President Vicente Fox's Administration Signs Agreement with Eight Political Parties

SourceMex Economic News & Analysis on Mexico, October 10, 2001 | Go to article overview
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President Vicente Fox's Administration Signs Agreement with Eight Political Parties


In a rare display of cooperation, President Vicente Fox's administration and the leaders of the eight political parties represented in Congress agreed on an outline of social and economic goals that will be followed during 2002 and possibly 2003. The agreement, known as the Acuerdo Politico para el Desarrollo Nacional, was announced at a ceremony in Mexico City in early October.

The agreement, which has been under negotiation for several months, specifies 47 social, economic, international, and political actions that must be taken in the coming months to help Mexico deal with an economic slowdown and to boost security. Thirteen of these were classified as more urgent, including steps to boost employment, increase national security, promote tourism, and improve distribution of basic goods to the poor.

Fox and the party leaders also agreed, among other things, to expand Mexico's telecommunications infrastructure, promote a system of sustainable development in the agriculture sector, and strengthen the country's judicial system.

"[This agreement] is essential to allow our democratic system to promote political stability, plurality, economic certainty, and social development," Interior Secretary Santiago Creel Miranda told reporters.

Critics say agreement is weak

The accord received mixed reactions from political and business analysts and members of the business and labor communities. Many critics praised the legislators' "good intentions," but said the accord is weak and symbolic because it offers no specific course of action and lacks any timetables.

"It would have been desirable for the accord to establish a consensus and a timetable for settling the issues in dispute," said analyst Jonathan Heath, director of the Mexico Consulting company Latin Source.

Other private analysts took the same stance. "This is an agreement of good intentions," said analyst Pablo Alvarez Icaza of Bursametrica Management. "They committed to discuss important issues but not to reach an accord."

Of particular concern, said Heath, are the wide differences between the administration and the two major opposition parties--the center-left Partido de la Revolucion Democratica (PRD) and long-governing Partido Revolucionario Institucional (PRI)--regarding tax reform. The administration has not shown any signs of backing away from its proposal to extend a 15% value-added tax (impuesto al valor agregado, IVA) on food, medicines, books, and other items. The PRD and the PRI are dead set against this proposal.

"Neither side has changed its position," Heath said in an interview with the official news agency Notimex.

The administration must also bridge major differences with the PRD and PRI on plans to allow private investment into key areas of the energy sector, such as petrochemicals, electrical power plants, and natural-gas production.

Creel and some legislators defended the lack of specifics, saying the agreement at least brought all parties to the table to discuss much needed reforms in fundamental areas of the Mexican economy.

"The agreements on specific issues are yet to come, they are in development," said PRI Deputy Marti Batres Guadarrama, a frequent critic of the Fox administration. Batres made the statement in a joint press conference with legislative coordinators and party leaders from the PRD, PRI, the center- right Partido Accion Nacional (PAN), the Partido del Trabajo (PT), and the Partido Verde Ecologista Mexicano (PVEM). The agreement has also been endorsed by Convergencia Democratica (CD), Partido Alianza Social (PAS), and Partido de la Sociedad Nacionalista (PSN).

PRD and PRI legislators cautioned that their parties' decision to enter into the agreement did not mean that Fox's proposals on tax reform and other contentious issues would receive automatic approval in Congress.

"By signing the agreement, we have not surrendered our right to highlight the policies that do not work," said PRI president Dulce Maria Sauri Riancho.

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