Special report on Mexico
All quiet on the South
Many
of Latin America’s largest economies are stuck in the so-called “middle-income
trap,” with slowing productivity growth making it unlikely that they will catch
up to the top global economies in the near term. Countries in the middle income
trap are losing competitiveness with poor economies on manufactured exports,
but are also unable to compete with wealthier economies in high-skill
innovation. As a result, they are “stuck” in the middle income category,
and they have been stuck for a long time. And Mexico is not the exemption.
Classifying
Latin American countries as middle income ones is a tricky concept created by
the extended use of the sometimes questionable GDP per capita measure. Using
the named before elaborated by the International Monetary Fund we can compare
the Mexican average citizen (10,118 USD per year) with the Romanian one (12,482
USD per year) which is curiously preceded by Poland with a considerable larger
GDP per capita at 14,901 USD.
Now
I have lived both in Mexico and Poland, I even was in Romania during these
summer and even though that at first sight Poland looks way more rich than
Romania, the latest is doing a great job catching up with the V4 countries
(Poland, Hungary, Czech Republic and Slovakia). The poverty rate in these 2
European countries with difficult pasts has reached historical lows and more
people than ever are entering the middle-income share of population they have
some really rich people (the so called billionaires) but no exaggerations, Romania
having just one, Ion Tiriac, with a net worth of 1.19 billion dollars and
Poland having 6 with fortunes varying from 3.3 to 1.2 billion dollars.
Mexico on
the other hand has 31 with fortunes varying from 65.5 billion dollars to 1.1.
The concentration of wealth in Mexico can be better described saying that the 4
richest man in the third largest country of North America are worth the 9% of
the country’s GDP when in Poland the same amount of people in the top are worth
just 1.6% of the country’s GDP.
The origin of all evils
Those are not news to be proud of if you are a
Mexican official when around 42% of the population lives in poverty. That
explains how in Mexico there are very few “new rich” people and more likely
families with money are getting richer and richer, fortunes that started to
grow during the dictatorship’ stability provided by Porfirio Diaz between 1876
and 1910 which ended with a violent revolution that killed one million in a 15 million-inhabitants
country that little achieved, as the old saying prays “the old king is dead,
long live to the new king” after some years of treason and multiple magnicides
the PRI (Institutional Revolutionary Party) took power and didn’t let it go
until the year 2000 with a very well-known electoral fraud on the road, in 1988
the so called ‘breakdown of the system” took place, later in 2017 the former
president that ruled during the elections Miguel De la Madrid admitted the
fraud.
It
was then during the last twenty years of PRI ruling that most of the Mexicans
made their fortune taking advantage of the NAFTA agreement signed in 1994 with
the United states and Canada, most of this Mexican billionaires accumulated
their assets thanks to the privatization of before national industries such as
telecom, mining and other sectors. The country saw an unprecedented growth
positioning itself by 2001 as the 8th largest economy in the world
ahead of countries such as Canada. Now is the number 15th and
leaving poverty aside we can blame some factors as the principle cause of
keeping Mexico in the Middle-income trap.
Winds of change
In
the year 2000 after more than 70 years of PRI ruling the expected power change
took place when PAN (National Action Party) won the presidential elections.
They received a country with a large GDP and a good per capita one (7,000 USD
compared with the 4,500 of their Polish pairs) and everything looked like
Mexico was about to give the big step and leave the middle-income countries to
join the club of the wealthy nations (to which took the first steps by joining
the OECD just to occupy until this day the last positions in almost every
ranking organized for this selective group of 36 countries).
The
new president was a promising one, he seemed to see that the only way to break
out was to save and invest more, invest in education, improve infrastructure,
and increase innovation, research and development. The former Coca-Cola executive and governor of
Guanajuato state came to power based on his popularity with voters — not
because of a political machine. Yet, once in office, he had to lead a system
based on three established political parties — the former monopoly party, known
as the PRI, the left-wing PRD and the conservative PAN. Each party controlled
roughly a third of Mexico's congress.
