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on the border line between the US and Mexico

Monday, November 24, 2014

How Peña Nieto's House of Cards Crumbled

BORDERLAND BEAT Posted by DD Republished from Huffington Post.
Written by Rodrigo Aguilera Editor/Economist (Latin America), Economist Intelligence Unit

Image Source:
The speed in which the foreign media bubble surrounding Mexico's government has deflated in recent weeks has been stunning, although hardly surprising for those of us who suspected it was only a matter of time. Admittedly, even the pessimists had been caught off guard at the speed in which Enrique Peña Nieto and his party, the PRI, managed to push through an ambitious structural reform agenda during its first two years in power. From the start, however, there were lingering doubts over the government's capacity for effective policymaking since this would be undertaken in the context of significant political-administrative shortcomings. Now that these have - tragically - become apparent, a re-evaluation of the outlook for the successful implementation of the reforms into the medium- and long-term (that is, beyond the short-term goal of negotiating and approving them) is undeniably in order. It is also worth understanding why many of these shortcomings were painfully aware to many Mexicans from the very start, but thoroughly missed abroad.

A history of failed reformists

Anyone thinking that the government of Enrique Peña Nieto represents a fundamental shift from the way Mexican politics is done is grossly mistaken. He is neither a "reformist" nor a "modernizer", two words that are frequently misused by foreign observers when labelling a statesman who is believed to be steering country in the direction of liberal democracy and free market policies. Not coincidentally, the last Mexican head of state to have been bestowed such praise was Carlos Salinas de Gortari (1988-94) who despite having successfully negotiated NAFTA and gained Mexico a seat at the OECD, ended his presidency with an indigenous uprising in the state of Chiapas and handed off to his successor an economy that was just days from plunging into a massive balance of payments crisis (the so-called Tequila Crisis of 1994/95). With this in mind it should not be surprising why many Mexicans have remained broadly sceptical of Peña Nieto's achievements: it wouldn't be the first time in their lifetimes that the country was tipped for success only for hopes to come crashing down.

For all his telegenic appearance suggests, it may come as a shock to those abroad that Peña Nieto is neither the driving force of his own government, nor that his inner circle is a radical departure from the old PRI that it has dissociated itself with (his political mentor, Arturo Montiel Rojas, is as old guard as it gets). If there is a parallel to how the Peña Nieto government likely operates in practice, it is perhaps as a modern Camelot: one where the president does not generate the ideas that drive the government's policymaking, but chooses those that are best put forward to him by his closest aides. 

Unfortunately what Peña Nieto lacks in initiative he also lacks in zeal (something that his two predecessors, Vicente Fox and Felipe Calderón, had in abundance - and to a fault). The result is a government that flounders whenever it requires its leader to take the helm himself. Until recently, it had encountered no situation in which it needed to do so but the manner in which Mexico's political crisis has intensified over the past two months is the direct consequence of this meek individual leadership that has been all too obvious even before he was elected.

Three months of getting it all wrong

Perhaps the first warning shot of things to come was the long delayed introduction of the National Gendarmerie. This 40,000-strong unit was originally designed to mirror their European equivalents and was seen as ideal for fighting the drug cartels: trained in policing duties but with the firepower of a military force. In the event, the Gendarmerie that was finally deployed with as much aplomb as disappointment in late August was barely 5,000-strong and constituted as a division of the Federal Police due to the impracticalities of such a small force being independent. The idea that soldiers and marines would be part of it was also shot down due to the intransigence of the military establishment in serving under civilian command. The government has quietly played down the fiasco, despite this being lauded since Peña Nieto's campaign days as the flagship security policy that his government would bring to the table. No further change to the security strategy has been proposed since.

Almost a month to the day that the Gendarmerie was introduced came the most shocking tragedy in a drug war that has had no shortage of them: the disappearance and likely murder in Iguala, Guerrero of 43 students from a rural teacher training school in Ayotzinapa with a long history of left-wing activism. The blatant complicity between the municipal government, the local police, and the hitherto little-known drug cartel known as Guerreros Unidos has since sparked a national outrage without precedent in decades and the PRI has borne the brunt of it even despite the fact that its left-wing rival, the PRD, governed both the municipality and the state in which it happened (not to say that the PRD has escaped unscathed; if anything it is facing its most severe internal strife since its formation in 1989). Every week since has seen countless vigils, marches and protests, many of which have turned violent and which despite an initially tepid foreign media coverage, has by now shattered the view held abroad that Mexico's drug war had somehow been contained; a view which of course, few Mexicans have been duped into believing.

