The governments of Colombia, Guatemala and Mexico, are convinced that transnational organized crime and in particular the violence it generates when carrying out their criminal activities, present a serious problem that compromises the development, security and democratic coexistence of all nations, and that the United Nations must urgently address this issue:
1. That use of illicit drug is a powerful incentive for the activities of criminal organizations in all regions of the world.
2. That despite the efforts of the international community over decades, the use of these substances continues to increase globally, generating substantial income for criminal organizations worldwide.
3. That having financial resources of enormous magnitude, organizations of transnational organized crime are able to penetrate and corrupt institutions of the States.
4. That it is essential to implement effective measures to prevent illegal flows of arms to criminal organizations.
5. As long as the flow of resources from drug and weapons to criminal organizations are not stopped, they will continue to threaten our societies and governments.
6. That, consequently, it is urgent to review the approach so far maintained by the international community on drugs, in order to stop the flow of money from the illicit drug market.
7. That this review should be conducted with rigor and responsibility, on a scientific basis, in order to establish effective public policies in this area.
8. That nations should intensify their efforts to further strengthen the institutions and policies of each country in the prevention and punishment of crime, their social programs in education, health, leisure and employment, as well as prevention and treatment of addictions to preserve social fabric.
9. That states should endorse their commitment to fight with determination and according to the principle of shared and differentiated responsibility, transnational criminal groups through mechanisms of international cooperation.
10. That the United Nations should exercise it´s leadership, as is it´s mandate, in this effort and conduct deep reflection to analyze all available options, including regulatory or market measures, in order to establish a new paradigm that prevents the flow of resources to organized crime organizations.
11. In this regard, the governments of Colombia, Guatemala and Mexico invite Member States of the Organization of the United Nations to undertake very soon a consultation process that allows, taking stock of the strengths and limitations of the current policy, and about the violence generated by the production, trafficking and consumption of drugs in the world.
We believe that these results should culminate in an international conference to allow the necessary decisions in order to achieve more effective strategies and tools with which the global community faces the challenge of drugs and their consequences.
The 76th UN assembly opened its doors in New York yesterday, Monday September 24, and for the first time ever, drug legalization will be brought up by no less than three Latin American heads of state.
Both Guatemalan and Colombian presidents have scheduled talks on Wednesday and both have already announced their intention to bring up the issue of global drug policy reform. Guatemalan president Perez Molina has been the most forthcoming, and announced his intention to ask for a global dialog about new approaches to the fight against drug trafficking, including drug legalization. He will also request a revision to the Single Convention on Narcotic Drugs of 1961 as amended by the 1972 Protocol. Perez Molina reiterated that the 50 years old war on drugs has failed and that it is time to look for more viable alternatives.
Colombian president Santos has been more ambiguous, and while he has been building up expectations for his upcoming talk at the UN, he also reminded that drug trafficking is punished by death penalty in many parts of the world. Let’s hope this is not what he means when he talk about “grabbing the bull by the horns”. More likely, Santos is contrasting the two extreme approaches of free-market and death sentencing to the current failed policies. While he has been hinting for a while his support for controlled regulation, so far, he has failed to take a resolute stand.
The case of Calderon is more puzzling. Yesterday, September 24, the Mexican president, whose term ends on December 1st, conceded: “ Let’s be honest, I don’t see any [solution] other than the regulation of drugs in the global marketplace, starting here, in the United States.” (“Seamos honestos: no se me ocurre otra que no sea la regulación de las drogas en el mercado global, empezando por aquí, por Estados Unidos”). He then lamented the 60,000 deaths caused by his own militarization of the fight against narco-trafficking. Where was he for the past 6 years? Will Calderon join the exclusive but growing club of retired heads of states asking for drug policy reform? As it seems that his market approach epiphany dates back to 2011 at least, one wonders why he didn’t act on it while he was in position to do so. As for his successor Enrique Peña Nieto, he has been wavering back and forth and his position seems hard to pinpoint, but as recently as Monday September 4th, he has been encouraged by Calderon himself to explore other alternatives, the codeword for legalization.
