Mexican president fails in bid to limit foreign energy firms

Apr 17, 2022, 12:37 PM | Updated: Apr 18, 2022, 6:07 pm
A worker works among the Solar Panels installed by Pireos Power on the roof of a warehouse in the S...

A worker works among the Solar Panels installed by Pireos Power on the roof of a warehouse in the State of Mexico on Wednesday, April 13, 2022. (AP Photo/Marco Ugarte)

(AP Photo/Marco Ugarte)

MEXICO CITY (AP) — Mexican President Andrés Manuel López Obrador failed to find enough votes late Sunday to pass a constitutional reform limiting private and foreign firms in the electrical power industry, marking the first major legislative setback for the president.

The defeat may set the tone for an angrier, more hard-line and polarizing president in the last 2 1/2 years of his administration.

However, on a simple majority the lower house later passed López Obrador’s proposal to nationalize the mining of lithium, a mineral used in electric car batteries and other devices.

No longer able to ride on a legislative super-majority as he did in the first half of his term, López Obrador was stung by the failure of the electrical-power bill, and may now resort to harsher attacks on opponents and regulatory bodies like the courts and electoral authorities.

The reforms that failed to pass Sunday would have undone much of the market opening in power generation carried out by his predecessor in 2013, but also raised concerns among U.S. officials and companies, who worried they would violate trade pacts and guarantees for foreign investors.

On Monday, López Obrador called the opposition members of congress who voted against the reform traitors, claiming foreign firms “bought the legislators.”

The lower house of Congress voted 275 to 223 in favor of the measure, which would have given more power to the state-owned electrical utility, but that was well short of the 332 votes needed for constitutional changes.

Ana Vanessa Cárdenas Zanatta, a political science professor at the Monterrey Technological and Anahuac universities, said the vote marked the first legislative setback López Obrador has suffered since taking office in late 2018.

“Today he couldn’t hide the fact that he was very angry,” said Cárdenas Zanatta, noting he had continued pushing the project despite warnings from the U.S. government.

“Yesterday a group of legislators committed an act of treason,” López Obrador said Monday. “Instead of defending the interests of the nation, of the people, they openly defended foreign firms that rob and prey.”

Alejandro Moreno, the leader of the old ruling Institutional Revolutionary Party, shot back “they are the traitors, and they haven’t solved the crime problem and have left women abandoned,” referring to increasing homicides against women in Mexico.

Political analyst José Antonio Crespo said López Obrador was a victim of his own refusal to negotiate any of his proposals, preferring instead to divide the country into camps of “traitors” and patriots.

“For him, sitting down to negotiate with the opposition is betraying the cause, because he is used to doing things the way he says they should be done, or not at all,” Crespo said. “I think this is going to hurt him in the second half of his term, because he no longer has the majority to do his bidding.”

“I think the final half of this administration is going to be very tough, very tense, forced, very risky,” Crespo said.

After the setback Sunday, López Obrador submitted separately a bill on lithium, which had been part of the reform bill that failed Sunday.

The bill approved in the lower house Monday would create a state-owned company for lithium mining, something López Obrador said would “nationalize lithium.” The bill must still win approval in the Senate.

Only one lithium mine in Mexico, operated by a Chinese firm, is anywhere near close to starting production. That would presumably be taken over by the government if the bill passes on a simple majority.

The electricity reform had sought to limit foreign-built renewable energy plants and guarantee at least 54% of electricity would be bought from government-owned generating plants, which are dirtier. Private and foreign companies, which have built wind and gas-fired generating plants, would have been allowed to keep up to 46% of the market.

Critics said the reform would hurt investors and their confidence in Mexico. The companies could have sought court injunctions, and the U.S. government could have complained under a free trade agreement and then put compensatory tariffs on Mexican products.

Pro-government legislators have already passed a law giving the state utility more discretion in deciding whose electricity to buy, but it remains stalled by court challenges.

The debate Sunday began with nearly all 500 deputies present. The ruling party and its allies needed a two-thirds majority to pass the constitutional reform.

Some pro-government legislators chanted ”Traitors´´ at the opposition, which objects to the reform. Opposition lawmakers shouted: ”It won’t happen.´´

Given the atmosphere, López Obrador’s Morena party failed to win over any significant number of opposition legislators. The vote appeared to promise 2 1/2 more years of polarization in Mexico.

“Now, families and couples are divided, I have friends I no longer see, good friends, because we are going to wind up fighting,” Crespo said. “I have never seen this level of polarization, above all, one that is promoted from the top.”

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Mexican president fails in bid to limit foreign energy firms