Meanwhile, the administration's response has been clumsy and late: it took nearly a month before Mr. Peña Nieto met in person with the families of the disappeared students, and his government's ten-point list of commitments reads like every other failed promise to fight crime and strengthen institutions before it. To add insult to injury has been the disastrous press conference held on November 7th by the general attorney, Jesús Murillo Karám, which was perceived to be inconsistent and  capped by an untimely comment of "I've had enough", which in turn sparked a deluge of scorn from social media. The massive march held on November 20th, symbolically chosen for being the anniversary of the Mexican Revolution of 1910, suggests that the social pressure is far from subsiding, which is probably what the government has been banking on all along. At its climax, a large effigy of Peña Nieto was burned in the middle of the Zócalo, Mexico City's main square. 

There's more. On the same day as the attorney's press conference, a tender for a high-speed train (Latin America's first) between Mexico City and Queretaro was cancelled after receiving just one bid, from a Chinese construction company (China Railway) allied with various Mexican partners. News of the single bid was met with concern from industry experts: the CEO of Bombardier (a major Canadian aerospace and transport firm which had expressed early interest) stated that the tender's two-month deadline was unrealistically short since a project so "technically challenging" would require around a year. But as one local commentator noted, there were only two possible causes for this fiasco: either the bidding process was indeed fraudulent and the government was pre-empting any scandal, or the process had been legit but the government was simply not willing or able to defend it in the face of expected criticism and scrutiny. Either case represents shocking incompetence in handling a project of this magnitude.

photo from "we are the way. org on twitter
Like every scandal in Mexico, this story would come with an encore: an investigation into the $7 million home (nicknamed the "white house" by the local media) of the first lady, former telenovela actress Angélica Rivera, revealed that the house was listed under the name of one of the Mexican companies involved in the rail bid, Grupo Higa, which had coincidentally received numerous projects during Peña Nieto's time as governor of the State of Mexico (2006-12).

 Later it was alleged by Rivera herself that the house had been "transferred" to her in 2010 by media giant Televisa, which has long been accused of wielding undue political influence in light of its uncomfortably cosy relationship with the PRI.

By next day over 200,000 twitter and over million views of video
 As this article is written, there has been no convincing answer to who actually paid for the house, and how, or if Rivera's statements are to be believed (her patronizing television address on November 18th was cringe-worthy even by telenovela acting standards), why effectively gifting a multi-million dollar home to the wife of a state governor with presidential aspirations is not a shamefully blatant conflict of interest even under the narrowest definition.

What this means for the reforms

In the short run, the legal implications of the "white house" scandal may give added impetus for the protesters to intensify the pressure over the coming weeks: it is hard to believe that a situation like this would not lead to calls for impeachment in the US or a vote of no-confidence in a European parliamentary system. But in the longer run, the government's recent string of failures matter enormously if they serve as early warning signs of deficiencies in the implementation of its structural reforms. For example, the energy reform, by far the biggest economic game-changer since NAFTA, calls for the creation of numerous new regulatory entities, and a tight schedule for both the transformation of Pemex into a "productive state firm" as well as for the liberalization of the sector to private competition. As was the case with the high speed rail tender, cutting corners in a rush to get things done may prove critical if these new markets open before they are ready to operate efficiently.

The success of nearly all reforms therefore rests on the same things that Mexican governments have consistently failed to get right in the past: establishing effective, transparent, uncorrupted institutions and preventing the conflicts of political and private interests from eroding the reforms' social benefits. More so, to spread these benefits - when and if they materialize - across the general population (particularly the poor) requires well-defined channels of redistribution across the three levels of government which at least in their lower levels (state and municipal) are mired in frightening levels of incompetence and corruption, as the incidents in Iguala have highlighted. 

