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Hot Air: Mexican and Brazilian Energy Policy




Here is an interesting article on Mexico and Brazil's energy sectors (https://nacla.org/news/2018/04/20/fueling-elections-mexico-and-brazil) from the invaluable Report on the Americas. Both Mexico and Brazil have large energy sectors that have been dominated, until recently, by state owned firms (PEMEX in Mexico and Petrobras in Brazil). Both countries have elections this year and, in both, there is the possibility of a left wing victory. In Mexico, Pena Nieto, the current PRI president, has been privatizing some of PEMEX's reserves, auctioning them off to multinational energy corporations. Pena Nieto also abruptly cut off domestic subsidies for gasoline (leaving consumers with higher prices), which hardened already widespread public opposition to energy privatization. National ownership of oil has long been a symbol of Mexican national sovereignty. Andres Manuel Lopez Obrador (AMLO) has a commanding lead in Mexico's presidential elections. AMLO's energy policy would slow privatization and invest in refining capacity so that Mexico could produce its own gas rather than import it from the United States. AMLO would not reverse Nieto's privatizations. It is not likely that he could. The privatization policy was implemented by means of a constitutional amendment. If AMLO wins, he will not have a majority in the Mexican Congress. So his power will be limited. Additionally, AMLO is concerned not to precipitate investor flight from Mexico. He is trying to signal to domestic and foreign capitalists that he is not going to harm their interests. What kind of political and policy space does that leave him for transforming the status quo?

Brazil is a different story. In Brazil, the conservative Congress and Judiciary impeached Dilma Rousseff of the Workers Party. Dilma's successor is Michel Temer, a politician who has been credibly accused of far worse crimes than Rousseff. The most popular politician in Brazil is Rousseff's predecessor Lula (Luiza Ignacio Lula Da Silva) - who held the presidency for two terms - was recently jailed on trumped up corruption charges. Again, his adversaries have done much worse things, but they are the ones in charge of the investigations. Temer has single digit approval ratings, which makes Nieto in Mexico (with approval ratings of around 25%) look popular. With regard to energy, Temer, like Nieto, has been busy privatizing Brazil's oil assets. This has also been the case in a number of other Latin American countries, such as Argentina, Colombia and Guyana. In all of these cases, multinational energy corporations are getting access to new assets, which is setting the basis for more oil consumption and more climate change.

I see what is happening in Latin American in relationship to energy policy in the United States. According to Michael Klare (https://www.salon.com/2018/02/13/the-strategy-of-maximal-extraction_partner/) the U.S. is pursuing a strategy of maximal extraction by eliminating regulations and limitations on energy exploration and development. With figures like Ryan Zinke in Interior, Rick Perry at the Department of Energy and the execrable Greg Pruit at EPA (not to mention the appointment of forer Exxon CEO Rex Tillerson) as Secretary of State, it is clear that the Trump administration is deep in the pockets of the fossil fuel industry. What we see with this article is how the power of this industry extends across the Americas as well.

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