Temptations

 Luis Rubio

Scarcely two years into the Peña Nieto government the political ambience had been upended and, in retrospect, the electorate had already decided the outcome of the 2018 presidential election. All that today’s president and his retinue had to do was refrain from engaging in any lunacy. However much the diverse Morena-party contingents tried, López Obrador maintained internal discipline, dispatched positive messages to all the power groups and achieved his purpose. So much so that the electorate granted him virtual control of the entire State apparatus, including the other branches of government.

Now the tables are turned. The political milieu begins to feel hostile for many Morena adherents, starting with themselves, and evidence of corruption is catching up with the presidential family. The opposition acquired a high degree of self-discipline in the mid-term election and prevailed to a greater extent than the pollsters expected. Heretofore, there are two factors that will determine the future: one will be the capacity of the President himself to sustain control of his apparatus, as well as his popularity. The other factor concerns the opposition, its ability to nurture a viable alliance and, eventually, to nominate a candidate, male or female, liable to win over the popular vote. Although both sides feel confident, neither will have it easy.

On the President’s corner, the waning of his ability to control events is evident, something inevitable given the moment of the political cycle in which he finds himself. Above and beyond their own circumstances and skills, (nearly) all presidents and leaders worldwide sense being destined to change the world, despite the convincing historical evidence against this. Once in power they perceive themselves as omnipotent and consider they wield divine right to change everything, to the extent that the institutions permit this. Recent years have revealed the enormous contrasts between strongly institutionalized societies and those only claiming to be: there’s Trump, who fought tooth and nail, accomplishing little change, at least in institutional terms, while Erdogan in Turkey and López Obrador in Mexico addressed themselves to undermining the existing order without building a sustainable and sound alternative.

On its part, all that the opposition had to do was understand how the lay of the land had changed and organize itself to deal with the new political reality. Notwithstanding this, as Oscar Wilde wrote, its leaders “could resist anything except but temptation” on believing themselves to be all-powerful, as in the old times. Instead of dedicating themselves to the construction of a functional alliance, according to the conditions created by an overpowering governing party and after a successful showing in 2021, they committed themselves to preserving petty fiefdoms that are not central to their own objectives nor much less to the possibility, seemingly small at this moment in time, of winning the 2024 election. As the old Anglo-Saxon witticism goes, their three main priorities should be a common candidacy, a common candidacy and a common candidacy. A candidacy that can carry the day.

The concentration of power in Mexico is so great and tempting -whether they are presidents or political leaders- that they easily lose their footing: soon they come to perceive themselves as almighty. Although those found at the zenith of power -wheresoever they align on that pyramid- never have the adeptness to see it, time erodes the mainstays of that power and reduces their capacity of control. In the last analysis, it is enough to observe the fate of most Mexican ex-presidents to recognize that there is nothing more futile, nothing more ephemeral, than presidential power. The institutional weakness that characterizes Mexico has its counterpart in the political reality of those who leave power: they had everything and then they lose everything.

Presidents and opposition leaders, each in their stead, want the same: impose themselves, do as they please, exercise their power -whether little or much- as if there were no tomorrow. In the summer of 1812 Napoleon commandeered an army of more than one million men headed for the gates of Moscow. Three years later he was wasting his life away on the island of Elba. The same happened to the Egyptian pharaohs, to Hitler and to Mao. No one can save themselves from the twilight of power and, still worse, in a society as institutionally fragile as Mexico’s.

The greatness of power is not found in symbols, appearances or popularity but rather in the results of its exercise. As the saying goes, the most difficult year of the Mexican presidency is the seventh (of a six year term) because this is when reality gets underway. It is at that instant that the president recently leaving office makes a start at viewing the world as it is and not how he had imagined it to be.

For the opposition, the opportunity is real, but equally ephemeral. An alliance of the size and robustness necessary to defeat a party in good measure hegemonic is not built in a day nor can it be limited to a sole election. It is carefully sculpted into shape or is in the end impossible.

Both sides face a great challenge. Those on the outside should be able to recognize that their smallness can only be surmounted by an effective union, transitory or not, in terms of the transcendental objective such as that offered by the upcoming mother of all battles, that of 2024.

 

www.mexicoevalua.org
@lrubiof

 

 

 

 

 

Starting Anew

Luis Rubio

The paramount question for the future of Mexico is how to create a foundation for its development in the long term. This concerns the eternal dilemma that is the object of distinct proposals and responses every six years but that never pans out. The most ambitious project for attaining this coveted transformation was NAFTA, which achieved three vital things: first, it resolved the chronic balance-of-payments crisis; second, it sowed the seeds of a platform of clear rules and mechanisms for making them be complied with, which became a source of trust and certainty for entrepreneurs and investors; and third, it allowed for the construction and development of a modern industrial plant capable of competing with the best in the world. None of this is trifling, but undeniably not enough.

The enormous success inherent in NAFTA did not extend to the country as a whole. In a text that appeared recently in the periodical Nexos, Claudio Lomnitz argues that the end product was a Mexico of rules and a Mexico dominated by extortion because in the latter a reform of justice and security was not brought about that would permit breaking with the factors that have historically anchored the country in underdevelopment.  And, worse yet, that the advance of organized crime has culminated with Mexico foundering in a sea of violence, uncertainty and decay. The present government, in its eagerness to procure votes and popularity without dedicating even a minute to matters of development or security, has exacerbated things not only due to ignoring them, but also to rendering them permanent.

