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Republication, copying or redistribution by any means is expressly prohibited without the prior written permission of The Economist The Economist November 18th 2006 A survey of Mexico 1 Time to wake up Also in this section Pregnant pause The old political model has died; a new one has yet to be born. Page 3 Mexico’s mezzogiorno What is needed to bridge the gaping north- south divide. Page 5 Spider in the web All roads lead to Mexico City. Page 6 Plodding on Economic stability is all very well, but where’s the growth? Page 7 Monopoly money Competition is not Mexico’s strongest point. Page 9 Mexico’s new president, Felipe Calderón (right), must resume reforms and set the economy freeor risk backsliding, says Michael Reid The joy of informality Working in the ocial economy has its draw- AKE up, wake up, my dear, the Canada. Mr Fox, a former head of Coca backs. Page 10 Wdawn has broken, the birds are Cola’s Mexican operations, pledged fur- singing and the moon has set. Thus go the ther economic liberalisation and reform. lyrics of Las Mañanitas, the Mexican Mr Fox’s government can look back on Policing the police equivalent of Happy Birthday, belted out a number of achievements for which his The rule of law is an aspiration, not a reality. every day in restaurants and homes across many domestic critics give him insu- Page 12 the country, often by troupes of mariachi cient credit. In recent years the country has musicians in full regalia. The verse seemed enjoyed greater political freedom than per- So close and yet so far particularly appropriate as Mexico cele- haps at any other time in its history. The brated its 196th birthday on September government has maintained economic Making the most of NAFTA requires change at 15ththe anniversary of the day when Mi- and nancial stability, with ination for home. Page 13 guel Hidalgo, a parish priest, called for in- this year estimated at 3.7%. Easier bank dependence from Spanish colonial rule. credit, together with a vast housebuilding Mexico gives every impression of sleeping programme promoted by the government, while the world changes around it. Having is slowly bringing tangible benets to an seemed to embrace globalisationfa- expanding middle class. Social policies voured by its geography, on the doorstep have helped to cut poverty. of the world’s largest consumer market the country risks slipping back into inter- Asleep in a hammock of oil necine conict and introversion. Even so, many of the hopes raised by Mr Six years ago the election as president Fox were dashed. He lacked a majority in of Vicente Fox (pictured left) completed a Congress and proved unable to win ap- Acknowledgments As well as those mentioned in the text, many other people long transition to democracy, ending 72 proval for any big reforms. Instead of the gave freely of their time and ideas to help prepare this sur- years of authoritarian rule under the Insti- annual growth of 7% he had promised, the vey. The author would like to thank them all, and particu- tutional Revolutionary Party (PRI). It also economy has limped along at an average larly Luis Rubio, Ambassador Juan José Bremer, Kevin Middlebrook, Laurence Whitehead, Michael Walton and seemed to set the seal on the economic of just 2.5% since 2000. The government’s several others who asked to remain anonymous. modernisation of the world’s largest Span- nances look better than they are, helped GDP A list of sources can be found online ish-speaking country, with a population by extra oil revenues equal to 2% of . of 106m. After Mexico went bankrupt in Fox has fallen asleep in a hammock of oil www.economist.com/surveys the debt crisis of 1982, the last three PRI money, says Liébano Sáenz, who was An audio interview with the author is at presidents cast aside protectionism and chief of sta to Ernesto Zedillo, the last of www.economist.com/audio state capitalism, most notably Carlos Sali- the PRI presidents (1994-2000). nas (in oce 1988-94), who led his country Labour productivity is low and grow- A country brieng on Mexico is at into the North American Free-Trade Agree- ing only slowly. Oil apart, Mexico’s ex- www.economist.com/mexico ment (NAFTA) with the United States and ports to the United States are losing market1 2 A survey of Mexico The Economist November 18th 2006 2 share to China’s. Some of the social poli- dent, Hugo Chávez. Mr Fox, along with dor recalled a long history of electoral cies have reduced the incentive for mil- Mexico’s richest businessmen, weighed in fraud under the PRI. He drew a particular lions of small businesses to put them- on Mr Calderón’s behalf. parallel