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New president, old problems - El Paso Inc.: Border Business

New president, old problems

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Posted: Sunday, July 15, 2012 6:00 pm

With the completion of Mexico’s presidential election on July 1, one North American presidential election is in the books, and we have one more to go in November, in the United States.

Mexico’s new president will be Enrique Peña Nieto of the Institutional Revolutionary Party, the PRI, which ruled Mexico for 71 years before losing power to the PAN party in 2000.

After a hotly contested and often bitter campaign, Peña Nieto garnered approximately 38 percent of the national vote to beat his nearest rival, Andres Manuel Lopez Obrador, by 6 percentage points. He will officially take office Dec. 1.

Peña Nieto inherits a country that is at a historic crossroads for reform, security and setting the economy on the right track for the future.

During the campaign, he made a pledge to return Mexico to the days when it was experiencing 6-percent annual economic growth, although this seems overly ambitious in the assessments of most economists.

He will need to deal with the issue of injecting more private investment into Mexico’s government-run oil behemoth, Pemex. The oil-rich country faces becoming a net importer of oil as its energy needs increase and Pemex continues to be run as an inefficient government entity in dire need of private investment to upgrade infrastructure.

Mexico’s new president-elect also must deal with educational and judicial systems that are in dire need of revamping. As one of the world’s leading emerging economies, Mexico’s educational system lacks the standardization and infrastructure that it is going to need to allow competition against other nations in the future.

It is universally accepted that the Mexican judicial system has long needed reform to root out corruption and to provide a consistent system of jurisprudence in order to keep attracting foreign investment.

Peña Nieto assumes the reins of a country where about 62 percent of the people who took part in the election did not vote for him. The vote can hardly be considered a mandate, especially as it appears that the PRI will not have an absolute majority in Congress to support the new administration’s platform. Peña Nieto’s political and negotiating skills will be tested to the limits.

Probably his biggest challenge is developing trust among Mexicans who fear that he represents a move back to the bad old days when the PRI used fraud, bullying and other heavy-handed tactics to maintain its grip on power.

Others question his mental aptitude, after he committed some glaring gaffes during the campaign. He has been painted as an artificial creation of the PRI without a lot of substance.

On the positive side, the presidential elections present a tremendous opportunity for the U.S. and Mexico.

The new president of Mexico will embark on a six-year term that will have either a four-year overlap with the Obama administration or up to a six-year overlap with the Romney administration, if Mitt Romney were to win in November and then is reelected.

Together, the newly installed presidents of both countries will need to work on issues related to immigration, border security, illegal drugs and energy.

The November general election in the U.S. can be used as a new beginning to address the hot potato issue of immigration reform, and how to deal with the estimated 12 million illegal immigrants living in the U.S. This is an issue that has been mired in politics with no clear solution in sight.

Whoever wins the November election will need to work closely with Peña Nieto to deal with cross-border security issues and the war on drugs that are responsible for violence and security breaches along the entire U.S.-Mexico border.

The populations of both nations have hit a fatigue level with these issues and are demanding a proactive approach from their leadership.

In terms of trade, along with Canadian Prime Minister Stephen Harper, the presidents can strengthen North America’s competitive position in the world by working together to remove bottlenecks that impede the movement of products between the three North American Free Trade Agreement partners.

A healthy North American trading bloc offers U.S., Mexican and Canadian companies the best opportunity of remaining competitive in the future against firms in regions like Asia and Europe.

As one of my elementary school teachers always used to say, “The world is your oyster.”

In this case the oyster lies before the three North American nations. The challenge is how we shuck it.


 

Jerry Pacheco is executive director of the International Business Accelerator, a trade counseling and training program of the New Mexico Small Business Development Centers Network. He can be reached at (575) 589-2200 or by email to jerry@nmiba.com.

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