By Irenea Renuncio
As Mexico heads for general elections on 1 July, frontrunner Enrique Peña Nieto of the Institutional Revolutionary Party (PRI) is likely to bring the party back to power. Although questions remain over the PRI’s authoritarian record during its 71-year rule (1929-2000) voters are likely to vote for the “devil you know” and punish the ruling National Action Party (PAN) for the increase in drug-related violence witnessed over the past six years.
Peña Nieto of the PRI has an advantage of more than 10 percentage points over his main rivals, Josefina Vazquez Mota (PAN) and Andres Manuel Lopez Obrador of the leftist Party of the Democratic Revolution (PRD) and is poised to become Mexico’s next president.
Security remains main concern in the short- to medium-term
Security remains very much the number one issue on the electoral agenda. Although disappointment from the unimpressive economic results obtained by the PAN during its 12 years in power have also had an effect on voters – poverty increased to 46.2% in 2010 from 44.5% in 2008 – drug-related violence is seen as the key issue influencing the elections. On 25 June, just a week before the polls, three members of the federal police, with alleged ties to drug traffickers, were killed in a shootout with other security forces at Mexico City’s Benito Juarez main international airport. The episode came as a reminder of the current security risks posed by drug traffickers in Mexico. Although no bystanders were hurt and no flights were cancelled, fears that the violence could spread to the capital will prompt voters to vote for a change embodied in the new face of the PRI: Peña Nieto.
President Felipe Calderon’s military-led security strategy has resulted in an estimated death toll of 47,000 since 2006, when he first declared war on drug traffickers. Despite this, the ruling PAN has not been able to curb drug trafficking or break the power of drug trafficking organisations. Drug cartels have managed to corrupt numerous local politicians and a large part of the public security forces, challenging governance at both state and municipal levels. Meanwhile, the risk of extortion and kidnapping, as well as collateral damage, has increased in high-risk areas while drug related violence has spread to traditionally non-violent states, such as Veracruz.
While the PAN has used the moral argument that “something had to be done” against drug traffickers, Mexicans are increasingly weary of the conflict which has led them to seek an alternative in the PRI. While it is true that a future PRI administration will struggle to eliminate the influence of drug traffickers, and drug-related violence will continue unabated in the short- to medium-term, violence is likely to be progressively reduced as the new administration moves away from the military-led clampdown that has characterised the current government.
Outlook for business environment positive, except for corruption
In overall terms, and aside from short-term security challenges, the likely return to power of the PRI is unlikely to have a detrimental effect on the business environment. The PRI is likely to maintain a pro-business agenda and foreign investment will continue to be welcomed. Political risks will continue to be low and financial stability will be guaranteed by the continuation of a sound macroeconomic policy and the independence of the Central Bank. Inflation targeting, fiscal responsibility and free trade are all guaranteed regardless of who wins the elections.
However, concerns will persist over the PRI’s record on corruption. The party has been tainted by major corruption allegations over the past decade, suggesting that it has not been able to effectively reform itself while in opposition. A culture of impunity persists across the party and it continues to be the overwhelming focus of recent corruption scandals, including some involving former party chairman Humberto Moreira and three former PRI governors of Tamaulipas state, who have been the subject of corruption allegations including alleged links to drug trafficking.
Aware of the potential electoral impact of association with corrupt practices, the PRI has recently moved to distance itself from corruption, but this is unlikely to herald any major reforms.
Looking to Mexico’s future
The 2012 elections will test the credibility of the PRI and whether the party has been able to regenerate and reform itself during its 12 years in opposition. Although the return of the PRI to power will not return the country to semi-authoritarian rule, allegations of corruption in the public sector may intensify as the PRI has failed thus far to eradicate an entrenched party culture of nepotism, clientelism and patronage. The stability of the investment climate is guaranteed at the federal level, but challenges to local governance are likely to persist. The power and influence of drug trafficking groups are likely to remain entrenched in some parts of the country, particularly on key drug trafficking routes in northern border states. However, drug-related violence is likely to progressively diminish as the PRI moves away from the current militarisation of the conflict that has characterised the current Calderon administration.
Irenea Renuncio is a Senior Latin America analyst at Maplecroft