A veritable revolution in how the government administers and distributes its revenues is long overdue but old habits die hard: the past two budgets have seen an increase in federal transfers and little effort to strengthen the capacity of states and municipalities to finance themselves. Additionally, these budgets see a massive rise in infrastructure spending which although arguably needed, is typically the sector most prone to corruption. These are not the signs of a truly "reformist" government, when the rotten edifice in which Mexican policymaking rests is left intact.

Can this government still deliver?

Time will tell if the Peña Nieto government recovers from its recent failures and delivers on its promise of bringing prosperity and peace to millions of Mexicans. But for foreigners accustomed to having been served an undeservedly rosy picture of the country's state of affairs over the past few years, the honeymoon has to be over: a more realistic appraisal of the challenges that Mexico faces should frame any discussion of its outlook from now on. Despite the success of passing the structural reforms, this is a government that has faced serious deficiencies in achieving its immediate policy objectives (not least has been the anaemic state of GDP growth since Peña Nieto came to power), and has not shown signs that it is willing to change the decision-making environment in Mexico.
Ultimately, political capacity matters and it is a prelude to development, not a consequence of it as many people seem to believe. In a recent article,  economist Dani Rodrik summed up the pros and cons of NAFTA 20 years on, noting that "for too long, Mexico's economic policies have reflected the view that the real economy will take care of itself once the 'fundamentals' (macroeconomic stability, openness, and basic regulations) are in place." To some extent, depending on the reform agenda to bring about economic success is not so much different: unlock the bottlenecks to growth, and growth will magically come. It won't, without absence of a radical transformation of how Mexican politics works. If there is any positive legacy from the Iguala tragedy as well as the scandals and failures that have erupted around it, is that the government and the Mexican political establishment as a whole can finally realize they are the ones in more dire need of reform.


  1. The philosophy of the PRI is its failure proof philosophy, they are the state and they do not fail, even if all they do is fail...
    The el PRI have been taking care of the structure of the infrastructure to rob and steal, since the time of venustiano carranza's carrancistas implanted the economic system of CARRANCEAR, which means stealing from the state coffers to the waste baskets and the spitoons..
    --the carrancear system, brought to heavenly heights by PRIISTA carlos hank gonzales of grupo atracomulco of which pena nieto is a mamber, was brought up to stratospheric platitudes by PRI's BERTIE BOY moreira, from carranza's home state, coahuila, leaving the state in debt by 3 billion dollars, a state not worth 3 000.000 pesos, mexican.
    What mexico needs is a total corrupton reform, with punishment, not with impunity, complicity and money from the US or any other foreign country...
    Also, the mexican minimum wage, is about 20 or 25 dollars, and american corporations looove to brag about it, what they don't say is that you have to be very lucky, and a good ass kisser to get a job like that, that more than 30% people earn muc less than that, and that 20/25 dollars minimum wage is A WEEK, 6days a week, 8 hours a day... and that it is in the view of world neoliberal conservatives, very good and a very good business, and anybody who pretends otherwise is a communist socialist pinko leftista.

  2. Humpty Dumpty sat on a wall/
    Humpty Dumpty had a great fall/
    All the kings horses and all the king's men/
    Couldn't put Humpty Dumpty together again/

  3. Could someone enlighten Michael Crowley of 'Time' that his rosy assessment of Nieto in his article (commercial) is now as undeniably fraudulent as it already was before that hilariously satiric trash even appeared in print. If he has enough time he could possibly try to pass it off as just a distasteful attempt at parody. Michael Crowley was a clown for writing that article. And he is now a coward for failing to even acknowledge it, much less apologize for it. Fuck you, Time Magazine, for perpetuating American ignorance on the state of Mexico. Stick it up your smug ass, Crowley, you fucking hack piece of walking filth.

  4. Nice pic! It looks like this time he didn't get his spoiled way, and now he wants his mommy!

  5. What ever happened to the man on the cover of Time magazine! This guy kooks like a boy who got his lollipop taken away!

  6. Death to PRI! This president will be the one who kills the PRI. Hopefully people will learn their lesson and and snub the PRI at the polls.