Current scandals such as that of the Office of the Attorney General of the Republic, the true objectives of so-called “preventive custody,” and the conflicts of interest with which some of the country’s large companies are led, on the outer edge of all regulation or legality, allow for catching a glimpse of the real problem confronting the country, the one which the next administration will have to attend to if it harbors the least minimal probability of starting to revert what seems to many today as the road to a failed State. A failed State, one in which vast zones of the country are inaccessible to any formal authority, subjects the population to a regime of submission to the narco-traffickers, the interminable wake of murders of journalists a case-in-point.

In 1982 Mexico found itself at a zero hour of dramatic proportions. The economy contracted in extraordinary fashion, unemployment grew as never before and the government discovered itself in virtual bankruptcy. It took ten long years to turn the situation around and it was NAFTA that enabled attracting the investment that would revert the crisis definitively. The question at present, in the face of a scenario similar in concept, though markedly distinct in specific characteristics, is that this would require turning the country around again, but this time with an inclusive outcome, one that tackles the problematic affecting the fact that the other Mexico that now lives in absolute insecurity, lack of definition and that it is perennially subject to extortion, of one ilk or another.

In contrast with the eighties, during which the Americans were more than willing to collaborate with the building of a new solution project -NAFTA- this time the task would have to be internal, the product of the erection of a political and social lattice that sanctions, once and for all, the shaping of this pummeled democracy with a penchant for failure. A project of this nature would imply rebuilding what could be denominated the “social compact,” which would in turn entail eminently precise redefinitions of responsibilities and relations between government and society, as well as the edification of mechanisms for making rules for compliance with the rules emanating from these.

The key point is that only an integral justice and security reform would countenance the achievement of such an objective. The reforms and/or strategies carried out over the last decades have been insufficient and inadequate for accomplishing this. For example, instead of beginning with the construction of a basis of security from the municipal level, the government opted for deploying the Army to pacify the country, with the result that a police force or justice system was never developed that would attend to the quotidian problems of the average citizen, while the best that can be said about what was done is that it evaded the further growth of organized crime. And to top it off, even this, with all of its limitations, disappeared with the consistent anti-strategy of doing nothing and trusting that things would solve themselves of the present administration.

Security and justice are the two great deficits that stand in the way of the country and that are perhaps the ticket to development and the future, supposing that their focus were to comprise a vision of problem-solving, building stability and security platforms from the bottom up, the only way to lay the foundations of something permanent. Mexican society clamors for security and justice, goals that have been rebuffed by one government after the other.

The famous Chinese ideogram alleges that crises are also wellsprings of opportunity. Mexico is moving directly toward a political, economic and social crisis.  Years of lethargy and, now, polarization, have engendered a collective blindness on the sole issue that is important: security and justice as the essence of integral development. High time to advance in that direction.

 

www.mexicoevalua.org
@lrubiof

Parliaments

Luis Rubio

Angela Merkel launched into her speech as would any president or head of state: with aplomb and clarity of message; but what followed was in no manner like typical presidential discourses. It was at an international congress in Berlin ten years ago; the governing party, the Christian Democrats, had loaned their headquarters for the realization of the event and the Chancellor was the speaker on one of the afternoons. After her speech was over the questions began and she avoided not even one: with absolute equanimity she went segued from one to the other; when the tone or complexity of the questions escalated, she responded with intensity. Parliamentary systems are very different from presidential ones, the latter protecting heads of state. Not so with parliamentary systems, where political leaders take on all issues daily, they confront questionings -reasonable as well as visceral- which obligates them to defend their cause and debunk their opposite numbers. For parliamentary leaders, there is no place to hide.

I remembered that scene when I saw President López Obrador speak about his “political testament” several weeks back. The contrast was stunning between a combative chancellor, ready to respond -and listen to- all refutations, and a president in an absolutely controlled atmosphere where nothing is left to chance. Parliamentary and political systems are very distinct one from the other, and each has its virtues and defects, but where parliamentary systems are exceptional is in the inability of the political leader to control the scenario. There we have Boris Johnson trying to save his skin on facing a rebellion of his own party or the permanent debility of the most recent Spanish governments because any movement could lead the opposition to the government.

Control of the scenario is precisely what characterizes the government of President López Obrador and the secret of his popularity. Nothing is left to fate: the narrative is home-brewed, the seat of the early-morning press conferences is that of the president, and the members of the press present, with eventual exceptions, are nearly always paid shills. Nothing is left to chance. If to that is added the absence of a united opposition with a narrative rivaling the presidential one, the scenario explains not only the control of the political discourse, but in good measure the popularity. As well as the risks that the very actor produces.

When AMLO invented the morning press conferences, at the beginning of his term as head of the Federal District government (2000), the context was decidedly distinct, reminiscent of the contrast between a prime minister and a president. At that time, AMLO was the pugilist who debated everything and responded to any questioning presented to him, while Fox was the protected president, isolated, tired and disinterested in defending a political project or even democracy itself.

