Mexico & Nafta - 23 September 2003
Into the second half
The halfway point of every Mexican administration is the beginning of the end of every Mexican president. The commentariat becomes much more interested in who may succeed him than in what the current president is doing. The disappointments of Fox's first term, and his party's weakness in the lower chamber of congress, mean that Fox starts his downward glide to pensionable status from a lower point than most of his predecessors.
Fox seemed to sense that it is now or never for him. He signalled that he would make a final effort to deliver the changes/reforms he promised in his first term. His third State of the Union address, on 1 September, made four promises for reform. The key reforms are to be in energy, electricity, tax and labour relations. Depressingly, Fox started out three years ago with the same list.
Fox claimed, melodramatically, that without reforms, the country's future was at risk. This means, essentially, that the country's future is in the hands of the biggest party in congress, the Partido Revolucionario Institucional (PRI).
The reforms will demand some difficult decisions. The new energy minister, Felipe Calderón Hinojosa, realises this. He said that it was paradoxical that Mexico, with its huge energy reserves, was a net importer of refined oil products and derivates. He added that it was shocking that the state oil company, Pemex, had been allowed to run down its reserves for so long without replacing what it extracted with new discoveries. He added that the current situation meant that Pemex's production levels could only be maintained if fresh money was spent on exploration: the government could not afford to do this, he added.
The same hard financial choices need to be taken in the electricity industry. The government reckons that the country will need to spend US$50bn pesos over the next 10 years to ensure that it does not run short of power. The government cannot afford to do this. So, Calderón Hinojosa argues, the private sector will have to be encouraged to shoulder the burden.
The old guard of the PRI is deeply sceptical about the benefits of the state withdrawing from any activities. The PRI is a clientelist or paternalistic party: It exists only to reward its supporters. its members do not want the consolation of ideological purity. Elba Esther Gordillo, the PRI leader in the lower chamber, who is, according to some priístas, far too close to Fox, is nothing if not a pragmatist. She called on the government to build majorities in congress, rather than aim for consensus. She argues that it is a mistake to believe that the only way congress could take decisions was by consensus: this way, she argued, congress became hostage to vocal minorities. She claimed that the country's democratic development meant that majority rule should hold sway, since it was obvious that there could never be unanimity on issues. She said that the alternative to majority rule, as the previous congress had shown, was paralysis.
Gordillo's realpolitik made a sharp contrast to the formal reply to the Informe by the panista president of congress: Juan de Dios Castro said that congress and the executive should not see themselves as competitors. He pooh-poohed the traditional interruptions of the president's speech as part of the spectacle. He said differences were natural but they could be bridged by dialogue, negotiation and compromises. Significantly, there was a shout of dissent from the PRI benches during de Dios Castro's speech, calling on him to go back and work for Fox. He was previously Fox's legal adviser.
In his Informe, Fox stressed that he was not calling for the privatisation of either the state oil company, Petróleos Mexicanos, or the electricity industry. He said that he just wanted them reformed so that they could function more efficiently and do what the country needed.
Fox's speech was long on claims of improvement: one of the most striking was that, since 2000, his government's administrative reforms had reduced the spend on administration from 45% of the total budget to 29%. He also claimed that a quarter of all government spending now went on education: spending on education was now the equivalent of 6.8% of GDP. Even so, as the Organisation of Economic Co-operation and Development recently reported, Mexico's education achievement lags that of comparable countries.
Fox conceded that there was general dissatisfaction with what his government had achieved. Fox won the 2000 election promising change, and, though he claims that the human rights position has improved, his government has not achieved the historic transformation the country expected.
Fox admitted that the economy, though stable, was not producing sustained growth and the jobs the country needed. He noted that in rural areas 34% of the people lived in poverty. Yet Mexico is the ninth-biggest economy in the world. Fox promised a drive to improve living standards in rural areas. This is a shrewd move: the PRI is strongest in rural areas. Increased rural spending may strengthen the PRI in the short term (and thus help Fox in congress) but weaken it overall.
Fox seemed to sense that it is now or never for him. He signalled that he would make a final effort to deliver the changes/reforms he promised in his first term. His third State of the Union address, on 1 September, made four promises for reform. The key reforms are to be in energy, electricity, tax and labour relations. Depressingly, Fox started out three years ago with the same list.
Fox claimed, melodramatically, that without reforms, the country's future was at risk. This means, essentially, that the country's future is in the hands of the biggest party in congress, the Partido Revolucionario Institucional (PRI).
The reforms will demand some difficult decisions. The new energy minister, Felipe Calderón Hinojosa, realises this. He said that it was paradoxical that Mexico, with its huge energy reserves, was a net importer of refined oil products and derivates. He added that it was shocking that the state oil company, Pemex, had been allowed to run down its reserves for so long without replacing what it extracted with new discoveries. He added that the current situation meant that Pemex's production levels could only be maintained if fresh money was spent on exploration: the government could not afford to do this, he added.
The same hard financial choices need to be taken in the electricity industry. The government reckons that the country will need to spend US$50bn pesos over the next 10 years to ensure that it does not run short of power. The government cannot afford to do this. So, Calderón Hinojosa argues, the private sector will have to be encouraged to shoulder the burden.
The old guard of the PRI is deeply sceptical about the benefits of the state withdrawing from any activities. The PRI is a clientelist or paternalistic party: It exists only to reward its supporters. its members do not want the consolation of ideological purity. Elba Esther Gordillo, the PRI leader in the lower chamber, who is, according to some priístas, far too close to Fox, is nothing if not a pragmatist. She called on the government to build majorities in congress, rather than aim for consensus. She argues that it is a mistake to believe that the only way congress could take decisions was by consensus: this way, she argued, congress became hostage to vocal minorities. She claimed that the country's democratic development meant that majority rule should hold sway, since it was obvious that there could never be unanimity on issues. She said that the alternative to majority rule, as the previous congress had shown, was paralysis.
Gordillo's realpolitik made a sharp contrast to the formal reply to the Informe by the panista president of congress: Juan de Dios Castro said that congress and the executive should not see themselves as competitors. He pooh-poohed the traditional interruptions of the president's speech as part of the spectacle. He said differences were natural but they could be bridged by dialogue, negotiation and compromises. Significantly, there was a shout of dissent from the PRI benches during de Dios Castro's speech, calling on him to go back and work for Fox. He was previously Fox's legal adviser.
In his Informe, Fox stressed that he was not calling for the privatisation of either the state oil company, Petróleos Mexicanos, or the electricity industry. He said that he just wanted them reformed so that they could function more efficiently and do what the country needed.
Fox's speech was long on claims of improvement: one of the most striking was that, since 2000, his government's administrative reforms had reduced the spend on administration from 45% of the total budget to 29%. He also claimed that a quarter of all government spending now went on education: spending on education was now the equivalent of 6.8% of GDP. Even so, as the Organisation of Economic Co-operation and Development recently reported, Mexico's education achievement lags that of comparable countries.
Fox conceded that there was general dissatisfaction with what his government had achieved. Fox won the 2000 election promising change, and, though he claims that the human rights position has improved, his government has not achieved the historic transformation the country expected.
Fox admitted that the economy, though stable, was not producing sustained growth and the jobs the country needed. He noted that in rural areas 34% of the people lived in poverty. Yet Mexico is the ninth-biggest economy in the world. Fox promised a drive to improve living standards in rural areas. This is a shrewd move: the PRI is strongest in rural areas. Increased rural spending may strengthen the PRI in the short term (and thus help Fox in congress) but weaken it overall.