The European Union affirms that López Obrador’s energy reform paralyzes investment

The headquarters of the European Commission in Brussels, in May 2021.
The headquarters of the European Commission in Brussels, in May 2021.YVES HERMAN (REUTERS)

The European Union views with fear the energy reform proposal of Mexican President Andrés Manuel López Obrador, one of the great initiatives that the president wants to carry out during his six-year term. Brussels has been the last political actor to add to the doubts about the measure. From the other side of the Atlantic, the reform is observed with suspicion, which concentrates in the State the power to manage the country’s energy resources and reduces the capacities of the private sector to supply itself with energy independently. The ambassador of the European Union (EU) in Mexico, Gautier Mignot, assured this Thursday that the European multinational companies in the sector – which, according to his data, contribute more than 13,000 million dollars to the country – are living days of uncertainty, which has caused private investment to come to a standstill.

“Currently, new investments are very slow because there is a context of uncertainty that makes it very difficult to invest,” said Mignot, after a meeting between European leaders and López Obrador, who attended the meeting as a representative of the Community of Latin American States. and Caribeños (Celac). “They are not going to withdraw all [las empresas] from Mexico, but there are some that are or are going to greatly reduce their activities, “added the ambassador.

The reform has opened a gap with the Mexican private energy sector that many businessmen see insurmountable, and even consider, if the measure is approved, appeal it in international arbitration tribunals. The United States, a necessary ally of Mexico, has also subtly criticized the initiative. In early November, Ken Salazar, the US ambassador to the country, acknowledged that there were differences between the two executives. “We are seeing if there are some ways in which we can reach a resolution. I don’t know if that is possible. What I do believe is that we have a good relationship with the government of President Andrés Manuel López Obrador ”, declared the ambassador at a press conference.

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Salazar also pointed out that US companies “of course are concerned” and that Mexico needs this investment. Along the same lines, Mignot has indicated this afternoon that his “position is not to tell Mexico not to make any reform, that is not up to us and neither to propose a counter-reform”, according to The Economist. However, the EU representative has asked that López Obrador take into account “the companies that have invested in good faith, without any legal problem, that have contributed jobs to the country, better protection of the environment for the planet, tax revenues … . ”.

“When you have a contract with the State,” Mignot continued, “it has to be respected, then it can be renegotiated, it is normal for regulations to be adapted. But this must also be done within a framework of dialogue ”. In addition, the ambassador has asked the Mexican government to respect the objectives set by the international community in the Paris Agreement, an understanding of almost 200 countries to stop the emission of greenhouse gases. Many environmental organizations in Mexico also fear that the reform represents a setback in the fight against climate change.

López Obrador’s energy reform, if approved, proposes canceling contracts with private companies; eliminate the Energy Regulatory Commission (CRE) and the National Hydrocarbons Commission (CNH), so that their powers are transferred to the Ministry of Energy; and give more power to the public energy company, the Federal Electricity Commission (CFE), led by Manuel Bartlett. In addition, it would provide the State with a monopoly on the exploitation of lithium, a mineral of great value, called “white gold”, whose largest world reserve is in Mexican territory.

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The president has defended on numerous occasions that, in this way, the aim is to ensure access to low-cost energy for the Mexican people, in addition to guaranteeing the country’s energy security. López Obrador has often charged in his defense of the measure against companies like Iberdrola, which he accuses of having too much political power. “If the reform to the Constitution is not made, these companies end up taking over the entire electricity market and what is happening now in Spain would happen to us, that the electricity rates for the user are through the roof,” said the politician in the morning press conference on October 11.

López Obrador’s constitutional reform proposal, which was presented to Congress on September 30, faces a hostile parliamentary scenario. For its approval, it needs two thirds of the Senate and the Chamber of Deputies to vote in favor, a majority that Morena, the president’s party, does not have.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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