It is significant that the debate is brought up by three conservative, well-respected heads of state with impeccable credentials, representing countries that have paid a very high price in the war on drugs. While it is doubtful that the UN discourses about drug policy reform could result in any concrete action in the near future, it still marks a significant shift, especially as the UN Assembly is an opportunity for multilateral exploratory contacts that may coalesce down the line into a coalition of the willing to legalize. Santos will meet in New York with UK Prime Minister David Cameron, who advocated drug policy reform before assuming office, but backed off since then. The path to global drug policy reform must pass through the UN sooner or later. This could be the exploratory stage of the process.
Santos has repeatedly affirmed his support for controlled legalization, always adding the caveats that legalization can only work globally, that it cannot be implemented unilaterally, and that he doesn’t want to take the lead of a coalition for legalization. Still, someone will need to bite the bullet and take the lead sooner or later. Perez Molina has tried to assume this role since taking office last January, but Guatemala is a clout-less, small impoverished country emerging from a brutal civil war; it was considered a pariah state plagued by human right abuses and systemic corruption until very recently. Molina was met with staunch opposition by his immediate neighbors Nicaragua, Honduras and El Salvador. Only Costa Rica responded favorably to Perez Molina’s initiative, who also got the ambiguous support of Colombia. Drug legalization was discussed at the April 15-16 OAS (Organization of American States) Summit in Cartagena, Colombia, but such discussion didn’t go much further than the acknowledgment that legalization is a valid point of discussion. As usual, a commission has been created to study drug policy alternatives, with a report scheduled for publication in June 2013; considering that the report will need the US and Canadian seal of approval, expectations shouldn’t be set too high.
Bottom-line: as Perez Molina is acutely aware, a Latin American coalition for drug policy reform won’t go anywhere without Colombia and Mexico onboard, and Latin America is the only part of the world where global drug policy reform can be initiated. Nevertheless, even if a lot remains to be done, we must acknowledge the astounding progress made since January of this year. A taboo has undoubtedly been broken; drug policy reform has become an almost mandatory topic at international meetings involving Latin America countries. Tiny Uruguay is debating the legalization of marijuana under state control; after having been dubbed the Switzerland of Latin America, Uruguay could very well become the Portugal of Latin America. The prospect of marijuana legalization in Uruguay has been met with surprisingly tepid opposition from the UN and the US, who might secretly welcome a sort of social and regulatory laboratory in this prosperous, non-strategic country with a long tradition of independence and great human rights records.
The November elections in the US could also be a game-changer if marijuana legalization initiatives are approved in Colorado and Washington State as polls seem to indicate. Such a move would most likely embolden Latin America.
Finally, we should keep our eyes open for the 22nd Ibero-America Summit, November 16 – 17 2012 in Cadiz, hosted by Spain and attended by Portugal and most Latin American countries. Portugal and Spain having some of the most liberal drug policies in the world, this summit should offer a favorable environment for an open debate on drug policy reform. Scheduled after the November US election, it might embolden Colombia and Mexico to take more assertive positions, especially if marijuana legalization initiatives succeed in Washington and/or Colorado.
Latin America has been (and still is) the hardest-hit region by the War on Drugs. It shouldn’t come as a surprise that it is the part of the world with the most vigorous debate about drug policy reform as governments look for alternatives to the failed policies of the War on Drugs. The debate is hampered by the long-entrenched prohibitionist credo and extreme pressure from the big Northern neighbor. According to Mexican president Felipe Calderon though, there was only one consensus at the April 15th Summit of the Americas: that the drug policy debate needs to be open to all alternatives.
Long confined to somewhat rarefied academic circles and the ultra-select ex-presidents club, the debate has now moved into the mainstream and is regularly capturing headlines; the taboo has been broken. Presidents don’t wait anymore for retirement before speaking out and discussion is finally leading to action. Even church leaders and Archbishops are joining the drug-reformist camp.
Last January, Guatemalan president Otto Perez Molina famously threw a stone in the war on drug murky pound and has stuck to his guns ever since. He boldly threw the debate into the April OAS meeting and is now ready to present his controlled regulation proposal to the 76th UN assembly in New York on September 26. He plans to use the platform to further advance the idea with other heads of state.
