Magazine article Washington Report on the Hemisphere

While Internationally Praised, Mexican Reform Leaves Much to Be Desired

Magazine article Washington Report on the Hemisphere

While Internationally Praised, Mexican Reform Leaves Much to Be Desired

Article excerpt

The international community has acclaimed Enrique Peña Nieto, President of Mexico and member of the Institutional Revolutionary Party (PRI), for his accomplishments as head of state. In 2014, Peña Nieto appeared on the front page of Time magazine, and the accompanying article dubbed him and his advisors, "The Committee to Save Mexico," due to the implementation of new reforms, such as the lauded Reforma Energética (Energy Reform) of 2013. Time journalist Michael Crowley, who also credited Peña Nieto for Mexico's recent economic success, has commended Peña Nieto's reforms as the "most ambitious reforms in memory."

In fact, last year Peña Nieto received an award from the governor of Texas for his success in increasing Mexico's economic prosperity. Thanks to Peña Nieto's liberalization of the Mexican market through the energy reform, Mexico and the state of Texas were able to sign a transportation agreement in order to "expand highway infrastructure" and facilitate trade. Peña Nieto's reforms have also allowed him to seek foreign investments, thereby furthering the expansion of Mexico's growing economy.

Foreign investors and journalists around the globe, who feel optimistic about Mexico's future, have supported Peña Nieto's reforms and general performance as president. Five weeks ago, The Economist described Mexico's economy as, "solid, if not stellar." Many people outside of Mexico believe the reforms implemented by Peña Nieto's administration helped to improve Mexico's economy. Indeed, because of the Energy Reform, northern states of Mexico are growing at high rates according to The Economist.

However, the PRI's opposition party, the Democratic Revolutionary Party (PRD) fears that Petróleos Mexicanos' (Mexican Petroleum, PEMEX) revenue will no longer be spent on the country's public services. The Energy Reform intended to privatize the oil extraction process of PEMEX. Many Mexicans believe the Energy Reform is problematic because it opens the state-owned oil industry of PEMEX to foreign investment. Former President Lazaro Cardenas, who expelled foreign investors and allowed public ownership of Mexico's oil and minerals, nationalized PEMEX in 1938. Since then, PEMEX and its revenue have belonged to the state of Mexico. Currently, PEMEX's revenue sustains 40 percent of Mexico's federal spending on public services and infrastructure. However, with Peña Nieto's unsuccessful attempts to find investors, PEMEX production has dropped, highlighting doubts as to the Energy Reform's future and its economic success.

While Peña Nieto's reforms have contributed to the growth of Mexico's GDP, poverty and income inequality have also increased. The peso has been severely devalued, and the country continues to experience social instability, violence, and public discontent.

Before implementing reforms, such as the energy and even the Reforma Educativa (Education Reform), Peña Nieto's administration should focus on the dysfunctional administrative system of PEMEX, and the disadvantages rural states, such as Oaxaca, face within the education system. Additionally, there are internal problems in Mexico's governmental system, especially in congress, where reform is needed. Peña Nieto's reforms are intended to maximize the efficiency of PEMEX and the education system. In order to do this, however, the efficiency of the Mexican government must be maximized as well. The reforms have not yet been successful, due to the administration's inability to address the internal conflicts of the country such as income inequality, poverty, impunity, and corruption in PEMEX and in the government.

Has Peña Nieto Created a Stable Economy?

President Peña Nieto's intention with the energy reform was not to privatize PEMEX or oil production, but to expand its capacity, since PEMEX still operates with inefficient technology from the 1970s. In 2013, Peña Nieto presented the reform at a conference at Chatham House in London, saying, "I want to leave this highlighted and clearly pointed out: It is not about privatization"*. …

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