Today’s AMLO, although obviously very dissimilar in personality and mode of acting, is like the Fox of back then, controlling his territory to protect his popularity. The relevant question is whether the finale of both protagonists will be very different.

Fox took office having achieved the historical milestone of defeating the hegemonic party. There was no way of outdoing that feat as president. If to that one further adds that he never understood the forces, hopes and changes that his electoral triumph had unleashed, the atmosphere would seem to guarantee a shipwreck. The combination of these two elements was lethal. On the one hand, his victory led to the “divorce” between the PRI and the presidency, which dramatically altered the structure of the traditional political system. The all-powerful presidency stopped being that (in addition to its diminishing by the very limitations of the personage), while all sorts of “de facto powers” acquired singular relevance, starting with the narcotraffickers. On the other hand, the overthrow of a party devoted to the control and submission of the citizenry had opened huge expectations for a democratic transformation. Fox demonstrated a lack of capacity to comprehend both dynamics. As so he fared.

López Obrador came on the scene with the mission of transforming the country from stem to stern: imposing a new system of government (well, the old system) and controlling the economy, the population and all the decisions. He rolled out lavish and historically overshot projects and remarkably soon ended up committed to the only thing that has come out right for him: his popular recognition. In contrast with Fox, who at least saw that no government or president can control everything in this era of the world, López Obrador tried to turn back the hands of time, only managing to freeze investment, in turn reducing the growth of the economy and the population’s employment opportunities and incomes. The pandemic, and Ukraine, became a good excuse for him in the light of a dismal administration, but migration to the United States informs against this, showing that there was indeed another way of governing and that the responsibility for the ongoing Mexican stagnation is exclusively his.

Will AMLO play out like Fox? The only thing for sure is that popularity is always fleeting, as illustrated by Fox himself and other presidents who preceded him. Dedicating oneself to popularity rather than to development entertains only one possible ending. The question is how bad.

www.mexicoevalua.org
@lrubiof

 

 

A Mis-Referendum

Wilson Center
  Luis Rubio   March 16, 2022

A referendum is supposed to be about initiatives undertaken by citizens or organizations of society to advance their agendas and garner support from the voters at large. In Mexico, the proposed referendum for next April (a new means of direct democracy that was only approved in 2019 by presidential prodding) was promoted by the president and has much more specific –and largely pernicious– objectives: it is meant to advance his own personal interests and agenda.

 

The proposed referendum was conceived by the president as part of his objective to dominate and control the country’s politics and agenda and to legitimize his government. In its original version, the idea was to establish a new foundation for the president’s party to remain in power for the long haul, much like the PRI did in its time. As things stand today, it has become not more than a means to enhance the president’s gradually waning popularity.

The law establishes that, for it to be binding, a referendum requires the participation of 40% of registered voters – an impossible feat. The previous similar exercise back in 2021, about whether to prosecute former presidents, attracted less than 7% of voters. Nobody expects much more than that this time around. Regardless, the president’s immediate objective is far simpler: to be able to claim that 95% of those attending voted for him. But there’s more to it than this.

Nothing better illustrates the imbroglio that national politics is presently undergoing than a December 2021 Alarcón comic strip on the so-called “revocation of the mandate” of the president: “We don’t want him to go, but we want to be asked whether we want him to go to say that we don’t want him to go.” The objectives of the president in promoting the referendum are transparent, but that does not make the process devoid of deception. The original thrust was to give citizens the possibility to vote for the president to resign; the actual wording that citizens will vote on reaffirms the president’s tenure, making impeachment impossible.

There are two independent dynamics advancing around this alleged citizen feast. One is the strategy being advanced by the president’s allies to convince as many voters as possible to show up on election day. The other one is taking place within the cohort that supports the president. In its attempt to increase popular participation on referendum day, the former promotes the illusion that the referendum makes it possible to force the president to resign. The latter aims to make certain that the beneficiaries of the president’s largesse (monthly cash transfers to his base) show up to vote. The ultimate objective is to raise the threshold of voting as much as possible.

Back in 2018, Lopez Obrador won the election with 53% of the vote. After that, his popularity reached 67%, but has since declined to 54% because of the exposure of several cases of potential corruption by the president’s brothers and son. As a result, the referendum has recently become much more than a tool to re-legitimize his rule: it has become his survival strategy. Today, nothing is more important to him than the referendum; for the president, everything hinges on the result.

Nobody, starting with the president, expects the referendum to change the status quo. His true aim is to gain an edge in the polls and to exploit his (alleged) victory to reload his popularity. Regardless of the actual outcome, the president will celebrate that the majority of voters approved of his presidency. He will repeat this over and over, even while most citizens, starting with those that refuse to participate in what many see as a charade, will have stayed out. Should the outcome be truly extraordinary in the number of participants, he may launch a frontal assault against the National Electoral Institute (INE) to reestablish executive control of elections, like in the old PRI times. As Stalin is supposed to have said, what matters is not who votes, but who will count the ballots. Retaining power beyond the current presidential term is the critical agenda of the president’s hardline advisors and supporters and the referendum is a key means to accomplish that.