Meanwhile, the OAS (Organization of American States) will invest $2.4 million to investigate alternatives to the current fight against drug-trafficking and study the feasibility and the potential social and economic impact of legalization. A commission of experts will present its finding at the OAS General Assembly, in Antigua, close to Guatemala City, where the Perez Molina’s proposal will be discussed in details. It is of course anybody’s guess of what will be left of the committee’s recommendations after its report has been revised by the US and Canadian censors.
Tiny Uruguay, often dubbed the Switzerland of Latin America, threw itself on the map last June when President Jose Mujica and his government announced their intention to legalize marijuana under state control. The marijuana legalization project is now in the parliamentary pipeline and is being debated as we speak. What is remarkable here is that both the governing party (Frente Amplio) and its opposition (Partido Nacional) both agree on the failure of prohibitionism around the world. Of course, for people living in the US, it is unthinkable that democrats and republicans may agree on anything beyond blind allegiance to the failed War-on-Drugs policies. But if they agree on the diagnostic, the two parties diverge on the cure. It should be noted that marijuana regulation has been on the Uruguayan parliamentary agenda in one form or another for almost two years, with various schemes being debated, including legalizing the cultivation for personal use and the current proposal for state regulation.
With a population of barely 3.5 million, Uruguay has the highest per capita income, highest literacy rate and lowest crime rate in Latin America, but it had the recent misfortune to be located on one of the new transit routes to Europe via West Africa and has been somewhat plagued by an invasion of pasta (cocaine-base). No need to say, Mujica’s proposal is generating a vigorous debate within the country and raising eyebrows and getting close attention in the surrounding countries, especially Argentina, Brazil and Colombia.
Argentina and Brazil are debating decriminalization of all drugs for personal use. The Supreme Court of Argentina already ruled unconstitutional the criminalization of drug use in 2009. In Colombia, the capital city of Bogota is debating an ambitious harm reduction program based on substitution and maintenance. Most Latin American countries have decriminalized drug use and possession for personal use, or are in the process of doing it.
It seems that no regional meeting or summit can take place nowadays in this part of the world without drug policy debate on the agenda. The 22nd Ibero-America Summit, November 16 – 17 2012 in Cadiz, Spain, bringing together the heads of state from Latin America, Spain and Portugal, is no exception. Drug policy and the fight narco-trafficking will be front and center at the meeting of interior ministers.
Drug policy reform is clearly on the move, and as I predicted in my book “world War-D”, Latin America is taking the lead. The battle is far from over though and there is a long and arduous road ahead of us. Although they have been toying with it for a while, the heavyweights, Colombia and Mexico, are still on the sideline. Mexico for one, is caught in a time warp since the July 1st presidential elections and up to the December official transfer of power. Caught in his own controversies, President-elect Enrique Peña Nieto has mostly kept silent, trying to stay out of the limelight and sticking to non-controversial issues.
As always, your support can make a difference. As a reminder, we have 2 ongoing actions:
Ex-presidents Rodrigo Borja of Ecuador, and Ricardo Lagos of Chile have joined the club of anti-prohibitionist ex-heads of states. Ricardo Lagos Weber, son of the ex-president, even presented a proposal for the legalization of auto-cultivation and use of marijuana for medical purpose to the Chilean parliament, a proposal that was squarely rejected by president Sebastián Piñera http://america.infobae.com/notas/56195-Pinera-La-droga-es-muerte-dolor-sufrimiento
In the US, all three marijuana legalization initiatives on state ballots are gathering support left and right (mostly left though), including state legislators, the local democratic party and the NAACP.
Uruguay & Guatemala pushes on with legalization, the US escalates crackdown, Oregon MJ qualifies for November ballot, Drug abuse down 50% in post-decriminalization Portugal
This week brought goods news and bad news for drug policy reform in the US and in Latin America:
Marijuana legalization project in Uruguay
The Uruguayan government is getting ready to send its marijuana legalization proposal to parliament for debate. That’s for the good news; the project is plugging along. The bad news is that so far only 24% of the Uruguay population support the proposal; President Mujica would like to get 60% approval to finalize the proposal, counting on widening support as the debates unfolds, a steep uphill educational battle ahead!
