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Mexico Monthly Memo: Jan. 21, 2011
Politics: The Possibility of a PAN-PRD Alliance and Police Reform
Much of the political discourse in Mexico in the coming weeks will center on the
question of a potential electoral alliance between the ruling center-right National Action
Party (PAN) and the far-left Party of the Democratic Revolution (PRD) for the July
gubernatorial election in the state of Mexico (commonly referred to as Edomex).
Encompassing the core of Mexico, Edomex is the country’s largest state in terms of
population and contribution to Mexico’s gross domestic product (GDP). As a result,
Edomex claims the most seats in the Mexican legislature and is the biggest recipient of
federal resources. In all likelihood, the party that wins this state will be strongly
positioned to win the presidential race in 2012.
With violence from the cartel wars steadily rising (murders rose 18 percent in 2010
compared to the year before) along with the level of political stagnation in the Mexican
legislature, the ruling PAN faces an uphill battle in retaining the presidency. The centerleft Partido Revolucionario Institucional (PRI) is thus set to make a significant comeback
in Mexican politics following the loss of its 71-year monopoly to the PAN in 2000.
Leading the party’s comeback is the young and charismatic Edomex governor Enrique
Peña Nieto, who is the popular frontrunner for the PRI’s presidential nomination.
Throughout the course of Mexico’s staggered gubernatorial elections, Peña Nieto has
been active in campaigning for his fellow PRI candidates in key states, with Edomex in
the spotlight. To improve his party’s chances, Peña Nieto succeeded in getting Mexico’s
Supreme Court to assert the constitutionality of a law in an electoral-reform bill (coined
the Peña Nieto law) that prevents multiple parties from putting forth a common candidate
in the Edomex election. Parties would still be able to form coalitions, but they would also
have to put forth a common platform and a single representative to be considered eligible
by election authorities.
The purpose behind this electoral reform law is clear: to prevent PRI rivals PAN and
PRD from forming an alliance that could deny the PRI a strategic electoral victory in the
heart of Mexico. Though coming from two different ideological points on the political
spectrum, the center-right PAN and the far-left PRD share a common agenda to prevent
the PRI from rebuilding its political monopoly. In an important test of the viability of this
politically estranged partnership, successful PAN-PRD alliances were formed for
previous gubernatorial races in the states of Puebla and Oaxaca. Now, the Peña Nieto law
has thrown a wrench into the PAN-PRD strategy by forcing any one political ticket to be
representative of a single party platform. Naturally, this has caused a great deal of friction
in the PAN-PRD alliance negotiations, with neither party willing to concede its own party
platform or rights to leadership of such an alliance. Whereas in Puebla (where PAN led
an alliance) and Oaxaca (where PRD led an alliance) the electorate favored one party
over another, the state of Edomex is more evenly split between the two parties, so each
party is all the more reluctant to concede a leadership role in an alliance. Leading
firebrand PRD leader Andres Manuel Lopez Obrador, in particular, has threatened to split
off from the PRD in protest of such an alliance, likely out of fear that his party would be
swallowed up in a partnership with PAN.
For now, both PAN and PRD are nominating their own candidates for the Edomex
election, while keeping open the possibility of an alliance. PRD plans to hold a
referendum in Edomex in late February or early March that will determine whether a
PAN-PRD alliance has sufficient popular support. There are many obstacles standing in
the way of the formation of a PAN-PRD alliance, but it remains both parties’ best hope of
slowing down the PRI’s return to political prominence.
The Mexican government has also made some incremental progress in its police reform
initiative over the past month by allocating $8.3 million to each of Mexico’s 31 states and
the Federal District to build a certified state police force. This move is part of the PAN
government’s proposal (still pending approval by the Mexican Congress) to create a new
unified police force nationwide that would replace municipal-level law enforcement
entities. The main idea behind the plan is to scrape out the thickest layer of corruption in
the Mexican security apparatus and install a Unified State Police Command with a
common purpose and strategy to combat organized crime in the country. While the
initiative is intended to address the critical issue of police graft, a number of factors are
likely to hinder its success. The state governments will have to muster the political will
and devote the necessary resources to pay, train and equip state police officers (even then,
higher salaries will not be able to compete with the cartel bribery budgets gleaned from
the drug trade). The states also face the difficult challenge of absorbing corrupt
municipal-level police officers who are being cut from the force. This also raises the
question of how many of them will be able to pass the vetting process in the first place.