Beyond the narrative and its daily expression in the form of a press conference, the president is experiencing the avatars of declining control, an inevitable trait of all governments as they advance through the second half of their administration. The real question heretofore is how negative the slope will be. The steeper the decline, the more likely Mexicans will experience a true competition for presidential succession; alternatively, if the government succeeds in maintaining a semblance of stability and order, the easier for him to nominate a successor and control the outcome. A truly fluid process.

Were the referendum to turn into an actual exercise in citizen participation, the competition would become far more vivid. So far, it has been Morena and its organizations that have been promoting the vote. However, many other organizations, most of them opposed to the president’s policies, have become quite active in attempting to convince them that a presidential defeat is actually possible. Hence, the competition will surely linger.

For an avowed student of history, President Lopez Obrador never understood Napoleon’s maxim that “to get power you need to display absolute pettiness. To exercise power, you need to show true greatness.” Reaching out to those who did not vote for him has not been part of his equation. Thus, the referendum is a perfect example of his persistent pettiness, for his objective has nothing to do with building citizenry, leading a true transformation of the country’s politics or improving the peoples’ livelihood, but with his unflinching desire to increase his power and impose himself on the half or Mexicans that do not follow him blindly.

https://www.wilsoncenter.org/article/mis-referendum

 

LUIS RUBIO Global Fellow; Mexico Institute Advisory Board Member; Chairman, México Evalúa; Former President, Consejo Mexicano de Asuntos Internacionales (COMEXI); Chairman, Center for Research for Development (CIDAC), Mexico

 

In the Meanwhile…

In the Meanwhile…

Luis Rubio

Don Quixote and Sancho Panza: the world of fantasy and of common sense, two sides of the same coin. Don Quixote prefers morals to advancing his causes and considers common sense a waste of time and energy.  Sancho Panza warns his master that the giant he desires to attack is only a windmill and, as such, should be left in peace. Abandoning his sensibility, that is, his common sense, afforded Don Quixote the freedom to involve himself in futile tasks such as setting upon windmills. In the end, the “long-armed giants” keep the population sufficiently satisfied and distracted for them to forget their quotidian problems. But those problems do not disappear: they prophesy the next disillusion, fall and disappointment. Or worse.

At this stage there is evidence of at least two convincing elements in the president’s manner of leading the nation. The first of these is that his objective is his popularity and not that of attending to or resolving the problems or the affairs of the country or those he promised to tackle when he was a presidential candidate. The second is that his ability to preserve that popularity has so far been exceptional. The tone, content and discursive manner that bring him ever closer to the popular base and glean support for him are, at least in statistical terms, extraordinary. It is not that this support is superior to that of many of his predecessors, but it does entail a unique characteristic: it is personal. The connection is not that of the traditional politician, remote at the Mount Olympus of power, but instead that of the witty president who is near to the heart of the Mexican Everyman.

But all coins have two sides. The rhetoric, the popularity and the support have been real, at least until recently. The problem with the scheme is that the country demands effective solutions and full attention to concrete problems. While the president harangues, predicates and defames, the real-world forges ahead and, and in this XXI century, the pace of the advance is dramatic, to the degree that the true alternative is being within the process or being left out (almost) definitively.

The evidence of this other side of the coin is unimpeachable and follows its own overwhelming logic. Suffice to mention some of the matters dominating today’s world: artificial intelligence, renewable energy, 5G infrastructure, genetics and biotechnology, and added value on the part of processes of high intellectual content (no longer manual). The countries that are within the process invest in educative systems and all that this entails, to prepare their populations for a world that distances itself every day from the existing one; they develop infrastructure for the highest possible connectivity and approach universal coverage of access to Internet networks; they build health systems designed not only to deal with immediate crises such as the pandemic, but also to become the touchstone that transforms an unequal society and one without many opportunities into the foundation of a modern nation in the course of one generation.

Instead of making headway in the construction of a better future for the population, especially the neediest, many of whose votes tipped the election toward the president in 2018 and who continue to back him, the real governmental project, the one that actually exists, does nothing other than perpetuate expectations that can never be fulfilled because there is no foundation for it. The contrast between what is required and what is truly accomplished as a government is striking and astonishing.

In a landmark study on India, Bhagwati and Panagariya* argue that only high economic growth rates, within a market-friendly scheme, permit breaking with the vicious cycle of poverty to build virtuous cycles of development. Handouts, so dear to the heart of the present government, do no more than postpone solutions and render them increasingly farther removed and difficult. The preference for popularity over development entails much greater consequences than those of a government lost in itself could fathom.

“It is tempting, says the Basque parliamentarian, Borja Sémper, that in this high-speed world it would seem more effective to join forces with the strategy of populism and deriding moderation. Playing by the rules of radicalism, pretending to triumph in the marketplace of ire and fear would perhaps be easier, but it is a lost bet. The center today is the person, and this world cannot limit this person to closed, identitary or uniformizing spaces according to 20th century ideas. We live in an era of online political systems and societies. We need not fall into populist radicality to triumph over populism, we have no need for defensive barriers, but instead expansive ones.”

Mexico’s demography is placing us dangerously near the point at which the largest historical contingent is found intersecting with the working age. The countries that achieve incorporating that population into the labor markets with a great human capital (education and health) will be relatively wealthy for the collective benefit. The others will end up aging and poor. A dilemma that will haunt Mexico forever.

