MEXICO: Will Calderon Take On the Vested Interests?

By IPS Correspondents Reprint | | Print |

Diego Cevallos

MEXICO CITY, Nov 30 2006 (IPS) - In Mexico no single party has a monopoly on political power anymore. But the private and public corporatist structures remain in place, as reflected by the privileges and dominant positions still enjoyed by a small group of companies and trade unions.

Outgoing President Vicente Fox, a former Coca-Cola executive who belongs to the conservative National Action Party (PAN), will go down in history as the man who defeated the Institutional Revolutionary Party (PRI), which ruled the country from 1929 to 2000. However, he has left the old structures nearly intact.

Observers wonder whether his successor, fellow PAN-member Felipe Calderón, will attempt to curb the influence of the powers that be, some of which backed his candidacy.

Calderón, who will be sworn in on Friday, is a career politician who favours free competition. During the campaign he said he would put an end to monopolies, create millions of jobs and fight poverty by providing incentives for new enterprises.

A World Bank study presented this week states that monopolies in different areas of the economy and powerful public sector unions are hindering economic growth in Mexico and that their influence should be curbed.

The report says the government institutions in charge of regulating competition are weak and thus easy prey for the private sector firms that they are supposed to oversee.

The Banamex and Spanish BBVA bank, the Telmex telecoms company, the Televisa TV network, the Cemex cement company, corn flour producer Maseca and breadmaker Bimbo enjoy near-monopoly control over their markets, which allows them to set much higher prices than those charged by similar companies in neighbouring countries.

The state-run oil company PEMEX and power company Luz y Fuerza del Centro are in a similar position.

The report also refers to the power of certain trade unions, such as the teachers’ union and the ones representing PEMEX and Luz y Fuerza del Centro workers, long-time PRI allies whose members earn higher wages than other workers.

Big business and the national teachers’ union backed Calderón in the campaign, while his rival, Andrés Manuel López Obrador of the leftwing Democratic Revolution Party (PRD), had the support of small farmers and several public and private sector unions.

The new president “will have to flex his muscles in the face of the owners of the country if he wants to live up to his promises of ensuring greater competition and employment,” political science Professor Miguel Morales at the National Autonomous University of Mexico told IPS.

If Calderón takes on that battle, “we will see a historic change,” he said.

The World Bank report blames the continued social inequality and poverty, which affects half of Mexico’s 103 million people, on the concentration of wealth in the hands of Mexico’s rich and powerful and on the influence of certain protected trade unions, which it describes as a throwback to old institutional and political accords.

The average monthly wage of a Mexican worker is 392 dollars, while oil workers earn an average of 978 dollars and workers in the energy, telecoms and education sectors earn 721 dollars a month on average.

Although the World Bank acknowledges that the members of these unions are much less well-off than the country’s millionaires, it points out that they enjoy significantly better conditions than the average Mexican.

Fox failed to live up to his pledge to purge the PRI-affiliated unions and to open up certain sectors to competition, which he argued would contribute to the fight against inequality and poverty.

On Nov. 21, he inaugurated a hydropower company built during his six-year term, which was given the name of the late Leonardo Rodríguez, the long-time leader of the electric workers union and former secretary-general of the Confederación de Trabajadores de México and the Congreso del Trabajo, key players in PRI corporatism.

The PRI regime was partly propped up by corporatist alliances with trade unions and small farmer and community associations, which helped it maintain political stability.

Some observers had predicted that when the PRI lost its grip on the federal government, the unions that were faithful to it would be weakened.

But to the contrary, the unions found a new ally: Fox.

The president also formed alliances with near-monopoly companies like Telmex, which has a market share of 80 percent, and Televisa, which has control over nearly all advertising and broadcasting spectrum.

On Nov. 20, when López Obrador was symbolically named Mexico’s “legitimate president” – he and his supporters say Calderón won the July elections by means of fraud – he outlined the high cost of services in the hands of private and public firms.

Mexicans pay 223 percent more than people in the United States for cement, 260 percent more for broadband Internet connection, 312 percent more for cell-phone service, 65 percent more for a land-line, 116 percent more for electricity in the residential sector and 131 percent more for power in industrial areas, and 178 percent more for credit cards.

They also spend 116 percent more than consumers in the U.S. on cable TV, 150 percent more on mortgages, and 3,600 percent more on bank commissions.

“This is despite the fact that the minimum wage in Mexico is 90 percent lower than in the United States. We cannot allow this situation to continue,” said López Obrador.

Raymundo Riva Palacio, a columnist for the daily newspaper El Universal, said the profile and career backgrounds of the ministers-designate in the area of the economy suggest that a fight against monopolies lies ahead.

Future finance minister Agustín Carstens, deputy managing director of the International Monetary Fund up to October, has spoken out against monopolies, while future labour secretary Javier Lozano has fought Televisa’s power in the past, from different sectors.

But only time will tell whether Calderón will face up to the public and private sector monopolies, or will follow Fox’s lead and remain beholden to the vested interests, out of convenience, said Morales.