TIME TO WAKE UP
Nov 16th 2006
Mexico's new president, Felipe Calderon (right), must resume reforms
and set the economy free--or risk backsliding, says Michael Reid
"WAKE up, wake up, my dear, the dawn has broken, the birds are singing
and the moon has set." Thus go the lyrics of Las Mananitas, the Mexican
equivalent of Happy Birthday, belted out every day in restaurants and
homes across the country, often by troupes of MARIACHI musicians in
full regalia. The verse seemed particularly appropriate as Mexico
celebrated its 196th birthday on September 15th--the anniversary of the
day when Miguel Hidalgo, a parish priest, called for independence from
Spanish colonial rule. Mexico gives every impression of sleeping while
the world changes around it. Having seemed to embrace
globalisation--favoured by its geography, on the doorstep of the
world's largest consumer market--the country risks slipping back into
internecine conflict and introversion.
Six years ago the election as president of Vicente Fox (pictured left)
completed a long transition to democracy, ending 72 years of
authoritarian rule under the Institutional Revolutionary Party (PRI).
It also seemed to set the seal on the economic modernisation of the
world's largest Spanish-speaking country, with a population of 106m.
After Mexico went bankrupt in the debt crisis of 1982, the last three
PRI presidents cast aside protectionism and state capitalism, most
notably Carlos Salinas (in office 1988-94), who led his country into
the North American Free-Trade Agreement (NAFTA) with the United States
and Canada. Mr Fox, a former head of Coca-Cola's Mexican operations,
pledged further economic liberalisation and reform.
Mr Fox's government can look back on a number of achievements for which
his many domestic critics give him insufficient credit. In recent years
the country has enjoyed greater political freedom than perhaps at any
other time in its history. The government has maintained economic and
financial stability, with inflation for this year estimated at 3.7%.
Easier bank credit, together with a vast housebuilding programme
promoted by the government, is slowly bringing tangible benefits to an
expanding middle class. Social policies have helped to cut poverty.
ASLEEP IN A HAMMOCK OF OIL
Even so, many of the hopes raised by Mr Fox were dashed. He lacked a
majority in Congress and proved unable to win approval for any big
reforms. Instead of the annual growth of 7% he had promised, the
economy has limped along at an average of just 2.5% since 2000. The
government's finances look better than they are, helped by extra oil
revenues equal to 2% of GDP. "Fox has fallen asleep in a hammock of oil
money," says Liebano Saenz, who was chief of staff to Ernesto Zedillo,
the last of the PRI presidents (1994-2000).
Labour productivity is low and growing only slowly. Oil apart, Mexico's
exports to the United States are losing market share to China's. Some
of the social policies have reduced the incentive for millions of small
businesses to put themselves on a proper legal footing. That is only
one symptom of a wider absence of the rule of law. Another is mounting
violence from drug gangs.
As Mr Fox's term draws to its close, Mexico is starting to look like
two different countries. Thanks in large part to NAFTA, much of the
north is making visible progress. By contrast, the populous south
remains locked in poverty, backwardness and neglect. Meanwhile, each
year some 500,000 or so young Mexicans cross the country's northern
border to the United States in search of a better life.
On top of all this, Mexico's politics have suddenly become much more
complicated and confrontational. The campaign ahead of the presidential
election on July 2nd was dominated by Andres Manuel Lopez Obrador. As
mayor of Mexico City, he had made himself popular by providing pensions
for the elderly and public works. Standing for a centre-left coalition,
he took his fiery oratory to the public plaza in a country where
politics has long been dominated by backroom deals. But he was pipped
at the post by Felipe Calderon, the candidate of Mr Fox's conservative
National Action Party (PAN). Mr Calderon won 35.9% of the vote against
Mr Lopez Obrador's 35.3%, a margin of just 233,831 votes out of almost
42m. The PRI's Roberto Madrazo polled a meagre 22.2%.
To many Mexicans, the election appeared to highlight their country's
divisions and to call its growing globalisation into question. Mr Lopez
Obrador spent his formative years in the PRI. He left it in the late
1980s when the economic nationalists in the party lost out to the
free-market technocrats. Though many of his economic policies were mild
enough, he inveighed strongly against poverty and privilege. To his
detractors, he seemed to stand for a return to the authoritarian
populism practised by the PRI in the 1970s. Nothing in his life
suggested any interest in or knowledge of the world beyond Mexico.
Apart from one brief wobble, in the run-up to the election Mr Lopez
Obrador was always ahead in the opinion polls. But he made mistakes,
insulting Mr Fox and staying away from the first of two campaign
debates. Some of the economic policies he proclaimed stirred fears of a
return to financial instability. He was also the target of a smear
campaign. Mr Calderon dubbed him "a danger to Mexico", comparing him to
Venezuela's populist president, Hugo Chavez. Mr Fox, along with
Mexico's richest businessmen, weighed in on Mr Calderon's behalf.