Since
Mr. Fox wasn’t able to forge a working coalition with either of Mexico's
opposition parties, political stalemate has developed. Even the members of Mr.
Fox's own party, the PAN, didn't always support Vicente Fox in the national
legislature. In this regard, it is useful to remember that, during the 1990s,
Fox and his contemporaries were considered northern "barbarians" by
the PAN's ossified and captive leadership in Mexico City.
As
a matter of fact, the moderate Mr. Fox — a descendant of émigrés from Catalan —
was considered a radical by some in the PAN. After all, this is a party that
began
as
a vehicle for Catholic, anti-communist conservatives opposed to Mexico's
Marxist revolution. Yet, he and other northern governors demonstrated that the
PAN could govern and solve problems. While the popular Mr. Fox gave the PAN
electoral credibility at the national level, he was only grudgingly accepted by
other PAN leaders — largely because of his ability to work with the PRI and
PRD. For example, in Guanajuato he kept experienced PRI bureaucrats in place —
and worked with other parties that were anathema to mainstream panistas.
Fox
joined the PAN in the 1980s, inspired by the charismatic PAN reformer Manuel
Clouthier, known as “Maquio,” who died in a suspicious car crash in 1989.
Always
the outsider who was more popular with Mexican voters than with Mexico City's
incestuous political class, Mr. Fox remains an outsider today, even after 14
years from his presidency.
He
ran as a reformer under the PAN banner in 2000, but took power as the head of a
political movement, the Alliance for Change, rather than a single party.
By
trying to be inclusive of all of the political constituencies that supported
his victory in 2000, he created an unwieldy executive branch that spent more
time debating internal turf issues than handling the nation's priorities.
Mexico
thus found itself at a crossroads. On the one hand, the present situation was
an improvement over decades of single-party rule prior to 2000. On the other
hand, Mexico was still stuck in a political stalemate that only a decisive
election could resolve.
The
middle-term 2003 election came and little change. The Vicente Fox’s party (PAN
represented at the right side of the graphic) didn’t win the so much required
majority of the parliament….
Fox
saw his domestic agenda thwarted, primarily by the PRI led by former Tabasco
Governor Roberto Madrazo. Mr. Madrazo is the PRI's leader in the Mexican
congress, an ally of former President Carlos Salinas — and a man who looked
like a major contender for the Mexican presidency in 2006.
To illustrate the paralysis
lived during those times because of the party division in the country I’ll give
an example. When Vicente Fox recently tried to resurrect his proposal to open
Mexico's state oil industry to private investment, a reform needed given the
changing times in the petrol market, Mr. Madrazo simply replied that the PRI
would not be considering the proposal , effectively killing the idea before it
even began, proposal that later when a PRI candidate won the elections in 2012
retook and implemented successfully. Something similar happened with the new
mexicos city airport in Texcoco which Fox couldn’t build because of the
opposition and EPN started to build as soon as he won the elections in 2012
(giving the building contracts to his friends). It is not wrong to say that the
PRI even without the presidency now, just like the old times were the cause of
stopping the potential growth of Mexico to seek their own benefit.
The second half of his
administration was marked by his conflict with Andrés Manuel López Obrador,
then Mexico City's Mayor. The PAN and the Fox administration unsuccessfully
attempted to remove López Obrador from office and to prevent him from
participating in the 2006 presidential elections. The Fox administration also
became embroiled with diplomatic conflicts with Venezuela and Bolivia after
supporting the creation of the Free Trade Area of the Americas, which was
opposed by those two countries. Mr Fox was a controversial figure because of
the specific diplomacy that used when talking about other leaders and
expressing about other countries, a perfect example of this was the crisis that
Fox held with Fidel Castro, mighty dictator of Cuba. A situation that provoked
a series of reactions. In the framework of the International Conference on
Financing for Development held from March 18 to 22, 2002 in the city of
Monterrey, Nuevo León, the then President Vicente Fox did famous the phrase
"eat and go". This was during a telephone conversation of the Mexican
president with his Cuban counterpart Fidel Castro where Fox told Castro that
his presence at that international summit represented “a good amount of
security and attention problems” and added that “it was not of friends notify
at the last minute ”that he was going to appear at the summit. Castro warned
that the invitation was from the UN and that he could not prevent his
assistance, since "that would lead to a worldwide scandal" and even
warned, "If you are the host and forbid it, I will have no choice but to
publish the speech tomorrow ”. As Castro did causing a diplomatic crisis and
tensions between Cuba and Mexico
On the other hand, leaving
apart the controversial public figure that he was, Fox was credited with
maintaining economic growth during his administration, and reducing the poverty
rate from 43.7% in 2000 to 35.6% in 2006, which
again increased with the next presidents, specially with EPN.
