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Mexico News..July

Posted by The Generals on August 2, 2012, 2:29 pm
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Subject: Mexico News WEEKLY July 12, 2012



Leader

PAN stands to reap benefits of Mexico’s post-electoral legal tussle

Mexico’s defeated leftist presidential candidate Andrés Manuel López Obrador is once again refusing to go quietly. He is preparing a legal challenge alleging that the victor Enrique Peña Nieto benefited from massive vote buying and campaign overspending by the Partido Revolucionario Institucional (PRI), as well as media bias. He is insisting that the elections should be annulled or invalidated. Intriguingly, the ruling Partido Acción Nacional (PAN) is levelling exactly the same charges at Peña Nieto while, pointedly, refusing to present a joint legal challenge with the Partido Revolucionario Democrático (PRD) and recognising his victory.
After a disastrous showing in the elections, this is a deft move by the PAN which can take the moral high ground without being associated with a PRD legal challenge that is likely to spawn protests which would be highly unpopular if they come close to causing the chaos of López Obrador’s protests after his narrow defeat in 2006. With the PRI falling short of a majority in congress, the PAN has also positioned itself to extract concessions from the party in return for supporting Peña Nieto’s reform agenda.
The PRD wants fresh elections to be staged. It argues that “approximately 5m votes” were bought by the PRI. It did not explain how it reached this figure, which just happens to be sufficiently larger than the difference of 3.32m votes separating López Obrador from Peña Nieto, or 6.6%, to justify the challenge.
The PRD made the announcement a day after the Instituto Federal Electoral (IFE) confirmed the official results of the elections, which were very similar to the preliminary count. The PRD is not challenging the congressional or gubernatorial results, which saw the party make important gains.
The PRD alleges that the PRI spent some US$100m more than campaign spending limits and bought votes by means of gifting thousands of people with bags of groceries, construction materials, appliances and pre-paid store cards for use in the Soriana supermarket and retail store chain. Some 50,000 students and leftists marched to the central Zόcalo square in Mexico City on 7 July denouncing fraudulent elections. The student movement YoSoy132 prepared boycotts against Soriana.
“We keep getting more information to support the hypothesis that the presidential election was bought, and that they don’t want change in our country,” López Obrador said. He added that the PRD was working to ascertain exactly how much money was used in an “immoral operation” in which “the principal operators were the PRI governors”. This is a sensible target. These are the dinosaurs in the PRI, some governing states that have never been in the hands of any other party where clientelism and venality are rampant: the fact that some of Peña Nieto’s closest associates are governors has fuelled concern that the change he offers from the past is mainly cosmetic.
This could be the last role of the dice for Lόpez Obrador. Marcelo Ebrard, whose successor in the Distrito Federal, Miguel Angel Mancera, thumped his challengers, is waiting in the wings to assume leadership over the PRD-led coalition Movimiento Progresista if the legal challenge backfires. While it is true that Brazil’s leftist veteran politician Lula da Silva tried four times before successfully coming to power in 2003, voters could grow tired of Lόpez Obrador’s post-electoral antics. His “Republic of love” looks less credible than ever. He signed electoral pacts saying he would accept the outcome of the elections - and days before he repeated that he would. He claims that the buying of votes invalidated these pacts, but these allegations had been flying around for weeks before the elections, which makes it look like he was always planning a challenge in the event of adverse results. President Felipe Calderón said López Obrador’s reaction was “predictable, even before election day”.
The PRD turned to the PAN to present a joint challenge against electoral irregularities. It was a reasonable request. The PAN party president, Gustavo Madero, had met his PRD peer Jesús Zambrano; he had professed himself to be “open to dialogue”; and he had accused the PRI of “a sophisticated vote-buying operation” in which PRI governors were embroiled, using public funds illegally. The PAN accuses the PRI of exceeding the campaign-financing limit; using parallel mechanisms of finance; and buying votes. It is even denouncing the partiality of some media outlets before the federal electoral tribunal (TEPJF). All this tallies precisely with the PRD complaints about the process to the TEPJF and yet the PAN party leadership (CEN) rejected the PRD proposal. Why?
