Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Mexico On the Cusp of An Election (The Economic Backdrop)

by maracatu Fri Jun 29th, 2012 at 06:03:09 PM EST

As Jo Tuckman notes toward the end of her NYT opinion piece, Mexico's Institutional Revolutionary Party's (PRI) comeback in Sunday's election seemed a forgone conclusion. While it likely still is, there have been some interesting late breaking developments.

However, to the dismay of some ET readers, those developments are not the focus of my brief diary, today.

While Mexican President Felipe Calderón hosted the Group of 20 leaders earlier this month, the New York Times published an article which highlighted the rivalry between his country and Brazil.   It is notable that US eulogies for Mexico, rare as they may be, become more copious only in a context of its juxtaposition with Brazil.  As I have commented in the past, the US has a thinly veiled dislike for the rise of Brazil on the world stage.  Despite the success of its remarkably neoliberal policies, Brazil is far too independent of the United States for its comfort.
You can almost taste a trace of schadenfreude in the New York Times article :

...just as momentum can change suddenly in a match at the World Cup or an event at the Olympics -- both competitions that Brazil will host in the next four years -- so can the dynamics between nations. Last year, Mexico's economy grew faster than Brazil's, and it looks set to outpace its larger Latin rival again in 2012.

According to an optimistic outlook by the UN's Economic Commission on Latin America and the Caribbean, Mexico's GDP is expected to grow around 4% for the year.  Back to the Times article, you can tell what horse the US is betting on in this 'race':
Meanwhile, Mexican factories are exporting record quantities of televisions, cars, computers and appliances, replacing some Chinese imports in the United States and fueling a modest expansion.  Economically, Mexico does not appear as grim a place anymore.

And yet, once Brazil is taken out of the picture, you get a clearer idea of what the US really thinks about the situation in Mexico, particularly regarding the economy.  As a matter of fact, all is not well in Mexico, generally speaking, and I am not referring to the violent drug war that has been grabbing all the headlines recently.  Not much has changed under the administration of Felipe Calderón since it was stated in a US Congressional report about the Mexican economy a couple of years ago that the expected structural changes were not forthcoming:
Numerous analysts have noted that Mexico's potential to promote economic growth, increase productivity, and lower the poverty rate is very limited without implementing substantial structural reforms. President Calderón has proposed a number of reforms to address these challenges, including proposals to eliminate extreme poverty, overhaul public finances, privatize parts of the state oil company, adopt labor reforms, reform the telecommunications sector, and encourage political reforms. Most of these proposals, however, have deeply rooted political implications and have been strongly opposed by the major political parties in the Mexican Congress.

One must take care not to generalize the US discontent with the Mexican economy to mean that Mexicans are fed up for the same reasons.  Despite token references to the poverty rate the US, as alluded to above, favors policies which are not welcome among the Mexican political parties (PEMEX is a case in point).  To be certain, the poverty rate has worsened:
According to CONEVAL(e) (National Council on Evaluation of Social Development Policy) the number of Mexicans living in poverty increased by 3.2 million from 2008 to 2010, following the global economic crisis. It implies that around 46.2 percent of Mexico's total population (52 million people), live in poverty, mainly in urban areas.

Nevertheless, it is important to take the long view in order to factor out the current crisis.  After all, we are quickly approaching the twentieth anniversary of the enactment of the North American Free Trade Agreement (NAFTA) between Mexico, Canada and the United States.  Up to the time of enactment, it was publicized in Mexico as the path most likely to bring prosperity if not a ticket to the club of advanced industrial economies.  According to an oft-cited 2009 study coauthored by a reputable Mexican colleague and two prominent North American authors:
...there is now widespread agreement that the North American Free Trade Agreement (NAFTA) has fallen short of its stated goals. Rather than triggering a convergence across the three nations, NAFTA has accentuated the economic and regulatory asymmetries that had existed among the three countries. Since 2001, the region has actually seen a decline in levels of integration in key areas such as manufacturing.

While a review of the study is beyond the scope of this brief diary, I just want to draw your attention to the chapter by Mexican colleague Enrique Dussel Peters, since it concerns the manufacturing industry which was to be the cornerstone of Mexico's economic development under the treaty:
Even before the recent global financial and economic crisis, the manufacturing sectors in the NAFTA-region were under similarly extreme pressures. The share of manufacturing in terms of GDP and employment has been falling in the three NAFTA countries, particularly since 2000... . Contrary to the period 1994-2000, which saw increasing regional integration in a highly competitive global market, from 2000-2009 (March) the NAFTA region together lost 6.3 million jobs in manufacturing, or 27 percent of total employment in the sector.  This suggests that in general, and in particular since 2000, the process of regional integration has deteriorated; in fact, an increasing process of "disintegration" has been taking place since then.

