Mexican union reform effort stays alive -- for now

MEXICO CITY — A dramatic vote in the Mexican Senate has kept alive a plan to reform this country’s corrupt and politically powerful unions, despite opponents’ attempts to smother the idea in the legislature.

But the senators' move late Tuesday could also torpedo a broader labor-reform bill, of which the union reforms are only one part. That left Mexicans pondering two very different futures Wednesday: one that could see a diminished role for the country’s king-making union bosses and another in which nothing much changes.

The reforms in question would require union elections to be held with secret ballots and open the books of big labor to public scrutiny. That, in theory, could undermine the virtual fiefdoms of labor leaders like Elba Esther Gordillo, the head of Mexico’s national teachers union, whose salary is unknown, but who is known to carry $5,000 Hermes purses and once gave out Hummers to loyal followers.

The reforms could also undermine an important source of political power for the Institutional Revolutionary Party, or PRI, which managed to co-opt big labor for most of the 20th century, when it ran Mexican society in a top-down, semi-authoritarian manner.

The teachers union and the powerful syndicate representing workers in the state oil company, PEMEX, both remain closely linked to the PRI. Critics consider both unions to be warrens of corruption, and hindrances to the modernization of two key elements of Mexican society: the poorly managed state oil and gas monopoly and the underperforming educational system.

Both Gordillo of the teachers union and Carlos Romero Deschamps, the longtime leader of the oil company union, were reelected over the weekend, clear indications that labor’s old guard was not planning on going gently.

That only intensified the drama facing Mexico's president-elect, Enrique Peña Nieto of PRI, who rode to victory in July promising sweeping government reforms, but heads a party that may not be so eager to give up its ways.

Peña Nieto, who takes office Dec. 1, has supported the idea of labor reform in general. He has declined, however, to take a strong stand on the union reform effort: In Madrid this month, he said he was in favor of greater union “transparency,” but added that the “autonomy” of the unions must also be respected.

His fellow party members are dominant in the Mexican Chamber of Deputies, and last month they stripped the broader labor-reform bill of its union-reform provisions before it passed the lower chamber.

On Tuesday, however, the union reforms were reintroduced in the Senate version of the bill, thanks to an ad-hoc coalition of senators from the left-wing Democratic Revolution Party, or PRD, and the right-wing National Action Party, or PAN. The bill passed on a 100-28 vote after 12 hours of debate.

Now, under Mexican law, the bill goes back to the lower chamber, which will consider the Senate’s alterations.

If the lower house approves the Senate’s changes, the altered bill will go to the desk of outgoing President Felipe Calderon, who introduced it.

But if disagreement remains, there is a chance the bill could languish in legislative limbo.

There is also a third possibility: The legislation could be approved by both houses, but without the union-reform provisions. Even in that scaled-back form, the bill could bring historic change to Mexico’s traditionally rigid labor market, making it easier for businesses to hire and fire workers, formalizing the outsourcing of work in some cases, and allowing for the payment of an hourly wage.

Those proposals infuriated some on the Mexican left, who worried that the bill only weakened the position of workers whose guaranteed minimum wage is about 60 cents per hour.

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PHOTO: A demonstrator shouts slogans against proposed labor reforms outside Congress in Mexico City on Sept. 27. A proposal to reform Mexico's 1970s-era labor laws, loosen work rules and increase union democracy split Mexican political parties, threatening to create the first big political battle for President-elect Enrique Peña Nieto. The banner reads, "No to labor reform." Credit: Alexandre Meneghini / Associated Press

 

Sanctions, currency chaos igniting unrest in outcast Iran

Soaring prices at Tehran's cavernous Grand Bazaar have ignited violence this week as money traders and vendors clashed with riot police over the plummeting value of the Iranian currency, which is being gutted by international sanctions and mismanagement by the Islamic regime.

What for most Iranians has been an abstract political dispute between their leaders and Western countries concerned about Tehran's nuclear ambitions has suddenly hit them in their wallets and pushed them to lash out. The rial has lost 80% of its value against the U.S. dollar in the last year, a decline accelerated by tightened U.S. and European Union sanctions now depriving the regime of half the hard currency it was earning from oil exports.

