Luis Rubio

All the governments of the world, of all colors, want private investment, but none can get it by force. Nobody -big or small, national or foreign- assumes risks or commitments without feeling comfortable and welcome, and those feelings do not depend on political speeches or the will of the ruler, but on the existence of clear and reliable rules. It’s that easy and that hard.

The notion of an “obsession” for investment sounds enticing and attractive, but it is a chimera. No one obsesses about investing. Who should be obsessed is the politician who needs private investment to achieve his development objectives, poverty reduction, employment and, in general, a generalized improvement in the life of the population. But a political or discursive obsession is anathema to private investment: the key lies in the reliability of the rules.

1. Investing involves risk taking: she who puts her money into a project -be it in the form of savings through a purchase of shares in a company, or he who undertakes a certain productive objective- is betting that they can achieve attractive returns. Their bet represents the recognition of a risk that the project will be successful. Many restaurants open their doors with a bang, only to end up closing a few months later. A failed bet.

2. Investing is an act of faith and trust both in the specific project and in the context in which the investment is made. The franchises are successful because they reduce the risk of the project. The same is required for the environment in which the investment would take place.

3. Nobody invests without a reasonable chance that their project will be successful and success depends on two big circumstances: the first is that the project itself is viable; the second, that there is a reliable and stable regulatory framework. The latter is what should concentrate the obsessions of the ruler.

4. Despite this obviousness, most governments focus on changing laws, launching major initiatives, creating bureaucratic monsters, rewarding their favorites and developing clienteles, when what is required is to strengthen the environment (a better educated work force, better infrastructure and multiple sources of certainty), that is, something very simple, but very difficult to achieve: stability in the rules of the game. Simple because it’s obvious; difficult because it implies going against endless accumulated prejudices.

5. The virtue of the NAFTA, and its enormous success in attracting investment, was rooted in the normative framework that was its essence: clear, reliable and non-changing rules. More specifically, in the original NAFTA the key was not the thousands of pages of procedures, but its chapter 11, which gave certainty to the investor regarding the security of their investment. It is no coincidence that NAFTA has become, through exports, the main engine of the country’s economy. Instead of inventing the hot water, as the Mexican saying goes, what would be required would be to extend the rules inherent to NAFTA to the entire national territory. It would be the most expeditious way to create a regulatory environment conducive to investment, while solving the mess created by Trump in the matter: certainty generated within Mexico.

6. And this implies a great lesson for the Mexican government and its base: in the interconnected world of today there is no difference between national or foreign investors or savers. They all follow the same rationale, everyone wants clear and reliable rules. Many Mexican companies have invested in Mexico through the North American or European FTA precisely to enjoy the same certainty. When Morena’s contingent in Congress proposes to limit foreign investment, it is in fact threatening all investment, beginning with the domestic one.

7. The current government wants to subordinate economic decisions to its political preferences. It sounds good and it is logical in its perspective, but there is nothing more pernicious for private investment than political decisions. Investment goes where there are clear and reliable rules, not where politicians change the rules or subordinate them to their political preferences. That’s why the decision about the airport was so damaging.

8. Private investment does not respond to speeches or prodding: all it requires is certainty or what is known as “trust,” which is nothing other than the conviction that the rules of the game will be the same on the day the investment is made and when the project comes into fruition.

9. The government can beg, implore, demand or criticize, but it cannot force a person to risk their savings through an investment.

10. The only thing a government can do is to control its checkbook, develop strong institutions that confer certainty, and ensure, through leadership, that the entire country is dedicated to attracting investment and enhancing it. It’s that easy and that hard. The better the labor, educational and infrastructure environment, the lower the risk and the greater the investment. It’s not rocket science.

It is still time to obsess about creating conditions for the country to really focus on attracting investment, all  of which has not been done in the past decades.

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@lrubiof

Luis Rubio

The numbers do not lie, but they tell two very different stories. On the one hand, the president enjoys an unprecedented level of approval; a parallel indicator, that of consumer confidence, reaches figures not seen in almost two decades. The paradox is that these figures are not related to consumption, which has been diminishing both in automobiles and sales in general. The enthusiasm shown by the citizens is not the result of an improvement in their personal welfare, but in their perception of the president and the expectations that he has generated. On the other hand, INEGI’s index of business confidence entered negative territory in January, while 75% of investors consider that the country is in worse condition than a year ago. The big question is whether these two groups of people live in the same country.

Each one will have his explanation for the phenomenon of contradictory perceptions, but I do not have the slightest doubt that the nodal factor lies in the leadership exercised by the President, who has acquired almost mythical dimensions in certain segments of society. The combination of a longing for leadership with a hope that current and ancestral problems will be resolved turned out to be an exceptional combination that the President has been able to take advantage of brilliantly. Perhaps the key that separates the two cohorts -those who are full of hope and those who see the future with concern, if not fear- is the almost religious bond that exists between a part of the first group with the President, just as the second group attempts to explain to itself,  in a rational and analytical manner, something whose central characteristic is precisely that of not being based on rational considerations.