The PAN reached a different conclusion to the PRD: the PAN accepts the results as legal if not legitimate; the PRD claims they are illegal and illegitimate. So, the PAN will complain - Madero said the fact that the votes were counted fairly does not mean the process itself was equal - but it does not want to get sucked into a long post-electoral dispute, which the PRD could radicalise with street protests, alienating the centre ground. The PAN has not forgotten the difficulties López Obrador caused the party by refusing to recognise the legitimacy of the Calderόn administration, but it also seems prepared to accept the election result as part of a quid pro quo with the PRI agreeing to political reforms.
The congressional results, coupled with the fact that the PRD is absorbed in post-electoral protests, mean that the PAN now holds the key to the ambitious reform agenda Peña Nieto professes to favour in the areas of energy, labour, tax and social security. This is an unlikely position of strength in the wake of the PAN’s heavy electoral defeat. The head of the PAN in the senate, José González Morfín, promised constructive opposition this week, saying “we will act generously for the country… but we won’t forget how mean the PRI was over the last 12 years. Now they are proposing (reforms which) they were dedicated to blocking for 12 years.” Conscious of this, Peña Nieto is already making overtures to the PAN, suggesting that some of these reforms could be approved before he would take office on 1 December and possibly even before the new congress sits on 1 September. This could be very attractive to the PAN. It would give Calderόn and the PAN a legacy other than just violence.
The PAN is likely to look for political reforms in exchange for its support for Peña Nieto’s economic reforms. It favours consecutive re-election for congressmen, which Calderón sees as a way to hold governors to account, and a second round in presidential elections on the grounds that two out of three parties are currently always left disappointed. The PRI is opposed to such a reform, fearing that an anti-PRI vote would stack up in a second round. Peña Nieto also opposes both reforms but if he wants to see his own reform agenda prosper he might have to overcome his own scruples and persuade his party to give ground.
The reason for this is that the PRI simply cannot go it alone. The projected composition of congress, released by the IFE this week, gave the PRI just 207 seats in the 500-seat lower chamber, down from 237 currently (see table below). Even with the support of its (not unconditional) ally, the Partido Verde Ecologista (PVEM), the PRI only has 240 seats. It may well be able to stitch up an ad hoc alliance with the Partido Nueva Alianza (Panal), which won 10 seats in the lower chamber, in exchange for its buttressing the party’s éminence grise, Elba Esther Gordillo, the leader of the teachers’ union, but it would still need to look for support elsewhere, especially for constitutional reforms.
It is much the same story in the senate, where the PRI gained 19 seats on its worst-ever result in 2006 to be left with 52. But, even with the backing of the PVEM, which won nine seats, and hypothetically the Panal, which won just one, it would fall short of a majority in the 128-seat senate.
The Movimiento Progresista - which includes the PRD, Movimiento Ciudadano and Partido del Trabajo - was the big winner in the lower chamber, gaining 46 seats (the PRD alone took 30 more) to be left with 136 seats, although it lost nine seats in the senate to finish with 28. Technically the PAN was the big loser, down from 142 to 114 seats in the lower chamber and from 52 to 38 in the senate, but the PRI knows it is more coherent, and would be a more reliable partner than the PRD, which is also likely to spend a good time licking its wounds if its legal challenge proves to be fruitless.
The TEPJF must validate the result and proclaim a winner by 6 September when Peña Nieto says he will appoint an official transition team. In the meantime, Peña Nieto, who insists the allegations against the PRI are “a set-up” and absolutely unfounded, named a team of advisers on 11 July to fight his legal battle and to begin to negotiate his reform agenda. Luis Videgaray, Peña Nieto’s campaign coordinator and finance secretary when he was Estado de México governor, was appointed coordinator of reform initiatives; Miguel Ángel Osorio Chong, former governor of the central state of Hidalgo, was put in charge of political strategy and negotiations; and Senator Jesús Murillo Karam, a lawyer and another former Hidalgo governor, will head Peña Nieto’s legal defence before the TEPJF.
Murillo Karam said that his priority in the coming weeks would be to do the groundwork for the creation of a national anti-corruption commission, and an autonomous citizens’ commission to oversee the federal government’s use of media publicity. Both moves are designed to show, in response to the PRD’s current legal offensive, that Peña Nieto is committed to transparency and oversight.
Composition of congress from 1 September