But Obama doesn’t seem to be getting the message, as medical marijuana crack-downs continue and even escalate, with Harborside, the largest dispensary in the world, despite the protests from Oakland city leaders. It is very hard to figure out why Obama, an avid pot smoker during his college-years, embarked on such a losing proposition. The crack-downs will not gain him any support in the center, while it certainly demobilizes and antagonizes some of its most faithful supporters, youths and liberals, who gathered in droves to support him in 2008, but will stay home next November. http://www.huffingtonpost.com/scott-morgan/obama-marijuana-harborside-health-center_b_1678701.html
Mark your calendar and get ready to participate in what could become one of the largest event for drug policy reform: Javier Sicilia and Mexico’s Movement for Peace with Justice and Dignity will lead a caravan across the United States this summer, calling for an end to the drug war. The caravan will begin in San Diego this August and will visit two dozen U.S. cities on its way to Washington, DC. http://www.globalexchange.org/mexico/caravan
“Mujica says that while drug addiction is a medical problem, drug trafficking is an unwinnable police problem.
Uruguay would be the world’s first nation to sell marijuana directly.” http://www.washingtonpost.com/world/the_americas/uruguays-president-says-his-plan-envisions-legalizing-only-marijuana-no-other-illicit-drugs/2012/07/05/gJQALgpHQW_story.html
Elections in Mexico: the return of the PRI – did the dinosaurs learn how to fly?
On July 1st, 2012, Mexican people elected a new president, soundly routing out the PAN, the party of exiting president Calderon. After a 12-years lapse, they returned to power the party that had ruled the land with an iron fist through systemic corruption and patronage for 71 years, until its historic 2000 defeat.
The PAN itself had broken the PRI’s 71-years grip on power on July 2, 2000, after the first reasonably fair election in the history of Mexico. The fairness of the 2000 election can be credited to Ernesto Zedillo, the last president of the then uninterrupted PRI rule, who ended up displaying surprising honesty and integrity. Unlike the vast majority of his predecessors, Zedillo didn’t amass vast fortunes while in office, he didn’t empty the country’s coffers before leaving office, and he set in place the conditions for reasonably fair elections and a smooth transition of power to PRI’s longtime nemesis.
Why, then, did Mexicans return to power the much loathed and feared PRI after a mere 12 years hiatus?
Several reasons have been advanced, starting with the relative weakness of the PRI’s presidential opponents. The most serious contender, leftist Andre-Manuel Lopez Obrador, known by his acronym AMLO, spooked moderates with his raucous and bitter reaction to his narrow loss of the contentious 2006 election, giving him a reputation of cranky sore loser. On the right, PAN’s candidate Josefina Vázquez Mota proved a rather tepid candidate with an uninspiring program based on vague claims for changes that voters could never quite figure out. She was further plagued by the unpopularity of her own party and its lukewarm support of her candidacy.
But the real reason for the PRI return to power is that it never left power in the first place; it merely retreated to its base at the state and local level and dug in to rebuild its power base and transform its government apparatus into a powerful political machine. Local governments are often run as fiefdoms in Mexico, frequently in open collusion with organized crime through all branches of government, starting with police and justice. The PRI controlled all 31 of the Mexican states until 1989. It still hanged on to 17 states at its lowest point in 2006, a share that grew back to 20 in 2010, and 22 in 2012 as the reconquest picks up steam.
A symbiotic relationship with narcotrafficking and organized crime
To properly understand the power of the PRI and its symbiotic relationship with organized crime, we must flashback one hundred years in history. In the aftermath of the often messy Mexican revolution, the PRI grabbed power and held on to it for seven decades thanks to widespread institutionalized fraud and rigged elections. The Mexican revolution coincided with the first opium prohibition laws in the US, which some Mexican revolutionaries opportunistically exploited to finance their operations through opium production and trafficking. The deep-rooted relationships between government and organized crime and drug traffickers were consolidated after the revolution and became one of the backbone of the PRI hold to power and an almost endless source of shady money. These links were especially strong, almost symbiotic at the state and local level. Thus were born the “gomeros”, as were nicknamed the opium producers, and their dynasties in the states of Sinaloa and Durango. Transit routes were established through the states of Baja California, Sonora and Chihuahua. The small village of Badiraguato in Sinaloa at the heart of the gomeros territory gained notoriety as birthplace of a litany of druglords luminaries, starting with Pedro Aviles, the first Mexican drug kingpin, Ernesto Fonseca Carrillo who established the modern Mexican drug cartels and the Colombian connection in the 1970s, Ismael “El Mayo” Zambada, his associate the legendary Joaquin “El Chapo” Guzman Loera, and his cousins the Beltran Leyva brothers, among others.
