Back to the Future

14 minute read
Tim Padgett and Dolly Mascareñas / Mexico City

Like doleful mariachi singers, Mexican leaders often lament that their country is “so far from God, so close to the United States.” Mexican President-elect Enrique Peña Nieto doesn’t take office until Dec. 1, but he already faces a cross-border conundrum. On Nov. 6, voters in the U.S. states of Colorado and Washington legalized marijuana — leaving Mexico, where 60,000 people have been killed in ghastly drug violence over the past six years, to ponder whether its cops should now scratch cannabis off their interdiction list and whether Mexico itself should just go ahead and make weed as legal as tequila. “Personally, I’m against legalization,” Peña Nieto told TIME before he visited President Barack Obama at the White House on Nov. 27. “But without a doubt,” Peña Nieto stressed, legalization in the U.S. “opens space for a rethinking of our policy, for a debate about the course of the drug war.”

The shrewd flexibility of that remark — a recognition that Obama, like U.S. federal law, still opposes marijuana legalization, yet an awareness that the legalization movement gives Latin American governments more leverage to retool a failed drug-war strategy — reflects Peña Nieto’s biggest political asset. His talent for dialogue and compromise helped lock up his first presidential victory three weeks before his actual inauguration, when he persuaded his centrist Institutional Revolutionary Party (PRI) to break partisan gridlock and ensure passage of a major labor-reform law. “It signals a new spirit of maturity among our political parties,” says Peña Nieto, “more of an agreement-seeking attitude.” Peña Nieto hopes he left some of that postpartisan mojo in Washington to help a newly emboldened Obama win deals important to Mexico, like immigration reform — whose chances, Peña Nieto acknowledges, are enhanced now thanks to the “great demand expressed by Hispanic voters” in the U.S. election. “I think we can start moving beyond what is sometimes a monothematic relationship due to the [drug war] issue,” Peña Nieto adds. “We can start focusing on prosperity issues again,” like Mexico’s participation with the U.S. in Trans-Pacific Partnership trade talks.

(MORE: Can Obama and Peña Nieto Clear the Marijuana Smoke?)

At home, however, Peña Nieto faces challenges more daunting than legal pot and illegal immigration. What Mexicans want far more than easier entry into the U.S. is a faster exit from the hole of narco bloodshed and economic malaise that their nation finds itself in today, even as Mexico’s leadership in Latin America is increasingly eclipsed by its fast-developing South American rival Brazil. Peña Nieto’s sexenio (the sole six-year term Mexican Presidents are constitutionally limited to) marks a critical moment for the Mesoamerican giant, and not just because the 46-year-old President’s youthful, pragmatic energy seems to offer Mexico a 21st century reboot. It also gives the PRI — which ruled Mexico from 1929 to 2000 as a one-party dictatorship — a chance to atone for the entrenched problems its notorious corruption helped spawn in the 20th century, from terrifying drug cartels to suffocating business monopolies to gaping economic inequality.

Peña Nieto, the former governor of central Mexico state, one of 32 states in the country, insists he never would have been elected in a democratic Mexico — he defeated his closet rival in July’s presidential race by six points — if voters didn’t believe the PRI had modernized too. In a wide-ranging TIME interview at his transition headquarters in Mexico City’s well-heeled Lomas de Chapúltepec district, Peña Nieto dismissed critics like presidential runner-up Andrés Manuel López Obrador of the leftist Democratic Revolution Party (PRD), who warns that the PRI’s mediagenic new face is just a pawn of the PRI’s “old mafia.” Peña Nieto points to his historic proposal to allow private investment in Mexico’s large but inefficient state-run oil industry as evidence that he represents a rehabbed PRI and not the hypernationalist party of the past. “In Mexico today you have to compete,” says Peña Nieto. “The big challenge now for me and my party is to produce results. If we don’t, we can’t compete.”

The stakes are high. Peña Nieto knows Mexico’s criminal crisis — including the recent arrests of 15 federal policemen, allegedly in the pay of drug traffickers, for ambushing and wounding two U.S. intelligence operatives and a Mexican naval officer — and its lackluster economic growth are linked “like a vicious cycle.” If Peña Nieto’s generation has indeed reformed the PRI — and that’s not certain yet — then the country stands a decent chance of fixing the security dystopia and socioeconomic dysfunction that keep almost half of Mexico’s 112 million people in poverty and force so many to search for work in the U.S. or with the cartels. But if Peña Nieto and the PRI fail, he admits, Mexico moves closer to becoming “a democracy of disenchantment.” And, notes Eduardo García, founding editor of the financial-news website Sentido Común (Common Sense), “the U.S. can expect to start taking in many more Mexican migrants again.”

