Oil reform caps year of dramatic changes in Mexico

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Associated Press

Posted on December 14, 2013 at 12:33 AM

Updated Saturday, Dec 14 at 8:04 AM

MEXICO CITY (AP) — This week's opening of Mexico's oil industry to private and foreign investment caps a remarkable series of legislative victories by a president trying to re-engineer the country's most dysfunctional institutions.

Enrique Pena Nieto struck an unprecedented political deal with the two main opposition parties in his first days in office. Then he pushed through reforms meant to bring higher standards, greater openness and competition to the oligarch-dominated telecommunications industry, the education and tax systems, the banking system, and, now, the state-run petroleum business.

Even with that track record, the hardest work lies ahead.

Mexico has reams of progressive laws on the books, virtually all of which have been thwarted by corruption and inefficiency involving officials at every level. Many police officers work for drug traffickers. Federal regulators turn a blind eye to blatantly monopolistic practices among the nation's largest companies. As a result, Mexicans have been left deeply skeptical about the potential for change.

The second year of Pena Nieto's six-year term will show whether the 47-year-old president and his rejuvenated Institutional Revolutionary Party have the ability to protect his reforms from the swarms of special-interest exemptions typically inserted into Mexican legislation by members of Congress allied with special interests. Then the president and his team must prove they can impose their will on federal, state and municipal officials, from education bureaucrats to local courts, charged with enacting his laws on the ground.

Inside Mexico, analysts and ordinary citizens are skeptical that Pena Nieto's year of successes will eventually lead to real change in the face of resistance from powerful players, from teachers unions to big corporations.

"In terms of public opinion there's been a sort of party and celebration that they've been able to strike certain deals between the various political parties," said Enrique Gutierrez Marquez, a political science expert at the Iberoamerican University in Mexico City. "That's fine, but there's a long way to go before this talk becomes reality. "

Question marks hang over many of Pena Nieto's reforms. He sent a tough message by almost immediately jailing the powerful head of the country's largest teachers' union on corruption charges. But the government is still thrashing out the details of the education reform with state governors who will have to overcome long-standing relationships of mutual dependency with the union if Mexican parents are ever to see the differences in their local schools.

And Congress, distracted by other battles, has missed its deadline for passing the secondary laws that would allow actual changes in the oligarch-dominated telecommunications business, which offers Mexicans some of the highest prices and most limited service among the world's largest economies.

Mexicans appear to have waning patience: Pena Nieto's approval ratings dropped from 54 percent to just under 50 percent since the start of his term, according to a November poll of 1,000 adults by the Mitofsky polling firm. Disapproval rose from 34.5 percent to nearly 49 percent.

Pena Nieto's promises to bring peace to the country after a seven-year drug war have since largely faded from official discourse as his administration struggles to make a significant impact on the criminal violence that continues to kill thousands each year and leave untold more victims of kidnapping and extortion.

Pena Nieto pledged during his campaign to repair the fabric of a damaged society with social programs focused on drawing youth away from a life of crime. He also promised to focus intensely on violent crimes such as murder, kidnapping and extortion that affect ordinary citizens the most.

So far, his security strategy appears largely consistent with that of his predecessor Felipe Calderon, who dispatched thousands of troops to hotspots and focused on arresting and killing the heads of criminal cartels. Some Mexican states remain largely in the grip of organized crime, and millions of citizens feel unsafe, afraid and skeptical of the government's ability to protect them.

The country's second most important problem, according to opinion polls, is the flagging economy, which decelerated during Pena Nieto's first year, sending the growth projection for 2013 from 3.5 percent to 1.3 percent, according to recent government figures. Pena Nieto's reforms have been praised by many economists as necessary for Mexico's long-term growth, but many ordinary citizens are growing frustrated that he hasn't been able to jumpstart the economy more quickly with relatively easy moves like a surge in government spending.

Pena Nieto started his term by striking an unprecedented 95-point deal, the Pact for Mexico, between the PRI and the country's main leftistmc and conservative parties.

The new president went on to display a deft political touch with a fiscal reform that pleased the left by increasing social spending and increasing taxes on the wealthiest.

That was followed by the oil industry reform approved Thursday, which delighted the conservative National Action Party by allowing the government to give private companies contracts and licenses to explore and drill for oil and gas, deals now prohibited under Mexico's Constitution.

But even after the strong approval given by both houses of Congress this week, skeptics are asking whether Mexico has the ability or will to regulate the private contracts for the benefit of all Mexicans rather than just a few.

His reform of Mexico's political system, which would allow some public officials to run for re-election, was passed by the Senate on Friday.

"We have to see very real progress taking place by the second half of next year," said Oscar de los Reyes, a professor of law and public administration at the Technological Institute of Monterrey, one of the country's leading universities.

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Michael Weissenstein on Twitter: https://twitter.com/mweissenstein

E. Eduardo Castillo on Twitter: https://twitter.com/EECastilloAP

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