At the heart of the mismatch between the prosperity that has been experienced in the past three decades and the unease of half of the population that led to the election results of 2018 lies the inability and unwillingness of all governments of that period to explain and convince the population of the complexity inherent in a world of integrated economies, technological change, the digital dilemmas and, in general, the key in which productivity -and education-  have become as  a factors of progress. Faced with this absence, AMLO has managed to discredit all that era by calling everything “corrupt,” obviating the need to explain or propose an alternative program that is viable, capable of leading to high growth rates.

There will come a time when the discredit of the past will prove insufficient to preserve the legitimacy of the government, but nobody can deny the astuteness and excellence of the political and media management that AMLO has brought and how easy it has been precisely because of the vacuum of legitimacy that existed in the past decades, especially since the 1994 devaluation and the crisis that followed. In fact, what is shocking is that he did not have, nor is he having, any competition to the narrative that, since 2000, he has been advancing. This was accentuated after Ayotzinapa in which the current president took control of the narrative and never faced any response or push back from the then president or his government.

The two stories that characterize the country today are opposed, but inexorably they feed back: both end up depending on the progress of the country. Expectations can be manipulated for a long time, finding new scapegoats every time the car is stuck, but what counts, at the end of the day, is a sensitive improvement in living standards. Palliatives as the subsidies that the new government is scattering right and left diminish the urgency of delivering results but, in the long term, they will prove insufficient, simply because there is no money in the world to compensate for lack of delivery. However, as Fidel Castro showed, in the presence of plausible enemies it is possible to achieve a systematic impoverishment of an entire country for many decades.

For its part, the economy cannot prosper without investment and for that the willingness of companies and of new investors is required. In contrast to the era and geography of Fidel Castro, the Mexican is an open economy and the country is characterized by a huge border with the largest market in the world. The recipe for polarization has real limits.

The investment depends on very clear factors, such as the market, opportunities, the dynamism of Mexico against other economies, and how the US economy is doing, because, through exports, it is Mexico’s main engine of growth. No doubt, new infrastructure projects help, but they are not enough.

However, at the end of the day, the most important thing for investment is the confidence that the government generates towards national and foreign businessmen and this depends, almost in its entirety, on predictable and stable rules of the game. The latter is precisely what the President wants to alter: he wants to impose new rules of the game and subject them to changes determined by his political considerations. In this scenario, the investment will not materialize. Sooner or later, this factor will clash with the massive support that the president has today.

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Luis Rubio

Groucho Marx, a comedian of the last century, said it with absolute clarity: “Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.” The government has great clarity about several of the problems afflicting the country but it is critical to ask ourselves: What happens if the diagnosis is wrong?

Of course, the government of López Obrador would not be the first to get the diagnosis wrong and later to apply an incorrect strategy, but what without doubt distinguishes it is its moral arrogance: not only is the President in possession of the absolute truth, but in addition all else is illegitimate, an interested party, or is conservative. His risk of being in the wrong is, therefore, greater.

In matters of security Mexicans have been taking stabs in the dark for decades. Some governments attempted to construct new police forces, others procured centralizing the command; some resorted to the Army, others vowed to return it to its barracks. Some tried to buy off members of organized crime, others tore down the police forces created by prior administrations. In a word, there has been a little bit of everything during the last thirty years, except for clarity about what was sought or continuity in policy. More quips than strategy.

The problem of security in the country entertains many dimensions, but were one to focus on a historical perspective, its character would be transparent, which simultaneously suggests the true essence of the challenge.  The matter of security arose in parallel with the deterioration that, little by little, was being experienced by the post-revolutionary regime, above all from the seventies, but expeditiously since the nineties. The order and respect for authority that had existed up to that time were due to the authoritarian nature of the regime, that is, to the fear the citizenry had of the police and of the government in general. Members of PRI governments spoke of the strength of the institutions, but, in retrospect, it is evident that there were no strong Institutions, but rather a very efficient and effective structure of control that, additionally, enjoyed enormous legitimacy during many decades.

The central government maintained strict control over all of the key factors of power and the functioning of the society, allowing it to hold sway over criminality efficaciously, subordinating the governors (and using them as instruments at its command) and dictating the rules of the game to the elements of organized crime who, during those years, were Colombians whose interest was limited to transferring their wares through the country to reach their target market, the United States. The Mexican government did not, as many imagine, negotiate with the narcos, but instead established the rules of the game that, according to the characteristics of the post revolutionary regime, implied payments to local or federal actors to expedite the process. Security was the product of the strength of the central regime and not of the existence of a professional, efficient and “modern” structure of the police or of the judiciary. It is that authoritarian system of control that Lopez Obrador aspires to recreate.

As that regime began to falter –because of the growth of the population, the needs of the global economy, the incipient political opening- its capacity for control kept diminishing. That is, there was never an explicit decision that would come to modify the regime: its deterioration was the product of its gradual depletion and of decisions in other ambits that exerted an impact on its power. And here we come upon the underlying problem: while the country has been changing in all of its spheres -political participation, freedom of expression, technological change, economic globalization- the government has remained bogged down in its own structures of yesteryear.