Mr.
Fox is likely to stay down in the history books as a mere transitional figure
in Mexico's progress toward true democracy and the rule of law. His last year in office
oversaw the controversial 2006 elections.
Clash of titans
3 candidates, one,
the Fox’s party candidate: Felipe Calderon a former Harvard student that was president of the PAN's youth
movement in his early twenties. Then a local representative in the Legislative
Assembly and, on two different occasions, in the federal Chamber of Deputies,
ran for the governorship of Michoacán in 1995 and served as national president
of the PAN from 1996 to 1999. During his tenure, his party maintained control
of 14 state capitals, but also faced a reduced presence in the federal Chamber
of Deputies.
Soon after Vicente Fox took
office as president, Calderón was appointed director of Banobras, a state-owned
development bank. He was accused by political opponents of committing abuse,
disputing use of certain legal procedures to finance property valued between
three and five million Mexican pesos (between US$300,000 and $500,000);
however, once political objections arose, he used other means to formalize his
transaction.
He joined the presidential
cabinet as Secretary of Energy, replacing Ernesto Martens. He left the post in
May 2004 in protest of Vicente Fox's criticism of his presidential ambitions
while supporting those of Santiago Creel, distancing himself from the former
president.
The
second one was Madrazo, as we read before he was the president of the chamber
and part of the PRI machinery, not so relevant for our report because he had
only 22% of the popular vote and ended as the irrelevant third place, but there
is something worth to know just to
realize what kind of shameless was he (in representation of his party). Roberto
Madrazo has never suffered from a reputation for honesty, indeed His image as a shady politician was so pronounced that
his opponents used it against him in the 2006 campaign, plastering the walls
with posters that read: “Do you believe Madrazo? I don’t either.”
So
it provoked laughter when Mr. Madrazo, was disqualified in 2007 for cheating in
the Berlin Marathon. He crossed the finish line in Berlin on Sept. 30 with a
startling time of 2 hours 41 minutes 12 seconds, easily winning the men’s
category for age 55. He grinned and pumped his fists in the air.
But a sports photographer, Victor Sailer, wondered why
Mr. Madrazo was wearing a jacket, a cap and long tights on a day when most of
the runners finished the race in sweat-soaked T-shirts and shorts. Mr. Sailer
showed his photo to race officials and raised the possibility that Mr. Madrazo
might have broken the rules.
Race
officials said they had proof that Mr. Madrazo had taken a shortcut. An
electronic tracking chip in one of his running shoes showed he had skipped two
checkpoints and appeared to have run one nine-mile section faster than any human
being on record, taking only 21 minutes.
“Not
even the world record holder can go that fast,” the race director, Mark Milde,
told The Associated Press.
With
this type of opponent Felipe Calderon had to worry about one man, and worry he
did. Andres Manuel Lopez Obrador, known as AMLO was since Cardenas in 1988
(Which won the presidential elections but was a victim of the system’s
oppression that resulted in electoral fraud) the strong man of the true left,
the left as he claimed was free of corruption and crony capitalism, the one
that fights for the rights of the poor ones with the slogan “there can be no
rich government with poor people’’.