  7. In Mexico, we do not have a government. We have kings, we have a dictatorship with a democracy disguise. Its been the same for 100 years. But thanks to internet, people have open their eyes and we are on a verge of a historical change. Stay toned!

  8. "...even the pessimists had been caught off guard at the speed in which...Nieto and his party...managed to push through an ambitious structural reform agenda during its first two years in power."

    Did Obama train this guy!?



    Legalize production and sale of all drugs, which are available anyway on demand within 5 minutes, anyplace in Mexico.

    Production and sale can be regulated (to some extent at any rate) and the great thing would be to put an end to the source of continuous conflict and enrichment of drug cartel lords and to their need to resort to weapons and killing to maintain their activities. Also eliminated would be the corruption fostered by the creation of immense wealth for the drug lords, which are increasingly infiltrating business and politics by means of bribery.


    US would then declare Mexico a "Narco State".


    War on drugs is imposed upon Mexico by US, and in this way, the US IS MAKING
    WAR ON MEXICO - NET, NET, NET truth.


    Purpose is to dismember Mexico, forming a puppet state allied to US in the North, and allowing the South of Mexico, predominantly Indian, to coalesce with Central America. American military bases in Mexico, to ensure American access to Mexican oil.

    OIL, as always, at the bottom of this problem. $$$$.

    1. I don't think legalizing drugs would stop the violence. There would still be tons of violent conflict over who gets to monopolize and control those drugs, and corruption would continue for the same reason. It seems idiotic to me to imagine that the individuals involved in the drug trade now are going to amend their ways and adhere to the law post-legalization, and refrain from killing others. So long as killing others = more profits (often, a LOT more profits), it'll continue. This is the fantasy solution for U.S. lefty hippies.

      The real solution is (1) legalize firearms for individual usage, and form auto-defensa forces across the country; (2) build new, modern prisons, not the corrupt, joke pieces of crap now that allow narcos to live in luxury, think something like ADX Florence; (3) reinstate the death penalty.

    2. What a crock of shit.. It's all America's fault huh.. One big conspiracy. Get off the meth.... It's making you paranoid.

    3. The Bottom of the blaming others. The lack of responsibility, the total refusal among the majority of Mexican citizenry to believe in themselves as the seat of power, and thus the solution to the paper tigers, telemundo phonies, con artists and cowards who kill unarmed, bound and blindfolded innocents and sell children as slaves and traffic narcotics ( what difference would it make, tell me,- to Mexico- if the addicts in the U.S. Got their drugs from another country?)
      The U.S. doesn't have to change AT ALL for Mexico to change. Change, reform, comes from within, not because some other country does or does not do something. Only when the oppression gets so cruel will the people see they have the right to be free, makers of their own destiny.
      Mexican people are not puppets, and they are not slaves. What happens in Mexico is ALLOWED by the Mexican people, just as the oppression in the U.S. is allowed by the sheep who accept the acceptable rather than struggle for the best.
      Carlos Castaneda should be the philosophical guide of the Mexican nation.

    4. You've hit the nail on the head. There is no war on drugs. It's a war of drugs and a war against Mexico and its people. Anyone from the area can tell you that with the arrival of the US military came all this violence and drugs multiplied. There's more drugs now then ever. Drugs need to be transported and distributed and all those military helicopters and planes are the ones transporting it. It takes a massive operation which couldn't be achieved even by so called drug cartels. Hillary Clinton gave the truth away a few years ago when she was referring to Mexico and she said it was an insurrection down there. This is a war against the people have no doubt about that and the drug and weapon trade that is being perpetrated by the US military is the excuse that they give for waging this war which in reality is a war against the people themselves and their aspirations for a better and more just life. It shouldn't be forgotten that drugs are just as important as oil or other resources to keep their system going. It makes them a lot of money. And yes, the US is driving this. The Mexican government is complicit in this but they are not the driving force. They are doing it at the behest of the US. To deny this is to be either ignorant of the facts or being dishonest.

  10. EPN please resign!!

    1. The president is not the problem and removing him will not solve anything , but if what you want is a scape goat that he is. The Mexican people need to change their attitudes and rethink their priorities to make the country better, start at home.

