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Jeffrey Simpson (Brigitte Bouvier For The Globe and Mail)

Jeffrey Simpson

(Brigitte Bouvier For The Globe and Mail)

JEFFREY SIMPSON

Mexico’s critical, fragile compromises Add to ...

Just about everything except the mouths of politicians seems to the paralyzed in the U.S. political system, especially Congress. Getting one big thing done seems next to impossible.

In Canada, the government can get things through the Commons and Senate, courtesy of its majority in both houses. But negotiate with the opposition parties? Are you crazy?

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In Mexico, by contrast, something remarkable and controversial is unfolding. In less than a year, President Enrique Pena Nieto and his party are negotiating with both other parties in Congress on an array of reforms that would leave the legislatures of Canada and the United States breathless.

The reforms include constitutional change (Canadians know how hard that is), education policy (including a challenge to the mighty teachers’ union), changes to personal income taxes (higher for the wealthy) and sales tax, an overhaul of the petroleum monopoly of state-controlled Pemex (a sacred cow in Mexico) and telecommunications and social policy. To attempt so many changes in such a short period makes this one of the most critical moments in Mexican history since the country became a full-fledged democracy in 2000, after seven decades of one-party rule.

Trying all this at once would be hard under any circumstances. Trying it while also combating drug-related violence and experiencing a period of slow economic growth means risking government overload. Mr. Pena decided he had to act fast on long-delayed reforms, but has paid a political price. His popularity has fallen to about 40 per cent from over 60 per cent after his election.

The President’s PRI party lacks a majority in Congress. So he triangulates: negotiating first with the centre-right PAN party over allowing foreigners to negotiate contracts with Pemex, then with the left-wing PRD over higher taxes on the better off. It’s a fine balancing act that flowed from the Pacto para Mexico (Pact for Mexico) inked by the three parties after the President’s victory almost a year ago.

While the parties negotiate and compromise, demonstrators take to the streets each week to denounce this or that reform. Teachers decry proposals that would subject them to performance reviews and take power from the union – despite poor results for Mexican students by international standards. Leftist groups promise a struggle against what their leader calls the “treason” of letting Pemex sign contracts with foreign companies.

Is there anything more emotional in Mexico than the Pemex monopoly? In 1938, the Mexican government nationalized the country’s oil. In 1960, it gave Pemex, a state enterprise, total control of the entire industry. As the great Mexican writer Enrique Krauze observed in La Reforma newspaper last week, in other countries oil issues are essentially economic, but in Mexico petroleum policy is a “secular theology … an existential dilemma, as if to allow [private investment] would signify the loss of the nation’s soul.”

Pemex’s problem – and by extension Mexico’s – is that conventional oil production has been declining. Pemex is inefficient by world standards and displays too much political favoritism and internal corruption. It lacks the technology and money to explore in deep water for oil or to exploit the country’s large shale-gas deposits. Since the government relies on Pemex for a chunk of its revenues, the monopoly’s problems ripple across the entire country.

Foreign companies won’t be allowed to own any oil concessions. They will be permitted to enter into contracts with Pemex, a mild reform by most standards but one that has people in the streets amid cries of sellout and the loss of the country’s patrimony. More complicated still is that the petroleum reform requires a constitutional amendment which, as Canadians know, is always hard.

Mexican critics complain that some of the reforms flowing from the Pacto para Mexico have been watered down (no sales tax on food, no foreign concessions on energy, not enough fiscal discipline). They are right, but such are the nature of compromises in a triangulated political system.

How long these fragile compromises can continue to be made is anyone’s guess. Mexicans who complain should cut themselves some slack. They are trying more reforms, more co-operatively, than either of their North American friends.

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