Las Americas

Tricky Dick's NAFTA for Energy


Although last month’s historic blackout shut down crucial industrial and financial centers in two out of the three North American Energy Alliance nations and killed the prospects for the privatization of electricity in a third, consolidating that strategic alliance continues to be a Bush-Cheney policy goal.

George W. Bush first proposed the creation of a “North American Energy Market” during his 2000 presidential campaign, and quickly obtained endorsement from Mexican president-elect Vicente Fox. The deal hinged on the privatization of Mexico’s state-run electricity and petroleum sectors. Both initiatives came to form the building blocks of Fox’s energy program, which as later revealed by the national daily La Jornada, was partially designed by Enron, whose former CEO, Kenneth Lay, was a long-time Bush crony.

Not unexpectedly, the creation of a North American Energy Alliance (NAEA) has been a key Bush White House project. In May 2001 the White House-directed “North American Energy Alliance Working Group,” chaired by Dick Cheney,

the once and future chief honcho of the Halliburton oil empire, issued a report that since has become administration energy policy, urging Mexico and Canada to formally join a North American Energy Alliance to provide the United States with a “stable” source of energy and ensure “U.S. energy security.”

As an example of such “stability,” under Alliance strictures the price of oil supplied by Mexico and Canada would be fixed below the world market price. Mexican critics of the proposed alliance, often described as “a NAFTA for Energy,” argue that the plan serves Washington’s needs at the expense of the delivering countries. The United States is the fattest energy hog on the planet, snorkeling up a quarter of the world’s daily petroleum output every 24 hours—20,000,000 barrels.

Flanked by cabinet ministers, business bigwigs, and officials of the government’s Federal Electricity Commission (CFE) this past August 14th, Vicente Fox used a ribbon-cutting ceremony at a Tamaulipas state electricity generation plant constructed by private enterprise as a springboard to launch his annual pitch for the privatization and deregulation of Mexico’s electricity industry. The new facility is one of 17 being built by private sector consortiums that include such transnationals as Mitsubishi, Westinghouse, and Siemens.

With 70 percent of its generating facilities set to reach 30-year operating longevity capacities by 2010, Mexico needs $60 billion in private sector investment over the next decade just to stay abreast of the demand for electricity, Fox warned. But less than an hour after the Mexican president wrapped up his pep talk on the wonders of privatization, the privatized and deregulated U.S. electricity infrastructure collapsed into unprecedented blackout, a $6-billion-a-day catastrophe that spread chaos and panic throughout North America without Al Qaeda even having to lift a finger. “Allah sent that thunderbolt,” one Baghdad resident told The New York Times. His city of course, has been on permanent blackout since the United States invaded.

Under the Mexican constitution, electricity generation is the exclusive domain of the CFE. But a 1992 modification imposed by then-president Carlos Salinas as a stepping stone to NAFTA opened the door for major corporation participation in the construction of generating facilities to run their own factories and manufacturing operations—with the stipulation that all excess energy be sold back to the CFE for general public distribution.

Under Fox’s proposed changes, private energy producers would now be able to sell their own juice to a select group of customers. Opponents like the very vocal and venerable Mexican Electricity Workers Union (SME) insist this scheme would permit private producers to walk away with the CFE’s 400 largest consumers, decapitalize the public sector, and create a two-tiered delivery system with poorer Mexicans left in the dark. At present, 7 percent of Mexican households have no electricity and for millions more, climbing rates limit illumination to a single dim light bulb.

Fox’s fixation with the privatization and deregulation of Mexico’s energy sector first emerged in a much-heralded “Plan for the Reorganization of the National Electricity Industry,” a document which incorporates verbatim chapters of an Enron proposal entitled “Clear Rules for Energy Development.” Before its collapse, the Houston megacorp operated 64 subsidiaries in Mexico, most of them incorporated in the Cayman Islands.

Despite Fox’s pleas for privatization, he continues to runhead-on into a legislative road block. Now the colossal August blackout on the east coast of North America has once again driven a coffin nail through the president’s plans.

Nonetheless, a worried SME decries the “silent”privatization of the industry. Between 15 percent and 30 percent of Mexico’s electricity generation is now in private hands; CFE documents obtained by the union speak of an eventual 50 percent share. Such inroads are a key goal of the North American Energy Alliance. But the Alliance is conceived of as a two-way street, both of them leading right back to the United States. Not only are U.S. transnationals moving into Mexico with an eye to dominating the distribution of electricity to Mexicans, much as Anglo-American entrepreneurs did under dictator Porfirio Diaz a century ago, but now these energy giants have carte blanche to set up south of the border and sell energy back to U.S. customers. Despite an acute deficit in electricity distribution throughout rural northern Mexico, U.S. energy corporations are now pumping tens of thousands of kilowatts from that region further north into California to keep San Diego households whirring with the latest modern appliances. U.S. per capita consumption of kilowatts is seven times that on the Mexican side of the border.

