Proposed reforms inside Pemex threaten to break Mexico’s biggest leftist party

The war drums have begun beating inside Mexico’s Democratic Revolutionary Party (PRD) as members of the country’s most important leftist group begin to take sides over President Enrique Peña Nieto’s plans to open up the state-owned oil industry to foreign investment.

Tensions among PRD’s leaders over the issue have divided party members into small factions, known as “tribes.”

This internal war actually started last week when Peña Nieto, who was in London for the G8 summit, told the Financial Times that his energy reform would include “the constitutional changes needed to give private investors certainty.”

To accomplish this, the president said that he was counting on his political agreement, the Pact for Mexico – which was signed last December by the leaders of Mexico’s main parties, including the PRD – to push through a series of reforms and the restructuring of institutions. That timetable for the 95 reforms was also signed by Peña Nieto’s Institutional Revolutionary Party (PRI) and the National Action Party (PAN).

The announcement by Peña Nieto of his plans to change Article 27 of the Mexican Constitution, which lists oil and other natural resources as belonging to the state, set off alarms inside the PRD.

There are politicians who are now using Pemex to live and survive politically"

Marcelo Ebrard, an influential PRD leader who served as mayor of Mexico City from 2006 to 2012, accused the president of wanting to privatize Petroleos Mexicanos (Pemex), the state oil conglomerate.

In an interview with EL PAÍS last week, Ebrard admitted that the PRD had a “crisis of confidence inside the party” and said that he will demand that a party convention be called so that PRD President Jesús Zambrano can go over the terms of the Pact for Mexico he signed in December.

“I am asking Marcelo to be more responsible; if there are no differences, then he shouldn’t invent the fact that he has some with me,” Zambrano posted on his Twitter account.

In a series of interviews, Ebrard has challenged Peña Nieto to a national debate to discuss allowing foreign investors in to Mexico’s oil industry, which was nationalized in 1938.

Zambrano, for his part, has flung some colorful accusations at Ebrard. “He is like a drunkard in a bar who is under the table and asking everyone what they are looking at to start a fight with someone who doesn’t want to fight,” he said.

PRD leaders have been called to an emergency meeting for Tuesday to discuss the government’s energy reform. Among those who will attend is Cuauhtémoc Cárdenas, party founder and one of the country’s influential leftist politicians. Ebrard was called in at the last minute.

“There are politicians who are now using Pemex to live and survive politically,” said Jesús Ortega, who forms part of a panel that oversees the Pact for Mexico and is considered one of the architects of the alliance.

“It is crazy for anyone to think that Pemex will be passed off to private hands. Nobody wants that; not even the neo-liberals. But to speak about Pemex has a political advantage,” he told EL PAÍS.

“The issue at hand is how to preserve petroleum revenue with the participation of private investors in some areas. There shouldn’t be service contracts in which we are obligated to pay a percentage of what is extracted.”

Nationalized by President Lázaro Cárdenas in 1938, Pemex accounts for one-third of the government’s revenues, given that it takes 67 percent of all its sales. This is a much higher percentage than that levied by the government in Venezuela on sales by its own state-oil company Petroleos de Venezuela (Pdvsa), which is 39 percent.

In 2000, Pemex was ranked the sixth-largest petroleum company in the world, but now it is the 11^th.

Its production has dropped from 3.4 million barrels a day to 2.6 million, and its capacity for refining is so limited that Mexico has to import gasoline from the United States.

Under past presidential terms, its administration has been inefficient and its powerful union and a network of contractors have stood in the way of any type of restructuring.

The PRD now has to come up with its proposal for Pemex. While his own tribe doesn’t carry much weight inside the party, Ebrard has the support of those who have criticized the party’s backing of the Peña Nieto government, even though many see his position as opportunist.

Waiting on the sidelines is Andrés Manuel López Obrador, the former presidential candidate who left the PRD 10 months ago. He opposes any type of privatization in Pemex, but as the leaders of his party continue to bicker and may eventually split, López Obrador could emerge from this entire controversy as Mexico’s top leftist leader.