Mexico, Spain on a Break?

President Andrés Manuel López Obrador called for a temporary break in the diplomatic relationship with Spain after considering abuses by Spanish energy companies such as Repsol and Iberdrola. While Spain rejected the decision and the disqualifications of the Mexican president, López Obrador clarified that “there is no break” but insisted on a “pause” between the two countries. 

“We have intimate relations with the people of Spain but in recent times, Spanish companies, supported by the political power of both Spain and Mexico, abused of our country and our people; they saw us as a land of conquest. I did not talk about breaking our relationship, no. I said we are going to calm down the relationship so that people no longer think that Mexico is going to be looted with impunity,” said López Obrador during his morning press conference.

Spain is the second largest foreign investor in Mexico with over US$76 billion at the end of the 3Q21. According to the president, company abuse comes from contracts set at very high prices that have not delivered the expected results. PEMEX Director Octavio Romero went into detail, pointing out that these were contracts signed with “all the advantages” for Spanish companies, which “charged for drilling” wells and undertook numerous surveys that resulted in “very little” gas for “a very few months,” he said in a Renewable Energy article. 

After López Obrador's statement on the “break” between Mexico and Spain, he was asked if he would withdraw the country’s ambassadors. The president said that he would not escalate the issue to that level, but would distance himself from Spain until relations improved. Spanish Foreign Minister, José Manuel Albares, stated this Thursday that the Spanish government “categorically” rejects the “unjustified” statements issued by López Obrador over the past days, as reported by the Spanish Radio and Television Corporation. “What the current economic ties indicate between Spain and Mexico is that governments must strengthen relations. Spain will always defend the interests of the Spanish people, their companies and Spanish honor.” 

The president’s issue with Iberdrola and Repsol goes way back to when he stressed that the contracts of these companies might be legal but they affected the country’s finances. Because of this, he emphasized that his proposal to reform the energy industry should be “defended” as a fight against contracts delivered to “corrupt foreign companies.”

The Minister of Industry, Commerce and Tourism in Spain, Reyes Maroto, has indicated that she sees no risk in the commercial relationship between Spain and Mexico despite the words of the Mexican president. “There are many Spanish companies that have been investing in Mexico for years and are part of the prosperity of that great country, just as there are many Mexican companies that find a place to invest in Spain,” she told COPE.

López Obrador is not alone in its efforts to reform the energy sector. During his recent visit to Mexico, US Special Climate Envoy John Kerry said that the US government was willing to offer financing and technological help to speed up Mexico’s efforts. However, he also stressed the US’ concern over the bill. “Promoting the use of dirtier, outdated and more expensive technologies over efficient renewable alternatives would put both consumers and the economy in general at a disadvantage,” Kerry told Reuters.