Oil, Revolution and Capital

Yesterday, in what will probably be seen as a fairly momentous vote, Mexico’s parliament approved the opening up of the national oil market (exploration and extraction) which had previously been under the sole charge of the nationalised company PEMEX. PEMEX (short for Petróleos Mexicanos) was created by the government of President Lázaro Cárdenas in 1938 in what many feel was the apogee of revolutionary nationalism. PEMEX has been a clunky, increasingly conservative and inefficient beast without doubt, but it is a huge employer and a source of around 2/5 of the government’s revenue. I fear this marketisation of oil will inevitably lead to a situation as in so many Latin American states historically (including Mexico prior to 1938) of extraction with minimum taxation. Aside from that, the employment situation could be another ticking time bomb as relative revenues fall. That said, this has been pretty much inevitable, certainly since the accession of the Salinas government in 1988 signifying the beginning of the end of state capitalism in Mexico. So I see this not as a major watershed, but as a stepping stone on a preordained path. As we are finding now in Britain, many will miss the hulking, inefficient yet public-owned behemoth once it has gone.

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