Lower Chamber
Senate

2009
2012*
2009
2012*
PRI
237
207
33
52
PAN
142
114
52
38
PRD
71
101
29
22
PVEM
22
33
6
9
PT
13
19
2
4
MC**
6
16
5
2
Panal
9
10
1
1
TOTAL
500
500
128
128
* Based on projected results by the Instituto Federal Electoral (IFE)
** Formerly known as Convergencia.
Composition of congress by coalition from 1 September

Lower Chamber
Senate

2012
2012
PRI-PVEM
240
61
PRD-PT-MC
136
28
PAN
114
38
Panal
10
1
TOTAL
500
128
Peña Nieto’s reforming zeal
Writing in El País, Mexican historian Enrique Krauze questioned the commitment of Enrique Peña Nieto to deliver on his proposed reform agenda: “many of these reforms are contrary to the PRI’s DNA… It will require the courage, conviction and vision of a true reformer to dismantle this corporatist edifice of the PRI with its antiquated ideas, interests and connections with crime. It is not at all clear Peña Nieto and his young team has this historic will.”
PAN and PRD future
The defeat suffered by the Partido Acción Nacional (PAN) in the presidential and congressional elections, relegating the party to just the third strongest force in the country, means it will need to be “rebuilt from the bottom upwards, brick by brick”, President Felipe Calderón said in an interview with Milenio television this week. He said this would be a “titanic” job. The PAN could play a bigger role in national politics, however, than the more successful PRD. Jesús Ortega, a moderate recent PRD party president, said it was critical that the PRD should not isolate itself again as in 2006 and should take part in the “accords and negotiations over the progressive reforms that the country needs”.
Mexico & Nafta

TRACKING TRENDS

MEXICO | Economic Activity continues to expand. According to Mexico’s finance minister, José Antonio Meade, Mexico’s economy will maintain its expansionary trend throughout the year despite the complicated international environment. Meade pointed out that GDP growth in the first quarter of the year had increased by 4.6% and that the country’s global economic activity indicator (Igae) recorded an increase of 4.7% in April, even higher than the GDP figure.
According to Meade, the favourable readings in these macroeconomic indicators “can be explained by growth in both domestic and foreign demand”. Focusing on the international situation, Meade said that, even in the current context of uncertainty, “Mexican exports have continued to exhibit a good dynamism”. He also highlighted the fact that domestic demand has continued to increase at a higher rate of 7.2% between January and May with investments also increasing by 8.6% during this period. Meade said that this reflected the fact that economic growth was “balanced across different areas”.
Finally, Meade also brought attention to the fact that all this has also translated into increased confidence in the Mexican economy which is reflected in the peso’s exchange rate: the peso has appreciated by 4.5% in the first six months of the year.
MEXICO | Set to join the TPP. On 9 July the US trade representative, Ron Kirk, sent a letter to the US Congress informing that the White House was promoting Mexico’s inclusion in the negotiations of the Trans-Pacific Strategic Economic Partnership (TPP). In his letter, Kirk explained that the goal of the TPP free trade agreement, which is currently being negotiated by nine countries in the Pacific basin including those in Asia-Pacific and the Americas, was to promote economic integration and increase global trade. In this sense Kirk adds that Mexico’s participation would “significantly contribute to achieving these goals”.
Kirk pointed out that Mexico has provided the US with sufficient guarantees of its “will to negotiate” all the norms and regulations that are currently being discussed by the countries that make up the TPP. The letter comes after the US announced on the eve of the G-20 Summit in Los Cabos, Mexico that it was extending an invitation to its North American Free Trade Agreement (Nafta) partner to join the negotiations of what has been described as the most ambitious free trade project in the world.
The countries currently negotiating the TPP represent 15% of global exports, 18% of global trade and almost a third (26%) of GDP. The addition of Mexico, Latin America’s second largest economy, will only add weight to the emerging group. Mexico’s trade with the current TPP members in 2011 was US$446bn. Mexico’s economy minister, Bruno Ferrari, has said that the government is “very interested and proud” at being included in the TPP negotiations as it considers it to be of great “strategic value”. Ferrari explained that joining the TPP would allow Mexico to play a more important role in the global supply chain to important markets such as the US and Asia-Pacific, “the world’s most dynamic region”. Mexico is set to join the TPP negotiations formally once this has been accepted by all the other negotiating countries. In the latest round of negotiations which took place on 10 July in San Diego the main US negotiator, Barbara Weisel, expressed hopes that Mexico’s inclusion along with fellow Nafta partner, Canada, and Japan could all be agreed within the next 90 days so that the three countries may join the next round of negotiations to take place before the end of the year.
MEXICO | Anti-piracy agreement signed. On 11 July Mexico signed the commercial agreement on falsification (Acta) which calls on signatories to commit themselves to fighting the falsification of brands, inventions, and intellectual and artistic works more efficiently. The agreement was signed in Tokyo by Mexico’s ambassador to Japan, Claude Heller, who explained that Acta sets up an international general framework for stopping the illegal trade of pirated and falsified products including the mass dissemination of digital material. Heller also pointed out that in signing the agreement Mexico has joined other countries, such as Australia, Canada, South Korea, the US, Japan, Morocco, New Zealand and Singapore, as well as the European Union.
S&P adjusts Mexico’s rating
On 9 July ratings agency Standard & Poor’s (S&P) increased Mexico’s short-term sovereign, risk rating to A-2 following a revision of its evaluation criteria. In a statement S&P explained that “the change does not reflect an improvement in the short-term creditworthiness of the country but a revision of S&P criteria regarding the link between short-term and long-term ratings”. The agency confirmed that Mexico’s long-term rating remained at BBB and that its perspective was for this to remain stable “as we expect that the Mexican government will continue with its current fiscal policies following the general elections”.
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