The security problem (and so many others) arises from the exhaustion of a system of government that has not transformed itself in the last fifty years and that is not on the same page as today’s reality. Involving the Army in security issues was a desperate decision to confront a real problem, but without recognition of the nature of the heart of the matter. In this context, the debate over the National Guard is utterly legitimate and meritorious: elevating the Army as a factotum in this matter is not a solution, it is solely another foolhardy measure.

The core problem is the inexistence of government –much more momentous in some latitudes than in others, as illustrated by Tamaulipas vs. Querétaro, to cite two prototypical cases- and not the drugs, the corruption or the violence in themselves.

The government of President López Obrador must focus on the correct problem to be able to resolve the matter besetting the entire population and that devours resources, spirits and lives like no other. Of course the Army will have to be part of the solution, but it cannot be the solution in itself: it is not trained for police functions nor does it respond to the citizenry. In the same manner, merely endeavoring to reconstruct the old all-powerful government of the sixties is absurd because it is not possible: the conditions that made the latter viable came to a halt when the society and developed and there is nothing that the government can do to recreate that schema, unless it aspires to emulate Pinochet.

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@lrubiof

 AMERICAS QUARTERLY – FEBRUARY 14, 2019

Mexico’s president has so far governed as if by fiat. If he doesn’t heed market warnings, he may be in for a rude awakening.

Andrés Manuel López Obrador has a vision, but not a plan. His long-term objective to recentralize power is clear, but the specifics of everyday decisions – on everything from social policy to infrastructure investment – remain obscure.

The danger of this improvisational form of government is not simply that the economy will fail to achieve higher rates of growth (that is almost already a given). It is that financial markets will react negatively to so much uncertainty. The recent downgrade of state oil firm Pemex could be the beginning.

Fitch downgraded Pemex last month because of what it called “continued deterioration” of its credit-profile and underinvestment in its production areas. López Obrador’s response, simply to attack the ratings agency as “hypocritical,” must be understood in a context in which the president is running things basically on his own. There are no public policy debates, only objectives and actions that López Obrador instructs his people to carry out.

The president clearly believes that by announcing his objectives or actions, things will simply happen. In fact, he’s campaigning on a permanent basis and rallying the crowds. That approach has worked so far: his approval ratings are over 80 percent. His popularity comes in part because, at least rhetorically, he is addressing people’s concerns.

Everybody knew about stolen gasoline, about how much corruption there is and how deep social divides are. By talking about these issues and, at least in some cases, acting upon them, the public see in the president someone who is finally doing something about the issues that brought him to the national palace. People have been willing to stand in line for hours to get gasoline not because the issue is being fixed, but because the president is facing it.

But what happens when it becomes clear that the president has failed to deliver change? At some point, the public will want answers in the form of prison sentences for the corrupt or better economic performance. But AMLO’s policies do not appear likely to take Mexico down that road. He has already expressly ruled out pursuing past corruption, and economic growth is unlikely to materialize in the absence of more investment, both public and private.

Fitch’s decision should have been a warning that things could easily get dicey down the road, and compelled López Obrador to change course. Instead, he attacked and kept going.

The result of all this is to put private investors, both domestic and foreign, on wait-and-see mode. The broader pressures on the economy won’t help in that regard. First, there’s uncertainty stemming from USMCA discussions in the U.S. Congress and the potential demise of NAFTA without having ratified the new agreement. Then there’s the situation with Mexico’s energy sector.

Secretary of Energy Rocío Nahle recently announced the launch of a new oil refinery in Dos Bocas, Tabasco, the president’s home state. Nahle indicated that it would be wholly owned by Pemex and that there would be a restricted tender, by invitation only. In other words, it will be financed by Pemex, whose financial accounts are, in fact, indistinguishable from those of the federal government.

Several months ago, both Fitch and Moody’s warned of the possibility of a rating downgrade should the government proceed with the Dos Bocas refinery. Assuming the two ratings agencies proceed with their earlier warning, the federal government’s accounts could be affected. That could easily trigger a market run.

López Obrador has opened his administration on an enormous number of fronts. He’s launched, or is supporting, a series of labor actions geared to undermining current union leadership; he has attacked former presidents (though, oddly, not his predecessor Enrique Peña Nieto, the man who made it possible for him to win); he’s fighting with several governors on budgetary matters; and he has abandoned the war against the drug cartels. Some of these actions may make sense, others are just shots in the dark. The common denominator is that there’s not a policy behind any of them that has been analyzed and is being adhered to. Each action is independent of the rest, except for the broader goal of concentrating power.

The president is running the government on his own. He shows up every morning for a 6 a.m. security meeting and then talks to the press for an hour or longer where he sets the agenda. The members of the Cabinet, usually looking sleepy, stand behind as part of the scenery but say nothing.

