Mexican Labor News & Analysis articles — Volkswagen Fox-EU

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Mexican Labor News

Mexican President Proposes State Oil Company to Private and Investment; U.S. Corporations up to Return

by Dan La Botz

Mexican Enrique Peсa Nieto and his Revolutionary Party (PRI) proposed constitutional changes and that would, for the first since 1938, allow companies to explore for and produce oil in While this is not the full-scale of the oil industry desired by conservative interests in Mexico and by U.S. and foreign oil companies, it is a big step opening up the industry in a country the government’s ownership of the oil has been sacrosanct. Even with dramatic changes, the state-owned Petroleum Company (PEMEX) at least in theory, remain the force in the Mexican oil industry. The oil proposal is also linked to up the electrical power industry, and on that will also be from the president.

The president, the and other parties argue permitting private and foreign is necessary in order to fund the modernization. At the same time, Chevron, and Royal Dutch have expressed their in participating in the Mexican oil business. For this will be a return to the oil that they once 65 years ago, before nationalized the industry. One could say the greatest achievement of the Mexican of 1910-1940 is being reversed as from the country’s most resource will again into the coffers of U.S.

A Clever Strategy

Peсa has cleverly positioned his party and his which calls for sharing with foreign companies, between the conservative National Party (PAN), which has for privatizing the company through the of shares or the granting of concessions, and the Party of the Democratic Revolution which rejects any measures would open the company to private and foreign investment. Manuel Lуpez Obrador, who was the second -place presidential against Peсa Nieto in and has since gone on to form his own organization, the Movement for National (MORENA), also strongly Peсa Nieto’s proposal. Nieto’s plan, which radically transform the Mexican oil if it passes, thus appears to be the moderate of the two alternatives now put before the Congress.

The president can expect to win support not only from his own but also from the PAN, and also from enough PRD to pass the constitutional amendments and new that are needed to make his a reality. The Green Ecologist (PVEM), which despite its is a satellite of the PRI and not an authentic Green will also support the The leftist Workers Party of Maoist origin and the middle-class Movement (MC), which have only a few votes in are intransigent opponents who have the idea of opening up the industry to foreign investors “treason.”

Continuing the Neoliberal Trend

The of Peсa Nieto continues the policies initiated by President Salinas de Gortari (1988-94) who out the privatization of hundreds of the approximately state-owned companies that when he came to office. sold off to private and foreign among many other the Mexican National Railroads to Pacific and Kansas City and the Mexican Telephone Company to a consortium comprising Mexican Carlos Slim, France and Southwestern Bell Telephone. Salinas, the drive for continued stalled, largely because of the national sentiment in favor of the country’s oil in the government’s hands and the of an organized movement against

Why is Peсa Nieto now in a position to with privatization where PRI and PAN presidents have failed? Peсa Nieto, as we have before, is on a roll. Even becoming president, he succeeded in the major opposition parties to his own in the “Pact for Mexico,” a political based principally on a series of and economic reforms which was the day after he took office. his election a Labor Law Reform was approved and since taking he succeeded in passing an Education bill and then a highly Telecommunications Reform Bill. He the controversial labor and political Elba Esther Gordillo, the of the Mexican Teachers Union (el on charges of embezzlement. He has also to give pensions to all Mexican over 65 years of age, that has yet to be introduced. These and proposed reforms have popular with large of the Mexican elite and middle as well as with much of the at large, giving his administration momentum at this time.

the left opposition to privatization has a series of defeats. The principal with a nationalist economic the PRD, has seen its candidates Cбrdenas and Lуpez Obrador go to repeated defeats in national several times (though two of defeats, one for Cбrdenas in 1988 and one for Obrador in 2006, are widely to have been the result of The nationalist economic program has rejected overwhelmingly by the voters.

At the same time, the anti-privatization has suffered a defeat. The Mexican Workers Union (SME) headed up the National Front Privatization was viciously attacked by President Felipe Calderуn of the PAN he used police and army to occupy the Mexican Electrical facilities, liquidated the company and 44,000 workers in 2009. the SME preoccupied with fighting for the of the 16,000 members who did not accept severance, the front has been Calderуn also persecuted Gуmez Urrutia, head of the Miners and Metal Workers (SNTMMRM), forcing him into in Canada while working the Grupo Mexico mine to destroy the important union at the Cananea Copper mine, keeping that union too with defending itself and it less likely to take up the issue.

