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Production from Mexico’s Cantarell field is collapsing, and production from new fields are not making up the difference. It appears very likely that Mexico has permanently passed its peak oil production. On top of that, domestic consumption is rising, creating the classic Export Land effect: declining production and rising domestic consumption equal accelerated declines in exports. Taxes from these export revenues generate the largest share of revenue for the federal government. Recent reductions in the tax rate that the government applies to PEMEX, the state oil company, shows that this key source of revenue is failing. The collapse of Mexican oil production has been extensively discussed elsewhere—here it is only my aim to highlight this as a component in the collapse of the Mexican Nation-State, and the positive feedback loops between the two events.
Mexico’s National and State Boundaries are Separating
The core proposition of a Nation-State is that the boundaries of the Nation and the State will coincide, allowing the State to effectively provide for the security and welfare of the Nation, and leading in return to the Nation giving their allegiance to the State (See Philip Bobbitt's "Shield of Achilles," the seminal work on the Nation-State construct). While no Nation-State is a perfect example of this ideal, Mexico’s proximity to enticing US labor markets, and the resulting massive emigration of Mexicans, is increasingly distorting this overlap. While “Mexico” remains a powerful cultural concept, that concept is increasingly dissociated with the geographic borders of the Mexican state. People can be wholly “Mexican” in Los Angeles, or, increasingly, Alabama.
The State of Mexico is Failing to Provide for its Nation
While the dissociation of the boundaries of a Nation with the borders of a State makes it more difficult for a notional Nation-State to provide for that part of its Nation outside its State borders, Mexico is also failing to provide for its nationals inside its borders. Recent protests over tortilla prices are just one example of the extreme poverty suffered by much of the nation (and, not entirely coincidentally, largely the result of scarcity in global oil markets driving demand for corn-ethanol). Similarly, while the average Mexican’s wealth is increasing, there are shadow factors at work—people like the Mexican businessman Carlos Slim, now the richest man in the world at $68 Billion net worth, are skewing the statistics. Without remittance payments from emigrants, Mexico's poverty situation would be far worse. When a State can no longer provide for its Nation, there is no longer any incentive for that Nation to voluntarily give allegiance and support to their State. The only remaining tool to exert control is coercion through a State’s theoretical monopoly on violence, and in Mexico even that is breaking down.
Mexico’s Monopoly on Violence is Collapsing
Not that Mexico was ever a poster-child for civic safety and effective policing, but the situation has grown considerably worse in the past year. There are mass desertions among the federal police. Outright infantry battles between crime organizations and the government are becoming a common occurrence. Hundreds, perhaps thousands, of police, judges, government officials, and reporters have been assassinated over the past few years. What control the federal government continues to exercise in states such as Sonora, Sinaloa, and Nuevo Leon is mainly due to the fact that crime organizations don’t want to actually take over the territory—they already experience the benefits of acting as a sovereign government without the burdens, and they’re happy to leave those burdens to the “official” government.
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http://www.theoildrum.com/node/2752#more
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