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Mexico’s future hinges on the outcome of the upcoming July 2018 presidential election. With just a few feet remaining from the finish line of the presidential race, the oldest horse, both in terms of age and political track record, is still a few steps ahead of the youngest, which follows in second place. A few days after the first presidential debate, Andrés Manuel López Obrador, the “left-wing” candidate representing the National Regeneration Movement (MORENA, according to its acronym in Spanish), was still in the lead over Ricardo Anaya, the “right-wing,” National Action Party (PAN, according to its acronym in Spanish) candidate. The candidate from the governing Institutional Revolutionary Party (PRI, according to its acronym in Spanish)—José Antonio Meade—plods along at a slow pace, seeming to have not heard the gunshot that started the electoral race.
The suspense building at the ballot boxes is nothing new. In 2006, when Felipe Calderón pulled ahead of López Obrador (also known by his initials “AMLO”) after the two candidates were nearly neck-and-neck in the race, the country underwent a period in which the credibility of Mexico’s democracy suffered a notable decline. Nevertheless, from the start to the end of his term as president, Calderón rode out the trials, strikes, and complaints regarding his victory. His first initiative in office was to push for energy reform in 2008, a move that was considered to be rather extreme and, ironically, was consequently curtailed by the PRI. The reform actually turned out to be insufficient—to the point that the succeeding Enrique Peña-Nieto administration had to propose another initiative that would significantly open the electricity and hydrocarbons industries. The reform, which was led by the PRI and the PAN and was approved in just three weeks’ time, liberalized the entire hydrocarbons value chain, though there were limitations to private participation in the transmission, distribution, and supply phases of the electricity sector due to Mexican consumers’ resistance to the open market.
That was the major difference between the 2006 presidential campaign and the 2012 election. When Calderón ran against AMLO, in terms of energy, private companies did not have as much to lose, given that Mexican energy monopolies still dominated the market. Furthermore, by the time Calderón completed his presidential term, the status quo remained the same. If López Obrador would have defeated Calderón, due to the static nature of the energy model, there wouldn’t have been much to revert in that sector. Before and after Calderón, Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE, according to its acronym in Spanish) were still omnipotent and continued to be until Peña-Nieto’s administration took charge and made intense, incessant invitations to the private sector throughout his presidency. Similarly, whoever beats the PRI in 2018 may bring the reform to an end and disturb the companies who are already involved in the energy sector. Therefore, if the election results in a win for AMLO, who has called himself the greatest opponent to the opening of the energy market, it could have a major impact on said opening, without changing a single letter in any of the laws or the Constitution itself. Is López Obrador the only primary danger to the energy reform? Or could any of the other candidates modify it due to political motives?
The previous paragraph accurately describes the main hypothesis of this paper: the energy reform may become extinct simply by omission, no matter who is in power. As will be argued in the coming paragraphs, the reform legislation conferred substantial legal powers to the president and his administration, enabling him to single-handedly halt the reform. Thus, the main goal of this paper is to expose the various ways by which the president can legally stop the reform, as he has control of the promotion and development of new energy projects. This is particularly possible in the current environment, given that the reform has serious problems in terms of social legitimacy due to pledges made by the Peña-Nieto government that went unfulfilled for reasons that will be explained further below.
This lack of legitimacy could be used in particular by López Obrador, whose discourse appeals mostly to the Mexican poor. Thus, the reform may be legal but, in López Obrador’s view, it lacks legitimacy, which in itself is hard to define. To establish a clear definition of legitimacy, we have chosen the conceptual framework provided by economist Joseph Stiglitz, who argues that legitimacy can be identified if transparency, competition, and fairness are present. In this paper, we discuss if these elements are present in the reform and, if not, whether their absence could strengthen Lopez Obrador’s opposition to it. In the final section, we analyze the specific weaknesses embedded in the vast powers conveyed exclusively to the president, which could make it possible to paralyze the creation of new energy projects. Lastly, we mention some examples about how this could be achieved.
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