A Pax Mafiosa was established, where the average citizen was essentially spared, except for the practically mandatory bribes required for virtually every single administrative operation, while drugs transited through the country without noticeable trail. The market was divided between two broad alliances in relatively peaceful coexistence, around the Sinaloa cartel on the Pacific side, and the Gulf cartel on the Caribbean sides.
The Pax Mafiosa started unraveling in the 1980s as a result of a conjunction of factors:
• As the old “Dons” retired or were eliminated, cartels broke down in competing factions and a far more ambitious generation emerged in the late 1980s.
• The closing of the Caribbean route through the Bahamas helped launch the Mexican trampoline to transit the cocaine from Colombia, dramatically raising the stakes and exciting the lust of the hot-blooded newcomers who had little patience and understanding for the virtues of backroom dealings and political patronage.
• With the 1994 Signing of NAFTA, Mexican authorities came under increased pressure to give more than token support to the US War on Drugs. The administration of Ernesto Zedillo started distancing itself from the drug cartels, a move that was extended under President Vicente Fox in 2000. Felipe Calderon turned to full-fledged warfare at the onset of his bitterly contested presidency, unleashing the army unto the drug cartels and launching his doomed War on Drugs. The move was widely viewed as an attempt to prop up and legitimate his fragile powerbase, but largely backfired with disastrous consequences. The militarization of drug enforcement in Mexico yielded over 60,000 deaths, 20,000 disappeared and 300,000 displaced.
• Coinciding with the end of the one-party rule, the Pax Mafiosa unraveled within the cartels as well. Alliances exploded, former allies went at each other’s throats with unprecedented violence and savagery.
• An entire US-trained elite army unit defected in 1999 to work as hired guns for the Gulf cartel as los Zetas. Los Zetas launched the militarization of the drug cartels themselves; the cartels started large-scale recruitment campaigns through banner advertising, medias and the internet, setting up military-style training camps. Paramilitary convoys of heavily armed thugs routinely run commando operations against rivals or the army. The power of Los Zetas grew dramatically thanks to careful recruiting via secret army connections in Mexico itself and in Guatemala, where los Zetas set up a franchise. They diversified their operations into extortion, kidnapping and human trafficking and set up top-notch accounting systems. As their power kept growing, los Zetas distanced themselves gradually from the Gulf Cartel, whose power was waning after the arrest of its leader, leading to a bloody split in 2010 and an explosion of brutality and violence that is still ongoing to this day.
“Plomo o plata”, bribe or bullet, has been the core strategy of the cartels from the onset, but Los Zetas’ primary objective is to instill fear, while the Sinaloa cartel still prefers patronage and backroom dealings. This may explain why the Calderon administration largely spared the Sinaloa cartel in its fight against the cartels.
It should be noted a significant strategic change in the cartels modus operandi, which has had far-reaching consequences: whether produced locally or transited, drugs were traditionally exported in their entirety, with no significant local trail. In the 1980s, the Colombian cartels started paying their Mexican associates in merchandise instead of cash in order to spread the risks and to lower the money-laundering costs. The strategy backfired and allowed the Mexican cartels’ takeover of international drug trafficking. The Mexican cartels themselves started paying for services in kind, but the merchandize involved in the transactions mostly stayed within the country, and fueled a rapidly growing internal marketplace. As the trail left by narcotrafficking keeps growing, violence is increasingly for control of local markets rather than transit routes and is expanding throughout the entire country. Mexico must now face a rapidly growing substance abuse problem of a magnitude that it has so far failed to acknowledge. It should be noted that Mexico’s fate is shared by most emerging countries located on transiting or producing zones throughout Latin America, West Africa and Central Asia.
