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August 17, 2001
George Grayson, who has made 72 research trips to Mexico, teaches government at the College of William & Mary and is an associate scholar of the FPRI. He has recently completed The Changing of the Guard in Mexico, to be published by the Foreign Policy Association in New York.
Mexico City — President Vicente Fox ran into a triple-whammy in early August. His center-right National Action Party (PAN) suffered setbacks in state elections amid disquietingly low turnouts, tens of thousands of peasants flooded into the capital to protest low produce prices, and the small but shrill People’s Armed Revolutionary Front (FARP) detonated crude bombs outside three branches of Banamex, a profitable Mexican banking giant that New York’s Citigroup has just acquired for $12.5 billion.
Do these events presage instability in a neighbor whose GDP will grow by less than 1 percent this year? How can Fox— who ousted from power the long-ruling Institutional Revolutionary Party (PRI) — address the needs of his nation’s “have-nots”? Will an ambitious guest-worker program combined with amnesty for millions of Mexicans living unlawfully in the U.S. provide an effective escape valve for Mexico’s social pressures?
A number of factors militate against an armed uprising in Mexico. First, even though officials have identified 14 rebel bands in the country,[1] these groups are small, prone to factionalism, and capable only of hit-and-run strikes. The FARP, for example, is an offshoot of the Guerrero-based Popular Revolutionary Army (EPR), which has carried out operations in Mexico City and in the states of Mexico, Morelos, and Puebla. The better known Zapatista National Liberation Army (EZLN), which boasts several thousand militants, concentrates on guerrilla theater, as well as propaganda appeals to foreign NGOs and the profoundly divided domestic Left dominated by the Democratic Revolutionary Party (PRD).
Second, the nation’s 192,770-member armed forces are loyal to the popular new president, and Defense Secretary Gerardo Clemente Vega Garcia views combatting poverty and hunger as central to national security. Indeed, the FARP activity has prompted Vega Garcia— in concert with civilian police agencies— to crack down on guerrilla organizations.
Third, while recent problems have taken their toll, Fox still enjoys a high level of legitimacy, as evinced by his 64% public-approval rating.[2]
Fourth, extended families furnish a safety net for the half of the population who eke out a living in fetid slums or on hard-scrabble communal farms.
Finally, the Mexican political culture is conservative— in part, because of the peasant background of so many of the country’s 101 million inhabitants; in part, because of the PRI’s protracted paternalism; and, in part, because of an awareness of the bloodiness of the early 20th-century revolution— a social eruption relentlessly featured in textbooks, films, TV dramas, and popular music.
Although the prospects for an upheaval are remote, Fox must concentrate on institution building. He inherited a deteriorating corporatist system from the PRI, which held power for 71 years by controlling and orienting its labor, peasant, white-collar, and public-servant constituencies. Increased integration with the global economy complemented by Fox’s presidential victory in mid-2000 have further weakened the PRI’s top-down structure. But its occupation-based sectors are still around— albeit with diminished power and bereft of a PRI president to call the shots. Thus, they can spark headaches for Fox, as evidenced by the peasant marches earlier this month.
Even as he confronts PRI interest groups, Fox has done little either to develop counterpoises to them or to establish new institutions. His own National Action Party (PAN) thrives in middle-class, urban areas, but lacks an organized presence within the countryside or union movement. The same is true with Amigos de Fox (Friends of Fox), a huge independent alliance spawned to help Fox win the PAN’s presidential nomination and the general election. Meanwhile, his labor secretary’s Catholic zeal has raised hackles among union bosses, while his agriculture secretary — a world-class garlic and broccoli grower— has little rapport with the nation’s millions of dirt farmers.
For starters, Fox must unite the PAN, which is composed of two major factions: the cautious “orthodox” or traditional wing composed of long-time party activists, who believe in advancing democracy and social-Christian ideas by working gradually through transparent institutions; and the hard-charging “Northern Barbarian” businessmen, who— like Fox— cast their lot with PAN in the 1980s and advocate a no-holds-barred attack on the corruption, incompetency, and distended bureaucracy fostered by the PRI during seven decades (1929–2000).
Upon winning the July 2, 2000, presidential contest, Fox emphasized that he would not acts as an agent of any political party. He failed to consult PAN leaders on cabinet appointments, and appointed only eight panistas to the top 50 posts in his administration. Even worse, he exacerbated his feud with Senator Diego “Jefe Diego” Fernandez de Cevallos— the PAN’s 1994 presidential standard-bearer and its most popular figure— by urging Congress to approve an ill-conceived indigenous rights’ initiative backed by the EZLN.
PAN mossbacks decried the wedding of the divorced Fox to his divorcee press secretary Marta Sahagun without their first obtaining Vatican annulments of previous marriages. That the Fox-Sahagun nuptials took place on July 2, 2001, eclipsing the PAN’s first-anniversary victory celebration, even irked party members who cheered the legalization of their personal relationship.
Such vexing matters aside, Fox and PAN leaders have begun to smoke the peace pipe. Felipe Calderon Hinojosa, a highly-respected traditionalist who heads the party’s 207 deputies, passed up a bid for Michoacan’s statehouse to help move the president’s controversial fiscal reform through Congress. If successful in this formidable challenge, Calderon— who has enlisted the help of Jefe Diego, Nuevo Leon Governor Fernando Canales Clariond, and party president Luis Felipe Bravo Mena — could receive a top cabinet portfolio like secretary of government (Gobernacion), while lofting his star for the PAN presidential nomination in 2006.
