Canadian company Nexen seeks to expand relations with Mexico's Pemex

This is an interesting development.

Since its nationalization by President Cárdenas in the 1930's, Mexico's all-powerful oil company, Pemex, has been dutifully protected by the government from foreign competition. Even during the 1980's and 90's when the Mexican government´s adoption of neoliberal policies ushered in a period of intense privatization, Pemex was able to weather the storm and emerge as one, if not the only industry still under the auspices of the national government. Since then Pemex has developed into a national hero, making it practically untouchable for foreign companies itching to get in on Mexico's once thriving oil industry. With the value of Mexican oil plummeting in the last several years Mexico has now warmed up to the idea of looking abroad for getting some much needed financial but also intellectual help in strengthening its oil production.

In the wake of the Great Depression and subsequently WWII, Mexico decided it was time to no longer be vulnerable to the disastrously fickle world economy. As a result, in 1948, it embraced the UN's Economic Commission for Latin America's (ECLA) proposed Import Substitution Industrialization (ISI) model in hopes of strengthening Mexico's industrial sector. Initially, ISI proved to bring much needed money to the national economy while simultaneously keeping down inflation. However, by the 1970's it became evident that by basically cutting all trade relations with the outside world, the efficiency of its industries had taken a major hit. Think about it, if you have nobody to compete against but yourself, there's no real incentive in spending more money on improving your product's quality. There's no point.

Because of this, Pemex hasn't developed the infrastructural capacity to take full advantage of Mexico's rapidly disappearing oil reserves. As a direct result, Mexico has had to swallow its pride and look abroad for help. Still, Mexican constitutional law, assuming they don't change it, stipulates that no foreign company can actually invest in Mexico's oil industry. However, it says nothing about intellectual exchange. This is exactly what Mexico plans to gain from its newly signed deal with Canadian oil company Nexen.

No president, even one as conservative as Fecal, would risk his political reputation by proposing Pemex's privatization. For Nexen and the various other companies that have already signed similar deals in recent years with Mexico, full privatization isn't even necessary, at least for the time being. Such deals simply mark the dismantling of a protectionist wall that for decades placed Mexico alongside Cuba in its level of global isolation. Of course, a lot of head way has already been made on that front in the last two decades since neoliberalism's emergence in Latin America.

Certainly, considering that improving efficiency and productivity of Mexico's antiquated oil industry will bring money to the country, such deals aren't necessarily a bad thing. Unfortunately, as I mentioned when talking about Fecal's plan to raise gas prices as part of his new Tax Reform, the money won´t be going toward lending a helping hand to the nation's poor, but instead it will pass right through the hands of the government on its way to paying back the exorbitant mound of debt that Mexico compiled as it opened its doors in the 1980's.