56 The Americas The EconomistSeptember 21st 2019
2Bello The reds and the black stuff
“C
ommunism is sovietpower plus
electrification,” declared Vladimir
Lenin in 1920. A century later, Andrés
Manuel López Obrador’s methodology
for the redemption of Mexico is his
morning press conference plus oil. He
wants to raise oil output by almost half,
and is poised to build Dos Bocas, an $8bn
refinery that will be his country’s largest.
Mr López Obrador (or amlo, as he is
known) defends this as boosting Mexi-
co’s energy security and sovereignty.
Jair Bolsonaro, Brazil’s far-right presi-
dent, claims that environmentalism is a
left-wing plot. Latin American leftists’
enthusiasm for oil refineries suggests
otherwise. In Brazil Luiz Inácio Lula da
Silva, president from 2003 to 2011, or-
dered Petrobras, the state-controlled oil
company, to build four of them. In Ecua-
dor, Rafael Correa conducted a $2.2bn
upgrade to a refinery. Peru’s Ollanta
Humala began a similar $3.5bn upgrade.
There are good reasons for amloto
want to exploit Mexico’s natural re-
sources to the full. Oil can help power
growth and fill the treasury. But he is
going about it in a different way from his
predecessor, Enrique Peña Nieto, who
opened up oil and gas to private invest-
ment but left Pemex, the state oil com-
pany, indebted and shot through with
corruption. In May, amlo’s government
announced that no private bidders had
met the terms for Dos Bocas’s construc-
tion. It will now be handled, opaquely, by
the state. He is throwing public money at
Pemex without requiring its reform.
In private, officials admit concern.
Dos Bocas is a “pendejada” (a load of
bullshit), admits one. Mexico has no
trouble importing gasoline from refiner-
ies on the United States’ Gulf coast, saysDavid Shields, an energy consultant in
Mexico City. Money would be better spent
on repairing inefficient existing refineries,
or on expanding distribution grids for
electricity and natural gas (though private
investment could do those jobs).
Ideology in part explains the enthusi-
asm for such projects among leftists.
Fossil-fuel nationalism is a throwback to
the concerns of the Latin American left of
the mid 20th century. amlo’s adviser for
the project is José Alberto Celestinos, aged
90, who was in charge of building refiner-
ies for Pemex in the 1970s. “Oil is a funda-
mental national symbol in Mexico,” says
Lorenzo Meyer, a historian. “To think of
clean energy policies like in Europe is a
luxury Mexicans can’t give themselves.”
And, of course, big state projects offer
the opportunity for many to make money.
Few people expect Dos Bocas to hit its
budget. The only one of Lula’s refineries to
be completed cost $20bn, nine times its
original estimate. Half of the $5bn that Mr
Correa’s government spent on oil projects
was stolen, according to his successor.
In energy terms, Latin America cannotbe accused of being a dirty region. It has
the world’s cleanest energy matrix, large-
ly because of its large hydroelectric dams
(though in Mexico, with fewer big rivers,
they provide less than a quarter of elec-
tricity compared with around half in the
region as a whole). Most of Latin Ameri-
ca’s carbon emissions come from land-
use changes and transport, as growing
middle classes jump into cars. It could do
its bit for the world by halting defor-
estation and embracing electric vehicles.
Some Latin American countries have
encouraged non-conventional renew-
able technologies, such as wind and
solar, whose price has fallen steeply.
Rather than copy European subsidies,
they have done so by fixing targets and by
using auctions in which the market
determines the supply price, notes Lisa
Viscidi, an energy specialist at the Inter-
American Dialogue, a think-tank in
Washington. More than 40% of Uru-
guay’s electricity comes from wind,
while solar plants provide 8% of Chile’s.
Both countries have had left-wing gov-
ernments—but have no significant oil.
The same goes for Costa Rica, which has
set (and appears to be on track to meet) a
target of producing all of its electricity
from renewable sources by 2021.
In Mexico Mr Peña held three auction
rounds for non-conventionals. amlohas
cancelled the fourth round. “They don’t
have a renewables policy,” says Mr
Shields. That is partly because the auc-
tions involve private investment, which
amlodistrusts, partly because wind and
solar power are intermittent, and partly
because nature has provided Mexico
with a bounty of hydrocarbons. But if
amlolooks around the world, he will see
that oil is rarely fuel for corruption-free
development, and that before too long it
may be technologically redundant.Why is the Latin American left hostile to clean energy?place every weekend. Once a year one qa-
miri gets the expensive honour of paying
more than anyone else for Gran Poder, a
carnival in La Paz.
Outsiders often see El Alto as a reflec-
tion of their biases. Leftists celebrate the
communal features of its economy. They
include aini: help from neighbours for
building or business, which the beneficia-
ry is expected to reciprocate. The fiestas are
a way of giving food and drink to the poor.
Anarchists admire El Alto’s self-regulation,
liberals its vigorous capitalism. The city
seems to combine all these. Pablo Mamani,a sociologist, describes El Alto as a city
“with broad solidarity”, but “absolutely lib-
eral” in economic matters.
El Alto tends to vote for Mr Morales and
cheered his nationalisation of gas reserves
in 2006. It likes subsidies and public
works, but demands that the state keep its
distance. “El Alto expects a lot from the
state,” says Mr Mamani. That goes along
with an ethic of self-reliance. In Aymara
culture, “one has to work for oneself.”
Alteñosgive Mr Morales little credit for
their prosperity. Many are sceptical about
his run for re-election (in which Mr Mesawill be his main opponent). They remem-
ber the Aymara practice of rotating leader-
ship, even if they do not always practise it.
“People view [Mr Morales’s campaign] sus-
piciously,” says Mr Chambi.
El Alto has nonetheless supported him,
except on two occasions. In 2010, when he
tried to cut subsidies for petrol, alteños
blocked roads again. He backed down. Five
years later they rejected his party’s mayoral
candidate in favour of Soledad Chapetón,
an Aymara woman of the centre-left. Those
are sharp reminders to Mr Morales: don’t
take El Alto for granted. 7