Union Members, Allies Protest Seizure of Mexican Utility

By William Booth
Washington Post Foreign Service
Friday, October 16, 2009

MEXICO CITY, Oct. 15 -- Union members and their political allies filled the streets of the Mexican capital Thursday night to condemn President Felipe Calderón's recent liquidation of a state-run power utility, a surprise move seen by many as an assault on organized labor.

Declaring the state-owned company so poorly managed as to be "unsustainable," Calderón on Saturday night authorized the seizure of Central Light and Power. He also deployed about 1,000 federal police officers in riot gear to enforce his decree; workers from another state-run power company swept in to take over the electric grid and keep the lights on.

For Mexico, the takeover marked a pivotal moment. The government has long allowed state enterprises and their powerful unions to operate at a loss, in order to boost employment and keep the peace between haves and have-nots. But, at Central Light and Power, Calderón said the government could not continue to support staffing levels and salaries demanded by the powerful Mexican Electricians Union in the midst of a deep economic crisis. It did not help that the company has lost a third of its electricity to waste and theft.

Union members have reacted with outrage, sparking a widening political brawl over the new realities of the social contract in Mexico.

On Wednesday, Calderón, a member of the conservative, pro-business National Action Party, denied charges by the electricians and their political supporters that the liquidation of Light and Power was the first step in a coming campaign to dismantle other trade unions, such as guilds for teachers and oil workers, which play an outsize role in the economic and political life of Mexico.

But the president's promises did little to calm the roiling political fight, as both right and left, business leaders and union chiefs, quickly took up opposing sides.

The leftist populist leader Andrés Manuel López Obrador, who lost to Calderón by a tight margin in a contested election in 2006, charged that Calderón was seeking to destroy Mexico's strong unions. Mexico City Mayor Marcelo Ebrard offered his support by ordering that an international book fair in the city's main plaza be dismantled to allow the thousands of protesters to occupy the space. Ebrard expressed sympathy for the electricians and questioned why they were fired in the midst of recession.

The union threatened to seek a court order stopping the liquidation of the company, which, legally, may also spell the end of the electricians union.

Analysts were divided on Calderón's motives. The business community generally supported the shutdown of Mexico's second-largest utility, citing its poor service and weak management. Reacting favorably to the president's move, Mexico's Bolsa index this week reached its highest level this year.

Others saw politics at play.

"There's not doubt that Light and Power is an inefficient company," said John Ackerman, professor at the Institute for Legal Research at the National Autonomous University of Mexico. "But the fact that he has decided to go against the union that historically most clearly represents the achievements of union rights and the left in Mexico is very much a political decision."

In explaining the company's losses, Ackerman pointed out that Mexico City and its surrounding areas are the most industrial in the country but harbor a huge informal economy, in which pirating electricity is common.

Daniel Lund, a political pollster in Mexico City, said Calderón "wants to do something big and media-grabbing to dominate attention," while avoiding going after the bigger challenges in the economy, such as the inefficient state-run oil company, Pemex, and quasi-monopolies such as Telmex, the telephone company.

"I think the policy is very contradictory, because on the one hand, you have a different government attitude towards unions very similar to the one at Light and Power," said Carlos Alba, professor of political science at the College of Mexico. "The teachers union or the petroleum workers union are very similar in many ways, so you wonder why shut down one and not the others?"

Calderón offered severance packages to the 44,000 employees at Light and Power and promised to continue pensions for retired workers. His government pledged not to privatize Light and Power and announced Wednesday that the utility would be run by another state company, the Federal Electricity Commission, which critics say is poorly run.

Researcher Michael E. Miller contributed to this report.

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