Regarding his country, Dussel Peters adds:
Mexico´s manufacturing share in GDP has fallen constantly since the end of the 1980s, from levels above 23 percent to levels below 19 percent in the last quarter of 2008 (and since 2001). In terms of formal permanent employment, the conditions have been harsher: from 1994 to March 2009 manufacturing´s share of total formal and permanent employment fell from 33 to 26 percent. Since its peak in October 2000, the sector lost 1.04 million permanent jobs through March 2009--or 25 percent.

On the question of Mexican agriculture under NAFTA, the issue of corn figures prominently.  According to Tim Wise:
When the Mexican government unilaterally liberalized corn markets, well ahead of NAFTA's 14-year transition schedule, U.S. corn flooded the Mexican market. Over two million people have since left agriculture, a drop of more than 25 percent.  With limited employment-generation elsewhere in the economy, many have added to the rising flow of migrant laborers.

Since this is not a diary aimed at policy recommendations, I'm not going to discuss any here.  Nevertheless, the above study has policy recommendations at the end which lean toward industrial strategy.  It is instructive to compare those with what can be gleaned from more mainstream analyses north of the border.  For example, the neoliberal agenda lurks not too far beneath the surface of a recent assessment of what is "wrong" with the platforms of  presidential candidates in the upcoming Mexican election.   According to the Center for Strategic and International Studies:
Few offered bold proposals to eliminate state and family monopolies, curb the SNTE's [teachers' union] hammerlock on public education, revamp the state oil company (Pemex), or make root-and-branch changes to noncompetitive labor practices.

In summarizing, it is clear that all interested parties agree that things are not well with Mexico's economy.  However, whereas the US favors deep structural reforms along mostly neoliberal lines, Mexicans see the problems differently.  Given the resurgence of the Institutional Revolutionary Party (PRI), to the extent that they are virtually guaranteed an electoral victory, it seems obvious that Washington is not going to get its way.  Despite all the complaints about corruption in Mexico, which many expect will be given a new lease on life under the PRI, it is worth remembering that it was Mexican President Carlos Salinas de Gortari of the PRI who negotiated NAFTA with the United States and Canada.  Clearly NAFTA has failed to deliver with each side blaming the other or at least different factors for the outcome.  While it seems unlikely that NAFTA will produce in the next twenty years what it has failed to produce in the past twenty, you never can be too sure.

I'm surprised that you didn't mention the Televisa Scandal. The UK Guardian has been on this.

A secretive unit inside Mexico's predominant television network set up and funded a campaign for Enrique Peña Nieto, who is the favourite to win Sunday's presidential election, according to people familiar with the operation and documents seen by the Guardian.

The new revelations of bias within Televisa, the world's biggest Spanish-language broadcaster, challenge the company's claim to be politically impartial as well as Peña Nieto's insistence that he never had a special relationship with Televisa.

The unit - known as "team Handcock", in what sources say was a Televisa codename for the politician and his allies - commissioned videos promoting the candidate and his PRI party and rubbishing the party's rivals in 2009. The documents suggest the team distributed the videos to thousands of email addresses, and pushed them on Facebook and YouTube, where some of them can still be seen.

The nature of the relationship between Peña Nieto and Televisa has been a key issue in Sunday's election since the development in May of a student movement focused on perceived media manipulation of public opinion in the candidate's favour.

Remember that Mexico is a market in which TV commands an outsized portion of the market for political coverage.  Paper readership is fairly low and online media has a low penetration rate.  Controlling the majority of TV coverage is a huge advantage.  

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Fri Jun 29th, 2012 at 08:16:44 PM EST
My intention was to eschew politics in favor of the economic situation.

"Beware of the man who does not talk, and the dog that does not bark." Cheyenne
by maracatu on Fri Jun 29th, 2012 at 08:41:06 PM EST
[ Parent ]
I can understand that.  It definitely seems that this story coming out now could have an impact on who wins.

