Mexico: President’s first failure in his flagship project contested by the US

Mexico’s President Andres Manuel Lopez Obrador suffered his first setback on Sunday when lawmakers rejected his flagship constitutional reform bill that strengthens the role of the public sector in electricity generation, a measure criticized by critics.

Despite poaching attempts, the presidential party Morena (Movement for National Renewal) and its allies failed to secure a qualified two-thirds majority in the Chamber of Deputies, in which the three main opposition parties united and voted against.

This vote also marks a rebalancing of powers in Congress’ favor in the face of a president who, more than halfway through his six-year term that began in late 2018, is still wildly popular according to certain analyses.

The qualified majority threshold was 334 deputies for 498 present (out of a total of 500). After more than 12 hours of debate, 275 MPs voted in favor and 223 against this draft reform of three articles of the constitution (25, 27 and 28) on “ownership of land and water” and the ban on monopolies.

MPs from the Vapor Mexico opposition bloc sang the national anthem after the ruling party called them “traitors” during the debate.

Because the left-wing nationalist president has raised the reform of the electricity market to the status of national sovereignty issues compared to foreign, American and Spanish companies.

Their draft for a constitutional amendment envisaged reversing the liberalization of the electricity market decided in 2013. The aim was to guarantee the public company, the Federal Electricity Commission (CFE), 54% of the market over the private sector and foreign companies, up from the current 38%.

The US denounces a risk for the billions of dollars in private investments by American companies in Mexico.

lackeys of imperialism

The US ambassador to Mexico, Ken Salazar, had estimated that approval of the reform could lead to “endless disputes” under the Mexico-US-Canada free trade agreement.

Spain also fears the consequences for its private companies like Iberdrola.

“We will defend our sovereignty!” ‘, the President of the Chamber of Deputies, Sergio Gutierrez Luna, had launched himself a few hours before announcing the defeat of his camp.

He accused the opposition of wanting to remain “lackeys of imperialism” in the service of foreign corporations.

“They won’t get through,” reiterated the opposition bloc, made up of the former state party PRI (in power for 70 years until 2000), the right-wing PAN and the left-wing PRD.

The president had tried to split the PRI (Institutional Revolutionary Party), for example by appointing one of its chief executives, the former governor, as ambassador to Madrid in September. Waste of time: he was expelled from the ranks of the PRI.

The opposition bloc condemned the cost of the reform in terms of public debt or the environment. PAN (National Action Party) leader Jorge Romero said this would set Mexico “back 50 years in terms of the environment”.

The President of the Republic had minimized his announced defeat in advance. “Whatever happens, we are prepared for treachery. I’ll explain again tomorrow,” he tweeted Sunday night ahead of the vote.

The President appears to be referring to a Supreme Court ruling from ten days ago. The court ruled that the law, which gave the public company CFE priority over private companies, was constitutional. This law was passed by Congress in early 2021 by a simple majority. This Electrical Industry Act (LIE) was immediately the subject of numerous complaints.

The president also announced last week that if his constitutional reform fails and is “betrayed by lawmakers,” he will pass a “mining bill” on Monday “to keep lithium the nation’s property.”

This bill against new mining concessions for lithium (a strategic mineral used in battery manufacture) requires only a simple majority.

Before his foreseeable failure in the House of Representatives, AMLO – the initials and his nickname of the president – ​​had confirmed in a referendum last Sunday that he would remain in power until the end of his term in office in 2024. Overall, more than 90% of voters voted to continue his mandate – albeit with less than 20% turnout.

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