Tailor Made

Luis Rubio

The purpose is evident. The question is whether it dovetails with the needs of the citizenry, which, clearly, are not the needs of those who redacted the new bill of law. The “initiative in administrative matters of the federal executive branch” is the dream of any bureaucrat: the government decides what is done, how it is paid for, who benefits from it and, if they do not like what is about to come down the pike, they can suspend their acquisition or contract without indemnification. Never, during the decades during which I have observed the manner of proceeding of Mexican politicians have I seen anything as perverse and biased as this.

The bill in question has as its manifest purpose the removal of all latitude and freedom of action from the next government: to persevere in the paradise that today characterizes Mexico, ensuring the permanence of the economy in a recession, that the income does not increase and that the country continues responding to the obsessions of a sole individual.

The bill’s avowed objectives that, in rhetorical terms, appear to be sensible, in reality masquerade his megalomania: its nominal aim is to strengthen the rectorship of the State in the economy. The changes it proposes refer to the faculties and attributions of the government in matters of        concessions, permits, authorizations and licenses; modification (diminution) of potential indemnifications in the case of expropriation; elimination of compensation for damages or harm when a contract is revoked; and it includes a clause of early termination (exorbitant clause) to be added to all contracts with the government. Along the pathway, the preeminence is repealed that at present is granted to international treaties and arbitral agreements. In a word, full governmental faculties are conferred for conducting public affairs without any limitation.

This is about a sudden change in all rules of the game, like the news on electricity right in the middle of Holy Week, all geared toward altering the normative framework in radical fashion.  Were this legislation to be approved, all private investment would disappear, because legal protection would no longer exist. Unless the proposed law were declared unconstitutional eventually by the Supreme Court, the new legislation would usher in the end of the only source of investment that has flourished during the last four years:  the one that enters under the protection of the commercial agreements in force, including the most important, already approved by the current government, that is, the Mexico-United States-Canada Agreement (USMCA).

The express objective of this is not to terminate private investment, but instead to subject it to the preferences of the government-in-turn. Very much in the style of the Fourth Transformation (4T), the objective is for whosoever invests to be in debt to the government, which retains the legal faculty of wresting away authorization when it thus decides. That is exactly the opposite of what has been being built during the past decades, when the objective was to consolidate, and to render credibility to, the general rules that were applied neutrally and impartially. As we have seen in these years during which the government has been negotiating (or attempting to negotiate) special deals with each company, especially in the electrical ambit, the objective lies in extending this practice to the aggregate of the economy, bestowing upon it a halo of judicial legitimacy. The case of the Spanish clean-energy company   Iberdrola is illustrative: given that the company was not willing to negotiate in governmental terms, it ended up selling its assets. It appears obvious that the government acquired a political victory, while Mexico and Mexicans got impoverished along the way.

What the redactors of the initiative do not grasp, or do not recognize, is that entrepreneurs and investors, of any nationality, have at their feet the entire world regarding their opportunities to grow and develop. Certainly, the neighborhood with the United States offers an exceptional inducement that has served as protection in the face of the brunt of the battle that government has undertaken; however, that has worked (well below its potential) under the existing legal framework. Were the legal context to be modified as this bill proposes, the situation would be another, very distinct.

An old axiom says that “When a governmental entity cannot, or would rather not, adequately perform its primary function,  or when it feels like its function is insufficiently grand, the agency will expand its mission, thereby distracting attention from its core inadequacy. Sooner or later, everyone sits down at the banquet of consequences.” That is what this bill proposes to achieve: advance the mediocrity of the current reality in order to freeze it in time and render impossible the country’s development and prosperity.

Each person will judge the desirability of this initiative, but the consequences would be inexorable because, in addition to damaging the general credibility of the government and of the legal system, it would constitute a straitjacket for the upcoming administration, even if it came from AMLO’s party Morena.

As the great novelist Robert Louis Stevenson wrote, “sooner or later everyone it seated at the banquet of the consequences.” We are now breaking into a run toward that.