Several other developments bespeak improved Fox-PAN relations. First, the chief executive has stopped lambasting Congress in his public appearances. Second, he and the PAN have agreed on a ten-member commission to fortify executive-party ties. Third, Fernandez de Cevallos, who realizes that Fox’s failure will hurt the PAN badly, recently traveled with the president to an event in Queretaro. Fourth, the PAN, which for several months had touted its own tax bill, has agreed to amalgamate its legislation with the president’s. Fifth, Fox signed Congress’s watered-down version of the Indian rights legislation, which a majority of states ratified in the face of vehement leftist and EZLN objections. Finally, the PAN’s secretary general rejected his party’s maintaining a “healthy distance” from the president, as Fox’s predecessor had attempted to configure his relationship with the PRI.
The president can benefit from the knowledge and experience of panista politicians, and the PAN has a better chance to win congressional majorities in 2003 if the chief executive retains his popularity. Above all, Fox and Calderon must unite PAN legislators behind the chief executive’s agenda if they are to attract votes from PRI and minor-party lawmakers. As long as the PAN remains divided and contentious, the PRI can accuse Fox and his party of fomenting legislative paralysis.
Beyond hammering out deals in Congress, Fox and the PAN must work with other power brokers— including the PRD, churches, chambers of commerce, governors, domestic NGOs, labor leaders, etc.— to forge a governing pact. Such an accord would replace the unwritten rules of the game that pivoted on a monarchial president. For years, PRI chief executives took advantage of a subservient corporatist party, a pliant Congress and bureaucracy, submissive state governments, and servile interest groups to deploy government resources to promote their objectives, reward allies, craft economic programs, finagle the press, and coopt or suppress dissidents.
New rules must address questions like: What economic strategy best fits Mexico’s needs? What should be the relationship between the various branches and levels of government? Will decisions emanating from a more professional judiciary command respect?
If Mexico’s elite neglects its responsibility, the people— already concerned about deteriorating economic conditions— could gravitate toward a “savior” a la Venezuela’s Hugo Chavez or Peru’s Alberto Fujimori, who offer simple, populist solutions to complex problems.
While special-interest pressure and the quest for Hispanic votes help explain Democratic and Republican support for increased immigration from Mexico, others declaim the “safety-valve” effect. That is, allowing men and women with get up and go to leave Mexico diminishes the likelihood of unrest— even guerrilla warfare— in a democratizing nation that shares a 2,000-mile-long border with the U.S.
Despite widespread poverty, the chances of an upheaval in Mexico are remote, provided the president can deliver on campaign promises to boost social spending, create jobs per year, and attain sustained economic growth. The U.S. economic downturn has made achieving these goals impossible, at least in the short run. But Mexico can do much more for itself by expanding tax collections. After all, Mexico’s revenues equal only 13 percent of GDP— a much lower figure than in Brazil (23.9 percent), Canada (21.8 percent) and the United States (20.8 percent). And fewer than 9 million people— out of Mexico’s 39-million-member work force— pay taxes!
Fox has submitted to Congress a fiscal reform package, which would close gaping loopholes, simplify the tax code and streamline collections. It also aims to revise the mortgage law, coax above ground the businesses that operate in the informal economy, and create a national savings bank. Congress approved most of the administrative and institutional changes in the spring, but ducked the more controversial items like extending the 15 percent value-added tax (IVA) to food, medicine, private-school tuition and books. Even though the richest one-fifth of the population enjoys 42 percent of the benefits of exempting food and medicine from the IVA, politicians have excoriated this recommendation as an assault on the poor. Pope John Paul II agreed, saying that it is “indispensable … to guarantee justice for [the poorest people], including in fiscal matters.”
Apart from such grousing, opposition parties pummeled the unpopular proposal in a demagogic fashion. For their part, groups that are currently exempted from most taxes — pharmacies, booksellers, truckers and farmers— were loath to lose their privileges. Finally, legislators blasted Fox’s lobbying. The president approved TV ads, which labeled as “liars” legislators who claimed the IVA change would harm the poor. These hard-hitting spots vexed lawmakers, who were averse to raising levies in the first place.
While some compromises are in order, approval of Fox’s tax initiative would yield monies desperately needed to create jobs, upgrade health care and education, build houses and enhance law enforcement. Instead of championing the exodus of hundreds of thousands of highly-motivated young people, the president would do well to enlist them to pressure pampered deputies and senators who care more about chalking up political points than combatting poverty.
For their part, U.S. congressmen should remember that (1) there are more poor people in America than in Mexico, (2) one amnesty program invariably excites demands for another, (3) guest-work schemes inevitably give rise to parallel streams of illegal aliens, and (4) Mexico is a rich country, whose own politicians must take the lead in using its abundant resources to benefit the many instead of the few.
Washington could boost spending on job training and access to education for impoverished Mexican-Americans and other low-income individuals lawfully living in this country. While not rewarding lawbreakers, such a policy would pay dividends for all Americans who deserve a helping hand.
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