Should things not work out the way the president expects and assumes, the real issue is whether he’ll begin to blame others for the results or if he’ll change course. His reaction to the Fitch downgrade suggests it’ll be the former: Rather than realizing that it was nothing more than a warning, albeit a serious one, he decided to fight things out in the street. He assumes, and has said, that everybody would have to submit to the president’s priorities, including the financial markets; the problem is that that’s not the way the world works in the 21st century, least of all for an economy as open as Mexico’s

https://www.americasquarterly.org/content/pemex-downgrade-was-warning-amlo-listening

ABOUT THE AUTHOR

Luis Rubio is chairman of the Mexican Council on Foreign Relations. He writes a weekly column in newspaper Reforma,and is the author and editor of dozens of books. His most recent book is A World of Opportunities, published by the Wilson Center.

Luis Rubio

Public security is a sine qua non condition for the development of the country and the issue that most concerns citizens. The problem is not new, but all attempts to confront it have proven insufficient, if not a failure. The three most recent administrations -each with its level of arrogance- has assumed the problem in its own way, but the results have all been pathetic; the only thing that is clear and unquestionable is that there are many myths around this issue*, but equally clear is that there is no single -or magical- solution to the problem: no silver bullet. If the López Obrador government does not recognize this point at the outset, its strategy, centered on the “national guard,” will end up in the same place.

The proposal to create a new structure in the form of a national guard, announced with great fanfare and little information, is not very different from the one that accompanied the announcement of the creation of the federal police two governments ago. In both cases, there was a big idea but not a plan for its integral development, much less a political consensus on the matter. The result was the expected: the insecurity did not yield. The causes can be many, but the winning prescription proved unsuccessful.

The creation of a national guard can be part of the solution or it can be another lost opportunity: everything depends on how it is constituted, what its objectives are, what strategy would be followed and, above all, what the project as a whole consists of. A misdiagnosis -which is what must be assumed because the plan presented lacks any logical coherence- entails a hazardous outcome. However, the danger lies not only in the fact that insecurity remains high, but that, unlike the previous attempts, this one comes fraught with an immeasurable risk in the form of the incorporation of the army in security tasks in an integral, permanent fashion and made permanent in the Constitution. That is, this is an extraordinarily hurried step, with unknown and, potentially, excessive and onerous consequences.

It is easy to understand why one administration after another has turned to the military: it is the most structured, respected and efficient corporation in the country. Given the vacuum, weakness -and corruption- that characterizes most of the federal, state and municipal police forces (and their counterparts on the side of law enforcement), the notion of resorting to the military is logical, even if it entailed a radical about face for the president. But the fact that there is such a fundamental challenge and such a competent institution does not imply that one thing can work to fix the other. The army has proven effective in showing the strength of the State whenever deployed, but not in creating conditions for public security beyond the time or place where it has had a temporary presence. The army is not a police corporation and should not be conceived as a long-term police response because it is useless for this and will never be different.

The army will undoubtedly be a central part of the solution to the security problem the country faces, but it cannot be the heart of the strategy. Unless the army is transformed into a police corporation -and everything that this implies in terms of conception and training- something that could be proposed as a strategy over a period of two or three decades, the military is trained to face formal enemies, not to be the guarantor of the security of the daily life of a community.

More important, the key question is not about recourse to the army for the purpose of protecting the citizenry, but about the creation of a new political and legal reality in the way the national guard has been proposed. Resorting to the army is necessary, but not in a permanent fashion, without a clear mandate or legal protection. It would be infinitely better to create a formal framework for the operation of the army in civilian security tasks than to elevate it as the heart of an unfinished security strategy in which there are no certainties for the citizens, the government or the soldiers themselves.

I wonder, why not bring the presence of the army through the national guard -or in security tasks in general- as a case of exception and, therefore, temporary? That is, what if, instead of encumbering the army in the Constitution to combat insecurity, the Congress legislates in a precise way how that corporation would act in an emergency and only for the time the emergency lasts. If what exists is a situation of exception, what is appropriate is to contemplate an equally exceptional response in the form of a regime of exception such as that contemplated in Article 29 of the Constitution.

What has been proposed is a desperate, ill-considered and inadequate response to build security, protect the citizenry, give legal certainty to the army and solve the problem that the government has raised. Instead of a single action aimed at trying to solve a complex problem once and for all, it would be far better to develop a multifactorial strategy in which the participation of the army is temporary, limited and exceptional.

*see a good summary of this: http://www.consejomexicano.org/index.php?s=contenido&id=2475

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a quick-translation of this article can be found at www.cidac.org

         Luis Rubio

One way of thinking about what is to come is to contrast what the new government says that it wants to achieve and what it in fact proposes to do. The case for austerity is illustrative: nearly the first priority of the new Congress was the Law of Austerity, followed by that of compensatory payments to civil servants, as an axis of its strategy. It is obvious, as a starting point, that no one can be against austerity  in principle; however, it is relevant to ask what the objective of the austerity is, and how it is to be put into practice: it is not the same to raise the efficiency and efficacy of the governmental function     (something desirable and for which there is a great lot of ground to cover) and it is something quite distinct to submit other branches of government by means of expenditure cutbacks (above all those that confer on the Congress the capacity of functioning as a counterweight) or to penalize  good functionaries by reducing their incomes. Two very distinct objectives, although both are equally consistent with austerity. The question is not an idle one: what is proposed to be achieved and what ensures the citizenry that this is adequate and necessary.

