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Mexico News Weekly- Feb.24

Posted by the generals on February 28, 2011, 12:01 pm

Subject: Mexico News WEEKLY February 24, 2011

Weekly Report - 24 February 2011 (WR-11-08)
MEXICO: What is López Obrador up to?
Andrés Manuel López Obrador, a radical left-winger, withdrew his (attempted and much trumpeted) resignation from the main left-wing party, the Partido de la Revolución Democrática (PRD) on 23 February. López Obrador’s manoeuvrings are designed to do two things: first to prevent the PRD going into an alliance with the Partido Acción Nacional (PAN) in the Estado de México, this year’s most important gubernatorial election; and second, to weaken the grip a rival faction, known as Los Chuchos, has on the PRD party machine. What he has achieved, however, is to show how weak and divided the PRD is.
The PRD’s current problems, however, do not mean that it has become as negligible a force as the opinion polls suggest. López Obrador himself still commands the support of a solid 10% of the electorate. Furthermore, his successor as mayor of Mexico City, Marcelo Ebrard, is a strong candidate for the presidency in 2012.
Ebrard has been busy polishing his international profile, most recently at the World Economic Forum in Davos. The big issue for Ebrard is winning the Left’s (principally the PRD’s but also the Partido del Trabajo’s and Convergencia’s) nomination for the presidency. If he does that he will be in a strong position because the main opposition party, the Partido Revolucionario Institucional (PRI), has a couple of candidates who are already at odds with each other while the ruling Partido Acción Nacional (PAN) appears to have no-one. Admittedly, at this point six years ago, the odds on Felipe Calderón Hinojosa, (then a none- too-successful party president, federal deputy and sacked energy minister), winning the presidency would have been ridiculously long.
López Obrador has made his move now to derail the negotiations between the PAN and the PRD over a joint candidate for governor in the July elections. As several political commentators in Mexico have pointed out, López Obrador has, in fact, been a semi-detached member of the PRD for most of the past five years. He has allied himself more with Convergencia and the PT than with the PRD, though the only place he campaigned directly against a PRD candidate was in the municipal election in Iztapalapa, a borough of Mexico City [WR-09-39].
In 2010 the alliance between the PRD and the PAN was successful in three states (Oaxaca, Puebla and Sinaloa, although in each state the victor was a former priísta) and again in Guerrero this year (again with the same caveat). To be fair, López Obrador, though stating his opposition to all four alliances, did not actively campaign against them or try to split the Left’s vote in the election.
The PRD and the PAN’s dance in the Estado is slowing down the whole political process. The PRI itself has not chosen a candidate to succeed Enrique Peña Nieto, the current governor and the frontrunner for the PRI’s presidential nomination, and hence the presidency, in 2012. The PRI is delaying its decision because it wants to know what its candidate will be facing. Formally, candidates do not have to register for the 3 July election until 1 May. The PRI party president in the Estado, Ricardo Aguilar Castillo, says that the party will spend most of March in consultation with its members about its manifesto and then hold a very brief (28 March to 6 April) primary before a party convention at which its candidate for governor will be announced.
The PRD national committee, dominated by Los Chuchos, voted on 19 February to hold a vote in the Estado on the putative alliance with the PAN. The problem is that the PRD national committee cannot decide whether it should hold a state-wide poll on whom its candidate should be, what question it should ask or whom it should ask. Should it ask all voters? Or just PRD members? Or all members of the PRD, Convergencia and the PT? If the poll is of all voters it may well be distorted by priístas who will vote the line recommended by Peña Nieto, who opposes any alliance between the PRD and the PAN in the Estado.
The odds must be that the PRD will abandon the idea of an alliance with the PAN in the Estado. It may be that Ebrard, a convinced Aliancista recognises that such a result is inevitable in the Estado, so pushing for an alliance there is doomed. His new position of cordial relations with López Obrador means that he benefits if López Obrador’s candidate in the Estado, Alejandro Encinas, does well. If Encinas comes a poor second (or even third), however, Ebrard’s arguments that the PRD (and the Left in general) needs to broaden its appeal for the 2012 presidential election are also enhanced.
The PRD also, incidentally, needs to pick a new party president after Lázaro Cárdenas Batel, the former governor of Michoacán and the grandson of President Lázaro Cárdenas del Río (1934 to 1940), who nationalised the oil industry, refused the job. The PRD is due to hold a party congress in March to pick its new president.
Minimum wages
The current minimum wage of M$1,700 (US$141) a month now buys only 78% of what the minimum wage bought in 1976. If the minimum wage were to retain its 1976 purchasing power it would have to rise to M$6,536 (US$544) a month. The figures are important because the current finance minister, Ernesto Cordero, (who is a possible contender for the presidency) attracted public ridicule this week when he claimed that any Mexican household with an income of M$6,000 a month could afford a house, a car and to educate children privately.

