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Mexico’s Moment

The PRI is about to regain power. Should we be worried?

8:05 AM, Jun 28, 2012 • By JAIME DAREMBLUM
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That is quite a remarkable statement. Throughout the 2000s, Brazil was the country experiencing an “economic miracle,” while Mexico was the country mired in sluggish growth. One big reason for this disparity was China: In commodity-rich Brazil, China’s economic surge led to a massive resources boom; in Mexico, it led to fierce industrial competition that suppressed job creation. But J.P. Morgan estimates that the Chinese-Mexican wage gap in the manufacturing sector declined from 237 percent in 2002 to 13.8 percent in 2010. “Experts expect Chinese wages to overtake those in Mexico within five years,” reports Financial Times correspondent Adam Thomson. In other words, China is losing its competitive advantage in the realm of manufacturing labor costs. That is good news for Mexican companies.

Of course, good economic news from Mexico gets fewer headlines than the ongoing war against brutal drug cartels. While the post-2006 death toll from drug violence now exceeds 55,000, a recent Pew Research Center poll found that 80 percent of Mexicans still support using the army to battle organized crime. Mexicans are well aware that the old PRI strategy for keeping the peace was to strike corrupt deals with drug lords, and many citizens are thus concerned that a Peña Nieto administration would do the same. The PRI candidate tried to assuage these worries in a recent interview with the BBC: “I can say categorically that in my government, there won’t be any form of pact or agreement with organized crime.”

On June 14, he went a step further, announcing that General Óscar Naranjo, Colombia’s former national-police chief, would be his special adviser on organized crime. The selection of a Colombian general with deep ties to Washington for such a key position “was meant to signal continuity in Mexico’s close working relationship with U.S. officials in the war on drugs and related measures such as rebuilding the police and court system,” noted the Los Angeles Times. “Naranjo is reported to be very close to Calderón’s security czar, Genaro García Luna, and is said to follow a similar playbook.”

It’s true that many PRI officials would prefer to take Mexico backward. But there are major structural forces (both institutional and societal) standing in their way, and Peña Nieto has sent encouraging signals about his appetite for reform. The country he will govern is an increasingly confident democracy with a healthy economy. Even on the security front, there has been progress, despite the horrifying number of drug murders. As former DEA administrator Robert Bonner wrote recently in Foreign Affairs, President Calderón “will bequeath to his successor major successes against the cartels, newly invigorated institutions, and a sound strategy.” Let’s hope that Peña Nieto doesn’t waste his opportunity.

Jaime Daremblum is director of the Center for Latin American Studies at the Hudson Institute.

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