Mexico City - Every Monday morning for the last 23 years, Ernesto arrived at Luz y Fuerza del Centro, Mexico City's power and light company, ready to work. This Monday, however, he arrived ready to protest.

    Late Saturday night, as Mexicans celebrated their national soccer team's qualification for the World Cup, President Felipe Calderòn sent hundreds of federal police to surround Luz y Fuerza. Hours later, he ordered the liquidation of the state-run company, claiming it was financially "unsustainable" due to corruption and waste.

    Now Ernesto and 43,000 other Luz y Fuerza employees are out of work. Another 22,000 retirees are wondering what will happen to their pensions.

    Controversial and possibly unconstitutional, Calderòn's decree was the first step towards what many Mexicans fear is the privatization of yet another of their country's key industries. But some wonder if the shutdown isn't something larger: a warning to unions across the country to cooperate, or else face elimination.

    "This is a war against the unions," Ernesto yelled over the chants of several thousand other protesters in downtown Mexico City. "If you break the Electricians Union, which is the nation's strongest, then all the other unions will eventually fall too. That's neoliberalism."

    Calderòn, who belongs to the conservative National Action Party (PAN), has denied that closing Luz y Fuerza represents an attack on Mexico's unions.

    "This measure is not, as has been said, a political attack by the government against union life," Calderòn said Wednesday. "I reiterate and will always reiterate my respect for union autonomy and for the lives and working rights of Mexican workers."

    Yet, the shutdown came with little warning, following a public spat between the federal government and the union representing Luz y Fuerza workers.

    On October 5, Calderòn's administration refused to recognize Martín Esparza as leader of the Mexican Electrical Workers Union (SME), which represents Luz y Fuerza del Centro. The federal government cited "irregularities" in SME's recent internal election, which Esparza won for the third consecutive time.

    Esparza is an ally of Andrés Manuel Lòpez Obrador, the liberal Partido Revolucionario Democrático (PRD) candidate who narrowly lost the 2006 presidential election to Calderòn amidst charges of voter fraud.

    Five days after refusing to recognize Esparza, Calderòn shocked the country by shutting down Luz y Fuerza, handing over the responsibility of providing electricity for nearly a third of the country to another state-owned company, the Federal Electricity Commission (CFE).

    Calderòn's administration has called the move a cost-cutting measure, alleging that years of waste and poor service by Luz y Fuerza have hurt the country by driving companies out of the capital.

    "Luz y Fuerza del Centro's results are notably inferior compared to organizations that provide the same services internationally and compared to the Federal Electricity Commission," the government said in a statement explaining the shutdown. The government says Luz y Fuerza lost 30 percent of its electricity due to theft and inefficiency.

    The controversy comes at a difficult time for Mexico, as debate rages over proposed government austerity programs aimed at alleviating the economic crisis.

    Despite predictions that the Mexican economy will contract 7.5 percent in 2009 - the worst contraction since the 1930s - Calderòn has rejected PRD calls for a more aggressive stimulus plan. Instead, he has proposed closing several government ministries as well as a two percent hike in sales tax on nonfood items - a tax hike liberals say will hit the poor the hardest.

    Yet, Calderòn has tried to link the decision to shutter Luz y Fuerza with his economic plan, which he says will help Mexico's poor. The president has said repeatedly that the roughly $3 billion in annual subsidies received by Luz y Fuerza is more than the cost of Mexico's Oportunidades anti-poverty program, implying that the savings will be redirected to the poor.

    Meanwhile, reports of blackouts are up across the country since Sunday. The newspaper El Universal reports power outages in 32 neighborhoods in Mexico City, as well as in ten nearby cities.

    The Electricians Union and the federal government have traded accusations all week long, ranging from charges of SME sabotaging power lines (a claim since retracted by the government) to federal police kidnapping SME members and forcing them to work without pay (a charge denied by the government).

    Calderòn's PAN party has largely followed in lockstep with the president's decision, while the Institutional Revolutionary Party (PRI) - returned to power in the July 5 elections - has also supported him. The PRD, however, has filed a petition with the Mexican Supreme Court alleging that since the National Assembly established Luz y Fuerza, not the president, the he never had the power to dissolve it in the first place.

    In his televised speech Sunday, Calderòn swore he wasn't privatizing the nation's electricity. But so far, the Department of Energy has said it may only rehire 8,500 Luz y Fuerza employees to help the CFE. Considering that the government originally said that half of Luz y Fuerza's employees were unnecessary, that leaves 13,000 required positions still empty. Where will those jobs come from if not from private companies?

    "Calderòn says he's not privatizing us, just turning our jobs over to the CFE," said Ernesto, who declined to give his last name for fear of government persecution. "But the CFE already has lots of private contracts. They're buying their electricity. Just go and ask in the north of Mexico how many private companies are generating electricity."

    "It's a backdoor to privatization," he said.

    With its petitions for a public debate between Esparza and Calderòn ignored, SME has enlisted dozens of other labor unions and planned a large demonstration for Thursday in downtown Mexico City. If the Luz y Fuerza debacle wasn't already a battle between Calderòn and Mexico's unions, it soon will be.

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