The Cartel Wars: Sinaloa Flexing, LFM on the Ropes
After spending much of the latter half of 2010 in stagnation, the Sinaloa Federation has
begun to push into other organizations’ territories and reassert itself as the most dominant
cartel in Mexico. While the Sinaloa Federation has a presence in nearly every corner of
Mexico, it has begun to expand its influence in three key areas: Tijuana, in Baja
California state; Monterrey, Nuevo Leon; and Acapulco, Guerrero.
Tijuana
In January 2010, after the arrest of Teodoro “El Teo” Garcia Simental, former Arellano
Felix lieutenant-turned-Sinaloa Federation proxy, the Sinaloa Federation lost is foothold
in the northern Baja California region and its access to the lucrative Tijuana point of
entry into the United States. Since then, the federation has been laying the groundwork
under the direction of No. 2 man Ismael “El Mayo” Zambada Garcia that will enable it to
operate more freely in the Tijuana and greater northern Baja California region.
Monterrey
The Sinaloa Federation was the backbone of the New Federation, which is an alliance of
the Gulf cartel, Sinaloa Federation and La Familia Michoacana (LFM) formed in early
2010 to fight Los Zetas in northeastern Mexico. The alliance loosened when LFM and
Sinaloa became distracted in other parts of Mexico, but in recent weeks we have seen a
resurgence of activity in and around Monterrey, with the New Federation once again
targeting the support network for Los Zetas (corrupt police officers and journalists).
Acapulco
Fighting in and around Acapulco over the past two years has primarily been between
remnants of the Beltran Leyva Organization and LFM. Going back a few more years, the
whole region was controlled by the Sinaloa Federation. In the last few weeks there have
been some subtle indicators via “narcomantas” (publically displayed banners bearing
cartel messages) that the Sinaloa Federation has once again started to probe the Acapulco
area, perhaps looking for a foothold to gain a greater degree of influence in the region.
The LFM organization has taken several blows to its leadership and operational
capabilities over the last month, namely the loss of the charismatic and spiritual LFM
leader Nazario “El Mas Loco” Moreno Gonzalez. A Mexican Federal Police offensive
against the group in its home territory of Michoacan that began Dec. 1, 2010, combined
with an offensive by the Cartel Pacifico Sur in the same territory, resulted in the loss of
numerous operatives and several regional commanders. One the group’s main trafficking
routes into the United States was also marginalized after the Mexican military arrested
senior LFM lieutenant Rigoberto “El Cenizo” Andrade Renteria in Tijuana, Baja
California. The LFM publically declared a month-long truce with the Mexican
government in December and did so again in January, indicating the group’s poor state of
affairs.
International Relations: Easing Tensions in the Trucking Dispute
It appears that the United States and Mexico are making progress toward resolving the
U.S./Mexico cross-border trucking dispute. The trade spat erupted in 2009 when the U.S.
Congress banned Mexican trucks from operating inside the United States, citing Mexican
truckers’ alleged regulatory non-compliance and other safety issues. Believing that the
U.S. actions violated the North American Free Trade Agreement, Mexico retaliated by
imposing punitive, rotating tariffs on a large number of U.S. goods, amounting to about
$2 billion worth of trade. Tensions eased Jan. 6 when the U.S. Department of Trade
presented Congress with a “concept document” for resolving the dispute, and more
details on the proposed resolution are expected in the coming months. Mexico announced
shortly afterwards that, while existing tariffs would remain for the time being, it would
end rotating tariffs on other U.S. goods as a show of goodwill. While U.S. President
Barack Obama could lift the ban unilaterally, he is seeking the support of congressional
Democrats, many of whom support the ban on Mexican truckers. STRATFOR will be
closely monitoring these negotiations in the weeks ahead as Obama tries to rally
congressional support and resolve the lingering trade spat.
Economics: A Vote of Confidence in the Mexican Economy
On Jan. 14, the International Monetary Fund (IMF) approved Mexico’s request to expand
the country’s flexible credit line (FCL) to about $72 billion and to extend it for two years.
Mexico’s previous $48 billion arrangement, established in March 2010, would have
expired this April. When including the Bank of Mexico’s $113.6 billion (at year end), the
precautionary agreement effectively boosts the country’s foreign exchange reserves to
about $186 billion, or 17 percent of GDP. Since IMF FCLs are made available only to
country’s exhibiting strong fundamentals, the IMF approval represents a vote of
confidence in Mexico’s economy, which is expected to have grown above 5 percent last
year (after contracting 6.5 percent in 2009). Though Mexico’s economic growth is set to
slow in 2011 due to a less favorable external environment, recent data shows encouraging
domestic trends in the labor market, manufacturing sector (particularly automobiles) and
consumer credit and confidence, among other indicators. The challenge remains for
Mexico to translate these promising indicators into more robust domestic demand, which
will be needed to offset an external slowdown.