December 5, 2012 6:41 pm

A grand plan for Mexico’s future

Reform pact is still woolly, but refreshingly ambitious

When Enrique Peña Nieto was elected Mexico’s 57th president last July, he promised sweeping reforms that would treble the country’s rate of growth. This was welcome news for investors. Over the past decade, Mexico has expanded at less than 2 per cent per year, falling behind most of its peers in Latin America.

Barely one day after being sworn into office, Mr Peña Nieto has produced a blueprint for his reform programme. True, his “Pact for Mexico” is only a statement of intent, riddled in many places with woolly language. Yet, the scope of the plan is refreshingly ambitious, including 95 “commitments” ranging from energy policy to education reform. It also carries the signatures of the main political parties – a welcome break from Mexico’s normally fractious polity.

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The pact rightly seeks to take on some of Mexico’s most deeply entrenched vested interests. In television and telecoms, oligopolistic giants such as Televisa or Telmex have routinely reaped benefits from customers while providing low-quality services. The government plans to foster competition by creating two new free-to-air networks and to strengthen the regulator by giving it more resources. Both reforms are overdue and should be enacted swiftly.

In education, the mighty teachers’ union, headed by Elba Esther Gordillo, has handed out jobs and promotions on the basis of contacts rather than merit. The government plans to win back some of the power lost to the union, moving to a rule-based system. This will help to drive up the quality of education, which is substandard.

Unfortunately, Mr Peña Nieto’s political courage failed him when dealing with the energy sector. For all the pre-electoral talk of getting the private sector more involved in Pemex, the state oil behemoth will stay in government hands. Of course, the promise to open up refining and the transportation of oil and gas to competition may help to foster investment. But since the dominant company remains publicly owned, the government will have little incentive to create a truly level playing field.

Ultimately, the success of Mr Peña Nieto’s reform agenda will not depend on how much he promises, but on what he delivers. This may require him to be less consensual than he has been so far. Mexico has a history of lofty ambitions which have been brought down by the reality of its conflictual politics. He should take advantage of his strong mandate for change to break with the past and give Mexico the future it deserves.

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