Foreign Affairs

Hope for Mexico

Mexico City — Drive down Avenida Reforma these days and you’ll see lots of this capital’s clogged traffic but no signs of the army of protesters mobilized during August and September to insist that leftist Andres Manuel Lopez Obrador won Mexico’s July 2 presidential election. Three months after AMLO, as he’s widely called, fell a quarter-million votes short of conservative Felipe Calderon, most Mexicans appear to accept that the votes were fairly counted and then recounted.

A U.S. government official here, who spoke on condition that he not be identified, lauded Mexico’s transparent conduct of its presidential election. What’s more, he expressed a buoyant optimism about Mexico’s prospects now that the roiling controversy over who will succeed President Vicente Fox has been resolved.

"AMLO is out of political and legal options," the official said.

In a wide-ranging interview, the official praised Calderon as a politically savvy leader who will find ways to work with an opposition Congress to advance the reform agenda Mexico needs.

"This is a guy (Calderon) who’s been in the political world, around elections since he was 14 or 15 years old. He knows how things work. He’s skilled politically where Fox was not," said the official.

That’s a vitally important point. Fox, a pro-business conservative who in 2000 became the first opposition candidate in 70 years to win a presidential election against Mexico’s long-ruling and corrupt Institutional Revolutionary Party (PRI), lacked the political skills to accomplish the reforms he promised. A former businessman, he hired corporate headhunters to assemble a cabinet that ill-served him. Then he failed to overcome opposition to his programs from a Mexican Congress dominated by his political opponents; the resentful PRI and the leftist Party of the Democratic Revolution.

Calderon will face a comparable challenge. His center-right National Action Party won only a minority of seats in the new Congress. To fashion a majority, he will need to do what Fox could not — form expedient alliances with members of the Institutional Revolutionary Party. Acting together, a centrist PAN-PRI coalition in Congress could overcome opposition from Lopez Obrador’s Party of the Democratic Revolution.

The U.S. official here said Calderon has a lot to do, starting with further economic reforms.

Mexico’s once insular, state-run economy has been transformed since the late 1980s. Mexico joined the world economy, lowered its trade tariffs, privatized many of its inefficient state-run enterprises, solicited foreign investment and signed the North American Free Trade Agreement with the United States and Canada.

But since then, free-market reforms have stalled. An estimated 40 percent of all Mexicans still live in poverty, a powerful impetus driving migration to the United States in search of jobs. Mexico’s competitiveness ranking has slipped markedly in comparison with, for example, China and, increasingly, India.

George Grayson, a professor of government at William and Mary College and a close Mexico watcher, says the Mexican economy faces serious trouble if further reforms are not implemented.

"China is eating Mexico’s lunch economically and India will be next," Grayson says.

Fox deserves credit for sound fiscal and monetary policy. He kept Mexico’s currency stable during his six-year term, avoided the peso collapses that dogged his PRI predecessors and kept Mexico’s economy growing at a reasonable pace.

But Calderon must do more, says the U.S. official here and many economists.

Chronic corruption in both business and government still inflicts a huge drag on the economy. Mexico’s state-run oil company, PEMEX, remains inefficient and poorly managed. Energy analysts say that without at least partial privatization and foreign investment, PEMEX production may decline. That would threaten Mexico’s economic growth and diminish the government’s prime source of revenue.

Indeed, oil revenues plus remittances from Mexico’s exported work force (mostly in the United States) provide most of Mexico’s supply of hard currency.

In a widely quoted speech, the U.S. ambassador here, Antonio Garza, said bluntly that Mexico needed an economy that relied on more than oil revenues and remittances from overseas workers. Garza was right, and Calderon surely agrees.

That Lopez Obrador, an economically untutored populist and advocate of various socialist nostrums, nevertheless came within a whisker of winning the presidency is a measure of how little Mexico has done to improve living standards for its poorest citizens.

Calderon’s daunting challenge will be to improve education and health care for Mexico’s lower classes while simultaneously building a more competitive economy that can raise living standards across the board.

Calderon must also improve Mexico’s often dismal state of public safety and order, primarily by defeating the rapacious and violent drug-trafficking cartels that so threaten the rule of law in Mexico.

The U.S. official here says he nonetheless remains "bullish" on Mexico and on Calderon’s chances to succeed.

So, too, apparently, do most Mexicans. Calderon won only a narrow plurality July 2 in a three-candidate PAN-PRD-PRI race. But subsequent public opinion polling after Lopez Obrador’s defiant, disruptive refusal to accept defeat showed that Calderon would have won a rematch over his leftist rival in a landslide.

That’s the sort of public support Mexico’s new president will need to deliver the further reforms his country requires.


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