An old Chinese proverb has it that there are three things that never return: the arrow launched, the word pronounced and the lost opportunity. Mexico is moving against all three factors.

 

*Why Growth Matters

www.mexicoevalua.org

@lrubiof

 

No Free Lunch

Luis Rubio

Mexicans longed for -such was the spirit of the moment thirty years ago and again in 2018- a successful country, developed, more equal and without the corruption that corrodes everything. But they were never willing to do what was necessary to achieve those aspirations. The result was to be expected: many promises, great expectations, followed by enormous disillusionments and their consequent political impacts.

Reform or transform, the two verbs employed to promote changes in the structure of the economy, the society, and Mexican politics during the last decades, mean the same thing:  modify structures to procure a better social and economic performance. What exists is changed to build something better. However, what happens when those changes are inadequate, insufficient, erroneous, contradictory or non-existent?

This is the history of Mexico in the last decades and now it is repeating itself, but inversely: formerly attempting to construct something new, now seeking to restore what there was before. The easy part is to blame this or that on what was done in the past or what is being done now, but the reality is that Mexico has for decades been subject to experimentation without the commitment (or even the real intention) or carrying out those reforms or the present “transformation” in integral fashion.

The countries that have executed flourishing transformations are characterized by political negotiations -among the politicians who represent the society and their diverse interests- to define and agree upon the final objective, and the costs they are disposed to assume.  The case of Spain is exceedingly eloquent: the famous debates of Felipe González during his years as leader of the Spanish Socialist Workers Party (PSOE) show how he faced his counterparts head on to define objectives, arrive at solutions, and attend to the consequences of these. Once the political negotiation was resolved, the “technicians” were put in charge of implementation, the way already paved.

In Mexico the process was exactly the opposite: here the objectives and strategies were defined by the technicians and then the politicians, lacking any incentive to cooperate, had to deal with the consequences. Yet more importantly, though it may seem paradoxical, that manner of proceeding limited the reach of the proposed reforms because the technicians themselves adjusted them to the political realities that they perceived. That is, instead of subjecting the transformation that they envisioned to broad political negotiation, they resorted to the circus stunt of preserving the status quo (maintaining the political system in form and the party in power) while the structures of the economy were altered, with evident impacts on the social order.

In this context, it is not by chance that in Spain a democracy was consolidated while the economy was being transformed, while Mexicans ended up with a split economy (modern and old, exporter and protected, productive and unproductive) and a political system in permanent strife. Additionally, Spain is not exceptional: there are multiple nations in Asia, South America and Europe that have carried out sensitive transformations in an integral way.

President López Obrador has been a stubborn critic of the reforms initiated after the 1982 economic collapse, but his own proposal, beyond his moral streak (attack corruption, poverty and inequality), suffers from the same transgression as that of his very indefatigable predecessors: he tries to impose it relentlessly, without discussion and, in the best of cases, with rigged surveys, and an interminable gift of gab designed to hush up a most incommensurate reality. Worse still, in contrast with the “neoliberals” he so revels in berating, on eliminating the entire technical capacity the government used to possess there can be no advancement of projects susceptible of generating income, wealth or jobs.

Looking back, past the scope of individuals and political parties, the results produced by governmental management since the end of the sixties to date are atrocious. Certainly, advances in various rubrics are impacting (and AMLO himself benefits from the financial stability as well as from the vitality of the export sector), but it is equally certain that an immense portion of the population does not sense improvement, above all in contrast with the expectations and promises accompanying those reforms (former and present).

López Obrador delights in beleaguering his predecessors, but before the cock crows, he will find himself on the other side of the podium with infinitely fewer valuable results (in fact, the majority of these negative) with which to defend himself.  Suffice to observe the corruption typifying his government, the burgeoning poverty and the incessant insecurity. Worst of all for him would be a scenario in which whoever succeeds him were to persist in the tactic of confrontation: confrontation with him.

The question now is what is it that is required to get out of the hole in which Mexicans find themselves and the one that the president continues to dig deeper one a.m. press conference after another. AMLO built his career by enlivening and exploiting social resentment which, while containing and diminishing the risk of a social explosion, has done nothing, aside from his narrative, to channel that capacity of mobilization toward the transformation of the national structures to achieve a more vigorous and equitable economy. No one, beginning with the president himself, should harbor the expectation of a promising future.

www.mexicoevalua.org
@lrubiof

 

 

The neighborhood

 Luis Rubio

In 2014, when Russia invaded and took control of the Crimean Peninsula, President Obama’s reaction was that this is “so 19th century” and no longer done in the 21st. Everything indicates that this memorandum did not reach the Kremlin. The invasion of Ukraine, of which Crimea was then a part, shows that geopolitics is as alive as ever. Nations are moved by interests, not by ideology, a memorandum that has not reached Mexico’s national palace either.

Behind the invasion of Ukraine there are two elements: one is the strategy of the West (the United States and Europe) throughout the decades after the end of the cold war; and the other is Russia’s ambition to restore its sources of strategic depth. For many years, US policy focused on distancing the then Soviet Union from China, with the aim of preventing the other two major world powers from approaching each other. However, starting in the 1990s, this strategy was abandoned less for clarity of direction than for the inertia generated by the victory of the West over the former communist power.

