Mexico Continues Nationalizing Key Industries Despite U.S. Objections

qz  |  With AMLO's purchase of 13 Spanish-owned power plants, the majority of Mexico's electricity production is now state-controlled.

The Mexican government agreed to purchase 13 power plants from the Spanish energy company Iberdrola for $6 billion on Tuesday (April 4), giving its state-owned power company, Commission Federal de Electricidad (CFE), majority control over the country’s electricity market.

Mexican president Andres Manuel Lopes Obrador (AMLO) called the decision part of a “new nationalization” of some of the country’s major industries, including mineral and oil production, according to Reuters.

The acquisition of the power plants will give CFE control of more than 56% of Mexico’s total production—up from approximately 40%, and surpassing AMLO’s previously stated goal of 54%.

The US and Canada have strongly opposed AMLO’s actions, and have threatened a trade war if Mexico continues to roll back access for international corporations in Mexico’s power and oil markets.

Iberdrola said the power plants would be taken over by CFE within five months as it looks to reduce its operations in Mexican energy markets. The company’s CEO, Ignacio Galan, said that the deal was a win-win.

“That energy policy has moved us to look for a situation that’s good for the people of Mexico, and at the same time, that complies with the interests of our shareholders,” Galan said after a joint appearance with AMLO announcing the deal.

AMLO has repeatedly compared Iberdola’s power over Mexican resources to Spanish conquistadors of the 16th century, even threatening to pause diplomatic relations with Spain over perceived neo-colonial actions by foreign energy firms.

Less than a month ago, more than 500,000 people flooded Mexico City to commemorate the 85th anniversary of the nationalization of the oil industry by president Lázaro Cárdenas del Río in the aftermath of the Mexican Revolution.

AMLO addressed the crowd, promising to carry on Cárdenas’s legacy, specifically highlighting his decision to nationalize the country’s energy and mining sectors, including Mexico’s burgeoning lithium reserves in the Sonora desert.

“Mexico is an independent and free country, not a colony or a protectorate of the United States,” AMLO said in a forceful rebuke of American influence in the country’s economy. “Cooperation? Yes. Submission? No. Long live the oil expropriation.”