Iranian President Mahmoud Ahmadinejad blamed the deepening economic chaos on foreign enemies, contending there is "no economic justification" for the public scramble to dump rials in favor of dollars, euros and gold. Supreme leader Ayatollah Ali Khamenei also struck a defiant pose, reasserting Tehran's right to enrich uranium and vowing that Iranians "will never surrender to pressure."

But Iranian exiles and scholars see the angry outbursts in the marketplace as a sign that ordinary Iranians are finally fed up with a regime that has brought them isolation, insecurity and eroding living standards. They see a population, resentful of a crackdown on dissent three years ago, now edging toward rebellion.

The unrest also demonstrates that the U.S. policy of letting sanctions and diplomacy undermine popular support for the regime is having the desired effect, confronting Tehran with its gravest challenge since Islamic clerics came to power in a  1979 revolution, the experts say.

The street value of the rial has dropped by half in the last two months and plunged 18% on Monday alone. The unofficial exchange rate for the dollar -- more than 35,000 before back-alley trading halted -- is almost three times the official rate of 12,260. But that subsidized exchange rate is available only from state banks to a limited and shrinking number of key importers.

Money traders stopped selling dollars Tuesday, confused over how to price the swiftly deteriorating rial. Some vendors closed their shops in protest of the government's failure to intervene and prop up the currency; others boosted prices beyond what many shoppers can or will pay.  

Before harsher sanctions kicked in three months ago, Iran's government had been using a sizable share of its $100-billion annual oil earnings to subsidize dollar-denominated food and consumer goods, to keep prices stable and placate the population, said Abbas Milani, a Tehran-born academic who directs Iranian studies at Stanford University.

Milani said he suspects the government was initially using the economic downturn brought on by the sanctions to put an end to the costly dollar subsidies. But he now concludes that the regime has been forced to let the rial tumble because it has run out of the hard currency needed to stop the slide.

"We're not talking about a billion dollars or 2 billion to stabilize a currency that has gone down so far. The government would have to find enormous sums of money to pour in, and if they had it they would have done it by now," Milani said.

"I don't think the regime can survive this one," he said, unless Khamenei does the unthinkable and meets Western demands that Iran cease enriching uranium beyond levels needed for civilian nuclear programs.

Tehran officials recently told the International Monetary Fund that they had $50 billion on hand, enough to see Iran through the sanctions bite for at least four or five months, Milani said. He calculates that the regime should have saved about $300 billion in a rainy-day fund over the last eight years. That no intervention in the currency crisis has been forthcoming tells him that much of the oil windfall has been squandered or siphoned off into private accounts of the Revolutionary Guards and government leaders.

"Social and political cohesion in Iran will be deeply disturbed by this economic crisis," predicted Alireza Nader, senior policy analyst on Iran for Rand Corp. "And it's not just the economic crisis -- you saw Iranians take to the streets in 2009 for a number of reasons, and those tensions have been simmering below the surface. We see them coming up now."

Nader pointed out that protesters at the bazaar this week have shouted denunciation of the regime's politics as well as soaring inflation. Shouts of "Leave Syria alone and think about us!" could be heard in clandestinely shot video footage of the angry crowds, he said.

 The Iranian government has been the sole regional supporter of Syrian President Bashar Assad and his brutal suppression of a rebellion now in its 19th month.

"Eventually this is going to put enormous pressure on the Iranian government to concede on a number of issues, not just the nuclear programs but domestic political issues as well," Nader said. "It's already gotten to the point where people's livelihoods are at stake and they're not going to tolerate that situation. We can definitely expect to see more unrest in the coming months."

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Photo: An Iranian shopper on Wednesday pays a fruit seller at the Grand Bazaar in Tehran with 50,000-rial banknotes. The sanctions-battered Iranian currency has lost 80% of its value in the last year, spurring inflation and social unrest. Credit: Abedin Taherkenareh / European Pressphoto Agency

Insert: Riot police block an approach to the Grand Bazaar on Wednesday after arresting money traders and dousing fires lighted in protest of the falling rial currency. Credit: European Pressphoto Agency

As 'Chavismo' sputters, a charismatic challenger woos Venezuelans

Venezuelan President Hugo Chavez has loomed larger than life over his oil-rich country for nearly 14 years, doling out healthcare and houses and university admissions to supporters of his “Bolivarian Revolution” aimed at creating history’s first affluent socialist state.