It
was the alternative to the crony capitalism lived to this day in Mexico where
the ones who are getting wealthy are the friends of the politicians, they
receive special treatment in public contracts and licenses. He had an enormous
support from the people because he showed what was he capable of doing during
his six years as governor of the most populous province in the country, Mexico
City. He did a great job there and showed off, the impeachment that Fox
conducted against him gave countrywide coverage of the situation and was the
best starting point for his presidential campaign.
Lobbies gonna lobby
But
AMLO was a bit too leftist and the businessmen
in the country were afraid of his policies so they came together and decided to
support the candidacy of Felipe Calderon over AMLO, they financed a countrywide
fear campaign against AMLO their slogan claimed "Andrés Manuel is a danger to Mexico,"
the attacks and the use of that phrase remained an essential component of the
strategy used. The businessmen took advantage of this rumor and released a large
number of spots repeating that AMLO was a danger "because it will destroy
the national economy"
As
result of this The Mexican general election of July 2, 2006, was the most hotly
contested election in Mexican history and as such, the results were
controversial. According to the Federal Electoral Institute (IFE), the initial
"Quick Count" determined the race was too close to call, and when the
"Official Count" was complete, Felipe Calderón of the right-of-center
National Action Party (PAN) had won by a difference of 243,934 votes (or
0.58%).
According
to the official count, López Obrador held an advantage over Calderón right
until 97.50% of the polling stations were counted, after which Calderón
overtook the first place by a difference of less than 1% of the votes. This
stats raised all the red flags about the liability of the results.
With
the result in doubt, the fear of civil unrest rippled across the nation. López
Obrador and his supporters quickly began to organize a campaign to challenge
the results of the election, including mass protests, marches, and civil
disobedience, culminating in a massive rally in Mexico City's historic Zócalo
on July 30, 2006. Estimates of the crowd at the rally range from 500,000 to
3,000,000 supporters.
The
biggest Obrador’s claim was to count the votes one by one again, on Saturday,
August 5, the TEPJF met in public session to rule on López Obrador's filings
alleging irregularities and requesting recounts. The seven magistrates voted
unanimously that there was sufficient legal justification to order a recount in
only 11,839 ballot boxes in 155 districts (9.2% of the total), thus rejecting
López Obrador's public demand that all votes and ballot boxes be recounted.
The
Tribunal based its decision of a partial recount on the fact that, despite
publicly demanding a "vote-by-vote" general recount, López Obrador's
party only presented legal claims for fewer than 44,000 polling stations, or
less than 34%. Therefore, legally, only those 44,000 polling stations were
deemed controversial by the TEPJF. The Tribunal ruled that the
non-controversial votes should not be recounted, because "the certainty
asked by the Coalition (of López Obrador's party) is tied to the respect of the
citizen counts in non-controversial polling stations". However, the
Tribunal did certify
that principles of certainty in the elections called for a justified recount in
some of the controversial stations, as irregularities were found there.
The
partial recount of votes in the disputed election began on August 9 amid escalating protests against alleged
electoral irregularities in the close election.
On
August 28, the TEPJF announced the results of the partial recount, subtracting
81,080 votes for Calderón, 76,897 votes for López Obrador, 63,114 for Roberto
Madrazo, 5,962 for Patricia Mercado, 2,743 for Roberto Campa, and 7,940 for the
remaining candidates. A total of 237,736 votes were annulled out of the
approximately 4 million votes recounted. Than means around 6% of the recounted
votes were annulled.
It
is believed that if all the votes were recounted most likely AMLO would have
become president of the United Mexican States.
With
this panorama, and his credibility on doubt Felipe Calderon took power in 2006.
His
presidency was marked by his declaration of "war" against the drug
cartels only ten days after taking office; this was considered by most
observers as an immediate strategy to gain popular legitimacy for the new
President after the convoluted elections. Calderón sanctioned Operation
Michoacán, the first large-scale deployment of federal troops against the drug
cartels. By the end of his administration, the official number of deaths
related to the drug war was at least 60,000. The murder rate skyrocketed during
his presidency parallel to that of the ignition of the drug war, with the
murder rate peaking in 2010 and decreasing during the last two years of his
term. The main architect of the drug war, Genaro García Luna (who was Secretary
of Public Security during the entirety of Calderón's administration), was
arrested on the United States in 2019 due to alleged links with the Sinaloa
cartel.