Back on the economic situation, I'm remembering back in 2006 that AMLO had a plank in his platform to build on Mexico's oil resources by developing the plastics and other industries that use it as feedstock.  With the proximity to the US market, this seems like a real winner.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Fri Jun 29th, 2012 at 09:16:35 PM EST
[ Parent ]
I still wager that the PRI will win.  They have had the machinery in place from long ago:

The Mexican revolutionary family has promoted the electoral fortunes of its electoral arm, the PRI, through the use of the Mexican variant on clientelism, caciquismo.8  The PRI has employed both the sold vote and the gregarious vote to increase turnout and the PRI margin of victory.9  The use of either the sold vote or the gregarious vote necessitate the availability of individuals whose costs and gains of voting can be so manipulated.  Historically, this has been maximized in the countryside, where both methods can be combined by rural caciques

"Beware of the man who does not talk, and the dog that does not bark." Cheyenne
by maracatu on Fri Jun 29th, 2012 at 09:38:55 PM EST
[ Parent ]
Win, yes.  But, how?

Election fraud was rampant in 2006 and 1988.  

It's almost certain that the PRI lost to the PRD, or I should say Cardenas, in 1988.  Miguel de la Madrid, the president '82-'88 admitted as much in his memoirs.

As for 2006, I know some people who were election judges who saw fraud before their own eyes.  I don't know whether it would have been enough to change the result, but it was still there.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sat Jun 30th, 2012 at 08:10:10 AM EST
[ Parent ]
As I quoted above - 'clientelism'.  

...OK, I guess what I mean is they won't "win" clean, but will "win" dirty.  Are there perhaps different "shades" of fraud?  Clientelism is a type of fraud (isn't it?) and has existed for decades; it exists across countries.  It even exists here in my homeland (Puerto Rico), so you might as well argue that nobody has "won" an election anywhere.

"Beware of the man who does not talk, and the dog that does not bark." Cheyenne

by maracatu on Sat Jun 30th, 2012 at 12:10:06 PM EST
[ Parent ]
My spouse just read in El Universal that trucks full of goods being distributed to the poor (to buy votes) were found/observed in Mexico City. The trucks belonged to both the PRI and PRD. Another report by phone from a friend in Mexico stated that voters were being offered money to vote for a particular candidate. In order to collect, the voter has to take a cell phone photo of their completed ballot and provide it to a party representative.

Nothing about such tactics that I haven't heard for the past forty years.  We were living in a small Mexican town during the last local elections and the fact that some parties would go to just about any length to secure a victory was more than evident. That all political parties would participate in fraudulent tactics stands to reason. Political power is money. Almost anything goes because there is no effective enforcement of election rules and law.

Consider the nasty tactics that both parties employ in the US, localize them for Mexico and bring them out into the open. That's politics in Mexico. Politics stinks period.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Sat Jun 30th, 2012 at 11:22:59 PM EST
[ Parent ]

"Beware of the man who does not talk, and the dog that does not bark." Cheyenne
by maracatu on Sun Jul 1st, 2012 at 07:24:56 AM EST
[ Parent ]
Honestly what I was trying to imply is that clientelism isn't enough.  I'm saying that I question whether the PRI won't need to alter election results through actually stealing ballot boxes, as various parties did in 1988 and 2006 to pull off a win.  That's a lot harder sell than simple clientelism. At the very least, I'm thinking that that kind of fixing the election would prompt protests like in 2006, if not larger.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Jul 1st, 2012 at 10:24:03 AM EST
[ Parent ]
OK, that's fine.  I'd look at it as one party blatantly appropriating itself of ballots that were already bought by the other party. (;-P)

"Beware of the man who does not talk, and the dog that does not bark." Cheyenne
by maracatu on Sun Jul 1st, 2012 at 12:38:02 PM EST
[ Parent ]
I think during the last election the allegation was that the Federal election authority (IFE) actually tallied ballots incorrectly to show a win for the PAN candidate Calderon over the PRI candidate Madrazo and Lopez of PRD. Since Lopez and Calderon were supposedly neck and neck, only small changes were needed here and there making a fraudulent win plausible.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears
by Gringo (stargazing camel at aoldotcom) on Sun Jul 1st, 2012 at 11:08:26 PM EST
[ Parent ]

"Beware of the man who does not talk, and the dog that does not bark." Cheyenne
by maracatu on Fri Jun 29th, 2012 at 08:42:47 PM EST
[ Parent ]

Go to: [ European Tribune Homepage : Top of page : Top of comments ]