  11. The Mexican goverment will never change. The Cartels have the upper hand on all the politicians. Stand and look pretty Mr. President Nieto try to help the Mexican cirizens from poverty. Sell that 7 million house.

  12. Mexican people deserves all this, the PRI always have been a political part of thiefs and murdereres and people voted them

    1. But did the people really vote for them? All elections are rigged and bought with money. The saying that it doesn't matter that you can vote but who counts the vote, is true. The illusion of democracy is a very well played out trick by politicians and the system. It's hard to believe it's still fooling people today.

  13. The PRI and PRD are both socialists, their raw material (who vote for them) are the poor and ignorant, they like them so much that they make them the most.

  14. Ora si, se las van a meter doblada, sin saliva y con toy grenas al pinchi pena nieto y a su pinchi gabinete y a su pinchi pri.
    But they kind of 'like it'

    1. Pus yo escuche q al peña nieto le gusta el arroz con popote pero le pago una buena feria ala mejor actriss del mundo solo porq tiene q berse bien el puto y q mexico tenga una primer dama.........dicen yo no se jajaja

  15. Gaviota: What house? Im about to sell that house. lmao

  16. To 7:22

    You obviously dont know what you are talking about. The mayority of mexican people did not vote for this pos president. The PRI has many powerful people that manipulated the votes by not counting or getting rid of votes with corruption. Also they force alot of government employees to vote for PRI or theyll be fired. They also buy alot of votes illegally. I mean you name it theyll do what ever it takes to put the person they want in power in order to accomplish their agenda. The mayority of the people have no option but to try and live with the imposed PRI president. This time though people are really fed up with all this injustice and corruption hence the manifestations and protest all over the country. The people of mexico are finally awakening and realizing what they can do by uniting together and manifesting themselves which i considered to be a good thing for the future of mexico. I hope in a not so long future the people of mexico will have the opportunity to have a real democratic election and elect a real democratic president.

  17. corruption is a way of life and business for the PRI, the only reason that elba ester gordillo went to prison for beina corrupt was the fact that she, as the highest power in education system, controlled millions of voters,,, ie, teachers, their spouses, sons, daughters, janitors, administrators and all the families of these, friends, relatives and all the families of these,, then the whole SEP (secretaria de education publica) education secretariat, which consists of tens of thousands of employees, then add their families, all these would vote for whoever elba ester gordillo would tell them, it was in their best interest so to insure their job for another sexenio (six years), so what did she do wrong then ? her "GALLO" or rooster, wasn't PENA NIETO, it was HUMBERTO MOREIRA, he too a teacher and from a family of powerful teachers, and long time was a match made in heaven, it wasnt PENA NIETO that put her behind bars but the PRI itself,, the PRI had been grooming pena nieto for a long time now, no one would change plans.

  18. 7:22 blame the internet for all this mayhem, nobody knew on the US many voting machines are private property, and that they have stolen big elections already, but the american people still know how to impose their will once in a while...
    @9:39 carlos castaneda never knew about conkspiwacy theories of everything, he also did not sell may books, he was too busy working within the mexican system of grabbing and holding onto the chayote, you don't become a published autor in mexico without some generous godfather or mother, usually a public officer with money to spare on select and illustrious BS artistes, hiswritting looks fine, but empty, no conspiwacy theories there !!!
    It is like blaming the indigenous murdered populations for getting murdered and massacred with foreign weapons by foreign trained indigenous agents of foreign governments to steal their lands, water, minerals, oil, etc etc etc, because they are or may become communist illiterate snobs wihout 'educaishun'...
    --I blame you for being stupid in spite of all the 'eishucaishun' you supposedly have, how about that!!!


    1. oh boy....ok friend you need to brush up on real facts and not rehash talking points of liberals as fact and obama's seed of truth, twisted, churned, chopped, baked and thrown to the masses.

      but the masses I THOUGHT were getting a teeny bit smarter.

      Obama's action is purely political. any nitwit can see that, and is not remotely the same as presidential exec orders in the past. here is a good overview.


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