Why Letting Foreigners Invest in Mexico’s State-Run Energy Giant Is About More Than Oil

Why Letting Foreigners Invest in Mexico’s State-Run Energy Giant Is About More Than Oil

It was not shocking news, exactly, when Mexican President Enrique Peña Nieto proposed Monday that foreign companies like ExxonMobil and Shell be able to invest in Petróleos Mexicanos, the troubled national oil company more commonly known as Pemex. Peña Nieto has been making it clear for months now that oil-sector reform is high on his agenda, and Mexican politicians have been debating overhauling Pemex for years. This week’s announcement may only be the first in a series of reforms that could finally set the lumbering, outdated, corruption-plagued behemoth to rights.

And yet even though it’s been clear for quite some time that an overhaul was coming, the proposed changes still managed to stir up powerful emotions among Mexicans. "We will defend our natural resource," lawmaker Benjamín Robles declared defiantly on Twitter. To understand why, it helps to look at the outsized role this single company has played in Mexico’s history and national mythology.

"For Mexicans, Pemex is like the Virgin of Guadalupe – it has the magic of symbolism," one political analyst told the Washington Post on Tuesday. "It’s like apple pie for Americans."" There’s the Fuente de Petróleos, a granite statue in the middle of a busy intersection in Mexico City that pays tribute to Pemex and its workers, depicting them as Soviet-style, hard-muscled oil men amid drilling machinery. Historian Lorenzo Meyer has likened the day Pemex was founded to Mexico’s "moon landing."

The power of Pemex over the Mexican psyche stems from the circumstances under which it was birthed: The company was formed on March 18, 1938, when then-President Lázaro Cárdenas sided with striking oil workers against foreign management, and nationalized Mexico’s reserves and foreign companies’ equipment. The nationalization is remembered in the country’s textbooks as a seminal moment in Mexican history, and since then "generations of Mexicans have been raised on the idea that Pemex embodies national independence from foreign intervention," according to the Los Angeles Times.

Generations of Mexicans were also raised on the idea of Pemex as a quasi-secondary state: Not only did Pemex supply Mexico with social services indirectly, through the billions of dollars it paid under a tax burden typically described as "crushing," but it also supplied them directly, running schools, day cares, and hospitals for its workers. It was in part this kind of largess — put in place during the days when the money was flowing — that has left Pemex in such bad shape today (combined, of course, with a slew of other usual suspects: corruption, incompetence, outright theft).

Peña Nieto’s bill, significant as it is, doesn’t even go as far as those who would like to see Pemex fully privatized might like. Still, the notion of foreigners investing in this piece of national heritage — Exxon, Chevron, and Shell are among the major producers that have expressed interest in Mexico’s "enormous" potential — has the power to strike a nerve. Leftist leader Andrés Manuel López Obrador has dismissed those offering Mexico’s resources to foreigners "traitors," and has called for protests next month.  Whether Peña Nieto will be able to get his proposal through Mexico’s legislature remains to be seen — but rest assured his fight will be about more than just oil.