A barrel-chested former paratrooper who has tapped Venezuela's oil revenues to court a loyal following among the country’s poor, Chavez has handily outpolled disorganized opponents in past elections and harnessed people power to defeat a 2001 coup d’etat and win a recall vote three years later.

But much of the revolutionary fire that stirred the masses into a political phenomenon known as Chavismo has gone out of the cancer-stricken president. For the first time since his 1998 election victory, he faces a viable competitor with a message of unity and a track record of efficient management as governor of the state that surrounds Caracas.

Few neutral observers are yet convinced that Chavez will fall to Miranda state governor Henrique Capriles in Sunday’s presidential election. They are as dubious of polls showing the 40-year-old challenger with a slight edge as they are of the Chavez-commissioned surveys depicting the incumbent at least 10 percentage points ahead. 

Still, there is a solidifying impression among political analysts that Chavez's "missions" to eradicate illiteracy, improve healthcare, provide government jobs and build housing for the homeless have benefited too few for the vast sums squandered on the programs. A Reuters news agency report this week on its investigation into the opaque ledgers of a massive slush fund under Chavez's control identified more than $100 billion in off-budget spending over the last seven years.

While the social programs are popular and have made dents in poverty and illiteracy, Venezuelans are tiring of unfulfilled promises after 14 years, said Michael Shifter, president of the Inter-American Dialogue think tank in Washington. He believes that Chavez "has run his course."

Violent crime has skyrocketed -- including at least two fatal shootings of Capriles supporters at campaign events this week. Infrastructure is crumbling, as seen in deadly refinery explosions this summer. Power shortages afflict much of the country, and "there is a sense that Chavez's rhetoric has lost its magic," Shifter said.

A cult of personality enveloped Chavez through most of his presidency, with his visage ubiquitous on posters and billboards. Broadcast media have been obliged to carry every one of his 2,300 speeches. If aired end to end 24/7, they would run for 72 days, according to the calculations of two prominent Latin American statesmen in a report for the Woodrow Wilson International Center for Scholars.

The report, by career Chilean diplomat Genaro Arriagada and former Mexican Federal Electoral Institute chief Jose Woldenberg, also noted that Venezuela’s high-tech balloting machines that identify voters by fingerprint are suspected by a third of the population -– and a majority of Chavez supporters -- of creating a record of how they voted, despite official demonstrations to the contrary.

Voters in line for new housing or other government perqs fear they'll be bumped from the waiting lists if they are found to have voted for the opposition, said Charles Shapiro, a former U.S. ambassador to Venezuela and now president of the Institute of the Americas in La Jolla.

"What is true is not as important as what people think is true," Shapiro said of voters' enduring  suspicions that their votes won't be secret.

Opinion polls in Venezuela are a poor gauge of voter intentions, said Shapiro, who wouldn't hazard a guess as to whether an end to the Chavez era might be on the horizon.

"What I do know is that Capriles has run a terrific campaign. Chavez has been president for 14 years, and in any country a certain weariness sets in," Shapiro said. "While Chavez is a very good campaigner, he clearly is not as vigorous as in past campaigns."

Chavez, 58, has had three cancer operations in Cuba in 15 months and often has been absent, uncharacteristically, from the public spotlight.

The 40-year-old Capriles, by contrast, has projected a dynamic image, plunging headlong into Chavista territory to assure the poor that as president he would maintain popular social programs but run them better.

"Capriles has been extremely smart in his campaign, in a way that would suggest there's not going to be a period of vengeance against Chavez supporters in the government," Shifter said. "The mistake the opposition has made in the past is saying that everything Chavez has done is bad."

It remains to be seen whether the young governor's message is strong enough to overcome the considerable powers of incumbency, with Chavez in control of the airwaves and the oil treasure chest, Shifter said. There are also concerns about whether a Capriles victory would be respected by Chavez loyalists on the electoral council, in the courts and among the armed forces.

"Capriles is the new generation," whether he wins this time or not, Shifter said. "People are obviously responding to his message and giving him a serious look."