MORE: Peña Nieto Tells TIME: I Want to Make Mexico an Emerging Power Again

Pressing the Flesh
For “Quique” Peña Nieto, the PRI is DNA. He was born in heavily populated Mexico state, adjoining Mexico City, in the town of Atlacomulco — which is also the name and cradle of a powerful PRI group with which his middle-class family had deep ties. His father was an electrical engineer and his mother a schoolteacher, but politics was as much a part of his childhood as soccer. Growing up, Peña Nieto had a ringside seat to his country’s despotic vote-buying machine. That regime had started out decades before as the standard bearer of the Mexican Revolution’s democratic values. But it degenerated, as the late Mexican literary giant Carlos Fuentes saw it in his epic 1962 novel The Death of Artemio Cruz, into a cynical syndicate, each generation of “new masters equally ambitious and rapacious.” By the 1990s, Mexico had one of the world’s highest numbers of billionaires even as its workers earned some of the world’s lowest average wages.

But Peña Nieto, a lawyer by training, also absorbed the more positive qualities of Atlacomulco politics, among them administrative acumen and a willingness to listen to grassroots voices for hours on end. “I genuinely enjoy being out among people,” says Peña Nieto, whose well-coiffed, telegenic looks and glamorous wife — telenovela (soap opera) star Angélica Rivera — have boosted his celebrity aura. “I’m not a politician who reads the public from a distance; you can’t take [its] temperature that way.” Says former Health Secretary and PRI president José Antonio González, a Peña Nieto mentor: “It’s in Peña Nieto’s political blood to be a dialoguista, to convince rather than impose.”

(MORE: A Return to Power: Mexico’s PRI Tries to Sell Itself as the Party of the Future)

Those attributes would come in handy when the PRI was finally defeated in 2000 by the conservative National Action Party, which has held Mexico’s presidency for the past 12 years. Two-thirds of Mexico’s 18-to-34 age bracket voted against the PRI candidate in 2000, and the then 33-year-old Peña Nieto knew that his party had to learn how to actually win elections, not rig them. As Mexico state governor from 2005 to 2011, he coaxed an opposition-led legislature to enact laws making the state’s revenue collection more efficient and equitable while sharply trimming bureaucratic fat. Peña Nieto’s tenure “was a reminder that the PRI does have accumulated experience in governing,” says Federico Estévez, a political analyst at the Autonomous Technological Institute of Mexico in Mexico City. “The trick for Peña is proving that it can also govern responsibly.”

Ending the Narco Nightmare
The tougher trick will be fulfilling the pledge Peña Nieto made during his presidential campaign to halve the number of drug-related murders in Mexico — which averaged more than 10,000 a year during the sexenio of his predecessor, Felipe Calderón, who sent the Mexican military after the cartels — by the end of his own presidency in 2018. (Peña Nieto claimed to have cut homicides by half in Mexico state until journalists found that his security officials had cooked the math; the murder rate actually remained unchanged, and Peña Nieto later admitted as much.) “Peña Nieto’s mandate is security,” says García. “More than anything, Mexicans voted for him to bring peace back.”

Some U.S. officials worry that means the Peña Nieto — led PRI will go soft on drug interdiction, as the party was accused of doing in the 20th century. Peña Nieto strongly denies any “PRI pact” with drug lords, but the uncomfortable fact for Washington is that even if there were a deal, many Mexicans wouldn’t mind it as long as the violence eased. To them, the routine massacres and beheadings are an unfair price they are forced to pay for America’s reckless drug consumption and weak gun laws. “When the Vietnam body count got to 50,000, the U.S. got out of Indochina, and that’s where Mexico is now,” says a former high-ranking official in the Calderón administration.

That should make it easier for Peña Nieto to phase the army out of the drug war. But even if Calderón’s bold but ill-conceived military strategy did often backfire, the uncomfortable fact for Peña Nieto is that his predecessor had to send out the troops because he couldn’t rely on Mexico’s corrupt and incompetent police forces to do the job. It’s not the gringos’ fault that Mexico’s law-enforcement and justice systems are a benighted travesty — only 2% of violent crimes there ever result in convictions. Peña Nieto needs to push police and judicial modernization more seriously than the country’s negligent elite has ever been willing to allow. “Mexico needs a more integrated approach to combating narco violence,” he concedes. “It needs a much more coordinated and professional judicial power, especially [one] that makes more effective use of criminal intelligence.”

