Everything seems set that, before ending its activities in 2013, legislators will materialize the energy reform \u2013 at least the Constitutional modifications proposed by the Executive Power on August of the current year. Expectations generated by its eventual approval have been enormous, almost at the level of waiting for a binge of growth and prosperity. However, there are primarily three risks that could end up in a hangover of disenchantment and scorn both for the reform as well as those who proposed it.Thereby, it is relevant considering certain aspects with the aim of avoiding these disappointment hangovers.
\nThe first type of risk is linked with political matters. Strangely enough, this might be the least dangerous given its predictability and relative weakness. On one hand, as expected, Andr\u00e9s Manuel L\u00f3pez Obrador has stated that he will not allow the approval of the reform. Nevertheless, at the same time, he doesn\u2019t seem to be too interested in joining forces to achieve that target (for instance, just remembering his absence in the several rallies that PRD organized dealing with the issue, led by Cuauth\u00e9moc C\u00e1rdenas). The main worry of L\u00f3pez Obrador nowadays is, undoubtedly, working for the registration of his National Regeneration Movement (MORENA) as a political party. If \u201cdefending the oil\u201d serves that purpose, he will seize the opportunity (as long as he remains the protagonist), though his disruptive ability appears minimal or at least manageable. On PRD\u2019s side, the energy referendum that it intends to apply \u2013 without L\u00f3pez Obrador \u2013 neither seems to be a threatening factor, but if the secondary legislation is approved, the situation might change. Despite that the 35th Constitutional article might be used by the leftwing as a last resource to hold back the energy reform, institutional locks to make the law binding are too strong and ultimately depend on the interpretation of the Mexican Supreme Court \u2013 without mentioning that the referendum still lacks any regulation. In sum, \u201ca divided leftwing will always be beaten\u201d.
\nAnother political risk is that, if changes to the 27th and 28th Constitutional articles were to be materialized, the most complex process of the reform will not have yet passed, that is to say, the discussions over secondary legislation. The experience with education issues points out this part of reform transition might turn out to be quite devious.
\nIn that sense, the potential political threats against the energy reform \u2013 protests, roadblocks and flamboyant rhetoric heard on the streets and in Congress \u2013 might fade away with the second type of risk: those linked with technical implementation. If a Constitutional reform that does not guarantee an adequate regulatory framework is approved, its benefits, investment flows and employment opportunities might be undermined. On one hand, if energy regulators are not offered protection, it will be complex to create a competitive sector where investments by other companies with incentives to innovation are produced; on the other hand, if transparency and accountability mechanisms are not established, profits for exploiting the energy resources \u2013 especially those regarding oil revenues \u2013 will not be used for the benefit of society. In addition, all seems to point out that there is no full conviction within the Executive Power about the complexity of the international market, which has transformed into a \u201cbuyer\u2019s market\u201d. Ergo, if the reform is not competitive enough, its potential of attracting investments will be minimal.
\nLastly, the third kind of risk regarding the energy reform deals with the expectations that it creates, that is to say, that it may prove to be overrated. Large amounts of private investments and the creation of numerous jobs have been promised in an unrealistic time period. Energy reform might happen but the question is: how will Mexicans benefit of more well-paid jobs in the oil industry when the country doesn\u2019t even have enough human resources, due to how specialized the sector is? In addition, how much responsibility of economic responsibility in the country can be assigned to a reform that doesn\u2019t modify the organizational structure of two inefficient public companies such as PEMEX and the Federal Commission of Electricity?
\nOverall, the energy reform might provide short-term macroeconomic benefits, that is to say, it will improve the risk-country index, the sovereign debt rating and, very importantly, it will break with one of the obsolete revolutionary nationalism. But if regulatory framework and competitive structures in the sector are not privileged, the promised investment frenzy will end up as a \u201cflash in the pan\u201d. Given the enormous political investment that the government has put on this issue, the cost of a bad reform would be massive.<\/p>\n
CIDAC<\/p>\n","protected":false},"excerpt":{"rendered":"
Everything seems set that, before ending its activities in 2013,
\nlegislators will materialize the energy reform \u2013 at least the
\nConstitutional modifications proposed by the Executive Power on August
\nof the current year. Expectations generated by its eventual approval
\nhave been enormous, almost at the level of waiting for a binge of growth
\n and prosperity. However, there are primarily three risks that could end
\n up in a hangover of disenchantment and scorn both for the reform as
\nwell as those who proposed it.<\/p>\n","protected":false},"author":3,"featured_media":4656,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[30],"class_list":["post-3462","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-weekly-political-analysis","tag-political-analysis"],"_links":{"self":[{"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/posts\/3462","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/comments?post=3462"}],"version-history":[{"count":2,"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/posts\/3462\/revisions"}],"predecessor-version":[{"id":4284,"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/posts\/3462\/revisions\/4284"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/media\/4656"}],"wp:attachment":[{"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/media?parent=3462"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/categories?post=3462"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cidacmx.org\/eng\/wp-json\/wp\/v2\/tags?post=3462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}