Carlos Jasso / Reuters Mexican President Enrique Peña Nieto speaks in Mexico City, September 2016.

Winning on Anticorruption

Why Mexico Won't Be the Next Brazil

Mexico’s Independence Day, celebrated on September 16 every year, is normally a festive occasion. This year, though, it was dampened by an angry march in the capital demanding the resignation of President Enrique Peña Nieto. Now approaching his fifth and penultimate year in office, the president is suffering from an unprecedented decline in popularity, with only two out of ten Mexicans approving of his job performance.

There are many reasons for Peña Nieto’s unpopularity. One is security—recent statistics indicate worsening violence in several parts of the country, and the government appears to lack a coherent and sustainable security strategy. In many areas, Mexico’s violent criminal gangs still fight for control of the lucrative illegal trade in kidnapping, extortion, pipeline tapping, and drug trafficking. Economic growth has also proved to be a challenge: according to forecasts from Oxford Economics, GDP is expected to grow a mere 2.5 percent in 2017. Although such moderate growth is enviable compared with that of some other economies in the region, it is a far cry from the 5 percent promised at the beginning of Peña Nieto’s term, which was supposed to come after the passage of reforms in energy and telecommunications.

Yet perhaps no other problem has stoked public anger like corruption. Not only have Peña Nieto’s family and close associates been tainted by corruption allegations, but the regular emergence of new scandals throughout his time in office has fed the widespread perception that the problem is getting worse. The president has not helped matters by dismissing corruption as a “cultural phenomenon” that “exists at all orders and levels of society,” arguing that therefore “no one can hurl the first stone.” Peña Nieto’s party, the Institutional Revolutionary Party (PRI), has suffered accordingly: in state-level elections on June 5, the party had its worst electoral showing in history, when it lost seven out of the 12 governorships up for grabs. Many of those losses occurred, unsurprisingly, in states where local PRI governors had been tarred with allegations of corruption and inefficiency. In Quintana Roo, Tamaulipas, and Veracruz, the PRI lost control of states that it had governed, without interruption, since the birth of modern Mexico.

POOR POLITICIANS

Corruption is big business in Mexico. According to the Organization of American States, the value of money tied to corruption—often in the form of bribes—is equivalent to ten percent of the country’s GDP, well above the world average of two percent. Weak rule of law and a politicized judiciary exacerbate the situation, leading to high levels of impunity among the country’s governing elite. Carlos Hank González, a twentieth-century PRI grandee and business magnate, famously quipped that in Mexico, “a politician that is poor is a poor politician.”

Nor has the country’s transition, over the last 20 years, from single-party PRI rule to a multiparty democracy made much of a dent in the problem. Not necessarily from a lack of trying: the Superior Audit Office (ASF) was created in 2000 as an agency of the lower house of Congress, meant to oversee government spending, and since 1982, the Ministry of Public Administration (SFP) has evolved into a body that can—in theory, at least—impose sanctions on public officials accused of corruption. Yet both have failed to achieve much real oversight. Like other efforts at administrative reform, they have been hobbled by political meddling and the lack of any authority to prosecute allegedly corrupt politicians. For instance, the SFP investigated the 2014 Casa Blanca scandal, in which Peña Nieto’s wife was accused of having obtained a lavish home from a government contractor on preferential terms; similar accusations were leveled against Luis Videgaray, a close Peña Nieto associate and the country’s former finance minister. Yet the ministry chose to fully exonerate the president and his associates, immediately raising questions of political interference.

TURNING THE CORNER?

Given such a history of weak oversight, it is unsurprising that reform advocates reacted with skepticism when, in May 2015, the Mexican legislature, with a two-thirds majority in both chambers, passed a constitutional amendment creating a new National Anticorruption System. The NAS is, in essence, a broad legal and institutional framework that strengthens existing anticorruption agencies and creates new ones, while mandating the adoption of a similar framework at the state level. But despite Mexicans’ justifiable cynicism, there is reason to believe that this time may be different. In fact, the NAS has the potential to be the single most significant anticorruption development in Mexican history and, barring political intervention, could decisively improve public sector accountability.

