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FAILURES IN THE CYBERSECURITY OF MEXICAN GOVERNMENT SITES

The importance of the topic of cybersecurity for companies and governments is evident today Both have benefited from technology to make their functions more efficient and their operations to be more user-friendly. However, our dependence on technology and the Internet makes many areas of our lives highly vulnerable to cyber attacks.

In 2014, Mexico began a campaign to digitize federal government operations. According to McKinsey & Company, the website www.gob.mx is a unique portal that gathers 34,000 databases of 250 government institutions and 5,400 public services. For example, official copies of the birth certificates and the Single Population Registry Code (CURP) can be obtained from this site.

However, the Mexican cybersecurity firm Seekurity, revealed that at least 16 government sites were compromised and those responsible for the administration of these sites have not realized. Various consequences can be derived from this action, since there is confidential information that is protected by the Personal Data Law.

The signature Seekurity indicates that “the most probable thing is that the hack has happened in the change of administration since nobody takes into account the inventory of the sites that are administered”. It is presumed that this attack was carried out by the North Korean hackers, better known as Lazarus Group. This group was involved in the robbery of 300 million pesos to the SPEI system against users in Mexico, Poland and Uruguay in 2018.

In Mexico, there was no cybersecurity strategy until 2017, when actions were taken by the government in conjunction with civil society groups, private organizations, and the academic community. Thus, the National Cybersecurity Strategy (ENCS) was consolidated in which strategic objectives are defined such as: society and rights, economic and innovation, public institutions, public security and national security. It is not yet clear if the administration of President López Obrador will continue with the strategy or if it will be modified and what the consequences will be at the diplomatic level with the North Korean government.

CRISIS IN THE TOURISTIC SECTOR?

The tourism sector has been an important source of income and jobs in Mexico. Tourism contributes more than 8% of GDP, thus being the third sector that contributes the most money to the country. The growth of this sector during the last decade had been increasing, despite several economic crises that have occurred, for example, the 2008 financial crisis. However, according to the National Institute of Statistics and Geography (INEGI), during In 2018 the hotel sector suffered a sustained fall in jobs and also recorded an increase in the number of layoffs, due to a lower hotel occupancy.
Most of the 70 main tourist destinations of the country suffered a fall in hotel occupancy in 2018 with respect to 2017, even during the month of December, in “high season”. The fall in tourism activity can be attributed to several factors; Among the most important are the increase in the perception of insecurity and the consequences attributed to climate change.
Thus, 2018 was the most violent year for Mexico in terms of homicides. Only in Cancún 550 murders were registered and the direct consequence was that the US State Department. UU issue travel alerts where citizens are advised not to visit certain cities in Mexico due to violence. These alerts mention important destinations for the tourism sector such as Quintana Roo, Baja California, Baja California Sur, Chiapas, and Guerrero. On the other hand, since 2015, the coasts of the Mexican Caribbean began to suffer some of the consequences of climate change. An atypical amount of brown marine macroalgae from the Bahamas began arriving at Mexican beaches, preventing tourists from entering the sea. The presence of these algae, known as sargassum, has increased by 40%, with 2018 being the year of greatest accumulation and negative effects for tourism.
The foregoing can cause various economic losses. According to Pablo Azcárraga, president of the National Tourism Business Council (CNET), if this trend continues, in 2019 there could be a 1.6% drop in tourist GDP with respect to 2018.

Are you interested in knowing the prospects of the tourism sector for the current administration? Is your company prepared for a fall in tourism due to the elimination of federal government investment in tourism promotion? Write to info@riesgospoliticos.com.mx to provide you with the advice you require.

 

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ADVERSE SCENARIO FOR CLEAN ENERGIES IN MEXICO?

