The Federal Electoral Tribunal confirmed Enrique Peña Nieto as winner of the Mexican presidential elections on August 31. This followed accusations that Peña’s party, the Partido Revolucionario Institucional (PRI) had bought votes and illegally used campaign funds. While the decision failed to address the question of whether the July 1 election was legitimate and free, the seven justices on the Electoral Tribunal concluded unanimously that there was insufficient evidence to prove fraud. President Felipe Calderon’s Partido Acción Nacional (PAN) party accepted the tribunal’s decision despite its finish in third place. Andrés Manuel Lopez Obrador of the leftist Partido de la Revolución Democrática (PRD) rejected the tribunal’s decision and called upon his followers to protest with a national rally on September 9. An estimated 38,000 people turned out for a peaceful rally in Mexico City, and the following day Lopez Obrador gracefully left the PRD party to reunite with his personal followers in the Movimiento Nacional de Renovacion (MORENA).
With the Electoral Tribunal’s confirmation that Enrique Peña had won with 38.2 percent of the national vote, compared to 31.6 percent for the second place PRD, we may conclude that Mexico has accepted the PRI victory. With the official declaration of a presidential winner behind us and a December 1 date for the oath of office, what does a prospective PRI administration offer Mexican citizens?
The PRI party platform laid out an ambitious plan for energy and fiscal reform – two key issues that have bedeviled the last three Mexican administrations. Opening up PEMEX to private investment requires two-thirds support in the National Assembly for a constitutional amendment. Rather than risk legislative defeat, PAN Presidents Fox and Calderón resorted to incremental reforms that opened the energy sector to private sector contracts downstream, i.e. oil distribution and petrochemicals. However, with diminishing barrels from the Cantarell oil field, it is critical to obtain both foreign technical skills and private funding for the exploration and production of new and deeper fields. In the electoral campaign, both the PAN and PRI presidential candidates agreed that a significant opening of PEMEX to private investment is needed. The PRD remained adamantly opposed.
At the same time, if the state loses the resources from PEMEX to fund 40 percent of federal government expenditures, as well as meet the obligations on PEMEX’s $52.2 billion debt, future governments will have to raise significant revenues from a wider base of Mexican taxpayers. Thus fiscal reform is closely tied to energy reform: you cannot privatize part or all of PEMEX without increasing alternative fiscal revenues.
After the July 1 election, President Calderón chose to demonstrate his reformist inclination by talking about the need to reform energy and fiscal policy, but acting on labor reform and transparency in municipal government. All four subjects are important for the modernization of the Mexican state and were addressed during Calderón’s six-year term. Regretfully, both legislative initiatives were defeated by inadequate support from opposition – principally PRI – legislators. Why did Calderón now introduce legislation to end restrictive labor practices and require municipalities to account for their income and expenditures? Why did Calderón not introduce energy and fiscal reform?
Strong constituencies support Mexico’s existing labor law and municipal governance. However, national sentiment supports the exclusive ownership of Mexico’s petroleum resource. Nostalgic attachment to a nationalized resource will take time and extraordinary effort to dissolve. Therefore, the emergence of a new coalition between the outgoing PAN presidency and incoming PRI leadership is best tested on the less arduous task. Calderón’s tactic is to test the coalition’s legislative strength over the passage of labor and municipal reforms. Neither reform will be easy. First, 30 percent of the registered work force is employed by state entities, including PEMEX. Until now, they have exercised a stranglehold over labor protections under Article 123 of the Constitution. Second, municipal governments were granted autonomy under the concept of a “municipio libre” which harks back to Emiliano Zapata and the Mexican Revolution. Without coalition politics, neither of these reforms is possible.
Following the July elections, a window of opportunity exists for this coalition. Calderón retains the presidency until November 30 with the power to initiate legislative reforms. However, the composition of the National Assembly changed on September 1 to reflect the electoral results. PRI now has 207 deputies and 52 senators. The PAN lost legislators, but still has 114 deputies and 38 senators. With the help of a small party, PRI and PAN together now have the necessary two-thirds majority to pass constitutional amendments. A PAN president with sway over his congressional delegation can ally with an incoming PRI president to introduce and pass significant reforms. Furthermore, Calderón requested that the legislation be discussed on a fast-track, 30-day schedule. If he succeeds, the achievement of modernizing labor practices and transparency in municipal governance will be his, despite sharing the crown with the future PRI president.
The PRI has a reputation for being highly disciplined with its leadership exercising strict control over its legislators, including approximately 15 deputies from the PEMEX union and over 20 deputies from the SNTE, the teacher’s union. During the 70 years of PRI reign, rejection of the party line risked losing access to presidential favors. This may change in the 21st century, but memory of the party’s historic power to sanction is expected to keep all PRI legislators in line with presidential pleasure.
Why did the outgoing PAN president and the incoming PRI president not use this coalition to make the harder changes in energy and taxation? Legislative leaders in both parties will wait to see how the votes align on the issues of labor and municipal governance. Will the traditional PRI discipline continue to function, or will a more democratic Mexican society produce renegades? If both parties succeed in holding their members in line to support their leaders, then we should expect the proposed energy and fiscal reform to follow shortly behind.
If passage can be achieved by November 30, Calderón can step down with significant reforms to his and to the PAN’s credit. Afterwards, it will be up to the Peña Nieto to keep the coalition and his own party together to engage energy and fiscal reform. It may be harder to keep internal PRI factions in line than to retain the alliance with the PAN, but the early days of a new administration traditionally give a Mexican president greater influence over his own party. We should therefore expect that legislation will be drafted and tactics prepared for the battle over PEMEX and taxation.
The consequence of passing bold reforms is to demonstrate that Mexican voters have elected a new PRI. This will deflect the criticism that PRI remains the old party with younger faces. Success based on these early tests of leadership will establish Enrique Peña’s reputation as a reformer. Presently, he has the advantage of skilful political aides and continued support from the national press which identified him as a winner back in 2010. Together, there is a good chance that Mexico can break from the nostalgia for a century old revolution and confront the challenges of a highly competitive global economy.