So when the vote unexpectedly went against him, Mr Lopez Obrador and
his backers felt robbed. They cried fraud, though they never produced
any convincing evidence, and called for "civil resistance" against the
electoral authorities. For seven weeks the beaten candidate's
supporters camped out in the centre of Mexico City, occupying the
Zocalo, the great square that has been the heart of the city since
Aztec times, and blocking Reforma, its grandest avenue. "To hell with
your institutions," declared Mr Lopez Obrador.
Even the independence celebration on September 15th was overshadowed by
the post-election conflict. Mr Fox chose to mark the occasion in his
(and Hidalgo's) home state, leaving the traditional venue, the Zocalo,
to Mr Lopez Obrador's people for the evening. After a final rally of
his supporters at which he vowed to proclaim himself the "legitimate
president", Mr Lopez Obrador suspended his protests. But he said he
would not recognise Mr Calderon when the new president formally takes
over on December 1st.
CRYING FOUL
In "The Labyrinth of Solitude", his classic study of the Mexican
character, Octavio Paz noted that his countrymen habitually mask
painful realities, hiding more than they reveal. Mr Lopez Obrador's
claim to be leading a mass social movement for democracy against a
"usurper", Mr Calderon, fits in with that tradition. Mr Lopez Obrador
recalled a long history of electoral fraud under the PRI. He drew a
particular parallel with 1988, when Mr Salinas was declared president
after the computers counting the votes had "crashed" while showing an
early lead for his leftist challenger, Cuauhtemoc Cardenas.
The parallel was askew. In 1988 the electoral authority was the
Minister of the Interior. But a decade ago, with the agreement of all
the parties, Mexico set up independent electoral institutions.
According to those independent bodies, two counts of the ballots (and a
partial recount of 9% of them) all showed the same narrow lead for Mr
Calderon. The election produced the best-ever haul of congressmen for
Mr Lopez Obrador's centre-left Party of the Democratic Revolution
(PRD). The electoral tribunal did find that the interventions of Mr Fox
and the business groups were technical violations of the electoral law,
but no other democracy would worry about such things.
Most of the people camped on Reforma, far from constituting an
independent social movement, were cogs in the political machine built
by the former mayor. The protest had the backing of the Mexico City
government. "It's not the people v the powers that be. It is the powers
that be," quipped Jorge Castaneda, a political scientist who was the
first foreign minister in Mr Fox's government.
The biggest irony of all is that as former members of the PRI, several
of Mr Lopez Obrador's closest collaborators were complicit in the
fraudulent campaigns of the past. The protests were "the rebellion the
PRI didn't do in 2000" when it lost power to Mr Fox, says Hector
Aguilar Camin, a historian. "Alternation in power had happened very
cheaply for us. It's the first protest against this young democracy,
done by the ex-Priistas of the PRD."
Mr Lopez Obrador's attempt to emulate Evo Morales, the Bolivian
president who toppled two predecessors by organising street
demonstrations, seems to have backfired. Polls show that if the
election were held today, Mr Calderon would win by a comfortable
margin. On October 15th the PRD lost a gubernatorial election in Mr
Lopez Obrador's home state of Tabasco even though he went to campaign
for his party.
All that said, Mr Lopez Obrador's campaign laid bare many Mexicans'
deep sense of dissatisfaction with the status quo. And Mr Calderon,
having won the narrowest of victories, has had to rearrange his
priorities. He now lists these as job creation, the fight against
poverty and public security; at the start of the campaign they came in
the reverse order. "Pragmatically, I'm interested in winning over a
part of the electorate that wasn't with me and whose concerns were much
more centred on poverty," he said in an interview for this survey.
The first question raised by the election and its messy aftermath is
whether Mr Calderon can govern Mexico. The second is whether he can
restore it to a path of democratic progress and rapid economic growth.
This survey will argue that, contrary to appearances, he has an
extraordinary opportunity to do both--but only by being far bolder than
his predecessor in tackling the many vestiges of the old order that are
still holding the country back. Many of these involve monopoly power,
public and private, political and economic. They cover a broad range:
from the teachers' union to Pemex, the state oil monopoly, and Telmex,
a private telecoms near-monopoly. It is these bastions of unaccountable
power, rather than Mr Lopez Obrador's antics, that are the real threat
to Mr Calderon's government and to Mexico as a whole.
See this article with graphics and related items at
http://www.economist.com/surveys/displaystory.cfm?story_id=8131886
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