Andrés Manuel López Obrador won the presidential election in Mexico with a percentage of the vote to which we had all become unaccustomed. None of his predecessors, from the nineties to date, had the level of votes or legislative support and legitimacy of mandate that these entail. For all of these, the Congress and the diverse State entities that enjoy autonomy served as counterweights, at least at some of the most critical moments. The Congresses, from 1997 forward, did not enjoy a partisan majority and, at many times, impeded the advance of presidential initiatives. In reality, their opposition was almost always rooted in short-term political misgivings to a greater degree than in a careful reading of the bills that were defeated, but now it is not even probable that this will occur. Nonetheless, there is great value is doing so.

The Mexican political transition that initiated with the 1996 Electoral Reform resolved the problem of access to power, but not that of the way Mexicans should be governed. In fact, much of the deterioration that has come about in recent decades -in security, economic growth and corruption -is due, nearly exclusively, to the political disorder deriving from the defeat of the PRI in 2000.  The end of the PRI-Presidency binomial brought with it all types of consequences, many of these negative: immense transfers (and waste) of funds to governors without any accountability; occurrences instead of government strategy; systematic deterioration of the institutional structures (procuring justice, the police, Offices of the Attorneys-General, customs); and, in general, the collapse of civility in day-to-day treatment among citizens, among politicians, and among both. Today it is not strange to hear a Mexican, on finding himself abroad, asking whether he can safely go out to walk in the street. That question would have been ridiculous some decades ago. The anger and dysfunctionality are not the product of chance. The question is how to carry out the changes that Mexico needs, rather than to go back in history to impoverish the country.

The solution that can be sensed in what AMLO has been doing and proposing consists of centralizing power through means such as virtual proconsuls in the states; the re-conception of the Army as supervisor of all affairs at the regional level; the reduction of the salaries of first-level civil servants; the creation of the distribution of programs of transfers to youths, the elderly and other susceptible groups, and the reduction of Congressional and Senate budgets. Centralization of power is not something that is good or bad in itself; the matter concerns centralizing for what. What the actions of the President in his early day suggest is that this is about a means to eliminate all dissent and to enhance loyalty.   However, the important part is not the accumulation of power in itself, but rather whether it can be changed for the better, not for change’s sake.

The mandate that AMLO received is to change the reality, but not just any kind of reality would result in an improvement of the living conditions of the most vulnerable population to which it would devote itself or to the creation of a better future in general.  Good wishes are not enough: there are problems of extreme complexity, beginning with that of security, that require careful planning.  Clearly, there are solutions, as demonstrated by some successful exercises at the state level, but an integral solution is going to require a plan that is well articulated by professionals and a willingness to build for the long term. Instead of this, what we are currently observing is a series of actions, not always coherent with each other, to angry clashes among groups close to the President, such as the mistreatment given to the Army, blaming it for all of the ills while, at the same time, turning it into the core of the strategy. The country, and AMLO, require long-term solutions. If he, with all the power and the mandate behind him, does not promote these solutions, the country will end up worse than it was.

Instead of cuts to the Congress, effective checks and balances are required that aid the President himself to ensure that his proposals will be liable to changing the reality for the good. Checks and balances do not diminish the presidential power but do oblige it to produce projects that can improve the life of the population. That is the mandate that appears evident in the past election; here’s hoping the new President interprets it thus.

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Luis Rubio

According to the historian Micah Goodman, the difference between animals and humans is that the former live exclusively in the present and act instinctively, while humans think and care about the future. The future is always unknown and generates fear, for which humans turn to religion and politicians. Religion allows to calm the spirit and the soul; politicians take advantage of the fear to deceive the voter: while on the campaign trail they make promises that can never be fulfilled, and thus clash with the reality, once they become responsible for the duties of government.

This story is repeated again and again in all latitudes. But today Mexicans are living something peculiar: the President is not only trying to fulfill all his promises, but he does not believe that there are limits to his capacity to achieve it. This has introduced an air of freshness in the function of governing that had not been seen in a long time and that the majority of the population recognizes and seems to appreciate.

The case of gasoline speaks for itself: by now it is evident that the government acted without much care, knowledge of cause or foresight about the consequences of its actions. But, after decades of flagrant robberies to the treasury through Pemex, the citizens applauded the boldness with which it acted, even if the latter implied tens of hours lost in the search of fuel for their automobiles. However, the story will only end when those responsible for the theft of gasoline are identified and detained, which does not seem to be in the cards or, given the weakness of the justice system, within the realm of possibility within the government. In that scenario, what began as a laudable goal could end up becoming a highly costly.