The 2030 Agenda for Sustainable Development, as we have mentioned, sets out a series of objectives to generate clear, measurable and quantifiable goals for the good of humanity, and in its seventh objective it proposes to move from the use of fossil fuels to “affordable energy and not pollutant”. Thus, it seeks that governments and companies migrate to the use of sustainable energies, understanding this as the energy produced and used with processes of low environmental impact and that will be available for future generations,
This objective is born from the fact that the global economy continues to depend on fossil fuels -petroleum, natural gas and coal- and the increase in greenhouse gas emissions is affecting the climate system. Our country, by adopting the 2030 Agenda, established a series of guidelines to move towards a low carbon economy, including the Transition Strategy to Promote the Use of Cleaner Technologies and Fuels, which establishes that, by 2024 , 35% of the energy used will come from clean sources.
Despite this, Mexico continues to generate most of the energy from the burning of fossil fuels and, although there are adequate legal instruments to achieve a transition to the use of clean energy, they may not be applied. In this sense, recently, the tender for the transmission line that would transport wind energy produced in the Isthmus of Tehuantepec was canceled. Likewise, the tender for the acquisition of clean energy was canceled, under the argument that its objectives and scope would be reviewed. Subsequently, an emerging order was announced by CFE for coal to Coahuila producers for 360 thousand tons. These actions have generated uncertainty and discontent in the private sector, since the implications can go as far as inhibiting future private sector investments in this industry.
The clean energy industry in Mexico has grown exponentially with the energy reform. For example, the generation of solar energy increased by 190% and the wind generation by 60% after the reform. This growth translates into investments that, in 2019, will amount to 6 thousand 600 million dollars.
This change of direction in the energy policy could not only delay compliance with the 2030 agenda and the goals of the energy transition plan, but also generate uncertainty in private investments within the sustainable energy industry. Such is the case of Iberdrola, a wind energy generation company that plans to invest 5 billion dollars over the next six years, but this investment will depend on the certainty of the new energy planning policy, said Enrique Alba, the company’s director.

Do you need advice to know the trends in the energy sector in Mexico? Write to info@riesgospoliticos.com.mx to provide you with the help your company needs.

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GASOLINE OUTDOOR, OPPORTUNITY THAT KCSM USED

During the month of January there was a crisis of shortage of gasoline. More than 10 states were affected by the Mexican government’s plan to combat huachicoleo, a strategy that sought to reduce the theft of hydrocarbons. A strategic part of the plan was to close the valves of the pipelines that transport gas, crude oil and gasoline, which generated problems with the supply of fuel. In Mexico City, 85 of the 400 gas stations registered a problem. Mexico has 17,000 kilometers of pipelines belonging to Petróleos Mexicanos (PEMEX) and it is in these networks that the theft of hydrocarbons mainly occurs. In 2018, these robberies cost the Mexican state 60 billion pesos.
Thanks to the energy reform of 2013, the Mexican oil sector was opened to private investment, allowing various companies to sublease Mexican pipelines, which generates considerable savings in transportation costs, that is, it was possible to generate competitive conditions. But with the closure of these, they had to find another alternative to transport gasoline. PEMEX, where appropriate, reorganized its supply chain by transferring thousands of liters of gasoline in pipes. This shortage represented the first crisis of the government, however, a company took advantage of this crisis and managed to use it in their favor, increasing their sales.
Kansas City Southern de Mexico (KCSM) is a railway company dedicated to the transport of cargo and was used as one of the safest and least expensive options -including the pipes- to deal with the shortage of gasoline. This company is one of the most attractive options for the market – given the lack of private infrastructure to store gasoline and transport it via pipelines – and is investing to have a storage center in San Luis Potosí that will have a capacity of 300 thousand barrels . In such a way that the savings in the transportation of gasoline can reach up to 25% in relation to the use of pipes, besides that this option represents a safer option compared to the use of pipelines.
KCSM has a strategic alliance with ExxonMobil, a Texan oil company, with which it imported a total of 2.6 million barrels between 2017 and 2018. In February, in response to the crisis, KCSM had an increase of 135% in the volume of imported gasoline through their trains. And, according to the president of KCSM, José Guillermo Zozaya, it is expected that imports will continue to rise as companies -mainly international- do not want to have a shortage problem again; for what he has already added to Total S.A. as a new customer.
One of the advantages that KCSM presents is that its network is international, which places it as a leader in rail transportation of gasoline in Mexico. In addition, it has an adequate infrastructure for the use of advanced technology and is part of the Asset Health Strategic Initiative, which seeks to reduce mechanical service interruptions, improve the quality of wagon inspection and increase the efficiency of railway workshops. They also use 400 drones to monitor the most conflictive routes and monitor all trains through multiple security filters. These security measures have allowed the company to only have 0.02% vandalism.
In this way KCSM was able to take advantage of the crisis of the huachicol and was placed as the safest and most economical option for the transportation of gasoline. All thanks to an advanced security strategy, the use of technologies and the correct implementation of international protocols in the field.

