Interview with Ricardo Pascoe: Political analyst, diplomat, congressman

Ricardo Pascoe

RICARDO PASCOE has a 30-year involvement in Mexican politics at the national level. He was in the PRD leadership cadre in the presidential elections of 1988, 1994 and 2000. In the national elections of 2006, he was active in the campaign of PAN’s presidential candidate, Felipe Calderón. He was a member of the Lower House of Congress in the 53rd Legislature (1985-88), where he served on the Budget and International Affairs committees. During the Fox administration, he was Mexico’s Ambassador to Cuba, an experience about which he has written a book (En El Filo: Historia de una Crisis Diplomática, México-Cuba, 2000-2002 (2004).

In 2011, he joined the PAN, and is considering a candidacy for Congress in the midterm elections of 2015. Presently, he is a political columnist for EXCELSIOR, with a weekly article published every Friday.

He was educated at SUNY at Old Westbury (1969), a Masters at the Facultad Latinoamericana de Ciencias Sociales (Santiago de Chile, 1973) and a PhD at Senior International University (Canada, 1998). As a child, he lived extensively in North Africa (Egypt and Sudan) where his father was a Mexican diplomat, accompanied by his American mother.

The interview was held in Mexico City at the Leon de Oro, an iconic cantina that dates from 1954 and which is located in the Escandón District.

Mexico Energy Intelligence (MEI).  Ricardo, in your column in Excelsior of September 20, 2013, you wonder if the administration of Enrique Peña Nieto will end up withdrawing its energy reform package, or at least reduce its scope to matters that would not negatively affect the cash flow from Pemex.  How do you come to this interpretation of events?

Ricardo Pascoe (RP). The Mexican federal government is strapped for cash. The logic of two independent series of events argues against the government taking any measure that would put its present cash-flow position vis-à-vis Pemex in jeopardy. First, you have the record of the government taking a bold position regarding taxing food and medicines, then backing away from it. The same sequence happens in regard to teacher evaluations. And remember that the government has literally “contained” public spending during the better part of 2013, for reasons quite unclear to any serious analyst. This has had the effect of slowing down the economy very significantly.

Regarding energy reform, the government is aware that there could be a significant backlash from the Left, which has declared its firm opposition to any reform that would entail constitutional changes. For this reason alone, the government could go gentle with energy reform. In addition, it would seem necessary to contemplate serious opposition coming from within his party, the PRI.

The other series of events that bears, if indirectly, on energy reform is the unexpected cash requirements that will be in the billions of dollars to repair the damage to social and economic infrastructure caused by the recent storms along both coasts. With such new obligations, the Finance Ministry will be in no mood to consider ideas to reduce Pemex’s tax obligations to the Mexican government.

The government might consider reforms such as restructuring Pemex into two or three units, and, in the process, eliminating the position of professional counselor, but such changes would not significantly affect the government’s cash position as far as Pemex is concern (and we have to remind ourselves that Pemex contributes roughly a third of the federal budget).

MEI: We do not have a good sense that we understand what are the real drivers of the government’s energy proposals.  As Cuauhtémoc Cárdenas commented at an energy panel at the Club de Industriales on September 19th, “The government says it wants 3.0 million barrels a day of oil by 2018, but why? Mexico, it seems to me, has no oil policy.”  How do you see the government’s motives?

RP: I believe that for a full answer to this question we need to go back to 1989 when it became clear that the Soviet Union would collapse and that the Cold War was over. This unprecedented situation meant a reordering of global alliances, and that the notion of “unaligned nations”, or Third-World blocs, was now irrelevant.

The administration of Carlos Salinas de Gortari (1988-94) was quick to align the economic future of Mexico with that of the U.S. Out of this search for a quick realignment the seed that would become NAFTA was planted.

MEI: The timing for such a change was also favorable for Mexico. The administration of George H.W. Bush in the United States was looking to see if it could build a trade block a counter-balance to the European Union that was formed in 1992.

RP: Yes, you could say that NAFTA came out of very different motivations.

About the present situation, I believe that in promising a series of reforms in telecommunications, education, fiscal policy and energy, the government is setting the table for a role in the TransPacific Partnership (TPP) that President Obama is promoting. I have the impression (or, if you like, suspicion) that such reforms will be requirements for membership in the TPP.