The theft of gasoline is part of a complex chapter of public life in recent decades. In these years, there has been a dispute between two ways of conceiving the national reality and its future. On the one hand, those who promoted the reforms, especially the economic ones that stemmed from the virtual bankruptcy of the government in 1982, proposed the integration of the economy into the technological and commercial circuits of the world as the means to increase productivity and, with it, to generate much higher rates of economic growth that, in turn, would improve incomes and create many more jobs. On the other hand, especially since the 1995 crisis, the post-revolutionary vision has returned to the forefront, which affirms that higher growth rates have not been achieved, that inequality has increased and that the country has lost the stability and security that characterized the pre-reform era.

If one goes beyond the political narratives and interests behind each of these positions, it is clear that both approaches have a basis in everyday life. Regarding the first, nobody can deny the virtues of the reform project in terms of economic growth, employment and productivity in virtually the entire northern half of the country. On the other hand, if one observes what has not happened in the south, the conclusion is equally evident: the contrasts and differences are clearly breathtaking. While much of the north of the country grows with extraordinary speed, the south has frozen in time, with what that implies in terms of employment, incomes and expectations.

What is a common denominator throughout the national territory is the collapse of security and justice structures, producing great impunity. That is, various regulations and concepts were reformed, but the necessary governmental capacity was never developed to preserve the most fundamental aspects of life in society: the safety of the people. The president has proposed a project for these purposes that, like its predecessors, is incomplete, not very well thought out and very risky, first of all because it is does not stem from a diagnosis that recognizes that the problem lies in the governmental structures themselves. Thus, by ignoring this, the new program will only deepen the problem, but this time politicizing the army along the way, while potentially corrupting it.

The problem of security is not different from the theft of gasoline. In both cases, the nodal factor is impunity: those who steal gasoline – and the officials and governors who charge a fee so that the robbery can take place- are no different from those who steal, extort, kidnap or kill without even blushing. In both cases, this occurs because there are no restrictions on their activity and abuse. It is this impunity that the president apparently wanted to show with the closing of the gasoline pipelines. But evidencing the phenomenon does not solve the problem: this is not a group of thieves, but a system within the governmental apparatus, at all levels, that benefits and promotes impunity.

The problem does not lie in the reforms that the president condemns day in and day out, but in the lack of clarity of the nature of the problem. At the end of the day, as the historian Margaret Macmillan says, “Reforms forestall something worse from happening.” The government has to review its biases about the national problem so that, as Goodman says, it becomes realistic about what it can actually achieve.

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a quick-translation of this article can be found at www.cidac.org

 Luis Rubio

Live by the sword, goes the saying, die by the sword.  In this manner, storm clouds- in the form of animosities, rancor, disqualifications and contempt- have ushered in the government of Andrés Manuel López Obrador. This is a way of conducting politics that wagers on the permanence of favorable winds, of continuous support, and the resignation of the population to its fate. It is a risky bet because sooner or later, storms arise and, by then, the “others,” those who have been wronged and reviled, will be involved in other things. The politics of discord are useful in electoral times, but lethal in the process of national construction.

All nations require a level, at least a basic one, of agreement to advance; but equally valuable is disagreement, whenever the latter concerns ideas and ways of resolving problems and never involves personal disqualifications. At least this is the way that civilized and democratic societies get ahead, as the United Kingdom showed in full color this week. However, in recent months the morality is judged of persons and groups by their political position: the good are with me, the others are conservatives or, in the vernacular, highfaluting, “fifi” in Spanish. The President pardons and excommunicates at will, with an almost religious fervor. Instead of bringing the population together in what should be the essence of the governing function, he disqualifies, eliminating spaces of agreement.

No one disputes who the president is; his legitimacy is the point of departure. That the electoral process is over and that the President is responsible for the future of the country are not under discussion. The nation’s best interest lies in joining with the population as a whole in his development project: nothing works better than with the participation and acquiescence of everyone. The strategy of dividing, polarizing and disqualifying is logical and rational in times of electoral contest, but it is not only absurd in governing times –all the more so when no one challenges his legitimacy- but it is also absolutely counterproductive.

Six years comprise many months, many weeks and many more days, each of which can dawn with problems, crises and complex circumstances difficult to manage. Some of the latter are domestic, others worldwide, but problems never fail to emerge for the President of Mexico. The question is how to confront these and solve them when they make themselves known. The strategy that the President has followed to date suggests that his calculations are optimistic: everything will come out fine, there will be no problems and time is on his side. Any one of the last fifty presidents of Mexico, including AMLO’s favorites, could confirm for him that the reality is never like that.

Problems appear at the least expected time, and the government has no alternative but to act. Such was the experience of President López Portillo with the 1976 devaluation and of President Miguel de la Madrid with the expropriation of the banks and the assassination of DEA agent Enrique Camarena; of President Salinas with the explosion in Guadalajara; of President Zedillo with the 1994 devaluation; and of President Calderón with the 2008 financial crisis in the U.S. The problem appears and the government must take action extending beyond its fancies or stances. It is at that moment that what matters is not only legitimacy of origin- perennially put to the test in crises- but also the political capital that the president has accrued in prior times.