What the West did not contemplate was the impact that this would have on Russia, a nation that, under the leadership of Putin, has devoted itself to recreating its zone of influence. In 2008 it invaded part of Georgia, in 2014 it took Crimea, in 2020 it forced an electoral result in Belarus, which was followed by Nagorno-Karabakh and, more recently, it restored peace in Kazakhstan, remaining as the guarantor of internal order. The strategy is evident, leaving only two weak flanks: Ukraine and the Baltics. Putin has employed a variety of means, not all of them violent, to achieve his goal. The invasion of Ukraine -direct action and without proxies- could well change the course of the world because now no one can ignore its implications.

The reverberations of Ukraine are beginning to be felt in immediate indicators, such as the prices of raw materials, particularly oil, because that region is especially relevant in this matter, and grains, and, eventually, in the growth rates of the economies most affected, especially in Europe. But the greatest impact of this intervention will foreseeably be felt in the return of the zones of influence in the world, a phenomenon that had already been taking shape in the South China Sea and around Russia. The one that is missing, and the one that affects Mexico, is the Western Hemisphere.

The end of the cold war was interpreted very differently in Russia and in the West. Although history could have been different (newspapers, magazines and social media these days are saturated with lamentations to this effect), the tangible fact is that instead of converging, the West and Russia moved in opposite directions. Beyond recriminations, some valid others not, the West took advantage of the end of the cold war to focus on improving the lives of its citizens, assuming that Russia was nothing more than, in the words of a famous politician, “a gas station with nuclear weapons.” Well, now it turns out that this gas station is forcing the West out of its lethargy and that has fundamental implications for Mexico.

In the 1980s, just as the cold war was winding down, Mexico chose to approach the United States to solve its economic problems. Contrary to the prediction of the catastrophists, the rapprochement gave Mexico enormous freedoms in terms of foreign policy because NAFTA constituted an agreement on the essence of the relationship, a shared vision of the future. The point was not to agree on each and every issue, but to commit to resolving them so that closeness would confer security to the Americans and development to Mexico.

In terms of development, the scheme worked less well than desired because Mexico did not carry out the internal transformation that this would have required; however, in terms of the bilateral relationship, perhaps the most complex border in the world, problems were resolved and both governments did what was necessary to avoid unnecessary conflicts.

Two things have changed. One is called Trump and the other López Obrador. Trump violated the essence of the understanding of 1988 in two ways: one, attacking Mexico and blaming it for his country’s problems; and the other, by link issues (migration vs. exports) he violated the explicit agreement never to do that.

López Obrador was key in the process of ratifying the TMEC, but his vision is clearly opposed to such closeness. Step by step, he has distanced Mexico from American priorities and, like the kid who challenges his teacher, he flirts with China and Russia as if it were a game.

In recent weeks, the Americans have abandoned their obvious decision not to respond to López Obrador and have begun to define their “red lines” clearly and precisely, most of these aimed at forcing Mexico to avoid further internal deterioration. Putin’s actions can only accelerate this process because the US will once again begin to see the world with a geopolitical logic, where Mexico is in the front row. The Mexican government no longer has much room to maneuver, especially if it wants to protect what little is left of economic growth, all linked to exports to the US.

www.mexicoevalua.org
@lrubiof

 

What’s to Come

Luis Rubio

The catastrophe to come was ever more evident. Errors and losses accumulated, the destruction was uncontainable and the end was imminent, yet no one rebelled. The population backed the government to the end, though this would imply total destruction. Thus begins the book of Ian Kershaw entitled The End: Hitler’s Germany, 1944-45. The historian relates the last months of the government of Hitler, a tragic moment at which the Soviet and American troops advanced systematically from opposite sides, the bombings destroyed entire cities, devastating apartments and iconic buildings, leaving the population in the street. The rational thing to do for the German government would have been to begin negotiations for a conditional surrender, but it wasn’t like that: the obsession with not reproducing prior historical moments (Germany’s surrender in 1918) led to total collapse. The relevance of this anecdote lies in that it was not only the government that that was obsessed: the population (with natural exceptions) was hand in glove with its government and not willing to think differently.

What renders this fascinating and tragic story relevant, and the conclusion at which Kershaw arrives, is that the population had been blinded to the surrounding reality because of its obsessive devotion to the leader. Nothing could make them grasp an alternative even if that meant the physical destruction of the cities or of their living conditions. The charisma was so powerful that no one seemed capable of thinking for themselves, of recognizing how dramatic the situation was, understanding the consequences of their actions throughout the war or realizing the massive disaster that the government and its messianic project had been.

Mexico is not Nazi Germany nor is the president Hitler, but there is an obvious similarity in the manner in which a certain part of the Mexican population follows López Obrador blindly and refuses to recognize that the deterioration is growing, and the absence of solutions is crystal-clear. The charisma of the president has permitted him to build a narrative that (so far) dominates the political panorama, controls the public discussion, holds in distain any critical posture or alternative. The problem, which will be increasingly apparent as the inexorable political cycle advances, is that people do not live by words alone.

