Structural reforms approved in Mexico

08/21/2014

On August 11, Mexican president Enrique Peña Nieto approved the final versions of energy reform legislation, concluding a series of 11 economic, political and social structural reforms proposed by his government, an achievement unprecedented in the nation’s history. Peña Nieto first proposed these reforms in December 2012, at the start of his term, promising they would bring economic and employment growth, less poverty and a reduction of the economic and social gap between the super-rich 1 percent and the rest of the country’s 120 million citizens, 60 percent of whom are classified as poor.

Every president for the past 25 years has spoken of these reforms, which require constitutional changes in funding, but economic forces have precluded their enactment; in addition, when those presidents’ parties did not hold a majority in Congress, the opposition was able to block the reforms. In the two previous administrations, for example, Peña’s Revolutionary Institutional Party, or PRI, denied the ruling National Action Party, or PAN, passage of the reforms. 

Experts agreed that the country had to change its economic structure in order to keep pace with globalization and the world’s economy in the manner of Brazil, India and China. The PRI was created 85 years ago, after the Mexican Revolution, with a vertical, autocratic and corporate structure through which it controlled the economic, political, labor and social life of the country. The party took advantage of the geographical proximity of the United States to follow that country’s lead in production and other sectors, all the while maintaining a false democratic, and even socialist, discourse. 

With World War II and the industrialization of the country, the economy grew at 7 percent and the presidents of the PRI were omnipotent. Infrastructure and raw materials were nationalized and labor unions and social organizations were controlled with rewards and punishment. That economic model persisted until the 70s, when because of changing times and the actions of various presidents and their corrupt administrations, the economy stagnated and people began to protest and fight for political and social change.

In order to conform to the requirements of the North American Free Trade Agreement of 1994, the government sold off the big state-owned industries with the exception of PEMEX (petroleum) and CFE (electricity), symbols of revolutionary nationalism and both highly corrupt; however, with the financial catastrophe of the following year and social pressures, the PRI lost political ground. The party lost control of Congress in 1997 and its candidate lost the presidential election of 2000. The PAN then governed for 12 years but did not dismantle the corporate structure, patronage and corrupt machine of the PRI; it did, however, break up the PRI’s longstanding presidential control over state governors, who then gained enormous power, increasing corruption.

In 2000 many thought that without the imperial presidency, the PRI would finally disappear, but it survived, thanks to its state governors and corporate groups. In 2006 Peña Nieto obtained the governorship of the state of Mexico with the help of a powerful faction of the PRI led by Salinas de Gortari, the reform-minded president from 1988 to 1994, who dismantled the state-owned industries. Peña began his presidential campaign on his first day as governor, surrounding himself with the PRI governors who supported him during the following six years.

After gaining the presidency, the administration, along with the two main opposition parties (PAN and the Democratic Revolutionary Party, or PRD) that were defeated and weakened internally, created the Pact for Mexico, which stipulated that the structural reforms proposed by Peña would not be blocked. The process concluded after a year and a half of advances and setbacks and it was hoped that the reforms were real and would not benefit the special powers as usual. Congress, with a PRI majority and the backing of the PAN and various minor parties, approved the new laws. But to no one’s surprise, the final changes benefited the powerful sectors of the economy and continued the corrupt privileges of the old PRI corporations.

In a triumphal and demagogic announcement, Peña spoke of the grand changes and benefits to come for the majority of the people when the reforms began to function—in a few years. There was much commentary for and against the reforms. It was said that with the opening up of the economy there would be major foreign investment in such sectors as petroleum, electricity and communications and the ensuing rise in competition would result in lower prices and higher employment. 

But now come the new economic actors: the powerful oil, gas, electricity and financial companies of the world that are busy corrupting regulators in other countries. In Mexico, this already occurs in the industries and agencies affected by the reforms, including communications, electoral and judicial, because the controlling entities lack the power to punish or restrain the abusers. Corruption, lack of accountability and favoritism are other impediments to the functioning of the reforms. Nothing can be done to change that. The minimum wage does not correspond to productivity and this drives the people into informal labor, which now makes up 60 percent of the work force and leads to poverty and criminality. Violence and crime have not diminished, and the unemployed young people see them as a valid alternative for employment. The judicial system has a long history of corruption that continues, untouched by reform.

In any case, we will have to wait and see if things truly change for the benefit of everybody and not just for the powerful and corrupt, as usual.

 

Victor Reyes is a translator, teacher, writer and native of Puebla, Mexico, with decades-old ties to the Light. The Spanish version of this column can be read at ptreyeslight.com.