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 Editorials | March 2006 
Mexican President: The Fox in Winter
Geri Smith - McGraw-Hill
| | Vicente Fox won the Mexican presidency in 2000 by using his charisma and marketing savvy to sell himself as an agent of change and the country's best hope of booting the corrupt Institutional Revolutionary Party. |
Vicente Fox won the Mexican presidency in 2000 by using his charisma and marketing savvy to sell himself as an agent of change and the country's best hope of booting the corrupt Institutional Revolutionary Party [PRI] - in power for seven decades - from office.
Today, as Fox nears the end of his six-year term, the former Coca-Cola (KO) executive enjoys a popularity rating of nearly 70%. Meanwhile, the once-invincible PRI is looking weak and divided. PRI candidate Roberto Madrazo is running in third place in the presidential race, with elections scheduled for July 2.
Even though Fox is constitutionally banned from running for reelection, he has been crisscrossing the country almost as if he were campaigning to cement his legacy. He wants to be remembered not only as the man who propelled Mexico into a new era of multiparty democracy but as the first Mexican president in more than a quarter century to serve out his term of office without a financial crisis.
"I am very proud and happy to have been part of the great social movement that allowed us to end a party dictatorship and an authoritarian government. Today we have a true democracy in Mexico, and a strong economy with the best economic indicators in our history," Fox told BusinessWeek in an interview on Mar. 2.
COWBOY CHARM.
BusinessWeek tagged along with Fox on a four-state tour of northwestern Mexico during which his crowd-pleasing charm was on full display. Fox, 63, wore his trademark cowboy hat and boots as he hopped onto a bulldozer to inaugurate a highway project in the state of Sinaloa. In the the tourist mecca of La Paz, in Baja California Sur, Fox stressed that his government has budgeted $8 billion for highway projects in 2006 - 10 times the amount that the previous PRI administration spent during its last year in office.
"Fox has done a good job, especially helping the poor and making our country move forward," says 59-year-old grandmother Maria Ninfa Torre Gomez, who came to hear him speak.
Fox, in fact, can boast of a number of impressive achievements. Thanks to strict fiscal discipline - not to mention record-high prices for the country's oil exports - Mexico has a balanced budget. Inflation is the lowest it has been in 37 years - at 3.3% last year, it was even lower than in the U.S. And the benchmark interest rate has fallen from 27% to less than 8% in five years.
SELF-PROMOTION.
So-called "country risk," as measured by the premium above U.S. treasuries a government must pay to get investors to buy their debt, is down to just 94 basis points, from 400 basis points at the start of Fox's term in December, 2000. Poverty has been significantly reduced through government programs such as one that pays stipends to 5 million poor families who agree to send their children to school.
Nonetheless, Fox's presidency is ending on a bit of a bittersweet note. He is frustrated, he says, that the country's electoral commission and supreme court have barred him from appearing in TV and radio spots touting the achievements of his administration. These bodies ruled that the spots sounded too much like campaign ads in support of Felipe Calderon, the candidate for Fox's National Action Party.
"I believe that in a democratic country, the president and all the citizens should have the right to express themselves - especially a president who has had five years of experience and has seen which things work and which don't work," he says.
LACK OF SUPPORT.
Fox is also stung by criticism from political opponents and members of the country's intellectual elite who label him a disappointment. In their eyes, he has not pushed hard enough on reforms to ensure that Mexico's economy remains globally competitive. Those includes overhauls of the tax and labor codes and opening the capital-starved energy sector to private investment.
If these reforms had been enacted, Mexico's economy would likely be growing much faster than its current rate of 3.5% a year, analysts say. Fox laments he was unable to enact energy reforms but notes that he did not benefit from a majority in Congress. "I hope that in the next presidential term the relationship between Congress and the executive branch will be on better terms," he says.
The president's foes also charge that he has failed to rein in Mexico's powerful monopolists, from telecom and retail magnate Carlos Slim to the two private TV networks, Grupo Televisa and TV Azteca. "Fox didn't meet all the expectations that were inordinately inflated by his team, by him, and by opinion makers," says political scientist Federico Estevez, of ITAM, a leading university in Mexico City.
STAY THE COURSE.
Still, Mexico is a dramatically different country thanks to Fox's upset victory in 2000. In a country accustomed to what one Mexican historian calls "imperial presidencies," where all-powerful executives exercised their clout in often arbitrary fashion, Fox refusal to do so allowed congress to wield more power. And thanks to his willingness to make unpopular spending cuts during slow-growth years, Fox ensured continued economic stability and the favorable investment climate the country enjoys today.
The challenge now, he says, is to avoid abrupt U-turns each time a new president takes office. That's a concern for many investors, both local and foreign, since current opinion polls show Andres Manuel Lopez Obrador, the candidate for the left-leaning Party of the Democratic Revolution, as the front-runner in the presidential race. No matter who wins, Fox says, what's important is to avoid huge policy shifts.
"To me, that's the biggest problem facing Latin America today," he says. "Each government comes into office and invents new development models. They move to the right or to the left and always appear to be experimenting. If one maintains public policy steady long enough, it will bear fruit and development will arrive." Fox is right in saying that it one of the main reasons that once crisis-prone Mexico is today, along with Chile, one of Latin America's most solid economic pillars. |
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