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Mexican left slams oil reform; tax reform expected

Mark Stevenson, Associated Press

Supporters of former presidential candidate Andres Manuel Lopez Obrador cheer as they listen to Lopez Obrador during an act to protest against the governments proposed energy reforms that would allow private companies to explore the country's oil and gas reserves, in Mexico City, Sunday Sept. 8, 2013. The proposed reform requires constitutional changes that strike at the heart of one of Mexico's proudest moments: President Lazaro Cardenas' nationalization of the oil company in 1938. (AP Photo/Marco Ugarte)

MEXICO CITY (AP) -- Thousands of people rallied Sunday in Mexico City to oppose President Enrique Pena Nieto's plan to open the state-owned oil sector to profit-sharing contracts with private firms.

Leftist leader Andres Manuel Lopez Obrador told the rally that the proposal constitutes "treason" and "a filthy, shameless robbery."

Lopez Obrador pledged to block attempts for greater private sector involvement with "peaceful civic mobilization" and called for more protests later this month.

"This is an act of treason equal to or greater than that of Antonio Lopez de Santa Anna," he said, referring to the 19th century Mexican president blamed for losing half the nation's territory to the United States by the end of the 1846-48 Mexican-American War.

Pena Nieto proposed the energy overhaul in August, saying state-owned oil monopoly Pemex has to offset falling production by exploiting shale gas and deep-water reserves and it needs foreign know-how and investment to do that.

Lopez Obrador, a two-time losing presidential candidate, claimed most of Mexico's proven reserves lie on land and in shallow coastal waters and no private firms are needed to drill for that oil.

Mexico expropriated foreign companies and nationalized its oil industry in 1938, and that move has been a popular symbol of national sovereignty ever since. Polls say a solid majority of Mexicans still oppose private or foreign investment in the industry even though oil production is down and easy-to-reach, shallow-water reserves are declining.

"They want to take away our natural resources, which is all that we have left," Maria Elena Chavez, a 58-year-old protester, said as she handed out copies of Mexico's constitution while wearing a white Pemex hard hat painted with the slogan "Pemex isn't for sale."

The reform requires changing the constitution, which currently bans profit-sharing contracts.

Pena Nieto's Institutional Revolutionary Party and the conservative National Action Party have enough votes combined to secure the two-thirds majority needed in the Senate to pass the change. They could do the same with the support of a small, allied party in the Chamber of Deputies.

The measure then would have to be approved by at least 17 of the country's 32 state legislatures.

Pena Nieto pledged to announce another reform plan later Sunday, this one to rework the country's inefficient tax system. Many Mexicans work under the table or avoid paying any taxes at all, and the tax code is littered with loopholes for large corporations.

Lopez Obrador claimed Pena Nieto wants to tax Mexicans more to replace revenue lost because some oil income, a large part of the federal government's revenues, would go to private companies under the proposed oil overhaul.

Pena Nieto's PRI party brushes off the criticisms.

"There are people who think that repeating lies will make them the truth, to distort the real aims of the reform," PRI Sen. Ana Lilia Herrera said. "We have oil and gas in deep water, but we don't have the cutting-edge technology to take advantage of them. The reform will help make it easier to get at them, to benefit Mexicans, of course."

Pena Nieto's administration has blanketed the airwaves with ads saying he doesn't plan to privatize or sell Pemex. But people like Chavez remain wary. "They know how to manipulate people very well," she said of Pena Nieto's party, which ruled Mexico without interruption from 1929 to 2000.