The NAS includes a number of anticorruption provisions. It creates specialized courts to  oversee corruption cases and gives greater authority to the ASF and the SFP—the former will now have the power to impose sanctions, and the latter’s secretary will now be ratified by the Senate, rather than appointed by the president. Unlike previous anticorruption efforts, the NAS includes provisions to protect against political pressure, including one that allows the Senate to block any presidential attempt to remove the new special anticorruption prosecutor. The NAS also has at its core a citizen participation committee, comprising academics and civil society representatives, with the right to obtain information from relevant agencies. It can, for example, request information on ongoing investigations and mobilize public opinion in cases of apparent impropriety. The committee has an additional mandate to propose improvements on government accountability mechanisms and will be responsible for defining the asset, conflict-of-interest, and tax statements that, as a result of the NAS, all public officials will have to present.

Protestors demanding the resignation of Peña Nieto clash with police in Mexico City, September 2016.

Protestors demanding the resignation of Peña Nieto clash with police in Mexico City, September 2016.

Civil society organizations have applauded the NAS for incorporating most of what they asked for during the congressional debate, including that the citizens’ committee members be chosen by a nine-member board, proposed by universities and other civil society groups and ratified by the Senate. It has also given the ASF broader powers, including the authority to conduct real-time audits of government agencies and revise public accounts from previous years. If properly implemented, the NAS has the potential to establish an effective system of accountability for public officials at both federal and state levels of government.

Above all, however, hopes for a successful anticorruption campaign rest on continued public pressure from civil society organizations. These organizations have already succeeded in getting the government to pass the NAS and have benefited from the enhanced transparency mechanisms passed in recent years. For instance, the Federal Institute for Access to Public Information and the Protection of Personal Data—created in 2003 and given greater autonomy in 2014—has earned a reputation for helping journalists and civil society actors access public information and uncover high-profile cases of corruption, in turn increasing awareness in society at large.

Public pressure is yielding political dividends, too: all of Mexico’s major parties have recently tried to enhance their reputations for fighting corruption. For example, both the PRI and the center-right National Action Party have suspended former governors accused of corruption and mismanagement. In a rare move, the Mexican attorney general, from the PRI, issued indictments for representatives of front companies receiving illegal public contracts in PRI-controlled Veracruz. All signs, moreover, point to the fight against corruption being a major issue in the 2018 general election, and as a result presidential candidates are almost guaranteed to pledge their support for the NAS. The NAS has the potential to be the single most significant anticorruption development in Mexican history

CLOSING THE DEAL

Although recent protests against Peña Nieto have prompted some comparisons with Brazil, the fact is that Mexico is unlikely to see a wide-ranging corruption probe similar to the one in Brazil that uncovered the Lava Jato (“Car Wash”) scandal and led to the ouster of President Dilma Rousseff. At least nothing similar is likely to happen in the next two years, largely because of the time it will take to fully implement the NAS.

The enabling legislation, passed in June, still requires significant institutional changes and the publication of regulations and bylaws before it can become effective. Additionally, state congresses were given a year to bring local laws in line with the new federal framework. But states have often been slow to follow through with similar national changes in the past, and getting them to fully adopt and implement the NAS may not be an easy process—there are still significant vested interests at the local level that will try to block it.

Support from the top is by no means guaranteed either. Despite the president’s public apology for Casa Blanca and his party’s endorsement of the NAS, the Peña Nieto administration has been lukewarm on anticorruption. Peña Nieto left the SFP without a secretary for two years and endorsed the creation of the NAS only after his own scandal erupted in 2014. Most recently, he appeared to be starving the NAS of money in the 2017 federal budget by not earmarking sufficient funds in the initial proposal submitted to Congress. For all its fine words, then, the government has yet to prove any genuine commitment.

Corruption, of course, will not disappear overnight. Yet for Mexico, the stakes riding on the NAS’ success or failure are high. During the Peña Nieto administration, Mexico has made great strides—to great fanfare among foreign investors—in passing key structural reforms in areas such as energy and telecommunications. But without better governance and respect for the rule of law, these economic reforms are likely to falter in time. (The inconsistency of contract enforcement, for instance, risks scaring off foreign direct investment.) In a country where the population is growing and expectations are rising, establishing trust is crucial. The NAS gives Mexico reason to be cautiously optimistic that it has found a framework for enhanced long-term government accountability and that its civil society will have the tools to finally hold politicians to account. 

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