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Mexico's president gathers power, pushes reform

Tuesday - 3/19/2013, 9:20am  ET

FILE - In this March 11, 2013 file photo, Mexico's President Enrique Pena Nieto, center, is flanked by Mexican Senate Deputy Chairman Francisco Arroyo Vieira, left, and Mexican Senate President Ernesto Cordero as he shows an agreement signed by him and the three major political parties that would create two new national television stations and form a powerful independent regulatory commission, along the lines of the U.S. Federal Communications Commission, in Mexico City. Pena Nieto has been fast out of the blocks in attacking some of Mexico’s toughest issues in a country often stymied by monopolies and corruption. He says his plan will make the country more democratic and competitive in the world economy, and his drive for reform is fueling international confidence about Mexico. (AP Photo/Alexandre Meneghini, file)

MICHAEL WEISSENSTEIN
Associated Press

MEXICO CITY (AP) -- New President Enrique Pena Nieto has been fast out of the blocks in attacking some of Mexico's toughest issues in a country often stymied by monopolies and corruption.

He arrested the most powerful woman in Mexico, leader of the largest union in Latin America, on allegations of corruption that previous presidents saw but were too compromised to tackle. He is taking on the richest man in the world, Carlos Slim, and pledges to bring diversity to a television industry dominated by the head of the largest network in Latin America, a scion of one of Mexico's leading families.

At one time all three were key allies of Pena Nieto's Institutional Revolutionary Party, or PRI, which ruled for 71 years with a combination of coercion and corruption before being voted out of office in 2000. Now, Pena Nieto is declaring that there are no more sacred cows.

The moves have built momentum behind what could be his most dramatic and difficult reform -- modernizing and drawing foreign and private capital to the behemoth state oil company, a long sacrosanct but increasingly inefficient pillar of the Mexican economy. On Sunday, at a celebration of the 75th anniversary of the nationalization of the Mexican oil business, Pena Nieto said again that he will transform Petroleos Mexicanos. The longtime head of the Pemex union, who had been expected by many to fight any changes but has been the subject of questions about unexplained family wealth, pledged his support.

Pena Nieto says his plan will make Mexico more democratic and competitive in the world economy, and his drive for reform is fueling international confidence about Mexico. Rating company Standard and Poor's raised the country's long-term sovereign credit rating from "stable" to "positive" last week, citing optimism about the government's ability to carry out structural changes. The Mexican peso is stronger against the dollar than it's been in a year and a half.

But some analysts warn against mistaking style for substance and making early declarations of victory against entrenched powers built up by the very party that now says it's trying to bring them to heel. It will take many months, in some cases years, before Pena Nieto's reform agenda becomes law and produces its first results, plenty of time for big promises to be derailed by special interests, institutional inertia and the PRI's old guard.

"It's quite remarkable to me that people are assuming that somehow we're at a new stage in political or institutional or economic development in Mexico," said John Ackerman, a law professor at the National Autonomous University of Mexico and a visiting scholar at American University in Washington. "Increased competition is great. But the central problem that's holding back Mexico's economic development is the concentration of political and economic power at the top, and with Pena Nieto we see more of this, we see a consolidation of this in fact."

While Pena Nieto has pledged to drive down violence, he has made few changes to Mexico's security policy. There has been no credible sign of a slowdown in the waves of killings that have turned many states into battlegrounds. The most significant change, critics say, has been a clampdown on official information about crime, part of a government-wide attempt to refocus national and international attention onto Mexico's economy.

The day before his Dec. 1 swearing-in, Pena Nieto and his team got the three main political parties to sign a 94-point national legislative agenda known as the Pact for Mexico that promises everything from efficient harvesting of rainwater to opening Mexico's behemoth state oil company to private and foreign investment. The Pact for Mexico was dismissed as theatrics by some observers at the time, but it has become clear Pena Nieto intends to push for every promise to become law as quickly as possible.

Addressing his Cabinet and hundreds of dignitaries at a celebration of his first 100 days, Pena Nieto jubilantly pledged to maintain the breakneck tempo.

"The intensity won't be passing. The pace of work will keep up. We didn't come just to govern, but to transform," he declared.

The new president pushed through the most sweeping education overhaul in seven decades, a potentially far-reaching reengineering of Mexico's deeply dysfunctional education system that calls for merit-based teacher hiring and promotion to replace a system in which union domination meant jobs were inherited and sold.

Teachers' union head Elba Esther Gordillo, one of the most powerful-yet-reviled people in Mexico, had pledged to fight the plan that passed Feb. 25, but then was arrested the next day on charges that she embezzled $160 million.

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