Peña Nieto’s answers to those difficult demands are still evolving. But Mexico’s embarrassing spate of federal police scandals has at least allowed him to make law enforcement more centralized. He recently announced that the Cabinet-level Public Security Secretariat (SSP), which oversees los federales, would be put under the control of the Interior Ministry. Beyond that, Peña Nieto, like Calderón before him, wants more uniform training of all state-level cops. He also proposes a “national gendarmerie,” a force of military-police officers, similar to Italy’s carabinieri and Chile’s carabineros, to replace the Mexican soldiers who were utterly unprepared to be drug cops.

MORE: Mexico Can Survive a New President

Then there’s the question of what Mexico should do about marijuana if more U.S. states light up legalization measures. “It doesn’t necessarily mean [Mexico] is suddenly going to change what it’s doing now,” Peña Nieto tells TIME. “But I am in favor of a hemispheric debate on the matter.” For example: Would legalization, since marijuana accounts for at least a third of the estimated $30 billion Mexico’s drug traffickers rake in each year, help sap the cartels’ coffers? And even if U.S. federal law doesn’t change, is it worth putting Latin American cops’ lives at risk chasing the drug if U.S. states are legalizing it? “This is a great opportunity for [Peña Nieto] to show leadership,” says Jorge Hernández, head of the Collective for an Integral Drug Policy in Mexico City, which wants Peña Nieto to back pot legalization in Mexico.

Doing Battle with Monopolies
But Peña Nieto acknowledges that public security is just as undermined by the unacceptable “socioeconomic contrasts that persist in this country.” Mexico’s middle class is expanding, with 17% of the population joining that rank in the 2000s, and the nation’s doing a lot of things right to lure investment. But its 45% poverty rate is still one of the drug cartels’ best recruiting tools, as is the fact that it is harder for the average Mexican to access bank credit and other financial services than almost anywhere else in the world. One result: an anemic 2% average economic growth rate since 2000, half what Brazil has had. “The definition of middle class is exaggerated here,” says Efraín Sánchez, 35, a recently married Puerto Vallarta construction worker struggling to make ends meet. If Peña Nieto wants to transform the “ineffective state” he deplored in his 2010 book, Mexico: The Great Hope, “he’ll have to challenge the economic status quo, not just in Mexico but in his own party,” says García.

(PHOTOS: Mexico’s Ongoing Drug Violence)

The new labor law, a compromise measure that makes it easier for small and medium-size businesses to hire and fire — and which compels more transparency from unions, long a bastion of PRI support — is a positive early step. So are Peña Nieto’s proposals to overhaul the revenue code — Mexico’s tax collection amounts to less than a fifth of its gross domestic product, the lowest among the 34 large economies in the Paris-based Organisation for Economic Co-operation and Development. He’s also creating an autonomous commission to combat, as he tells TIME, “the social cancer of corruption” that costs Mexico almost a tenth of GDP each year, according to the World Bank.

Just as important is the plan to channel private capital into state-owned Petróleos Mexicanos (Pemex), the $125 billion oil giant whose production is declining at an alarming rate. “Private participation [in Pemex] is a sensitive national issue for Mexicans,” says Peña Nieto, “but we have to expand [Pemex’s] capacity and infrastructure.” Brazil’s booming, state-owned Petrobras, he admits, “offers a good example” of the kind of broader investment Pemex has to welcome if it wants to stay globally competitive.

Yet none of those reforms may matter as much as the battle against Mexican monopolies. From tortillas to telecom, they control market shares as high as 95%, and many of their tycoon owners — including Carlos Slim, the world’s richest man — owe their billions in no small part to their past ties to the PRI. That makes it all the more incumbent on Peña Nieto — who is often accused of his own cozy relationship with the nation’s dominant television network, Televisa — to crusade for competition. Economists project that developing countries can add about a point of economic growth for every 100 small and medium-size businesses that become large companies — a reality that Brazil has embraced, and Mexico hasn’t. Peña Nieto says he’s ready to submit trust-busting legislation that would include vital legal-appeals reform, “to prevent monopolies from being able to resort to the constant, endless litigation they use to avoid paying fines and sanctions.”

Peña Nieto has a full agenda as he assumes power, and it’s all the more challenging given that he won only 38% of the vote in July, while the PRI fell well short of the congressional majorities it had expected. “That was a healthy sign for our new democracy,” says García. “It said Mexicans want to give the PRI the benefit of the doubt, but they don’t want to give it a long leash.” Peña Nieto’s challenges won’t end at Mexico’s borders — his other major goal is to regain the Latin American leadership role Mexico had enjoyed before the chaos of the drug war engulfed the country. “When we improve our social and economic development at home,” he says, “I know we’ll project ourselves more strongly outside Mexico again.” While that might not put his country any closer to God or farther from the United States, at least it would help Mexico catch up with the likes of Brazil.

with reporting by Ioan Grillo / Mexico City

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