A New Phase for Mexico

A New Phase for Mexico
National Electoral Institute (INE) has fined Lopez Obrador’s National Regeneration Movement (MORENA) $10 million over a trust the party created to help earthquake victims. President-elect López Obrador..

National Electoral Institute (INE) has fined Lopez Obrador’s National Regeneration Movement (MORENA) $10 million over a trust the party created to help earthquake victims. 

President-elect López Obrador won a landslide victory in Mexican general elections. With a long time to go until he takes office in December of 2018, Obrador has announced ambitious plans to ensure a reduction in migration to the US through development of Mexico’s socio-economic landscape. 

Background 

Pre-Columbian Mexico dates to about 8,000 BC, is identified as one of seven cradles of civilisation. It was home to many advanced Mesoamerican civilisations before European contact. After independence from Spanish colonisers, three decades of ‘Porfiriato’ rule from 1876 which modernised the country, ended with the Mexican Revolution of 1910. This culminated with the promulgation of the 1917 Constitution and the emergence of the country's current political system. 

Mexico is the second largest economy in Latin America and is a major oil producer and exporter. However, there is a deep rooted social divide between the affluent and the poor. Much of the rural area in the country is underdeveloped and the cities are home to large slums that are in a constant state of expansion with increasing rural to urban migration. This inequality has played a role in the rise of crime and drug trafficking in the region. 

The drug trafficking business from Mexico to the US is worth an estimated $13 billion a year. Apart from violence between drug cartels, the country has one of the highest rates of kidnapping in the world. According to a report by the International Institute for Strategic Studies (IISS), Mexico is the second deadliest conflict area in the world after Syria. 

In 2016, The Economist Intelligence Unit has rated Mexico as "flawed democracy.” The Institutional Revolutionary Party (IRP) was the de-facto party functioning in the country for decades until 1997 when congressional elections were held. Enrique Peña Nieto is currently the 57th President of Mexico. He began his term with an approval rate of 50% and finally bottomed out at 12% in January 2017. He is seen as one of the most controversial and least popular presidents in the history of Mexico. 

Andrés Manuel López Obrador of the National Regeneration Movement (MORENA) won the general elections in July, the first time a candidate won an outright majority since 1988. The left leaning President elect has vowed to crack down on corruption and rein in Mexico’s war on drugs. 

Analysis 

Mexico’s president-elect López Obrador vowed to rule for people of all social classes, all sexual orientations and all points of view. “But we will give priority to the most humble and to the forgotten.” 

Obrador has written a 7 page letter to US President Trump, seeking to initiate "a new stage in the relationship" of the two countries and to make progress in the areas of "trade, migration, development and security.” 

The new Mexican government has promised to respond to record-high violence with judicial reforms. The incoming interior minister has said that the militarisation policy in curbing drug trade was in violation of the constitutional statute that public safety should be in the responsibility of civilian authorities. Obrador has granted his minister “carte blanche,” the freedom to do as he pleases, in legalising drugs. 

Freedom in recreational use of drugs can have multifold effects on the economy.Taxation would increase public revenue and deployment of military and civilian police to tackle illicit trade will be reduced.These forces can be redirected to the borders to prevent illegal migration or to curb armed violence and kidnapping. Revenue from taxation of marijuana can be used to improve impoverished communities most susceptible to engaging in blackmarket trade. However, excessive taxation in the long run might perpetuate underground transactions. 

The incoming party has plans to propose legislation in Congress for a "transitional justice system," that would include reduced sentences for criminals who cooperate with authorities on unsolved crimes. But it would also include Lopez Obrador's controversial proposal to provide legal amnesty for certain drug crimes. 

"A transitional justice system for Mexico is possible and urgent, not just for the victims of the violence but for all of Mexican society," said Sanchez Cordero, a jurist in the apex court. The new government's proposal would also include truth commissions, such as those used in post-conflict situations, and a system of reparations for victims of drug violence. 

Mexico has also been advancing the revamp of the North American Free Trade Agreement (NAFTA) and a swift conclusion to negotiations. The US, Mexico and Canada have failed to nail down a deal to alter NAFTA after almost a year of talks, with wide differences remaining over such issues as auto-content rules and a sunset clause. However, US tariffs have complicated relations with the other two parties. 

Assessment 

Our assessment is that the president-elect can usher in a wave of reforms necessary to overhaul Mexico’s weak governance and ailing economy, however, rapid reforms may hit hurdles during implementation in the short run. We believe that his policies seem ambitious, but may be negotiated until it is acceptable to all members of Congress. We feel that Mexico may play a more definitive role in international agreements under Obrador’s rule.

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