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Photo: Venezuelan presidential candidate Henrique Capriles, at a campaign rally on Monday, has united the country's scattered opposition forces to confront President Hugo Chavez with the first serious challenge of his 14-year tenure in Miraflores Palace. Credit: Leo Ramirez / AFP/GettyImages

Insert: President Hugo Chavez, at a campaign rally in Yaracui state on Tuesday, still draws enthusiastic crowds but has been less in the public spotlight this election year because of long absences for cancer treatment in Cuba. Credit: Juan Barreto / AFP/GettyImages

Sudan and South Sudan sign a deal to resume oil exports

JOHANNESBURG, South Africa -- Oil exports are set to resume from Sudan and South Sudan after their leaders signed trade and security agreements Thursday aimed at ceasing hostilities and setting up a demilitarized buffer zone on their shared border.

The deal averts the threat of sliding back into a war that has lingered since clashes resumed in April between the uneasy neighbors.

But in a sign of the underlying hostility, there was no territorial deal resolving one of their most enduring sources of conflict: the disputed border and the region of Abyei, which both sides claim.

The two countries faced U.N. Security Council sanctions if they failed to reach a peace deal.

Talks between President Omar Hassan Ahmed Bashir of Sudan and President Salva Kiir of South Sudan, which were mediated by the African Union, had dragged on since Sunday before they finally signed the accords in the Ethiopian capital of Addis Ababa.

The two sides signed a peace deal in 2005 that ended more than two decades of war and led to South Sudanese independence in July 2011. But many contentious questions, including the border and oil transit issues, were left unresolved. 

26 killed in gas pipeline explosion in Mexico

 

MEXICO CITY -- At least 26 oil workers were killed Tuesday and several dozen injured in a huge explosion and fire along a natural gas pipeline in northeastern Mexico, officials said.

Officials with Petroleos Mexicanos, or Pemex, the state-owned oil giant, said they were investigating the cause of the explosion, which ripped through a distribution plant, sent orange flames into the sky and forced temporary evacuations of parts of the area in Tamaulipas state, which borders Texas.

Pemex initially said 10 people were killed and 40 injured. Later, via its Twitter account, the company raised the death toll to 26. It did not update the number of wounded but said four of the dead worked for Pemex and 22 worked for contractors. It was not clear if that included foreign companies.

Pemex's vast operations in Tamaulipas, a violent state dominated by drug cartels, have suffered thefts of gas and oil and the kidnappings of numerous workers.

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Photo: A Mexican army vehicle patrols as fire and smoke rise from a gas pipeline distribution center in Tamaulipas state. Credit: El Manana de Reynosa / Associated Press

 

39 killed in huge Venezuela oil refinery fire; gas leak suspected

This post has been updated. See note at bottom for details.

CARACAS, Venezuela -- An early morning explosion and fire at Venezuela's largest refinery killed at least 39 people Saturday and left the nation’s most important source for auto and airline fuel out of commission.

Giant flames and columns of smoke continued to billow from the Amuay refinery, located 200 miles west of Caracas, the capital, into the afternoon. 
 
The disaster occured  at a crucial moment in Venezuela’s presidential campaign in advance of its Oct. 7 election, with the efficiency of President Hugo Chavez’s government  a major campaign issue. State-owned oil company PDVSA is the owner and operator of the refinery.

A gas leak apparently caused the accident, which destroyed or damaged 11 tanks where propane gas, crude oil, naphtha and other chemicals were being stored. The refinery processes half of Venezuela’s fuel production.
 
It was too soon Saturday to say what impact the fire could have on U.S. gasoline prices. On average, Amuay exports about 360,000 barrels per day of refined gasoline, mostly unleaded fuels, to the eastern U.S.  Thus, U.S. motorists, who buy more than half of the complex’s average production of 645,000 barrels per day, could pay higher prices if the refinery remains out of commission.
 
The dead included 17 national guardsmen who were assigned to protect the sprawling refinery complex, one of the largest in the world. A 10-year old boy who lived nearby was also among the victims. At least 86 were injured with burn injuries. Social networks, however, reported that many more were still unaccounted for.

With the Amuay fire raging in the background, Venezuelan Defense Minister Henry Rangel Silva went on TV in the afternoon to offer condolences to family members of the guardsmen killed in the disaster. 
 
Energy Minster Rafael Ramirez, who also heads PDVSA, told reporters at the disaster site Saturday morning that some of the fires near the tanks were under control and that there were sufficient  inventories of fuel to ensure internal supplies and exports for 10 days.

UPDATE, 7:00 p.m., Aug. 25: The number of people who died was raised from 26 to 39.