Operation Pena Nieto: the reconquest
The Mexican public went into the 2012 elections weary and fatigued, almost resigned, without enthusiasm or passion. While the issue of violence was omnipresent throughout the campaign, it was never addressed in any meaningful way by any of the three leading candidates; proposals were characterized mostly by their consistent vagueness. The Mexican War on Drugs itself was a hot potato issue promptly discarded with platitudes. Within the public was palpable a secret longing and nostalgia for a time when crime was more or less controlled and largely a matter of understanding between governments and criminal organizations, sparing the average citizen.
Now that the PRI got back to power, what can be expected? Given the profound transformation that reshaped the Mexican drug-trafficking landscape over the past 12 to 15 years, a return to the old cozy relationship between government and organized crime is unrealistic outside of the areas where such relationship was never disrupted. Given the paucity of details delivered on the campaign trail where broad promises ruled over the practical means to fulfill them, we are reduced to interpreting the rather opaque internal evolution of the party since its historical 2000 defeat, or rather, since the 1994 election of Ernesto Zedillo.
Zedillo was hastily picked by the PRI establishment four months before the 1994 elections after the assassination in Tijuana of presidential candidate Luis Donaldo Colosio, who was viewed as a reformist within his party. Colosio’s murder is still unresolved and remains shrouded in rumors. Internal infighting within the PRI is widely invoked, especially as Colosio’s assassination was followed a few months later by the assassination in plain daylight in Mexico City of PRI president José Francisco Ruiz Massieu, brother-in-law of then president Carlos Salinas de Gortari. Salinas’ own brother Raul was later charged for Massieu’s assassination. Mr. Salinas reign ended in scandals and controversy, his name synonymous with corruption and greed.
Left with empty coffers, which constrained him to a hasty devaluation upon taking office in December 1994, Zedillo turned against his mentor and accused him of ordering Colosio’s murder, among others. Suspect bank accounts and suspicious money transfers were linked to the Salinas clan and Salinas himself self-exiled to Northern Ireland. As already noted, Zedillo set in place the conditions for reasonably fair elections in 2000. Zedillo was rather unpopular within his own party who felt betrayed by him. To avoid a repeat of the Zedillo experience, the PRI selected a particularly dinosaurian candidate, Francisco Labastida, who lost decisively to Vicente Fox. The 2006 PRI candidate Roberto Madrazo was even more dinosaurian and suffered a humiliating defeat amidst open internal infighting, while the PRI’s state base shrunk to 17.
Reality finally sunk in that some changes were badly needed. Thus was launched a charm offensive centered on heartthrob Enrique Pena Nieto, EPN. Back from his self-imposed exiled, Salinas de Gortari is widely suspected to be pulling the strings of his longtime protégé EPN. Also behind EPN, is the powerful TV network Televisa, where EPN’s wife Angélica Rivera is a popular soap opera star, and who played a crucial role in building up EPN over the past few years, turning his governorship into a real life soap-opera.
EPN was handpicked in 2005 as governor of the state of Mexico by his predecessor from 1999 to 2005, his uncle Arturo Montiel Rojas. Arturo Montiel Rojas sought his party nomination for the 2006 presidential elections but dropped his bid among charges of widespread fraud and corruption. Monteil Rojas is widely suspected of creating for him and his sons a personal fortune worth 100s of millions of dollars through traffic of influences and the use of public funds for private purposes, among others. Monteil Rojas was acquitted in 2006 thanks to his successor, protégé and parent, EPN himself. Both Monteil and Pena Nieto are rumored to belong to the “Grupo Atlacomulco”, named after the birthplace of a long dynasty of politicians stretching back to 1942. Often synonymous with impunity, the nebulous group saw public service as a means of private enrichment, and produced six governors of the state of Mexico since 1942. The group also had an obsessive fixation on producing a Mexican president, a fixation that Pena Nieto fulfilled after several unsuccessful attempts.