The success of the narrative, which is also reflected in the president’s popularity, will not be sufficient to compensate for the absence of investment, jobs or opportunities. Without doubt, the strategy of social transfers aids in solidifying the credibility of the government, given that the latter represents a source of sustenance that is of utmost importance for a massive portion of the population. However, there are two factors that suggest that the strength of the charisma in Mexico’s case is very different from that described previously. First and foremost, after a decade during which the migration of Mexicans to the United States was minimal, in this last year it has literally exploded, amassing hundreds of thousands of aspirants to cross the Rio Grande in order to incorporate themselves into the U.S. workforce. Those individuals are going because they do not see opportunities in Mexico. Receiving a “support”, as the president terms it, is very nice, but does not compensate for the lack of economic growth, the only way that poverty can be reduced in a definitive manner. People are voting with their feet.

The other factor is that Mexicans have withstood decades of unkept promises, governments of diverse stripes that promise nirvana, only to end up with business as usual. All those governments offered solutions that were, nearly always, unfulfillable, and the population understands it thus. The handouts that a family receives are always welcome, but the recipients of   this largesse know that it is in essence a mere exchange of favors, a process that is repeated every six years: the names and the methods vary, but however charismatic the figure, that same population that discerns so few options in their daily lives knows that someone else will come to offer more funhouse mirrors, reinitiating the cycle once more.

None of this diminishes the extraordinary capacity of the president to manipulate perceptions and expectations, hence his popularity indexes, but for decades Mexicans have been observing the same phenomenon and there is no reason to expect something different this time around. Of course, there are many imponderables along the road that will determine how this all ends, aspects concerning the economic performance (especially the exchange rate), the appearance (or not) of some alternative figure outside the presidential entourage, and the ability of the president himself to avoid greater fragmentation in the Morena party. The coin is in the air.

The story that Kershaw tells is terrorizing because of the suffering, fear and irrationality that dominates the thought processes not of the leaderships (who understood perfectly well what was coming) but also of the population in general in the face of the certain defeat. No one had the capacity nor the desire to drive a change of course to evade a catastrophe. To follow the leader blindly was its nodal characteristic and determined how all ended. With luck, the nature of the Mexican and a long history of shattered expectations, will avert a catastrophe, but nothing will diminish the extraordinary costs of a government that knew how to foment the conflict but not to resolve the problems or create conditions for progress.

www.mexicoevalua.org
@lrubiof

 

Other variables

Other Variables

            Luis Rubio

The problem with fires is that they can blow in any direction -and one can get burned. However, that seems to be the frame of mind of the government today. The presidential term advances within a global environment over which the president has no control, but in which things are brewing that can be propitious as well as devastating for the development of Mexico. Those other variables are critical but are not on the governmental radar.

Two external factors are especially relevant for Mexico because on them depend the economic stability, thus the solidity or weakness, of the social fabric. One of these is exports, the main engine of the economy, which are contingent upon the vitality and dynamism of our U.S. neighbors. The other is the U.S. monetary policy, from whose decisions derive the stability of the peso–dollar parity. No one in their right mind can sneer at those elements and, nonetheless, that is precisely what the Mexican government has been doing.

In terms of exports, where the automotive sector predominates, the government drives an energy policy that is directly lined up against the trends that the sector is undergoing. Let’s start with the obvious: it is estimated that in the year 2025, 20% of automobiles sold worldwide will be electric, a percentage that will rise to 40% for 2030 and to 100% for 2040. That is, the main engine of Mexico’s economy -the exportation of cars and car parts- will experience a radical transformation and, nevertheless, Mexico is not a part of this. The manufacturers of those vehicles are not investing in the production of electric vehicles in Mexico due to the uncertainty provoked by the electricity reform bill.

The bill entertains very clear political objectives, but its economic rationality is somewhat ludicrous, not to say perverse. Beyond the proposal of further centralizing and controlling power, the reform proposal would have two evident consequences: first, it would raise the cost of electric current because the production costs of the Mexican Federal Electricity Commission (CFE) are higher than those of the producers that the initiative purports to remove. The remaining consequence will be that it would diminish (or disappear) the generation of electricity by non-traditional means (solar, wind, etcetera), whose production has become an imperative for many companies. In a word, the electricity reform that has been put forward would do away with the goose that lays the golden eggs and that is the principal unitary driver of the economy. No sane person would act in such a way unless they were propelled by a suicidal dogma.

The matter of the exchange policy is more subtle and indirect but, in contrast with the previous example, one over which the Mexican government has no influence in the least. Except that the lack of influence is accompanied by the enormous impact that the decisions of the U.S. central bank exert on the stability of the Mexican peso. When interest rates in dollars are low, as has been the case during the last decade, the peso lives on the flows of foreign investment that profit from the differential between the rate in dollars and the rate in pesos. However, on raising the interest rate in dollars, the appeal of investing in pesos decreases because investors do not see the need to take risks when the dollar is yielding attractive returns. That is the very threshold Mexico finds itself in today.