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Photo: Firefighters and rescue teams work at the Amuay oil refinery in Punto Fijo, Venezuela, on Saturday. Credit: Diario EL Amanecer/Associated Press

At least 95 killed in Nigerian tanker explosion

JOHANNESBURG, South Africa -- At least 95 people were burned to death in Nigeria's oil-rich Rivers State when a petrol tanker that overturned and spilled fuel on a highway exploded, officials said.

The blast happened as dozens of people gathered around the crashed tanker, trying to recover the gasoline leaking into containers, a spokesman for the Federal Road Safety Commission, Kayode Olagunju, told local media.

Nigeria has experienced many similar catastrophes in the past, including explosions at fuel pipelines where people try to siphon off fuel.

The Federal Road Safety Commission reported that 95 people died and 18 were injured. However, Nigeria's Vanguard newspaper quoted a local witness who said he counted 98 bodies. Children and pregnant women were among the dead, the newspaper reported.

Tighter sanctions on Iran trigger threats and defiance

Harsh new sanctions imposed on Iran were intended to so deprive its citizens of life's necessities that the government would be forced to end what the U.S. and its allies fear is a program to build nuclear weapons.

Instead, Iran's Revolutionary Guard on Tuesday test-fired missiles capable of reaching Israel and the U.S. Navy's 5th Fleet base in Bahrain. Iranian lawmakers have threatened to close the Strait of Hormuz to bottle up Persian Gulf neighbors' oil shipments. Senior officials warned that progress in nuclear negotiations won't occur until the United States and its allies show Iran more respect.

Iran says that its nuclear program is for peaceful purposes only, and since U.S. and European Union sanctions went into effect Sunday its officials have reacted with defiance and bluster. The Central Bank chief has reassured the public that $150 billion in foreign currency reserves should see the country through the trade cutoffs, and officials have said they stockpiled plenty of imported food and consumer goods.

But Middle East analysts see Tehran's posturing as unsustainable in the long run. As food prices soar, gasoline lines lengthen and the rial currency is eroded by inflation, Iranians who care more about their day-to-day existence than having a nuclear program will force leaders to make a choice, experts predict.

Iran gets 80% of its revenue from oil exports, according to the U.S. Energy Information Administration, which valued that trade at about $73 billion for 2010. Due to previous sanctions that have curbed Iranian exports and international bank transactions, production has already fallen from 4 million barrels a day two years ago to 3.3 million a day in May, the EIA said. The new sanctions are expected to cut exports by half, creating storage problems for what Iran can't sell and potentially forcing the government to shut down wells.

Those prospects have instigated the muscle-flexing coming out of Tehran in recent days, according to those monitoring the situation.

"I don’t think Iran will try, or that it would succeed in closing the Strait of Hormuz, but they will probably harass shippers in hopes of having an impact on the neighbors' ability to ship out oil," said Suzanne Maloney, senior fellow at the Brookings Institution's Saban Center for Middle East Policy.

Attempts to cast Iran as a victim won't rally nationalist spirits for long, Maloney said.

"These themes of conspiracy and economic warfare and of the world being against Iran are part of their history, but they are going to feel the impact of these sanctions in a way that nothing else in the revolution or the Iran-Iraq war had on their lives and wallets in the past 33 years," she said.

The rial has lost 40% of its value against the U.S. dollar since a round of sanctions were approved late last year. As jobs disappear in a shrinking oil industry and household incomes decline, Iranians may come to see their leaders as the cause of their hardships.

Alon Ben-Meir, an Iraqi-born Middle East scholar at New York University's Center for Global Affairs, expects the standoff over Iran's nuclear program to be resolved if and when its leaders realize they will lose power unless they abandon it.

Iran's Islamic leaders see themselves as the guiding influence of the Shiite-inhabited crescent that extends from the Persian Gulf to the Mediterranean Sea through Iraq, Syria and Lebanon, said Ben-Meir. That is why Tehran has insisted on inclusion in the Syrian peace process, he said, to ensure that the minority Shiite-offshoot Alawite sect of Syrian President Bashar Assad retains its grip on power and its political allegiance to Iran.

Israel has threatened to bomb Iranian nuclear facilities if they appear to be near to producing atomic weapons or entering what Ben-Meir calls the "zone of immunity," the relocation of development activities to fortified compounds like one at Fordow, near Qom, that would be invulnerable to air strikes.