Do you need help to see find opportunities in the midst of crisis? Write to info@riesgospoliticos.com.mx to provide you with the advice that your company requires.

 

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WHAT IS THE FORECAST OF THE MEXICAN ECONOMY?

A couple of weeks ago, Fitch reduced PEMEX’s debt rating, which gave the first signs of how economic forecasts would be announced in the following days. Fitch downgraded PEMEX’s rating due to the debt problems faced by the oil company and because a feasible plan by the government to rescue it was not in sight.
On March 1, Standard & Poor’s downgraded Mexico’s sovereign debt from ‘stable’ to ‘negative’ because of the decline in the outlook for growth and the change in public policies in the energy sector. “The negative outlook of PEMEX’s global scale rating reflects that of the sovereign and our opinion that the close relationship between the company and the federal government will remain unchanged during the following years,” they said in their statement.
In addition, the Organization for Economic Cooperation and Development (OECD) reduced growth expectations for the Mexican economy to 2% by 2019 and 2.2% by 2020, 0.5 percentage points less than previously expected for both years. “The great political uncertainty, the current commercial tensions and a greater erosion of business and consumer confidence are contributing to the slowdown,” the OECD said in its report.
The International Monetary Fund (IMF) -for its part- lowered the growth prospects in Mexico for both 2019 and 2020 due to the decrease in the expectations of attracting foreign investment in the country. Finally, the Bank of Mexico also reduced, for the third consecutive time, the expectations of economic growth in the country, leaving it in a range of between 1.1% and 2.1%. placing it .0.6 percentage points less than the range of the previous perspective that ranged between 1.6% and 2.7%
The decision on the oil debt rating by Moody’s is still pending, which is expected to be similar to that of the other rating agencies. Moody’s has questioned PEMEX’s current direction: “Despite the higher capital expenditure in 2019, we believe that it is unlikely that Pemex will achieve the government’s production goals without an improvement in capital efficiency,” the ratings agency said. release.
These reductions in the rating of the debt by different rating agencies and international and national organizations indicate that Mexico, with the current economic model, will not grow at rates higher than 2%. These perspectives contrast with the numbers given by the current administration, whose prospects have reached a growth of 4%.
Although members of the party in power in the Congress were pronounced to regulate the work of the rating agencies in the country, President Andrés Manuel López Obrador clarified that it will not limit the work of these agencies. However, the government has not yet announced measures that could cause rating agencies and financial organizations to correct the economic outlook of PEMEX and Mexico. PEMEX’s recent financial restructuring plan was described as insufficient by the rating agencies, giving another blow to government policies to clean up the oil company’s finances.
The effects of this decline in ratings and growth expectations are already manifesting. The Mexican Stock Exchange had the longest period of decline since 2015. Financial institutions have indicated that, if they do not act with public policies that provide certainty, consumption could be affected, further impacting economic growth.

Do you need advice so that your company navigates within this complicated economic climate? Write to info@riesgospoliticos.com.mx to provide the support you require.

 

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