Can Mexican economic reform be reinvigorated? That's the key question the country's business community is asking as three leading presidential candidates rev up what could be one of the closest races in the country's history, with the vote scheduled for July 2, 2006. Mexico's powerful billionaire Carlos Slim recently launched an initiative to build a broad consensus to boost economic growth and break the political gridlock that prevented President Vicente Fox from implementing important tax and labor reforms. "We're trying to agree on how this country can meet the challenges it faces and take advantage of the opportunities that are out there," Slim told BusinessWeek on Nov. 23.
Slim has persuaded more than 500 leading business and political figures, plus two of the three top presidential candidates, to sign his National Accord for Unity, Law, Development, Investment & Employment. The pact calls for improving the rule of law, encouraging private-public investment in infrastructure and energy, and promoting deregulation and tax reform. True, the effort could go nowhere. But Slim's public posturing is unusual in a country where business traditionally has steered clear of politics. For the 71 years that the Institutional Revolutionary Party (PRI) ruled Mexico, businesspeople quietly but generously supported the party with campaign contributions in exchange for favors. In 2000, when Fox wrested control of the presidency from the PRI, business hedged its bets by giving to his National Action Party (PAN) as well. Now funds are also flowing to the center-left Party of the Democratic Revolution (PRD).
Few businesspeople, including Slim, will openly say which candidate they favor. The latest polls show a tight three-way race that includes the PAN's Felipe Calderón, 43, a former Energy Secretary and ex-congressman who favors constitutional reforms to allow some private investment in oil refining and deepwater exploration. He has recently closed up the lead enjoyed by the longtime favorite, PRD candidate Andrés Manuel López Obrador, 52, the populist former Mexico City mayor. Currently in third place is the PRI's Roberto Madrazo, 53, an old-style politician who is falling in the polls after corruption allegations surfaced against top PRI members.
Who's with Slim
The business elite is believed to favor Calderón, and he has declared that his platform echoes Slim's initiative. Madrazo also signed Slim's accord, but López Obrador has indicated that if he signs, he will add a clause opposing private ventures in the oil sector. Big Business is wary of López Obrador's tendency to spend heavily on government programs, and fears that he may crack down on monopolistic practices that favor some big companies. But midsize companies hit hard by globalization, such as textile manufacturers and retailers facing import competition, may be attracted to his vow to shore up domestic businesses.
Whoever wins, the trick will be avoiding the legislative roadblocks that hampered Fox after his party failed to win a congressional majority. That will require building coalitions, which likely "means policy proposals will be moderate," predicts Allyson Benton, Mexico City-based analyst for New York's Eurasia Group think tank. But execs like Slim recognize that substantive change is needed if Mexico is to grow faster and stay competitive.
By Geri Smith in Mexico City
Edited by Rose Brady