The U.S. economy is going through an unusual situation: an accelerated growth in prices. Under normal circumstances, the Federal Reserve would raise interest rates in order to “cool down” the economy without causing a recession. Although the president of the Fed has voiced his opinion in that respect, the political debate has veered off in another direction, enlivened essentially by a clash of perceptions: some consider this a transitory phenomenon, the product of a disruption brought about by the pandemic on production and the supply chains, while others regard it as a structural phenomenon that should be cut back at the root to avoid later stagnation, like that which took place in the decade of the seventies. For the former the next step would be to introduce price controls; for the latter the response should be monetary in character (interest rates). What the central bank does will have repercussions directly on the stability of the Mexican foreign exchange.

The core point is that Mexico presently finds itself at a particularly sensitive moment, in the face of potential turbulence on the part of variables that could impact the country’s stability specifically at the moment in which the process of the presidential succession is being stoked. The automobile companies will act according to the way the potential electricity reform could impact them, while the Federal Reserve will do what is proper in its sphere of authority. Neither of the two will consider the impact that their decisions will have on Mexico.

What is indeed certain is that, in its doctrinaire eagerness to alter the existing regime in matters of electricity, the Mexican government is playing with fire in that it does not choose to understand the enormous destructive consequences that this would entail for the Mexican economy and for the stability of the country.

 

www.mexicoevalua.org

@lrubiof

 

Freedoms

 

Freedoms

Luis Rubio

Mexico has undergone an underlying, albeit hidden, discord about its future for various decades. From a positive quasi-consensus -at least more or less generalized enthusiasm- with respect to the future that was born with the liberalization of the economy and, especially, with the successful negotiation of the North American Free Trade Agreement (NAFTA) at the beginning of the nineties, Mexicans passed to an ever more acute dispute that arose from the severe recession of 1995. From that crisis, the “war cry” went up to today’s president, who from that point was convinced that reforms did nothing more than accentuate inequalities and give rise to poverty.

Fending off the reforms became his mantra and raison d’être. But his project transcends the economic content inherent in those reforms: his grievance is against the philosophical vision -the culture- innate to the change that came about from the mid-eighties, which he denominates, disparagingly, “neoliberalism.” Thus, his project of government would become less pragmatic than philosophical–ideological in nature and perhaps it was from whence derived his expectation (or ambition) of trans-sexennial transcendence.

His vision is made clear in the following lines: “In a short time… we have contributed to changing the mentality of broad sectors of the people of Mexico. We have exposed the system with all its forms of control and manipulation.” As with all political projects, the alternative he proposes is equally manipulative, but the approach entails a radically different vision from that which characterized the country in past decades and that extends beyond a difference with respect to the function of the government in the society or of how concentrated or decentralized the power should be.

Leaving the national context, the counter-project that the president embraces is similar, in fact it derives, in philosophical terms, from the European wars that emerged from the Lutheran rebellion. Europe was divided between the reform (Protestant) and the counter-reform (Catholic), a schism that rocked the world and from which there materialized very contrasting pathways and philosophical views. From Catholic and revolutionary France arose the notion that what exists can be destroyed and the new can be built again from ground zero, a view that ended with Robespierre at the guillotine. That same perspective was adopted by the Soviets to control their society in centralized fashion, leading to its end in the Gulag. Innumerable governments around the world, that of Mexico included, claimed that it was possible to control all the variables of economic functioning without any risk, ushering in the successive crises that the citizenry endured in decades past.

The other vision emanated from the Enlightenment with figures such as Adam Smith and David Hume, which were more modest in their viewpoints and pretensions. Their point of departure was that the world is complex and that no one can control it because it depends on numerous factors, not all of which are known. Therefore, the function of government is to create conditions that render it possible for individuals, families and businesses to find opportunities and exploit them for their benefit, consequently that of the community.

The contrast between the two visions is dramatic: the first induces to the building of an aggressive and intrusive government, dedicated to centralizing power, controlling the citizenry and imposing its preferences and prejudices on each member of society. From there arise the employment of conflict and confrontation as instruments to advance the cause.

The second vision is more unassuming and clashes directly with the arrogance of the first because it places the individual within the centrality of the development and rejects any pretension of being able to plan or manipulate history.

The more complex the world and the society becomes, the inevitable process of human development in general -and economic in particular- the less the viability acquired by the centralized systems because they only function with increasing levels of repression and control. The USSR collapsed because it could not deal with the complexity, China is unviable without its increasingly generalized and sophisticated systems of control.

President López Obrador’s project is extraordinarily ambitious in that it transcends the traditional measures of government. His aspiration is to change the country and to impose upon it his philosophy and cultural vision: ranging from his moral guidelines to bear hugs for Narcos. To achieve this, it is unavoidable to dismantle any and every source of resistance or opposition, whether the latter stems from a governmental entity (here the notion of “autonomy” becomes redundant) or from an educational institution. The change of culture is not to be negotiated but instead imposed. The risk of a vision of this nature is that it very rapidly moves from the “narrative” stage to outright confrontation and from there to repression -or collapse. Once initiated, the process is uncontainable.

Idi Amin, the brutal and despotic dictator who immersed Uganda into poverty, corruption and criminality, is (in)famous for his affirmation that “there is freedom of speech, but I cannot guarantee freedom after speech.” This is a phrase that sums up the concentrator vision of power and that is not disengaged -cannot be separated- from the concentration of power and the pretension of exacting a new culture as if recasting the country.

 

www.mexicoevalua.org

@lrubiof