Mexico has even lobbied with the governments of Chile, Peru and Colombia to form a sort of regional sub-bloc in anticipation of membership in the TPP, called the Pacific Alliance, which recently formalized its structure in a meeting at the United Nations but a week ago. Additionally, Mexico is working on the formation of an even more ambitious group called MIST, composed of Mexico, Indonesia, Singapore and Turkey.

MEI: How would you measure the performance of the Peña regime in its first ten months in office?

RP: It would be an understatement if I said that its performance has not met my expectations.  In the first place, it is frightfully behind in spending its authorized budget for 2013, which has thrown the economy into a serious deceleration, without having reached, yet, open recession. In the second place, the government is acting in a strangely timid fashion. It wanted to pass a reasonable tax on food and medicines, but, under political pressure, it backed off.

MEI: Why do you say “reasonable”?

RP: The tax reform was a means to make everyone who is active in the workforce a tax-paying stakeholder who would hold the government accountable. In a country with a huge, informal economy, millions of citizens do not pay taxes at all. As all have to eat, taxing food would bring everyone into the formal economy. Hopefully, paying taxes would also empower them to demand quality services from the government.

MEI: Where else has the government acted timidly?

RP: Again, reasonable legislation was enacted that required performance evaluations of teachers in public schools. Sequential failure on such tests would be grounds for the termination of employment. As Andrés Manuel [López Obrador] sees it, the 25,000 people that came out on the streets of Reforma Boulevard on Sunday morning, September 21, to protest the law is but a foretaste of what is yet to come.

What has happened is both risible and profoundly sad. Thousands of teachers around the country leave their classes and come to the national capital to blockade streets and, in general, try to disrupt daily life as much as possible by peaceful means. For a few days, not even the congressmen could enter their offices, as there was a human blockade around the building.

In response, the government withdrew the requirement that incompetent teachers be dismissed; instead, they will be reassigned but not fired. The fact that the teacher’s rebellion has gone on so successfully against the government’s wishes is due to another factor. Soon after taking office, the federal government arrested and incarcerated Elba Esther Gordillo, the union leader who had led the teacher’s union for at least 23 years, accusing her of corruption. The accusation, though true, was politically timed and motivated. Now what we see is that the one leader who controlled the union is in prison, while the new leadership is noticeably weak and unable to control their own rank-and-file.

In this way, we can see that the government has backed down on two consecutive occasions on important matters of public policy. Is “timid” the right word? I hope that events do not unfold in such a way as to make “incompetent” more descriptive.

MEI: Given this history, I can see how you would reach the conclusion that the government might back away from energy reform, especially if there is a strong reaction on the street.

RP: People underestimate the charismatic power of Andrés Manuel. He is still a powerful voice on the national scene; and he is strongly—if mistakenly—against the energy reform that is being proposed by the government. But I must insist: there is also opposition within the President’s own party to the proposed energy reform, which makes it even more difficult for a government that rules with a certain clumsiness and uncertainty to maintain a firm course. Zigzagging has been the characteristic of the current federal government in Mexico.

When I served as ambassador to Cuba, the debate over energy reform was apace in Mexico. When President Fox suggested an official visit to Cuba, I immediately told him that the theme of the visit should be energy, given that the Cuban government has opened the whole sector to joint Cuban-foreign investment. British, Spanish, Norway, Chinese, Canadians, even Vietnamese firms are drilling in Cuba. You can easily know this because as one drives upon the northern coast of Cuba the drilling rigs are visible, and each displays the flag of its country of origin. I thought then that, given the Cuban experience, the Mexican Left would be amenable to moderating its anti foreign investment stance. Hence, I never cease to be amazed by the irony that the Nationalist-Leftist coalition is so opposed to foreign investors in Mexico, when the Leftist counterparts in Latin America welcome investors from all over the world: to wit, Cuba, Venezuela, Brazil, Argentina, Ecuador, Bolivia.

MEI: How did President Fox respond to your suggestion? What happened during his official trip to Cuba?

RP: He was immersed in another idea regarding the trip to Cuba, which his immediate circle promoted, mainly [his foreign minister] Jorge Castañeda, and which was part of Washington’s agenda. The purpose of the trip was to meet with Cuban dissidents, and not that of serving as a bridge-building foray toward the Caribbean. Hence, though he visited a Canadian electrical-and-oil installation, with Fidel Castro serving a guide, it never really played as an important part of the trip.