The strategy of polarization and discord to which López Obrador adheres, and which contaminates his entire Cabinet and government, does not augur well for the future. Crises call for the best in he who governs and the support of the society; when the society is divided –into the good ones and the bad- governance is difficult and, in times of crisis, impossible. AMLO’s gamble on a strategy of permanent division and disqualification entails the risk on not counting with the society when the easy times evaporate.

The ample legislative majorities that the President has allow him to suppose that the earthly kingdom is his and that no one can curtail his sources of support. But there are two scenarios of which no one must lose sight: the first is that there’s a big difference in the support a candidate can accumulate vis-à-vis the difficulties inherent to the daily exercise of the functions of government. AMLO’s current popularity could easily vanish should things not improve. The second is that, when crises materialize, all suppositions cease being valid: at that moment in time, everyone sees to his own interests and that is as true for the most ordinary of Mexicans as for the loftiest of these.

No government can have the luxury of alienating half of the population (the 47% who voted for other candidates) nor can it presume that their own base is unalterable. As Napoleon once said, “to get power you need to display absolute pettiness. To exercise power, you need to show true greatness.”

Chairman Mao was more direct in his appreciation. When historian Edgar Snow asked him what was needed to govern, Mao responded: “A popular army, enough food and the trust of the people in their governors.” “If you could only have one of the three things, which would you prefer?” asked Snow. “I can dispense with the army. People can tighten their belts for a time. But without their trust it is not possible to govern.”

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AMERICAS QUARTERLY
BY LUIS RUBIO | JANUARY 16, 2019

The Mexican president’s revolution speeds on, with little regard for the consequences.

Mexican President Andrés Manuel López Obrador has a nostalgic vision of the country he wants to build over the next six years: a return to Mexico’s past in which presidents make decisions while officials and the public simply follow. But after a full month in office, his commitment to that vision – and the lack of care he shows for the risks it entails – have clashed with a country that is far too diverse and dispersed to simply fall in line.

Six years ago, the government of President Enrique Peña Nieto entered office promising wide-ranging constitutional reforms through the Pact for Mexico, an agreement on the PRI’s ambitious legislative agenda that included the then-two largest opposition parties, the PAN and PRD. Though it succeeded in pushing through important constitutional changes, the opposition’s association with the PRI’s history of corruption helped pave the way for AMLO’s rise.

Since his inauguration on Dec. 1, López Obrador has taken a different tack. Rather than negotiating a broad agreement like his predecessor, AMLO is moving by stealthy imposition. He’s advanced at breathtaking speed to remove as many checks on his autonomy and independence as possible – particularly as they pertain to economic regulation. The independent institutions he has not been able to remove or subdue, he has begun to starve by reducing their budgets, as in the case both of Mexico’s national transparency agency and its independent hydrocarbons regulator.

But there are limits to what AMLO can accomplish by these means. The more he pushes forward with a government by imposition, the harder time he’ll have realizing the “transformation” he so desires.

His first budget is a case in point. AMLO is convinced that his government can and should not spend more than it takes in. But there are two problems. First, AMLO’s base, having been promised the sky during the campaign, is ready to collect and won’t just let López Obrador off the hook. Second, business and investment decisions in the 21st century have nothing to do with a president’s wishes.

The budget, presented and approved by Congress in December, was an attempt to appease both constituencies. In the immediate, it seems to have worked: financial markets broadly – though not universally – approved of the proposal without forcing AMLO to compromise on his promises to increase social spending on the young and the elderly and fund pet infrastructure projects. But this is unlikely to hold.

That’s because while the budget didn’t break the parameters of sound macroeconomic management, danger looms if it’s implemented as planned. The budget holds the seeds of an ambitious program that is unlikely to satisfy the same financial markets in the future: investments in a new and economically questionable new refinery, infrastructure projects that will rely heavily on government funding, and a rapid growth in transfers to AMLO’s favorite constituencies, all of which provide disincentives to the growth of private investment or productive employment. In addition, the disbursement of these transfers will be made based on a roster of beneficiaries that was built by AMLO’s own teams, ignoring the official, professional institutions in charge of such activities.

Even then, AMLO’s coalition is so diverse and complex that, one way or another, he’ll soon be forced to accept trade-offs that are inherently contradictory to what markets are hoping for.

Beyond the actual allocation of funds, the process of putting the budget together itself shows why AMLO’s vision of tight presidential control is bound to clash with the reality of governing a modern, dynamic economy. That process was political, full of symbolism and catering to his base and vision. He purposefully reduced allocations to a series of programs and institutions in order to exact their allegiance. The case of Mexico’s universities is extraordinary: university presidents submitted to his wishes and rhetoric, and funding that seemed to have been taken away was immediately reinstated. The point was made very clear: whoever submits to the president wins. Indeed, AMLO’s aim seems to be to recreate the old ideological and political hegemony that characterized the PRI era.

AMLO despises technical considerations; for him everything is political. His recent attempt to thwart rampant gasoline theft is another example of this. AMLO’s top-down, improvised decision, and its amateurish implementation, led directly to scarcity and long lines at gas stations that affected millions of consumers. It’s not clear what he’ll learn from the experience, but one thing is apparent: the real world is different from what he imagines or wants it to be. And yet, so far, he’s enjoying broad popular support for his actions.

