NC | But all of that changed when AMLO came to power in late 2018. For the first time in 30 years Mexico had a government that was not only determined to halt the privatisation and liberalisation of Mexico’s energy market but to begin dialling it back. Allegations of corrupt practices and price gouging by Iberdrola and other energy companies became a popular talking point at AMLO’s morning press conferences. The juicy contracts began drying up. Instead, a range of obstacles began forming, from disconnections to nonrenewal of permits and fines for price gouging.
The times of plenty had come to an end. And not a moment too soon.
At the rate things were going, the CFE would be generating just 15% of Mexico’s electricity by the end of this decade, says Ángel Barreras Puga, a professor of engineering at the University of Queretero; the rest would be generated exclusively by private, foreign companies.
“Who was going to control prices in the market? Foreign companies, with all that entails. Behind the foreign companies are their national governments. And we have seen how the US government, the US Ambassador and US legislators came to Mexico to try to pressure AMLO to change his policies. Ultimately, they are all lobbyists of private companies.”
There are few better examples of this than US Ambassador to Mexico Ken Salazar, as Ken Hackbarth reported for Jacobin at the time of Sakazar’s appointment in 2021:
Upon leaving (the US Interior Department] in 2013, Salazar went through the revolving door to work for WilmerHale, a law and lobbying firm with close ties to the Trump family, whose roster drilling- and mining-related clients included none other than — you guessed it — BP. From his lucrative new perch in the private sector, Salazar used his clout to support the Keystone Pipeline and the Trans-Pacific Protocol (TPP), whose “investor-state” provisions would let corporations challenge environmental regulations in private tribunals; fought against ballot initiatives that would limit fracking and distance oil wells from buildings and bodies of water; opposed climate lawsuits against the fossil fuel sector; and, in a highly questionable skirting of ethics rules, provided legal counsel to the same company, Anadarko Petroleum, that benefitted on multiple occasions from his stint in government…
The fact of sending an oil and gas lobbyist to lecture Mexico on renewable energy — one, moreover, representing an administration that just opened 80 million acres for drilling in the Gulf of Mexico and is approving drilling permits on public lands at a faster rate than Trump — would be comical if it were not so revealing of the ugly underbelly of US-Mexico relations.
More to Come?
The AMLO-Iberdrola deal has raised concerns in business circles that other foreign energy companies could face a similar fate as the Spanish utility, as AMLO government pushes to expand the state’s role in the energy sector. Bloomberg describes it as a warning shot for international energy companies.
“The choice of words and messages is deliberate,” said John Padilla, managing director of energy consultancy IPD Latin America, adding that such moves could be intentionally sending a warning to foreign companies amid protracted trade disputes with the USA on energy policy. “The main message for private sector investors, at least on the electricity side, is certainly not a good one.”
Mexico’s nationalist energy policies have already stoked the ire of its North American trade partners, Canada and the US, which argue that they violate the USMCA regional trade agreement by discriminating against Canadian and US companies. As Reuters reported a week ago, the Office of the United States Trade Representative (USTR) is considering making a “final offer” to Mexico negotiators to open its markets and agree to some increased oversight.
Failing that, USTR will initiate a dispute settlement against its southern neighbour. If the panel rules against Mexico and the Mexican government refuses to rectify its behaviour, Washington and Ottawa could impose billions of dollars in retaliatory tariffs on Mexican goods.
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