MEI: How would you evaluate the record of Antonio Sarukhan as Mexico’s ambassador to the U.S. during the Calderón administration. Our impression is mixed. By some measures, he may have been the most effective ambassador to the U.S. in living memory, if not in the entire historical record. At the same time, he missed opportunities to engage with important constituencies.   I heard him speak on four or five occasions during his tenure.

Your first impression is that here is a real diplomat who knows to perfection the language of the host country and who understands its culture, politics and sense of humor.  One occasion, in Houston, at a lunch sponsored by the Houston World Affairs Council at the Petroleum Club downtown, he have an incisive survey of U.S.-Mexico relations, starting his remarks with the quote from Dickens in Tale of Two Cities: “It is the best of times and the worst of times.” In his remarks about the illegal gun trade with Mexico, he employed great wit in saying that “I doubt that the Founding Fathers contemplated ordinary citizens hunting deer with automatic weapons; but I’m reasonably sure that they would not smile on commerce in guns that would be in violation of the laws of a neighboring country.”

In his entire survey, he did not mention petroleum or Mexico’s oil policy once. When asked, in the Q&A, he replied “Diplomats and mosquitos have something in common: they can both be killed by newspapers.” The reply got a laugh from the 200 or 300 people in the audience, but it was a blatant avoidance of the topic. He did say something more, but then added, “since my remarks are off the record.”

A subsequent query to the Embassy about the availability of his prepared remarks produced the reply: “There is no record, and his remarks are off the record.”  I replied, with restrained irony, “Is your reply to my question ‘on the record’?”

It seems to me that someone of his evident skill as intercultural communicator—and one who had visited 48 states during his term in office, speaking before dozens, if not hundreds of audiences–would have insisted on putting on the record his insights about the dynamics of U.S.-Mexico relations.

Were your remarks as ambassador to Cuba similarly “off the record”?

RP:  Unlike you, I never had the opportunity to hear one of his presentations as ambassador; but, by your account, he was an accomplished speaker. You might also forgive him for not going into a discussion of oil policy in Houston (despite the promising venue of the Petroleum Club), as the diplomatic corps in general knows little about the dynamics of any given industry. So, understandably, no diplomat, ambassador or otherwise, would want to risk making a fool of himself by presuming to speak about the intricacies of Mexican oil law and policy before an audience of oil professionals.

As for his not wanting to have his remarks on the record, it’s standard fare in the diplomatic world. If the recourse to “off the record” didn’t exist, much less would be said openly. Regarding my remarks in Cuba, I am an atypical diplomat. Just read my book and you’ll see what I mean.

MEI: Do you have plans to enter politics again, that is, beyond your present role as a political columnist for Excelsior?

RP: I am considering becoming a candidate as a federal Congressman in the midterm elections of 2015. The fact is that when I was a congressman more than twenty years ago, it took me a full three years just to learn my job—then, suddenly, all that I had learned was made irrelevant when my term of office ended three years later, due to the fact that reelection is prohibited in Mexico.

I thought at the time that it was a pity that society had spent resources educating me to be a public servant in the Congress, and then, because of a no-reelection rule that was born in the prejudices and passions of a hundred years ago, my experience and training are set out to pasture.

MEI: How do see the issue of reelection in Mexico? Someone told me recently of a politician from Nuevo Leon who has switched back and forth between the Senate and the Lower Chamber for twenty years without once facing the voters in a direct, popular election. So you could say that there is a political aristocracy within the no-reelection regime.

If you again serve in Congress, what elements of government would you want to change?

RP: Transparency in all public affairs and the battle against corruption is the key to a successful and prosperous Mexico. Without this, many of the proposed reforms—now called structural reforms—will come to naught. Therefore, I think these two issues, together, are the Gordian knot of Mexican politics.

Without this, even free and fair elections will be an impossibility, not to mention a buoyant economy. The fight against the drug cartels has a corruption-tainted component that is frightening as well. In short, these issues touch the very fabric of Mexican politics and society. The way in which they are dealt with will define, in very many ways, the future of Mexico.


Written by

Mexico Energy Intelligence

Baker & Associates offers niche-market business and policy intelligence related to Mexico's oil and gas, power and chemical industries. Over 1,000 reports have been issued in the last 20 years. Subject matter expert and publisher George Baker, who directs the firm, has carried out consulting assignments starting in the late 1970s at the height of the Oil Boom in Mexico. He brings bilingual and bicultural skill-sets to understanding and responding to challenges of business and public policy, coupled with a deep familiarity with the history and idiosyncrasies of the Mexican operating environment.