According to Greenpeace, in addition to drying up what little water remains under the desert, the Sempra plant alone will generate 180 tons of carbon monoxide emissions annually (Mexico has no carbon monoxide limits) and 200 tons of sulfur dioxide (“acceptable” Mexican levels are twice as loose as they are a few miles north). California Greenpeace describes the plants as energy maquiladoras that are one more example of environmental racism. San Diego Democratic Congressman Rob Filner is even more explicit, labeling the Sempra and Inter-Gens operations “19th-century imperialism.”

Both Sempra and Inter-Gens have admitted their culpability in the notorious 1999 California energy swindle, which has cost the state an estimated $60 billion. While other perps like Enron have gone belly up, Sempra and Inter-Gens continue to sell energy to California—although they had to move to Mexico to do so. During the 1999 scam, energy speculators deliberately held electricity off-line to cause power blackouts, so they could inflate the price of their product.

Beachheads in the North American Energy Alliance, the Mexicali facilities will be powered by natural gas delivered from Bolivia and Indonesia to soon-to-be-built liquid natural gas re-gasification terminals along the pristine Baja California coastline between Tijuana and Ensenada. Marathon Oil of Houston already holds permits for the construction of port facilities and LNG terminals in the tourist corridor north of Ensenada. What natural gas is not sold to Sempra and Inter-Gens, will be pipelined up to southern California.

The prospect of LNG terminals in their own backyard alarms the locals. (No such terminals have been opened in the United States since the 9/11 terror attacks because they are so vulnerable to sabotage.) “We used to be the center of the tourist trade,” cracks Tijuana Congressional representative Jaime Martinez Veloz. “Now we will be the center of the

terrorist trade.” He speculates that Bush could use the pretext of the proposed North American Energy Alliance to send in the Marines to safeguard the terminals.

Natural gas interconnection between the two countries is another vertebra of the NAEA and the accompanying silent and not-so-silent privatization. Despite Fox’s repeated pledges never to privatize PEMEX, whose purview includes natural gas development and production, the national petroleum monopoly now contracts with 300 transnational corporations for services it cannot afford to perform for itself. Now with drilling about to begin in the enormous Burgos dry gas fields in the northeast, PEMEX is promising transnationals “Multi-Service Contracts” (MSCs)—constitutionally outlawed “risk” contracts in which the driller takes home a percentage of the find.

Among those U.S. transnationals participating in the Burgos project are Fluor Daniel (which also won a $300 million contract to drill in the revived Chicontepec oil fields), and the ubiquitous Halliburton Corporation. In addition, Halliburton, whose KBR division is making out like Ali Baba in “reconstructing” Iraq after an invasion designed by the company’s ex-CEO, has won a $23 million contract to build a gas separator in Chiapas, not far from rebel Zapatista autonomous zones. (Zapatista territory in the Lacandon jungle sits on PEMEX-proven deposits of natural gas.)

Off-shore, Halliburton has become the chief purveyor of technology for the Cantarell complex in the Bay of Campeche, Mexico’s most abundant oil field. Some critics complain that PEMEX’s Exploration and Development division has virtually been taken over by Halliburton.

All of this activity is heartwarming news for Dick Cheney and George Walker Bush, the architects of the North American Energy Alliance. Access to Mexican oil is very much what the NAEA is all about—although such access has hardly been denied by Fox.

For much of the year before the Iraq invasion, Mexico was Washington’s number one petroleum supplier but curiously, after Bush declared victory in May, the Saudis once again became the top dogs in the oil basket. Although Fox heeded Bush’s injunction to up export production quotas to fuel the U.S. war machine and keep gas prices within reason at the pumps up north, Washington yearns for more direct control over Mexico’s oil industry in order to “ensure U.S. energy security” that is at the core of the Cheney-Bush North American Energy Alliance. But such control may be short-term. According to recent PEMEX studies, Mexico’s proven reserves are expected to give out in the next 11 to 13 years at the current rate of extraction.

John Ross is reported to be in Cancún—and we don’t mean on the beach.