The Mexico Institute’s “Weekly News Summary,” released every Friday afternoon summarizes the week’s most prominent Mexico headlines published in the English-language press, as well as the most engaging opinion pieces by Mexican columnists.
What the English-language press had to say…
This week, the debate on the Energy reform continued and the PRD presented its reform proposal. Last Monday the PRD presented its own energy reform proposal, which did not include constitutional changes or a greater role for private companies. The Proposal seeks to loosen the government’s stranglehold over revenues from Pemex, where approximately 70 percent of profits go to fund the federal budget. The main speaker during the presentation was Cuauhtémoc Cardenas who said Pemex should be more independent by removing Cabinet secretaries and the oil workers union from the Pemex board seats they now hold. In the same regard, this week in an interview with The Wall Street Journal, Pemex’s CEO Emilio Lozoya announced the plans to set up a new company to explore and produce shale gas and deep-water oil in the U.S. as part of an ambitious strategy to turn around years of falling production. “The geology is similar and we can benefit from numerous areas of collaboration with international oil companies”, Lozoya said to the newspaper.
In the midst of the reform debate, this week new figures of economic growth were released. According to the numbers, Mexico’s economy contracted for the first time in four years during the second quarter as slower export demand and weakness in construction and services sectors. On Tuesday, INEGI informed that gross domestic product shrank 0.74% from the first quarter in seasonally adjusted terms. On an annual based analysis those figures implied decline of 2.9%. According to The Wall Street Journal, the sluggish activity is adding a sense of urgency to the government of President Enrique Peña Nieto to press on with his reform agenda. After those figures were released Ministry of Finance cut the government’s full-year growth forecast to 1.8% from 3.1% previously.
This week , teachers tried to break into a legislative session during a march against Mexico’s education reform. The Washington Post reported that about 500 teachers clashed with police in the parking area of Congress after teachers tried to get inside the complex. The teachers have blocked roads around the parliament all week. As reported by BBC News this week, teachers are incensed by reforms that would curb union powers and ban practices such as buying and selling posts.
What Mexican columnists had to say…
This week, columnists continued with the discussion about energy reform in Mexico. In his weekly piece, Jesus Silva-Herzog pointed out that it seems that Enrique Peña Nieto is more worried about defending the historical legitimacy of its proposal rather than its economic relevance or social benefits. On his view, the government’s message is clear: “Do not worry: we are only removing the later additions to the Constitution made to the original text approved during Cardenas administration”. Meanwhile, Sergio Sarmiento referred to the interview Emilio Lozoya Austin, head of Pemex gave to The Wall Street Journal where he stated that “Pemex is about to launch a new company that will work in the gas fields and oil shale in the United States “. According to Sarmiento, it is wise for Pemex to invest resources in the most productive options for shareholders, who are Mexican citizens. At this time, however, it makes sense Pemex to concentrate its investments in Mexico. Jorge Fernández Menéndez added to the debate writing that Cuauhtémoc Cardenas is right when he says that we must look to the future and not the past if we want to reform the energy sector. However, the future in terms of energy requires constitutional reforms that are being proposed and there will be no certainty for any serious investor without those reforms.
On economics, this week Leo Zuckermann, wrote that when it comes to delivering bad news, the government sends its deputy managers to the face the media, as was the case of the treasury Undersecretary which this week announced the Mexican economy is in a clear process of deceleration so economic growth in 2013 will be lower than in 2012. Finally, on the teachers’ protest Sergio Sarmiento wrote that such protest broke with all precedent when the CNTE besieged for hours the Legislative Palace, as it did days before with the Senate, not only to prevent the start of the special session but to demand the withdrawal of three bills.