being out of the picture) and we communists will have to know how to respond.

—How can we communists respond clearly if our every word and every step require a balance sheet covering the whole development and phases of capitalism from the nineteenth century to the present? No right-wing or center-left organization does anything similar to justify or to oppose the privatization of a petroleum company!

—The answer is so materialist that it even ends up on the terrain of empiricism: we have only to return to reality, to learn the steps taken by our class, to make conscious the meaning and value of those steps, even as we confront it critically to expand consciousness and advance its independence as a class. Layoffs, inflation, tax increases, rollbacks of labor rights, industrial and ecological disasters are all immediate causes requiring us to defend the survival and unification of struggles, whatever form they may take and however dispersed they may be. As a first step, the Mexican proletariat and the popular sectors on its periphery have to become conscious of the strength and energy squandered in their submission to the lost cause of the nation and its leaders (both the false ones and the messianic ones). For this, there is more than enough political and historical speculation; it will suffice to take hold of matters where they begin, in the immediate struggle over the conditions of life. To give a direct example: in December the “left-wing” government raised the cost of urban transport and in particular of the Mexico City subways, a measure affecting millions of people. A small group of young people, belonging to a generation which has never known “secure” employment and the manna of the oil wealth, attempted mobilizations, hoping that they would echo the mobilizations in Brazil in summer 2013. The balance sheet was rather negative; the proletariat was unaware of its own power. Not only was the result another economic setback, but another opportunity was lost to built classwide links within the working class and those on its periphery. This kind of scenario, in which division and class indifference predominate, was the previous situation which led to the subsequent events.

—In 2006, two large vectors converged and shook up the political scenario in that presidencial election year. On one hand, miners‘ strikes spread throughout the country, during which confrontation with the forces of repression resulted in the deaths of two steel workers in the port of Lazaro Cardenas, in the state of Michoacan; on the other hand, the resistance of the peasants of Atenco (located in the middle of the country) against the expropriation of their lands linked up with the isolated and cornered little island of the Zapatistas in Chiapas, resulting in a violent repression and the imprisonment of its leaders, while in the southern state of Oaxaca, a teachers‘ strike, which initially fought off the attempt to repress it, attracted the support of wide sectors of the population and established, for a few months, popular power as the Oaxaca Commune. The Oaxacan experiment wound up being crushed by forces from the navy, since the federal government feared that army troops, largely made up of Oaxacans, would not respond with the necessary aggressiveness. This was the popular-proletarian vector. Of course, its political expression was at no time communist, but rather a trade unionist, populist and even nationalist mix. But its composition and its demands were proletarian. The other vector was the electoral struggle of the PRD and of AMLO, which never lent support to any of these causes but rather turned its back while trying to enlist them in the “realistic” and “peaceful” road of electoral change.

—The result was thus that the regime, following orders from the United States, blocked any access to power by a left-nationalist alternative (as did emerge in South America). The simple truth is that Mexico is the fundamental base of US imperialism in the Americas, and the geographic corridor running from the Mexican border to Colombia is its basic and impenetrable security zone. Most recently was the electoral fraud[6] and its aftermath, the call for the so-called “war on drugs” whose real meaning has been the militarization of the country and the violent disappearance of any attempt at social resistance. This “realistic” and “peaceful” path resulted in a grim accounting of the dead, ranging from 60,000 to 100,000 during Calderon‘s presidency (a figure far exceeding the 30,000 murders committed by the Argentine dictatorship in the same number of years).

—Thirdly, and incomprehensibly, other unions sacrificed during the Calderon presidency from 2006 to 2012 such as the Mexicana de Aviación (which also disappeared overnight), the electricians of the SME and the unprecedented resurgence of the student movement, wound up placing their hopes in the legal and electoral struggle.

—Both on the economic front (with privatization and the sell-off to foreigners of the main assets of the country) and politically (the checkmated option of a nationalist government), the Mexican proletariat finds itself up against a situation of perfect “revolutionary defeatism.” The bourgeoisie has spoken clearly. The bourgeoisie has clarified the terrain of class struggle. It only remains for the proletariat to understand this, to leave behind all its illusions and to recognize the fact that the other forces in play depend on its strength and not the other way around. Once again, this “weak” link in the world capitalist chain seems headed for a social explosion. Let us hope that, this time, it connects up with the multi-racial American proletariat, of which Mexican workers form a fundamental part, once merciless imperialist competition eliminates the last remaining privileges of the United States and returns it to a position like the one it occupied in the nineteenth century, when it was a beacon to the international proletariat.

  1. [1] Partido Revolucionario Institucional, the statist-nationalist development party which ruled Mexico from 1930 to 2000, and which recently returned to power.
  2. [2] Partido Revolucionario Democratico, a center left party which has mobilized hundreds of thousands of supporters against probable fraud in the last two national elections.
  3. [3] The ICC is a left communist group with branches in approximately fifteen countries, including Mexico.
  4. [4] The Alliance for the Security and Prosperity of North America was created in Waco, Texas, on March 23, 2005, by the United States, Canada and Mexico. The contents of the agreement were kept secret from that time onward, and culminated in the August 2007 meeting of George W. Bush, Canadian Prime Minister Stephen Harper and Mexican president Felipe Calderon. A watchdog group used the US Freedom of Information Act in November 2006 to obtain some of the confidential documents from a closed meeting of September 2006 in Alberta (Canada). Present were top-level representatives of the private sector of the three countries; the meeting formulated 51 recommendations for increasing the competitiveness of North America.
  5. [5] Lazaro Cardenas was president of Mexico from 1934 to 1940 and used the impending crisis leading to World War II to expropriate US and British oil interests in Mexico. He remains a symbol of a potent nationalist statism.
  6. [6] In the 2006 presidential election, Federico Calderon of the PAN supposedly defeated AMLO by an extremely slim majority, and many Mexican relieve that the result was a fraud. AMLO mobilized his PRD supporters for weeks of demonstrations in the streets of Mexico City, but did no more, and the result stood.


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