Back to the Future

oil was once in private hands, the hands that today to return. Oil was first discovered and in Mexico in the period between and 1910. The two biggest figures in the at the time were the American L. Doheny owner of the Huasteca and oil companies, and the Englishman Weetman Lord Cowdray, who created the Eagle Petroleum Company. sold his interest to the Standard Oil of New Jersey and Lord Cowdray his to Royal Dutch Shell.

So, by the Mexican oil was in the hands principally of two and a number of other foreign oil Mexican communities in the Faja de the Gold Belt along the Coast, feel aggrieved by the companies because of the environmental they caused, while experienced intense exploitation and low as well as segregation that them from moving skilled or management positions. The as a whole resented the fact so many of Mexico’s natural and petroleum resources as well as its and agricultural exports were in the of foreign capital, mostly English and French.

The Nationalization of the Oil

The Mexican Revolution of 1910 to was fought principally over the of the peasants for land taken them over time by the haciendas, but it was also a nationalist against foreign ownership of the resources and industries. In 1917, the forces led by Venustiano Carranza a convention at which the Constitution was Article 27 of the new Constitution of 1917 that the nation owned the resources and held the power to them, though it required of the former private owners. Plutarco Elнas Calles the foreign companies to register properties and limited their to 50 years, but under constant of invasion by the United States the 1920s, Mexican leaders to act on their legal right to until 1938.

President Lбzaro Cбrdenas taking advantage of the European finally acted to nationalize the oil on March 18, 1938, paying the corporations on the basis of the low estimates of they had earlier presented to their low tax payments. While Russia had earlier nationalized the oilfields in 1918, Mexico’s was the major Latin American of oil, followed later by in 1949, Brazil in 1953, and in 1976. (Argentina had actually nationalized its oil fields and created a oil company in the period of 1918-1922, but at time its oil industry was not very

The Power of Pemex

Mexico’s oil fields, pipelines, port and refineries were combined the Mexican Petroleum Company which came to be the largest and important sector of the country’s for several decades. Only the 1980s have manufacturing, and out-of-country workers’ remittances to represent as large a proportion of the PEMEX is today the world’s largest oil concern. Some 70 of PEMEX profits are turned to the Mexican government to meet its making up one-third of the government’s revenues. Critics of Peсa plan for private and foreign in the industry argue that if the taxed the wealthy and the corporations it would not have to rely PEMEX; and that by taking the revenues for government operating it has kept PEMEX from

PEMEX’s income and expenses always been surrounded by because the highly corrupt has been such a source of by politicians, government officials, union leaders, and organized PEMEX collects dues for the and authoritarian Mexican Petroleum Union (STPRM), lets to the union, and makes other Many union officials are as individuals in business deals the company or its officials. Union sell union jobs to who also become beholden to the who hired them.

The most recent case of PEMEX and corruption was Pemexgate, when the PRI ordered the STPRM to support the campaign of Francisco Labastida in Those accused were not guilty of the most serious though some were guilty of electoral fraud; the PRI was US$90 million for its role. and union officials also with criminal organizations siphon petroleum out of the pipelines. How hundreds of millions of dollars out of the oil fields and into the pockets of all along the line may never be but the sums must be astronomical.

