On December 5, 2006, Mexico?s President, Felipe Calderon, outlined his first 100 days, pledging fiscal discipline through government austerity programs; renewed efforts to combat Mexico?s illegal narcotics industry; social spending programs concentrating on education and healthcare; to counter political and security corruption; and a robust drive to increase foreign direct investment in sectors of the Mexican economy that will have the greatest impact on job creation.
Calderon, elected as a pro-business pragmatist candidate, has dedicated his initial presidential honeymoon phase to increasing competitiveness within the Mexican economy; reforming Mexico?s antiquated energy sector through privatization and foreign investment; reforming Mexico?s tax and regulation systems; continuing both export and Gross Domestic Product (GDP) growth; and limiting inflation. Calderon?s ambitious program is similar to his predecessor?s, although President Vicente Fox?s six years were largely devoted to forming a working relationship with a hostile Congress. Fox?s inability to form a coalition government negatively impacted his agenda and led to stalemate and drift.
In a move to placate the leftist opposition, Calderon delineated a portion of his 2007 budget to social programs championed by his opponent, Andres Manuel Lopez Obrador. Calderon?s 2007 budget slashes his presidential salary and that of his staff by 10 percent, freeing up nearly US$2.5 billion, enough to build 2,500 schools. These pay cuts echo a central tenet of Lopez Obrador?s presidential platform. Calderon is also seeking a 9.3 percent spending increase on public health programs, concentrating on programs designed explicitly to aid Mexico?s youth.
Calderon has committed his government to curtailing the rampant escalation of illegal narcotics trafficking impacting Mexico?s security environment. Turf wars between drug trafficking cartels have resulted in 3,000 homicides since 2005. Although foreign direct investment has steadily increased during Fox?s tenure, the growth of insecurity associated with illegal narcotics cartels has spooked international investment. Calderon has assured foreign business leaders that his administration will work to ensure a secure environment for companies wishing to set up operations in Mexico, particularly along the US-Mexico border.
Additionally, Calderon has demonstrated his government?s desire to limit the effects of civil disorder campaigns. The six-month long Oaxaca City protests had tremendous impacts on Mexico?s tourist industry, eliminating the city?s main source of revenue (WAR Report, WAR Report, and WAR Report). Mexico?s newly named Interior Minister, Francisco Ramirez Acuna, demonstrated his antipathy to those who use civil protest, particularly violent civil protest, to achieve political ends. As governor of Jalisco, he angered international human rights organizations with his repression of protesting groups.
Calderon?s economic platform will focus on creating jobs through large-scale infrastructure programs and heavy investment in Mexico?s tourism industry. Large-scale infrastructure programs, which are historically the purview of state governors, will serve the dual purpose of enticing foreign investors, thereby adding Mexican jobs and increasing Mexico?s competitiveness in the international economy.
Perhaps the largest challenge facing Calderon is Mexico?s need for reform in its energy sector. Both the state-owned electricity company CFE and oil Pemex are inefficient and plagued by dilapidated equipment. Fox was unable to achieve reforms among these companies, although he championed significant private investment and even talked about privatizing Pemex before he became president. However, Congressional opposition to Fox?s proposal curtailed reforms in Pemex and CFE. Calderon is likely to face similar opposition, particularly from the leftist Party of the Democratic Revolution (PRD), which adamantly opposes any privatization of Mexico?s energy sectors.
Mexico?s Future Course
Calderon?s successes or failures will be dependent on his ability to form a coalition government with both the Institutional Revolutionary Party (PRI) and the PRD. Should Calderon prove no better at this than his predecessor, his political, social and economic agendas will not come to fruition. Six more years of political idleness will prove devastating to the Mexican economy and social systems that are in need of heavy reforms. Fox?s macroeconomic successes, particularly Mexico?s low inflation rates and rising export numbers, will likely recede to pre-Fox levels. Calderon?s first 100 days in office will indicate his ability to form political relationships and achieve his administration?s goals. Corporate actors and international investors considering investment opportunities in Mexico should first analyze Calderon?s ability as a political tactician. Forming a working, give-and-take relationship with Congress will be key to Calderon?s next six years in office and to multinational successes in Mexico.