Mexico's president gathers power, pushes reform

[March 19, 2013]  MEXICO CITY (AP) -- New President Enrique Pena Nieto has been fast out of the blocks in attacking some of Mexico's toughest issues in a country often stymied by monopolies and corruption.

He arrested the most powerful woman in Mexico, leader of the largest union in Latin America, on allegations of corruption that previous presidents saw but were too compromised to tackle. He is taking on the richest man in the world, Carlos Slim, and pledges to bring diversity to a television industry dominated by the head of the largest network in Latin America, a scion of one of Mexico's leading families.

At one time all three were key allies of Pena Nieto's Institutional Revolutionary Party, or PRI, which ruled for 71 years with a combination of coercion and corruption before being voted out of office in 2000. Now, Pena Nieto is declaring that there are no more sacred cows.

The moves have built momentum behind what could be his most dramatic and difficult reform - modernizing and drawing foreign and private capital to the behemoth state oil company, a long sacrosanct but increasingly inefficient pillar of the Mexican economy. On Sunday, at a celebration of the 75th anniversary of the nationalization of the Mexican oil business, Pena Nieto said again that he will transform Petroleos Mexicanos. The longtime head of the Pemex union, who had been expected by many to fight any changes but has been the subject of questions about unexplained family wealth, pledged his support.

Pena Nieto says his plan will make Mexico more democratic and competitive in the world economy, and his drive for reform is fueling international confidence about Mexico. Rating company Standard and Poor's raised the country's long-term sovereign credit rating from "stable" to "positive" last week, citing optimism about the government's ability to carry out structural changes. The Mexican peso is stronger against the dollar than it's been in a year and a half.

But some analysts warn against mistaking style for substance and making early declarations of victory against entrenched powers built up by the very party that now says it's trying to bring them to heel. It will take many months, in some cases years, before Pena Nieto's reform agenda becomes law and produces its first results, plenty of time for big promises to be derailed by special interests, institutional inertia and the PRI's old guard.

"It's quite remarkable to me that people are assuming that somehow we're at a new stage in political or institutional or economic development in Mexico," said John Ackerman, a law professor at the National Autonomous University of Mexico and a visiting scholar at American University in Washington. "Increased competition is great. But the central problem that's holding back Mexico's economic development is the concentration of political and economic power at the top, and with Pena Nieto we see more of this, we see a consolidation of this in fact."

While Pena Nieto has pledged to drive down violence, he has made few changes to Mexico's security policy. There has been no credible sign of a slowdown in the waves of killings that have turned many states into battlegrounds. The most significant change, critics say, has been a clampdown on official information about crime, part of a government-wide attempt to refocus national and international attention onto Mexico's economy.

The day before his Dec. 1 swearing-in, Pena Nieto and his team got the three main political parties to sign a 94-point national legislative agenda known as the Pact for Mexico that promises everything from efficient harvesting of rainwater to opening Mexico's behemoth state oil company to private and foreign investment. The Pact for Mexico was dismissed as theatrics by some observers at the time, but it has become clear Pena Nieto intends to push for every promise to become law as quickly as possible.

Addressing his Cabinet and hundreds of dignitaries at a celebration of his first 100 days, Pena Nieto jubilantly pledged to maintain the breakneck tempo.

"The intensity won't be passing. The pace of work will keep up. We didn't come just to govern, but to transform," he declared.

The new president pushed through the most sweeping education overhaul in seven decades, a potentially far-reaching reengineering of Mexico's deeply dysfunctional education system that calls for merit-based teacher hiring and promotion to replace a system in which union domination meant jobs were inherited and sold.

Teachers' union head Elba Esther Gordillo, one of the most powerful-yet-reviled people in Mexico, had pledged to fight the plan that passed Feb. 25, but then was arrested the next day on charges that she embezzled $160 million.

Gordillo rose to her influential position thanks to earlier PRI leaders, although she had strained those ties by supporting other parties in recent years.

Last week, Pena Nieto put forward a set of constitutional and legal changes that he pledged will drive down some of the world's highest cellphone prices and bring programming choice to a country almost entirely dominated by two television magnates.

The largest broadcaster, Televisa, long has been seen as a staunch ally of the PRI. Slim helped build his fortune when he bought Mexico's failing national telephone company at a bargain-basement price from a PRI government. Slim's Telmex controls 80 percent of Mexican landlines and 70 percent of the mobile-phone market. Emilio Azcarraga's Televisa has 70 percent of the broadcast TV market and more than 45 percent of cable television.

Pena Nieto has shown "that yes, he has the capacity to take decisions like arresting Elba Esther Gordillo, difficult decisions that require strength," said Jose Antonio Crespo, a historian and researcher at the Center for Economic Research and Teaching in Mexico City. "These are good signs that's he's willing to get into serious reforms, along with the opposition."

The telecommunications reform has been enthusiastically received by most economic experts and civil-society groups in the week since its introduction, with near unanimous praise of its toughening of the Mexican regulatory system. But many say it would only make it easier for Mexico's existing tycoons to enter each other's markets - not for new players.

And it's far from clear when the president's education revamp will result in real change in the classrooms.

Pena Nieto has made other changes that haven't drawn the fanfare, but have potentially far-reaching consequences for the power of the president, a once-imperial role during PRI rule that was weakened after the National Action Party won the presidency 12 years ago and ushered in a more democratic Mexico.

He persuaded the PRI to rewrite its rules this month, incorporating the president into the party's top leadership after years of nominal separation between the party and the government. The move will assure party fealty to the presidential agenda, avoiding the internal splits that weakened the PRI in the past, analysts said.

Providing another potential stick for Pena Nieto, Congress stripped lawmakers and other public servants of their longstanding immunity from prosecution, leaving only the president with total legal protection.

For some observers, Pena Nieto's first days are reminiscent of the splashy starts of other PRI presidents such as Carlos Salinas Gortari, who took office in 1988 and undertook a dramatic series of reforms but left office amid a devastating economic collapse fueled by overspending and budget mismanagement.

"This style is a way of saying, 'I've arrived, I'm a different president, I'm new,'" said Jesus Silva-Herzog Marquez, a political science professor at the National Autonomous Technical Institute of Mexico. "It's an assertion of power, a determination to change the rules."

[Associated Press; By MICHAEL WEISSENSTEIN]

Associated Press writers Galia Garcia-Palafox and Olga R. Rodriguez contributed to this report.

Michael Weissenstein on Twitter: http://twitter.com/mweissenstein.

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