Iranian lawmakers have already summoned President Mahmoud Ahmadinejad to parliament to explain why the economy has deteriorated so rapidly, said Ben-Meir, and the public is "not buying all of this" when told the setbacks are the result of unjustified sanctions.

Defiance is playing well on the domestic front in these early days, say the analysts, but Tehran's leaders will ultimately have to decide between the nuclear program and popular demands for decent living standards.

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Photo: An upgraded medium-range Shahab-1 missile is launched during the second day of military exercises on Tuesday by Iran's elite Revolutionary Guard at the Lut desert in southeastern Iran. Tehran's response to tightened sanctions has been defiance. Credit: Mojtaba Heydari/European Pressphoto Agency

From Iran, new threats to close key oil route

TEHRAN -- Iranian lawmakers renewed threats to close the strategic Strait of Hormuz, a vital oil-shipping route, in response to mounting economic sanctions against the Islamic Republic.

The move -- widely regarded as more bluster than a credible threat -- came Monday, a day after Europe began to enforce an oil embargo. Iran responded with a fresh round of war games that will involve firing missiles at models of foreign air bases.

"If we completely go under the sanctions, we will not let a single oil drop pass through the Hormuz Strait," Arsala Fathipour, head of the Iranian parliament’s economic commission, told the semiofficial Iranian Students News Agency.

Situated between the Gulf of Oman and the Persian Gulf, the Strait of Hormuz is a passageway for a sixth of the world's oil production, including much of the crude extracted in Saudi Arabia, Iran’s bitter regional rival.

The U.S. Navy is reported to be primed to thwart any attempt to block the strait.

Analysts downplay Iran’s periodic threats to close down the strait as political oratory, a view shared by some inside Iran.

"It's irrational rhetoric, and I think top officials in Iran are seeking diplomatic ways to solve the dispute," said one Iranian lawmaker who asked to remain anonymous.

The threat from "some adventurist politicians" should not be taken seriously, added Nader Karimi Joni, a Tehran-based analyst and columnist. Such comments, he said, do not originate from key decision-making blocs, such as the powerful Guardian Council or the supreme leader himself, who has the final say on all state matters.

But observers say the renewed tough talk reflects a pugnacious viewpoint that seems to have taken hold among certain hard-liners.

Iran has been subject to an escalating series of sanctions, many targeting its key oil sector. The moves are meant to pressure Tehran to pull back on its nuclear program. Washington and its allies suspect that Iran is trying to develop an atomic bomb. Tehran insists its program is exclusively for peaceful purposes.

The United States and Israel have not ruled out the possibility of a strike on Iranian nuclear facilities if the issue is not resolved through negotiation.

Iran has officially downplayed the effect of sanctions, but the Obama administration and others say the penalties are starting to batter Iran’s already shaky economy.

Despite the renewed threats on the Strait of Hormuz, Iranian Foreign Minister Ali Akbar Salehi sounded a conciliatory tone in comments published Monday.

"There is no solution but diplomatic and political settlement of [the] Iranian nuclear issue,” Salehi said in an interview with the Iranian Students News Agency. “The issue may have come with ups and downs, but overall I believe that we are moving toward fixing the issue and the other side has no way but to follow mutual understanding with Iran."

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U.S. officials say China is reducing purchases of Iranian oil

WASHINGTON -- China has fallen in line with Western efforts to cut back purchases of Iranian oil and will be spared economic punishment threatened under a new round of U.S. sanctions, Obama administration officials said this week.

The cutbacks are being imposed in an effort to force Iran to agree to limits on its nuclear program, which many nations fear is aimed at developing a nuclear bomb.

Most countries that have been major buyers of Iranian crude began reducing their purchases in recent months, and 18 of them were granted exemptions from U.S. sanctions earlier in June.

China, the largest purchaser of Iranian crude in 2011, was conspicuously absent from the list. Industry officials said there were signals that China might be hoping to snap up the unpurchased oil at discounted prices to power its vast manufacturing sector.

But China has been shifting to other sources of petroleum since the beginning of the year. On Wednesday, a Chinese government website announced that Beijing had cut back its purchases of Iranian oil by 25% so far this year and intended to maintain the reductions through the end of the year, U.S. officials noted in a media teleconference on Thursday.