This has been the pattern of AMLO’s first month and a half in office. A clear idea of what he wants to do, but a lack of planning and care in execution. Mexicans are paying attention. Despite AMLO’s tight control of his base, the general public is not the submissive crowd of the 1960s. Protests, jokes, memes and demonstrations have marked AMLO’s first days in office, especially during his gasoline debacle. AMLO’s base has already shown fractures; as time goes on, the new president will not only face greater opposition, but the need to spend much more time, energy and resources appeasing his followers.

https://www.americasquarterly.org/content/why-amlos-attempt-centralize-power-comes-cost

ABOUT THE AUTHOR

Luis Rubio is chairman of the Mexican Council on Foreign Relations. He writes a weekly column in newspaper Reforma,and is the author and editor of dozens of books. His most recent book is A World of Opportunities, published by the Wilson Center.

Luis Rubio

In the historical vision of the Left, the government was not the product of an election but rather as the result of a revolution or, in any case, as a takeover. The objective was power and the means for acquiring it were least in importance: assumption of power to change the world. The conduct of the Morena party in the Mexican Congress during recent months leads one to think that its contingents do not yet note a difference: for many of these groups (or tribes, as the they were known within PRD), what is important is to possess the power to effect a radical change and not that of governing for the entire citizenry, as would be expected of a government in a democratic system. The question is where this new government is to be found: in the democratic rules or in the revolutionary ones.

There are three angles that can be observed: first, the overwhelming victory and its implications for those who as of a month ago formally hold power; second, the inherent complexity in such a diverse coalition, so disperse and with opposite rationalities; and, finally, the most ambitious vision that President López Obrador has outlined for his government. Each of these elements entails its own dynamic that, when combined, as could be seen in the gasoline disaster, has a high propensity for producing great discord.

The triumph of Morena was so overpowering that it surprised even its own adherents. Describing the composition of its bench at the San Lázaro Legislative Palace, a Morena delegate mentioned that they never imagined such a scenario, to the degree that many of the new representatives clearly were not suitable for their new responsibility. But beyond the persons themselves, the win has not been recognized by the Morena followers themselves as the fruit of a democratic vote: in fact, to date recognition has not come forth for the National Electoral Institute, for the Electoral Tribunal, or for the democratic procedures regarding this AMLO’s and Morena’s electoral triumph. For many of its members, it comprised not an election but the takeover of the government or, at best, a recognition of their power. The practical difference may appear to be insignificant, but in reality it is more than transcendent because it determines the nature of the political game: will it be a government that complies with the rules of the civilized political game or will it attempt to change the reality, sweeping away the whole political structure, imposing its law as if this were the Old West.

The coalition that Morena built will be without doubt the most complex part of the AMLO government.  The coalition includes persons and retinues ranging from the Extreme Left to the Extreme Right, passing through former guerrillas, intellectuals, base groups, former members of PRI, PAN and PRD, shock groups, businesspeople.   Each of these coteries or tribes retains its own aims and many are not only incompatible with the others, but also contradictory. For many AMLO is a superior being, but for others he is a mere instrument for advancing their agendas, with or without him. It is a rare day that some do not attack others from the rostra of the two legislative chambers. Administering the conflict inbred in this coalition will be as difficult and tedious as the properly enunciated governmental function.

In addition to the latter, AMLO and his cohorts seem to view last July’s election as an immoveable and immutable milestone: the 53% who voted for AMLO is point zero and everything after that is up. If one were to observe any country in the world, highs and lows are normal and, ever more frequently, the lows. We must remember that at the beginning of 2018 AMLO entertained only a 30% preference, suggesting that the additional 23% is more volatile than he imagines. Many citizens voted for AMLO because they saw no alternative or because they expected rapid and effective solutions; if the latter do not materialize, his support will begin to erode. The way AMLO makes decisions will not help him: should he pursue his current way of acting, his support will vanish, quickly.

All of this is only the jumping-off point. AMLO has proposed an extraordinarily zealous vision for the development of his government. The vision is not accompanied by a plan, but instead by a series of objectives or agendas of his own or of his group -many of these obsessions- which do not contribute to the construction of that vision, the very one that in many respects requires the reconstruction of an idyllic past that has in no case ever existed and one that is impossible to recreate. This implies that there would be many individual projects, some emanating from the Executive Branch, others from the Legislature, that would not be markedly coherent among themselves but that would respond to the objectives and agendas of particular groups or of ideological conceptions, without there being an evaluation to measure their consequences in terms of the growth of the economy or of their impact on the distribution of income, something easy to argue but very difficult to impact in practice.

AMLO was never a legislator and appears to view legislative power as pure and simple rubber stamp; however, it is there that he will be confronting the complexity and dispersion of his own coalition. More importantly, on ignoring the opposition, he would incite confrontation, nearly sure to gnaw away at his own legitimacy. The paradox is that it may be in the legislative power that his government will consolidate or collapse.

www.cidac.org
@lrubiof