Friday, December 27, 2013

Mexico - the 2013 champion of reforms

"If an award could be given in 2013 for Country of the Year, Mexico might deserve it. No other country has done more this past year to put reforms in place to transform a nation – and with startling democratic consensus", wrote Christian Science Monitor on 15 December. It is a rare compliment from the American media which have been obsessed with negative portrayal of Mexico headlining issues such as drug trafficking, illegal immigration and violence. Mexico has brought about more fundamental reforms in the last twelve months than any other democratic country. 

The reforms were initiated by Enrique Penha Nieto, the young and dynamic President of Mexico since December 2012 as part of  the " Pact for Mexico"( Pacto por Mexico) signed by the four major political parties of the country committing consensual support to vital policies and reforms of national importance. He started the negotiations with the other parties as soon as he was elected in July 2012 and  signed the Pact on the second day after his inauguration. The Pact has brought together the ruling centre-left Instituitional Revolutionary Party(PRI) and the three principal opposition parties; the leftist PRD party, the Conservative  PAN ( which was ousted from power in 2012 after two terms) and the Green Party which joined the Pact in January 2013. The political parties came together for the Pact after the realization that the polarization of politics had weakened the country alarmingly especially in the last decade.

The 95- point agenda of the Pact ranges from tax overhaul to barring junk food in schools. The Pact has already helped in passing six major reforms in the last twelve months: (1) reform of the educational system (2) legal reform  (3) a telecommunications law that limits the quasi-monopolistic powers of the biggest companies including that of Carlos Slim, the world's richest man (4) a  tax reform increasing the tax for more social spending (5) Electoral reform  and (6) the energy reform.

The energy reform bill passed by the Congress on 12 December is the most dramatic and historic one, since it was considered as the most difficult to achieve. The Petroleum sector had remained as a holy cow in Mexico since the nationalization in 1938 because of the fear of  domination by the giant US firms. The inefficient monopoly of Pemex has resulted in fall in crude output by a quarter. The new law allows entry of foreign and private investment which will rejuvenate the energy sector with investment and technology. The production of oil is expected to increase by a million barrels by 2020 and energy costs for consumers and the industry will become lower.  
The energy reform of Mexico is good for India which has been importing Mexican crude oil regularly in recent years. In 2012, India imported US $ 2.83 billion worth of crude oil from Mexico. India is Mexico's third-largest market for oil after the US and Spain. As Mexico increases its production capacity, India can count on Mexico as a regular longterm source of supply in future. The reform has also opened opportunities for Indian companies to invest in the Mexican oil sector, as they have done in Venezuela, Brazil and Colombia.
 Every one of the reforms was ferociously opposed by the vested interests, unions and ideological warriors of the country. Mexico city was paralyzed for many weeks by the protestors in the last one year. But the government firmly stood its ground and carried the reforms through. Still, the reforms would continue to face challenges by the forces opposed to them as well as in implementation through secondary legislations. Mexico also faces serious problems of drug trafficking, crime and violence, besides high levels of poverty and inequality as well as slow growth. But what is important is that the reforms have given a new confidence to the people in the political system that it could deliver and have made them more optimistic about the future. 
The reforms have heralded a new paradigm of democratic functioning besides opening a new era of economic and social transformation for Mexico. The manner in which the the ruling party and the opposition parties have worked together and brought about so many reforms under the Mexico Pact is an example and inspiration for other democracies of Latin America and the world. The Economist magazine commended, "Mexico appears to have found the medicine for political gridlock" and commented,"plenty of Americans must have cast a jealous eye south of the border this year".  Wall Street Journal wrote, " At a time when politicians in Washington struggle to agree on anything, their Mexican counterparts sit down almost daily to talk about thorny issues".  The Mexico Pact shines even more brightly against the dark background of the US government shut down in October 2013 and the policy paralysis in Washington DC due to the irreconcilable ideological polarization and fight between the Republicans and the Democrats. The next prime minister of India could start off with a "Pact for India" by reaching out to the opposition parties and forging a consensus on some of the issues of vital national interest.

This article was published by Mint Newspaper on 27 December 

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