with 1988, when Mr Salinas was selves on a proper legal footing. That is So when the vote unexpectedly went declared president after the computers only one symptom of a wider absence of against him, Mr López Obrador and his counting the votes had crashed while the rule of law. Another is mounting vio- backers felt robbed. They cried fraud, showing an early lead for his leftist chal- lence from drug gangs. though they never produced any convinc- lenger, Cuauhtémoc Cárdenas. As Mr Fox’s term draws to its close, ing evidence, and called for civil resis- The parallel was askew. In 1988 the Mexico is starting to look like two dierent tance against the electoral authorities. For electoral authority was the Minister of the countries. Thanks in large part to NAFTA, seven weeks the beaten candidate’s sup- Interior. But a decade ago, with the agree- much of the north is making visible pro- porters camped out in the centre of Mexico ment of all the parties, Mexico set up inde- gress. By contrast, the populous south re- City, occupying the Zócalo, the great pendent electoral institutions. According mains locked in poverty, backwardness square that has been the heart of the city to those independent bodies, two counts and neglect. Meanwhile, each year some since Aztec times, and blocking Reforma, of the ballots (and a partial recount of 9% 500,000 or so young Mexicans cross the its grandest avenue. To hell with your in- of them) all showed the same narrow lead country’s northern border to the United stitutions, declared Mr López Obrador. for Mr Calderón. The election produced States in search of a better life. Even the independence celebration on the best-ever haul of congressmen for Mr On top of all this, Mexico’s politics have September 15th was overshadowed by the López Obrador’s centre-left Party of the suddenly become much more compli- post-election conict. Mr Fox chose to Democratic Revolution (PRD). The elec- cated and confrontational. The campaign mark the occasion in his (and Hidalgo’s) toral tribunal did nd that the interven- ahead of the presidential election on July home state, leaving the traditional venue, tions of Mr Fox and the business groups 2nd was dominated by Andrés Manuel Ló- the Zócalo, to Mr López Obrador’s people were technical violations of the electoral pez Obrador. As mayor of Mexico City, he for the evening. After a nal rally of his law, but no other democracy would worry had made himself popular by providing supporters at which he vowed to proclaim about such things. pensions for the elderly and public works. himself the legitimate president, Mr Ló- Most of the people camped on Re- Standing for a centre-left coalition, he took pez Obrador suspended his protests. But forma, far from constituting an indepen- his ery oratory to the public plaza in a he said he would not recognise Mr Calde- dent social movement, were cogs in the country where politics has long been rón when the new president formally political machine built by the former dominated by backroom deals. But he was takes over on December 1st. mayor. The protest had the backing of the pipped at the post by Felipe Calderón, the Mexico City government. It’s not the peo- candidate of Mr Fox’s conservative Na- Crying foul ple v the powers that be. It is the powers tional Action Party (PAN). Mr Calderón In The Labyrinth of Solitude, his classic that be, quipped Jorge Castañeda, a politi- won 35.9% of the vote against Mr López study of the Mexican character, Octavio cal scientist who was the rst foreign min- Obrador’s 35.3%, a margin of just 233,831 Paz noted that his countrymen habitually ister in Mr Fox’s government. votes out of almost 42m. The PRI’s Roberto mask painful realities, hiding more than The biggest irony of all is that as former Madrazo polled a meagre 22.2%. they reveal. Mr López Obrador’s claim to members of the PRI, several of Mr López To many Mexicans, the election ap- be leading a mass social movement for de- Obrador’s closest collaborators were com- peared to highlight their country’s divi- mocracy against a usurper, Mr Calderón, plicit in the fraudulent campaigns of the sions and to call its growing globalisation ts in with that tradition. Mr López Obra- past. The protests were the rebellion the1 into question. Mr López Obrador spent his formative years in the PRI. He left it in the late 1980s when the economic nationalists in the party lost out to the free-market tech- nocrats. Though many of his economic policies were mild enough, he inveighed strongly against poverty and privilege. To his detractors, he seemed to stand for a re- turn to the authoritarian populism prac- tised by the PRI in the 1970s.