To say that EPN is surrounded with shoddy characters is understated. Nevertheless, operation EPN was masterfully planned and executed. The PRI presented a firmly united front; its candidate approached the electoral season with stellar name recognition and a solid lead in the polls that was never seriously challenged throughout the campaign. But what kind of president will EPN be, and what kind of party has the PRI evolved into remains largely a mystery. Did the PRI merely get a facelift, or did it evolve and even mutate? Without a doubt, dinosaurs still abound within the party, but did the new generation learn how to fly? The 1994 presidential election, that saw the assassination of candidate Luis Donaldo Colosio and the subsequent election of Ernesto Zedillo, clearly demonstrate that the PRI is not as monolithic as most people think, although what it reveals about its means of handling dissensions is disquieting, for the least.
Corruption by design
The challenges facing the country are numerous and deep-rooted, most of them creation of and leftovers from the PRI rule and consequences of the PRI’s legacy of corruption by design that permeates the entire government apparatus, where rules and regulations are often intended as a mean to repay favors or extract bribes, especially at the state and local level. The often inextricable and confusing web of government procedures is considered a black hole of red tape. Thus for instance, the process for the opening and operation of even the simplest business is fraught with all kinds of obstacles, requiring up to a dozen different permits or more, and the required formalities are well beyond the capacity of a generally poorly educated population. As a result, the informal economy accounts for 30% of PNB and employs over 15 million people, sustaining over 30% of the population; it is also an inexhaustible source of extortion and bribing opportunities by officials and criminals alike, leaving the concerned populations exposed to all kinds of criminal activities. Capricious, arbitrary and excessive regulations are the main obstacle to the integration of the informal economy. To his credit, EPN promised to simplify the tax system to reduce the size of the informal economy and boost revenues, which would be a positive first step, but to be successful, the simplification must take place at the state and local level as well.
Another product of corruption by design is the highly dysfunctional and totally opaque justice system that is in dire need of deep structural reform, if not complete overhaul. Impunity is the rule in criminal cases. Civil cases can go on for decades, for the sole benefit of bribe-collecting judges and fee-collecting lawyers. Flawed property laws leave the door open to all kinds of frauds and abuse. Labor laws are extremely rigid and obsolete, often bordering the absurd; thus, some teaching jobs are hereditary and can be bought or sold. Many of Mexico’s teachers are imaginary or dead, some of them are barely literate; absenteeism is rampant; 80% of education expenditures go to teachers’ payroll. Calderon’s attempt to impose competency tests for teachers were met by stiff opposition and resulted in teacher riots in many parts of the country.
In the economic arena, corruption by design and systemic clientelism spawned the emergence of a neo-feudal system of quasi-monopolies operating behind custom-made regulatory firewalls and controlling vast sectors of the economy from telecommunications, to TV, to food-processing, to cement, to tortilla, sliced bread, alcohol, beer or dairy products. With bloated and highly inefficient states monopolies controlling oil and power, all the vital sectors of the economy are under tight control, stifling competition, raising costs and ultimately creating major hurdles to economic development. Mexicans pay as much as 40 percent more for basic goods and services because of monopolistic practices. The Mexican economy bears a heavy toll for the exorbitant privileges granted telecoms conglomerate Telmex/Telcel that turned its owner Carlos Slim into the richest man in the world, with a fortune equal to 7% of Mexican PNB. According to a 2012 report released by the OECD (Organisation for Economic Cooperation and Development), Mexican telecommunications customers are overcharged $13.4 billion per year, while the total loss attributed to the dysfunctional Mexican telecoms sector is estimated at $129.2 billion between 2005 and 2009, 1.8% GDP per annum.
In the media sector, two television networks, Televisa and TV Azteca control 97% of the country’s television viewership. Run by Emilio Azcarraga Jean, “El Tigrillo”, Televisa is the dominant player with 68% of the audience and yields considerable political might, with the power to make or break political careers. Televisa has been repeatedly accused of being the architect of the Pena Nieto reconquest operation, and the student movement YoSoy132, mobilized for months to protest against Televisa’s bias.
EPN promised to open up the Pemex oil monopoly, and the CFE power monopoly, but it is doubtful that he will do much to curtail the power of Telmex,Televisa, or any of the other oligarchies.