Weekly Report - 24 February 2011 (WR-11-08)
NAFTA: Calderón’s agenda for awkward US trip
The Mexican presidency has announced an outline agenda for President Felipe Calderón Hinojosa’s two-day trip to Washington on 2 and 3 March. Calderón will meet President Barack Obama on 3 March. The trip, which will be Calderón’s fifth bilateral meeting with Obama, comes at an awkward time for bilateral relations.
Also on 23 February, Janet Napolitano, the US Homeland Security Secretary, criticised President Calderón for his harsh comments about the lack of coordination between US security agencies. Napolitano’s strong comments (“disappointed” is officialese for angry) overshadowed the news that the Mexican army had arrested a gangster who conveniently confessed to murdering Jaime Zapata, an Immigration & Customs Enforcement (ICE) agent killed in Mexico on 15 February.
Calderón’s outspoken comments on the lack of coordination between US security agencies (he named the DEA, FBI and CIA) were unfortunately timed: they were published on the day of Zapata’s funeral in Brownsville, Texas. Calderón was particularly angry about the behaviour of the US ambassador to Mexico, Carlos Pascual, as revealed by US embassy cables published by WikiLeaks.
Pascual, who was sent to Mexico by Obama, arrived with a questionmark against him, at least in the eyes of Mexican officials, because of his professional expertise in dealing with failed states. Calderón, in his videoed interview with El Universal accused Pascual of “ignorance [that] has translated into a distortion of what is happening in Mexico…[which has caused] an impact and an irritation in our own team.” Calderón was referring to the WikiLeaks publication of US State Department cables which discuss the perceived shortcomings of Mexico’s intelligence services; the conduct of its army in Calderón’s anti-crime campaign; and the inability of its security forces to work well with one another. Calderón’s comments were the first official Mexican response to the WikiLeaks revelations.
Calderón’s clear unhappiness at what Pascual has been reporting to the US suggests that over the final 18 months of his administration relations with the US are likely to be bumpy. Policymakers in both the US and Mexico are now beginning to think about what may happen in 2012 when a new Mexican (and perhaps also a new US) government will take office.
On 23 February, Socrates Rizzo García, a former governor of Nuevo León (1991-1996), whose state is now one of the main battlegrounds between drug gangs, said that when (his party) the Partido Revolucionario Institucional (PRI) ran Mexico (until 2000), “a strong presidency and a strong [federal] government” assigned the routes each drug gang could use so that there was no fighting between the gangs and ordinary people could live in peace.
Rizzo’s comments suggest that if the PRI were to recover the presidency in 2012, it might revert to this former policy, which at least kept the death toll down in Mexico. Since President Calderón took office in December 2006, 35,000 people have been killed by drug gangs.
Rizzo’s comments, made at a conference held at Coahuila state university’s law faculty, were also aimed at Calderón. In his 22 February interview Calderón accused Mexico’s state governors of failing to help the federal government. Rizzo’s argument was that in his day the federal government handled the whole issue of the drug trade and kept state governments out of the loop.
Army Day
On 19 February, Army Day, President Felipe Calderón announced the creation of four new army battalions, which will be deployed in Mexico’s unstable north-east. Calderón’s decision is an acknowledgement that his use of the military, particularly the army, as a stopgap law enforcement agency while police forces are overhauled and improved, has not worked. It also shows that despite the president’s repeated insistence that the army deployment is temporary (made again on 19 February), the army and marines will remain on the streets for the foreseeable future.

Weekly Report - 24 February 2011 (WR-11-08)
MEXICO | Growth. GDP growth in the final quarter of 2010 was 1.3% quarter-on-quarter, and 4.6% year-on-year, the official national statistics institute (Inegi) reported on 21 February. This brought year-on-year growth to 5.5% for 2010.
The final quarter growth figure of 4.6% was substantially better than the consensus forecast which was for GDP growth of 3.9%. The main reason for this was a pick-up in exports to the US. On the other hand, the quarter-on-quarter growth figure was a bit less than the 1.7% consensus forecast.
Startlingly the growth rate of 2010 was the highest annual rate since the Partido Acción Nacional (PAN) first won the presidency in 2000. In 2000 (all but one month of which was managed by President Ernest Zedillo Poncé de León’s economic team) the economy grew by 6%.
In 2009, the economy contracted by 6.5%. Originally this was the worst contraction since the Great Depression, but subsequent revisions have now put it as the second worst, behind President Zedillo’s first full year of 1995.
In December, the best performing sector was agriculture (where output was up by 12.5%). The chill in northern Mexico in January and February, which has wrecked the maize crop in Sinaloa, is likely to mean that this sector will do badly in the first part of 2011.
The industrial sector in December had decent growth in output, rising 4.9% overall. The growth in output was pretty broadly based.
Services were the comparative laggard in December, rising only 3.3%, year-on-year.
MEXICO | Slim. The world’s richest man, Carlos Slim Helú, announced on 22 February that he was investing in Colombian oil exploration. This is Slim’s first foray into the upstream oil business. Slim has an enviable reputation (and a fortune of US$54bn to prove the point) for being among the first to spot business opportunities. In Mexico, oil exploration is still a state-owned monopoly, through Petróleos Mexicanos.
Slim’s company is Tabasco Oil, in which he has acquired a 70% stake. It has a concession to explore for oil in eastern Colombia and has promised to invest US$6m in the project. Geoprocesados, which had set up Tabasco, has long worked with Pemex on seismic evaluations of potential oilfields.
MEXICO | FDI. In 2010 foreign direct investment in Mexico came to US$17.7bn. This was 17% more than for 2009, according to preliminary figures from the Secretaría de Economía. The 2009 figure is also 53% higher than originally reported: the ministry’s first estimate was US$11.4bn.

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  • Mexico News Weekly- Feb.24 - the generals February 28, 2011, 12:01 pm
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