Andres Oppenheimer

Mexico’s reforms built on shaky ground

M Visiting this country after several months, more than a month after the disappearance and likely murder of 43 students by drug gangs in cahoots with local authorities in the state of Guerrero, feels like arriving in a different country.

Only a few months ago, President Enrique Peña Nieto was receiving an award for “statesman of the year” in New York, and his government’s bold energy and education reforms were being heralded by world media as the start of a “Mexican Moment” that would put this country on a fast track to the First World.

But now, while Mexico’s economy continues to do much better than that of Venezuela, Argentina or Brazil, Mexicans have suddenly become enraged over the country’s endemic violence, and over a series of new scandals that are widely seen as signs of massive political corruption.

Whoever you talk to, poor and rich, agree that the Sept. 26-27 killings in the town of Iguala — alongside new scandals involving possible government corruption in a murky $3.7billion high-speed train construction bid awarded to a Chinese consortium, and the purchase of a $7million mansion by first lady Angelica Rivero — have led to Peña Nieto’s worst political crisis since he took office two years ago.

Granted, there has always been public discontent over drug-related violence in Mexico, which according to official figures has resulted in at least 22,000 deaths since 2006. But the disappearance of the 43 students in Iguala, who the government now believes were executed by drug traffickers tied to the town’s mayor, have caused a much bigger public outcry than the thousands of killings in recent years.

Part of the outrage is due to the fact that this time, the disappeared weren’t victims of cross-fire among rival drug gangs, but student protesters who had traveled to Iguala to steal buses they intended to use for a demonstration. It was not a case that local politicians could claim was out of their control. Apparently, the radical students were preparing to spoil a public ceremony that was to be presided over by the mayor’s wife.

Federal law enforcement authorities had long known about the town’s major’s ties with the drug lords, according to press reports. Despite the fact that both the Iguala mayor and the Guerrero state governor belong to the leftist Democratic Revolution Party, there is growing anger at the Peña Nieto government for not having acted against the town’s corruption-ridden leadership.

Since the disappearance of the 43 students, protesters in Guerrero have taken to the streets, blocked the Acapulco airport and nearby roads, and destroyed local offices of Mexico’s three biggest political parties. In Mexico City, masked protesters attacked the National Palace and destroyed one of its historic doors, as well as several nearby bus stops and metro stations. Hardly a day goes by without marches and incidents of violence.

Simultaneously, a news report by Aristegui Noticias revealed that the first lady had purchased her $7million mansion — now known in the press as the “White House” because it also happens to be white — from a subsidiary of a Mexican company that had been awarded major government contracts, raising suspicions of under-the-table sweet deals.

The firm’s holding company, Grupo Higa, was, among other things, a partner of the Chinese consortium that had been awarded the controversial $3.7billion contract to build the Mexico-Queretaro bullet train.

Shortly before the news of the “White House” purchase details broke out, the Peña Nieto government canceled the Mexico-Queretaro contract with the Chinese consortium, which had been the only firm participating in the bid. Other major companies had withdrawn from participating in the bid, complaining that they were given only two months to prepare the paperwork.

My opinion: Mexico is facing a serious political crisis, at a time when declining oil prices are threatening to diminish the avalanche of oil industry investments that are expected to pour into this country over the next few years as a result of the recently-passed energy reform. If it’s not dealt with properly, public discontent could produce greater unrest, and further hurt the economy.

Peña Nieto’s energy, education and other reforms have been necessary, and good, but they were built on shaky ground. They won’t produce massive investments if investors perceive that giant contracts are awarded through questionable bids, and local authorities linked to drug traffickers can act above the law.

It’s about time that Peña Nieto embarks on the mother of all reforms — turning Mexico into a country of checks and balances.