EPN and the Mexican War on Drugs
The most pressing issue facing EPN, and the one for which he is most anxiously watched in the US is the Mexican War on Drugs and the cartel violence. While he promised policy changes on the campaign trail, EPN remained extremely short on details. He committed nonetheless to change focus from combating drug trafficking to curbing violent crime, kidnapping, extortion and robbery. This will be a welcome move within Mexico if he can deliver, as justification is hard to find for prioritizing the fight against drug trafficking, a criminal activity that affects mostly a foreign country, over the fight against the crimes that affect all Mexicans. EPN also insisted on the US responsibility in controlling guns trade towards Mexico.
With victory behind him, EPN could become more open about his real intentions; just two days after the elections, EPN declared in an interview with well-respected PBS that legalization should be part of the drug strategy debate. EPN’s openness to the drug legalization debate might explain the surprising support he received from ex-president Vicente Fox, who defeated the PRI in 2000. Vicente Fox, along with his predecessor Ernesto Zedillo, has been a vocal opponent of the war on drugs since leaving office.
The debate about drug policy reform has evolved rapidly in Latin America over the past few years, with calls for reform coming from a growing number of retired presidents, including the last two Mexican presidents, and ex-presidents of Colombia, Brazil and Chile. Colombian President Santos has toyed for a while with the idea of legalization, and his government decriminalized possession of cocaine and marijuana for personal use on June 29. Guatemalan president has been asking for an open debate about legalization since taking office in January 2012, while Uruguay announced on June 22 its intention to legalize and control marijuana. Argentine and Brazil are currently debating their own drug policies. Drug possession for personal use is decriminalized in most of the region. Mexico joining the drug reformist camp would signal a radical shift in the region and could be the catalyst needed for the formation of a regional coalition for drug policy reform.
Did he learn how to fly?
So, what can we expect from Pena Nieto and his party for the next 6 years? His two predecessors made sweeping promises of reforms they could never deliver for lack of support in the Mexican senate and congress. The PRI being the largest party in both houses, Pena Nieto will have more latitude to implement the much needed structural reforms he promised on the campaign trail, and that are strikingly similar to those sought by the PAN for the past 12 years. He is still short of a majority and will need to build alliances. Pena Nieto and the PRI will be under intense scrutiny over the next 6 years, both from inside and from the US. In any case, the PRI should be kept in check thanks to its lack of absolute majority, which could also be a recipe for paralysis and an alibi for maintaining the status quo. The PRI has been given a second chance. Will it squander it or will it make the most of it?
Although his legacy has been badly tainted by his doomed War on Drugs, Calderon leaves a country with remarkable economic fundamentals and a rapidly improving investment climate, moderate public spending, solid fiscal accounts, low inflation, low interest rates and a stable currency. Mexico is projected to grow more than 4.5 percent in 2012, its fastest growth rate in a decade. On the flip side, inequality and poverty have been growing steadily over the past 6 years, not to mention out of control violence and insecurity. Enrique Pena Nieto thus inherits an economically and fiscally sound Mexico, though confronted with daunting security and poverty issues. Will he live up to the occasion, build on the legacy he inherits, and propel the country into the century with the badly required reforms? Will he rein in the neo-feudal system of concentrated economic power that created him in the first place? Did the little dinosaur evolve enough to learn how to fly? Will he resist the predatory impulses of his mentors and his ancestors?
As governor of the state of Mexico from 2005 to 2011, Pena Nieto built a reputation of openness and tolerance, with strong negotiating skills and a capacity to build alliances across the political spectrum. He cut the state’s debt by about a quarter, ramped up investment and his state outperformed the Mexican economy. He will need all of these skills and more to succeed in his new position. A return of the PRI to its plutocratic past is unlikely, as is a return to the Pax Mafiosa of the past, which doesn’t rule out some backroom understanding with the least violent cartels, or even a de-facto alliance to crush the much reviled Zetas. The country has changed dramatically over the past 18 years. The transformation launched by Ernesto Zedillo is irreversible. If he hasn’t learned how to fly yet, EPN might not have another choice but to try.
Jeffrey Dhywood Investigative writer,
author of “World War D – The Case against prohibitionism, roadmap to controlled re-legalization”