Calderón's
term was also marked by the Great Recession, which resulted in a 4.7% drop in
gross domestic product for 2009. An economic recovery the following year
resulted in growth of 5.11%. In 2007, Calderón established ProMéxico, a public
trust fund that promotes Mexico's interests in international trade and
investment. The total foreign direct investment during Calderón's presidency
was US$70.494 billion.[11] As a result of the countercyclical package passed in
2009 to address the effects of the global recession, the national debt
increased from 22.2% to 35% of GDP by December 2012. The poverty rate increased
from 43 to 46%.
Other
significant events during Calderón's presidency include the 2008 passing of
criminal justice reforms (fully implemented in 2016) the 2009 flu pandemic, the
2010 establishment of the Agencia Espacial Mexicana, the 2011 founding of the
Pacific Alliance and the achievement of universal healthcare through Seguro
Popular (passed under the Fox administration) in 2012. Under the Calderón
administration sixteen new Protected Natural Areas were created.
It
was during this period that Mexico started to figure internationally as a
unsafe country with a high number of murders, but also a lot of investment and development
came to the country during the period, somehow after two periods of PAN ruling
people forgave or rather forgot the old mores of the ruling party during most
of the 20th century and again after 12 years from non-ruling a
candidate from the PRI was elected president in a election marked with the lack
of strong candidates that could convince the people with a candidate from the
PAN that the only merit she had was being woman and an AMLO that sometime
seemed to have a chance to win the elections but he didn’t change his rather
leftist speech that cost him the elections 6 years before so he lost again just
that this time with a larger difference so he couldn’t successfully claim electoral
fraud.
It is popularly said that some
people voted for Enrique Pena Nieto also known as EPN (winner candidate from the PRI) just because he was handsome or because they received a laundry machine,
new toilets or even bags of cement, most of them got 35 USD (500 pesos at the
time) in cash or as a voucher to certain supermarket chain.
Those are the benefits of having an uneducated population that rather believe
what they see in the state-financed TV than actual economic data. They just
didn’t care about the benefits of long-planned economics and would prefer the
cash offered to them, also because their difficult financial situation.
The imperium strikes back
EPN
wasn’t that bad president, he had the majority in both chambers so he could
pass most of his laws, internationally at the beginning of his mandate he was
seem as the president implementing the reforms that Mexico needed when he was
actually just retaking the old reforms from Fox and Calderon that his party,
the PRI, didn’t allow them to pass. As an example for this in February 2014, Time magazine was met with
controversy for the release of a cover featuring Enrique Peña Nieto and the
legend Saving Mexico as the cover article's title inside the magazine. The
controversial article praised the president and his cabinet for
reforms like opening oil fields for foreign investment for the first
time in 75 years (a reform towards which Mexican citizens have shown mixed
feelings), ending the Mexican drug wars (which was not completely accurate),
and even going as far as saying "the opposition party blocked major
reforms that were necessary", that "American leaders could learn a
thing or two from their resurgent southern neighbor" and saying Mexicans
citizens' "alarms were replaced with applause".
The
auto manufacturing industry expanded rapidly under Nieto's presidency. In
conjunction with Kia Motors in August 2014, the president announced plans for
Kia to build a US$1 billion factory in Nuevo León. At the time, Mercedes-Benz
and Nissan were already building a US$1.4 billion plant near Puebla, while BMW
was planning a US$1 billion assembly plant in San Luis Potosí. Audi began
building a US$1.3 billion factory near Puebla in 2013. As of December 2014, two
years into Peña Nieto's term, total investment in the auto sector in Mexico had
reached US$19 billion.