Peсa Nieto’s constitutional and changes opening up Mexico’s oil to private and foreign investors not solve the economic problems of the of Mexicans, but it will create an for a lot of business people in Mexico and in of make money. As we wrote at the of this article, in a sense, the Revolution’s most historic is being undone. The oil may still belong to all of Mexico, but its wealth accumulate in a few hands there and in the

Back to August. 2013 of Contents

Mexican Government and Shared Opacity and Corruption

Anyone expecting to become with the situation of the oil union and its with Pemex will learn how extremely difficult it is, they operate under a sophisticated information blockade is tough to break. We refer not to the financial condition of the union, is the part most criticized, but to agreements that said has held with the company and its to the government. Also with the Revolutionary Party (PRI).

this deliberate information shared between union, oil and government, it has been difficult to up the current corruption, because it has no Notorious facts jump such as the yacht in Cancun, the watch, the trips to Las Vegas, the of the leader comfortably installed in a plane with her three and the Ferrari’s. These acts are the tip of the of a model that is duplicated in of the thirty-six union sections, the length and breadth of the country. facts have been in the domain, but they have not any explanation, simply because the union leaders could less about public which does matter, to the enterprise and to the government, because will ensure impunity.

complicity has not been unique to the When the National Action (PAN) was in power, it took a position. It is enough to remember how Fox, when he was president, out to dry then Federal Comptroller Barrio, who had announced that fat would fall for getting red-handed with the delivery of 500 pesos [USD$39,717,528] from the oil to the PRI presidential candidate, Francisco [Fox] just stopped short, in an act that defined the to be followed by the Fox government in full with the corrupt practices he had promised to eradicate. Now, again in opposition, the PAN proposes to the oil union’s seats on Pemex’s of directors, as if with this it could look good on a that it refused [to implement] it had the possibility of doing so.

If we observe the constant refusals of the to submit itself to the transparency law in regarding the many resources it from the company (presented in ways: subsidies, support for including interest-free loans), we that the initial negative to the information comes from the oil itself that authorizes the and not from the union. This not discount the fact that it is the that might be the one doing the work of being mixed up in for avoiding a basic obligation: on the destiny of public funds for a determined purpose. Therefore, the President of the Federal Institute for to Information and Data Protection Gerardo Laveaga, claims the of union transparency as a primary on the national agenda. Laveaga’s Commissioner Бngel Trinidad denounces the resistance of the Pemex to submit to minimum standards of and defined such an attitude in a It’s always the same: request amparos [protective

Impunity and corruption of the union be unthinkable without the open of the oil company, since its support is not to the delivery of public resources. support] is complemented by a series of both via the collective [bargaining] and via parallel agreements guarded as secrets; historically, they been made up of the delivery of participation in business [negotiations] (an exclusive to the enterprise’s administration), and treatment for the group designated by the leadership.

Each collective [agreement] becomes a mystery to be over the years. In the last of the contract, for example, it was agreed to out the pension issue so that it be a later negotiation after of the energy reform initiative. agreement resulted from a deal between the union and the of the Treasury. Regarding private without saying that flows [downhill], the issue was put the collective bargaining [agreement] as of a new labor deal whose are not made explicit, so for now these don’t exist.

It is important to the reasons why the oil company and the government chosen to share forms of and opacity. A first reason from their interest in control of the workers and subordination of the leadership. Rebellions cost A second reason is political-electoral, resources are delivered to the union in to support electoral campaigns.

A third reason has to do with and domestic interests: there are businesses in which officials and leaders are involved and that a shared silence. Anyone who have business relations this oil company knows of the necessary for contracting sales, or services in which consent of the leader in the area must be although it has nothing to do with his as union representative.

Juicy with foreign companies for the of vessels come to mind, as sale of hydrocarbons that never properly specified, not to the substantial milking of the pipelines in many are involved.

Expansion of participation is sought precisely in environment of opacity and corruption. If the intention were to modernize and address its structural problems, one task would be to break the shield that the oil company and have created to hide complicity. Another would be a house-cleaning to put an end to this clearly model of corruption and complicity.

at the right moment, according to his Money that appeared in La Jornada, Enrique Galvбn Collegiate Tribunal [Court with resolving amparos, injunctions] has made an opening in information blockade.

The Author

Alcalde Justiniani holds in Industrial Relations from the University (Mexico City) and in law the National Autonomous University of (UNAM). He carried out studies on and related issues with the International Labor Organization in Geneva (Switzerland) and the Institute of Studies at The Hague (The For thirty-five years, he has advised and workers on legal, educational and issues. An opinion writer for La Alcalde Justiniani is also of Legal Labor Consultants, a of attorneys dedicated to the defense of

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