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 News Around the Republic of Mexico | August 2006 
Mexico: Is the Election Finally Over?
 Geri Smith - BusinessWeek
| | Felipe Calderon, presidential candidate for the National Action Party (PAN), attends a meeting with legislators elected in his headquarters in Mexico City, August 28, 2006. (Tomas Bravo/Reuters) |
With fraud ruled out in July's vote, Calderón is looking presidential. Job One? Dealing with a divided country — and a rival who won't concede.
Mexico's too-close-to-call presidential election finally appears to be reaching resolution: The country's top electoral tribunal ruled Aug. 28 against a total vote recount, saying there was no evidence of fraud. Although the tribunal has until Sept. 6 to officially declare a winner, it's all but certain that Felipe Calderón of the center-right National Action Party will be inaugurated Dec. 1 as the new President of Mexico.
If running a country as large and complex as Mexico has always been a challenge, Calderón faces an additional difficulty that no other Mexican President has ever had to endure: a defeated candidate who refuses to concede, and who in fact plans to act as a shadow President and "national coordinator of peaceful civic resistance" during Calderón's six-year term in office.
Andrés Manuel López Obrador, the former mayor of Mexico City who lost the July 2 election by just 0.6%, or around 240,000 votes out of 41 million cast, not only claims the result is fraudulent; he also says the "neo-liberal" economic model espoused by Calderón "has only benefited a privileged few, and has impoverished the majority of Mexicans."
IMAGE PROBLEM. Therein lies Calderón's trickiest task: Convincing the nearly two-thirds of Mexican voters who didn't vote for him - he won with just 36% of the ballots - that he will represent their interests. "The challenges facing Calderón are enormous - a large number of Mexicans will consider him illegitimate, so he must walk a very fine line as he reaches out to them," says Rafael Fernández de Castro, dean of international relations at ITAM, a leading university in Mexico City.
During the campaign, López Obrador presented himself as the defender of the nearly 50% of Mexicans who are poor, while claiming that Calderón represented big business and the country's wealthy elite. Indeed, the wealthier northern states largely backed the PAN candidate, while the central and southern states that have high concentrations of rural poor, mostly indigenous people largely backed López Obrador.
But Calderón says the image is false. "I don't want to see a poor Mexico and a rich Mexico," he told newly elected members of Congress on Aug. 28. "I want to see one strong, developed Mexico with solid economic growth, and above all, with conditions of justice that satisfy all of us."
Calderón, 44, has pledged to expand existing anti-poverty programs, including one called "opportunities," which pay monthly stipends to the families of 6 million poor schoolchildren to ensure they attend school and receive medical checkups. He will also expand a program created by outgoing President Vicente Fox that provides health insurance for millions of Mexicans who are self-employed or work in the "informal" economy without fringe benefits. He also plans to step up construction of government-built low-cost housing.
GROWTH IMPERATIVE. To combat the impression that he favors Mexico's wealthy business elite, analysts say Calderón should eliminate economic privileges, including tax exemptions and tariff protection for coddled industries. He also needs to crack down on powerful monopolies in such areas as telecommunications and broadcast media, to bring down prices for consumers, and to encourage new competition.
And he has to find a way to generate greater economic growth, which averaged just 2.3% a year under Fox. Calderón plans to give priority to Mexico's tourism industry, which is a big jobs-creator. He has pledged to introduce a flat tax to simplify the tax code and improve tax collection, which at just 11% of gross domestic product is insufficient to fund social development and improve the country's physical infrastructure.
"The voters who tipped the balance in favor of Calderón are middle class voters earning between $8,000 and $16,000 a year - people who want access to auto loans, for example - whose jobs are in danger if the economy doesn't grow robustly," says Luis Rubio, head of the Center of Research for Development, a Mexico City think tank.
Calderón, a former congressman who holds a Master's degree in Public Administration from Harvard University, must work closely with Congress to win approval of key structural reforms that Mexico needs in order to remain attractive to multinationals as an offshore manufacturing and services center. Investors face rigid labor laws and high energy prices that have made Mexico lose international competitiveness. Without a congressional majority, Fox was unable to convince legislators to open the country's energy sector to more private investment and carry out labor and fiscal reforms.
IMMIGRATION AGENDA. In the July elections, the PAN significantly increased its representation in Congress, and although Calderón still won't enjoy a majority, he should be able to build coalitions with the Institutional Revolutionary Party (PRI), the former ruling party that's now in third position after the PAN and the PRD. "Mexico has to work hard to become interesting again to foreign investors because it has lost some of its appeal," says Fernández de Castro.
And on the international front, Calderón needs to find a way to work more closely with Washington to solve the immigration conundrum along the 2,000-mile border, which sees an estimated 400,000 Mexican illegal immigrants cross each year. Mexico could help speed approval of U.S. immigration reform and creation of a temporary-worker program if the Calderón administration makes a good-faith effort to crack down on migrant smuggling gangs and tightens security along its own southern border with Guatemala to slow the flow northward of Central American migrants, says Fernández de Castro.
For now, though, Calderón's biggest challenge lies at home, specifically in the tent city that López Obrador's supporters have erected along the capital's main artery, Paseo de la Reforma. A leading business confederation estimates that the six-week-old blockade has cost city businesses at least $375 million dollars. While the tents may slowly disappear, López Obrador shows no signs of backing off on his vow to doggedly pursue Calderón's every move as President.
It's going to take some skillful diplomacy if Mexico's soon-to-be-certified President-elect is to heal the wounds in this sharply divided country.
Smith is BusinessWeek's Mexico bureau chief |
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