He
also changed the security’s perception of the country by changing the
communication strategy with the drug war, that didn’t mean the end of the
violence moreover EPN continued the same path traced by Calderon and the
violent deaths raised, just that they weren’t announcing publicly all the
crimes so the people wouldn’t know the truth about the insecurity in the
country.
He
did diagnose the problematic in the country going on to say that there are two Mexico’s:
one "that competes and wins in the global economy, with growing levels of
income, development and well-being", while the other Mexico "has been
left behind [and] hasn't been able to take advantage of its potential.",
but made little to actually achieve his goals.
During
the second half of his six-year mandate his popularity fell drastically to 23 percent (74
percent said they disapproved of his performance) after a series of
scandals connected with corruption, some of them were internationally condemned
.
Brazilian
conglomerate Odebrecht, accused of corruption and bribes throughout Latin
America, is currently under investigation for allegedly overriding the Peña
Nieto's presidential campaign with illegal campaign funds. In exchange for the
campaign money supposedly Peña Nieto gave Odebrecht contracts through
state-owned Pemex. An Odebrecht employee told a Brazilian court that he had
been asked to pay a bribe to Emilio Lozoya Austin, then head of Pemex.
Other
loud case was when in September 2014, 43 male
college students were forcibly taken then disappeared in Guerrero. The forced mass disappearance of the students
arguably became the biggest political and public security scandal Peña Nieto
had faced during his administration. It led to nationwide protests,
particularly in the state of Guerrero and Mexico City, and international
condemnation.
Good always win
With this panorama the federal elections in 2018 took place, with an
AMLO running for the 3th time with a changed speech (a more friendly one) and
stronger than ever, despite the well-prepared candidates from PAN and PRI the voters
just had enough from this parties and wanted to try something different that
could finally change the course that Mexico was sailing with. From the
beginning to the end in all polls he was in the first place and after the
elections AMLO won with a stunning 53% of the popular vote, more than 30 points
ahead of Ricardo Anaya, his closer competitor.
It is said that the disappointment of the people during EPN sexenio was
the best possible AMLO’s electoral campaign, the lack of popularity and credibility
of Peña Nieto's government, is perceived to have caused his political party the
PRI, to suffer its most monumental defeat, getting the least percentage of
votes in the history of the PRI. The candidate José Antonio Meade, and the
political party did not win majority of votes within any of the 300 voting
locations around the 32 states of Mexico, losing to other political parties.
The PRI was also defeated, on each of the nine elections for state governors
where MORENA won five, PAN three, and Citizens' Movement one. The presidency of
Mexico went to Andres Manuel Lopez Obrador, from MORENA. The PRI also lost to
MORENA in Atlacomulco, the hometown of Enrique Peña Nieto.
A new hope
López Obrador took office on 1 December 2018. He took a 60% salary pay
cut, The minimum wage was increased by 16.21% in 2019 and by 20% months later.
Showing that was going to be loyal to his slogan “there can be
no rich government with poor people’’
AMLO ’s policies include increases in financial aid
for 11 million students, doubling the pension for the elderly, doubling the
minimum wage, an amnesty for non violent drug criminals, construction of 100
universities and universal access to public colleges, ending the war on drugs
and the legalization of some drugs like marijuana, cancellation of the Mexico
City New International Airport, a referendum on past energy reforms implemented
in 2013 that ended Pemex's 75 year state-own control of the oil company, the
profits represented 18% of the total budget revenues of the public sector, stimulus
and subsidiaries of the country's agricultural sector, the construction
of one more oil refineries, increased social spending, decreasing the salaries
of politicians and the decentralization of the executive cabinet by moving some
key government departments and agencies from the capital to the states.
After
a bit more than a year it is hard to say if he is doing the things well, at
least some corrupt politics are being hunted down and trailed in the courts, it
has been a rather violent year and without remarkable economic growth but the bases
to turn Mexico into a safe country, with equality for all are being placed, it is
now the perfect time for the country to show off and become the global economic
power that surely can be, I will for sure as I know that you too keep an eye on
the country and his policies.
