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A Tale of Two Mexicos

WASHINGTON—It’s just as well that Mexico has two self-proclaimed presidents while the final count in Sunday’s presidential election takes place: Mexico is not one, but two countries. Roughly one-third of the voters espouse modernity and globalization, and two-thirds cling to one of two forms of traditional politics: left-wing populism and the type of institutionalized political patronage represented by the Institutional Revolutionary Party, or PRI.

That is not to say that Felipe Calderon, the National Action Party, or PAN, candidate whose votes signify a desire to take Mexico to the next level under the global sun, will necessarily deliver just that—or that Andres Manuel Lopez Obrador, the populist who is tied with Calderon, will be able to get away with every messianic dream he comes up with. What it means is that Mexico will most likely be stuck with its socioeconomic system for the next few years.

This division between modernizers and traditionalists is not new. While the PRI was in control of the country, the split took place within its own ranks. Now that the PRI has become the third force in Mexican politics, the division pits opposing parties. The process of modernization started in the mid-1980s and continued in the 1990s under three successive presidents of the PRI—Miguel de la Madrid, Carlos Salinas and Ernesto Zedillo. After Vicente Fox debunked the PRI in 2000, the PAN became the rallying force for modernizers and the left-wing Democratic Revolution Party, or PRD—which had split from the PRI in the late 1980s—took up the traditional populist banner that mythical PRI figures such as Lazaro Cardenas had brandished in the past. The PRI, for its part, came under the control of the so-called ``dinosaurs’’ and refused to espouse any kind of political idea, behaving like a vested interest content with enjoying power in the 17 states it still controlled and blocking all attempts at economic and social reform in Congress, where it constituted a majority.

Although Fox needs to be commended for continuing to open up the political system and guaranteeing freedom of the press, he failed to push through the types of reforms that might have helped his country leap forward and build a constituency for the acceleration of structural change. Because he couldn’t untie the many knots that keep productivity low, the big divide between the small segment of society that is fully globalized and the masses who gravitate toward the informal economy or toward the border with the U.S. has not been bridged. With an average annual growth of 2 percent, the economy has failed to pull people out of poverty. The only reduction in poverty Fox can point to has to do with cash transfers that provide temporary relief.

The failure to modernize means, for instance, that oil production—the source of 40 percent of the government’s revenue—is showing signs of decline. The Cantarell complex, which accounts for roughly two-thirds of Mexico’s oil production, will probably lose half its output capacity in the next couple of years. Since the sector is closed to private investment, the possibilities of redressing the decline and expanding production in other fields are nonexistent. This is just one example of how the system holds back production. Not to speak of high energy costs and taxes that account for Mexico’s drop in various competitiveness rankings.

Felipe Calderon is aware that he needs to throw open the doors and the windows of the Mexican socioeconomic system and let fresh air in. ``I am tired of the old caricature of the Mexican sitting idly against a tree with a sombrero over his face,’’ he told me a few weeks ago—a line he has repeated in many public appearances in the last few weeks of his campaign. But so did Fox and here we are.

As for Lopez Obrador, it is true that he will face many constraints if he attempts to turn the clock back. International commitments—including NAFTA, which has helped expand Mexican exports by just under 300 percent, and membership in the Organization for Economic Cooperation and Development—might induce moderation. The crude reality of a split Congress might hold him back too. But Latin America has seen populist leaders bend the rules once they achieved a critical mass of support. And the PRI, Lopez Obrador’s alma mater, might be responsive to the siren songs of a former PRI guy desperate to mend fences and trade some power for legislative support.

Whatever happens, don’t expect Mexico to become the next India—a nation now enjoying surprising growth—anytime soon.

Alvaro Vargas Llosa is Senior Fellow at The Center on Global Prosperity at the Independent Institute. He is a native of Peru and received his B.Sc. in international history from the London School of Economics. His Independent Institute books include Global Crossings: Immigration, Civilization, and America, Lessons From the Poor: Triumph of the Entrepreneurial Spirit, The Che Guevara Myth and the Future of Liberty, and Liberty for Latin America.

(c) 2006, The Washington Post Writers Group
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From Alvaro Vargas Llosa
GLOBAL CROSSINGS: Immigration, Civilization, and America
The erosion of national boundaries—and even the idea of the nation state—is already underway as people become ever more inter-connected across borders. A jungle of myth, falsehood and misrepresentation dominates the debate over immigration. The reality is that the economic contributions of immigration far outweigh the costs.