The Politics of (Latin American) Oil


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 (Translation: “Oil belongs to all. Mexico in defense of oil”)

Latin America is quite different from other oil-producing parts of the world regarding the political implications of oil. It is undoubtedly a strategic resource for producers in the region (Brazil, Venezuela, Ecuador, Argentina and, of course, Mexico) as well as it is for all other producers around the world, but whereas in Africa it leads to the “resource curse” and in the Middle East it is the centerpiece of high realpolitik and even a cause for interstate wars, in Latin America it is associated with both economic neocolonialism and economic nationalism, as well as presenting interesting contrasts.

Several days ago, the Mexican government announced its plan to amend the national constitution to allow for foreign oil companies to become partners of Pemex, allegedly because it needs the technology, expertise, and capital it currently lacks to exploit untapped shales. It is not outright privatization, but it is still an obvious change in policy that many Mexicans oppose (see image above). Some of the reasons are not difficult to explain: The Mexican constitution prohibits the privatization of Pemex because oil is not just a strategic resource, but also a national treasure that belongs to Mexicans and cannot be touched by predatory foreign capital. Indeed, under populist president Lázaro Cárdenas, what used to be the exclusive property of US oil corporations and later became Pemex was nationalized in 1938 (and FDR, not willing to contradict his Good Neighbor Policy, let the affair die down). The logic back then is not different from last year’s expropriation of YPF, Argentina’s oil company, from Spanish energy giant Repsol — a nationalistic, populist, stick-it-in-your-face, attitude against foreign interests was at play in both cases, only that in the case of Argentina it connects to the larger skepticism against neoliberalism that underscored the “pink tide” of the 1990s and was buttressed by the global recession. Another noteworthy oil nationalization occured in 1976, when PDVSA was established. (There are some nuances in this case: The erstwhile foreign owners of those oil holdings were already paying millions to the Venezuelan government for the privilege of being there, the Venezuelan head of state at the time was not populist, and many operations were outsourced to private contractors over the years.) Although PDVSA is a stakeholder in a well known US oil corporation (Citgo) and currently anti-American Venezuela actually exports oil to the US, the consensus among opponents of the late Hugo Chávez is that PDVSA has become a cash cow for the government (i.e. the main source of funding for its social largesse and political patronage) and a very innocuous way for radical democracy to penetrate into unsuspecting countries in Central America and the Anglophone Caribbean.

In the case of Mexico proper, one cannot stop thinking about the internal struggle for the heart and soul of the current party in government, the PRI, during the late 1980s. On the one hand, there was the old guard, the heirs apparent to Cárdenas and the nationalistic fervor that characterized the Mexican Revolution; and on the other, there were the neoliberal technocrats led by Salinas de Gortari, who won control of the party machine when he was appointed President of Mexico in 1988 (that is stuff for another blog). His successors, Zedillo and current president Peña Nieto, have not looked back. In the case of the latter, the idea of allowing Pemex to have foreign partners, while ostensibly walking a middle line between keeping things are they still are and outright neoliberal privatization, has been welcomed with hostility by many Mexicans. Indeed, López Obrador, protagonist of the post-electoral drama of 2006, is leading the chorus of voices against making Pemex a little less untouchable.

However you slice it, oil has a different undertone in Latin America than in the rest of the world. Think about it next time you drive around Boston and see the big Citgo sign overlooking Fenway Park.


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