Elections unlikely to sway Mexico economy
TRACI CARL
Associated Press
MEXICO CITY - The presidency is up for grabs. Congress is anybody's guess. But when it comes to Mexico's business world, the big boys still rule.
The July 2 elections will likely bring new economic policies to this emerging democracy, but few expect sweeping changes in Mexico, where the minimum wage is only $4.50 a day and both government and corporate giants are controlled by an almost tribal elite.
Mexico's key industries are locked up by business moguls that include at least 10 billionaires, led by Carlos Slim. He became the world's third-richest man by profiting off privatization in the 1990s, buying up the government's telephone monopoly and building an empire that now sells everything from cell phones to Sears appliances to the enchiladas suizas at his popular Sanborns chain of restaurants.
And while Slim gets richer, top computer engineering graduates get only about $15,000 a year, if they have the personal connections needed to get a job at all. Opening a small business remains a daunting prospect, involving copious paperwork and often bribery.
Despite promises to raise wages and fight corruption, there's little sign the three leading presidential candidates will make fundamental changes.
While all three talk of making Mexico's economy more competitive, they have shown little desire to push these goals on the titans of the country's biggest industries, including Mexico's two main television networks, Televisa and TV Azteca; and Cemex, one of the world's largest cement producers.
Technological innovations, recent World Trade Organization rulings and other outside forces have forced some reforms in the telecommunications industry, slightly lowering what are the some of the world's highest telecommunications fees.
But internal change is slow. Mexico's Congress has been quick to protect industry leaders who control everything from what Mexicans watch on television to what kind of beer they drink at the cantina.
This year, lawmakers approved a new radio and television law that gives the two leading networks free digital spectrum to cover their existing analog frequencies, paving the way for high-definition, interactive and combined services. Any potential digital rivals will have to pay to compete.
Many argued the reform would further reduce media competition in Mexico. Televisa alone controls four of the country's six national networks, the biggest cable company and Sky, the only satellite-television provider.
"For the life of me, I don't understand the Mexican Congress, why they would pass a law like that when the Mexicans are already getting ripped off by monopoly prices," said Sidney Weintraub of the Center for Strategic and International Studies in Washington.
Government dealmaking often seems to benefit Mexico's biggest companies. Another example is the racetrack or electronic betting outlet concessions granted to a firm linked to Televisa. That deal was made by Santiago Creel, right before he resigned as Mexico's interior secretary last year to launch an unsuccessful presidential bid.
The North American Free Trade Agreement has forced Mexico to stop protecting many of its domestic producers and allow imports of cheaper goods.
In the past year, several cut-rate airlines have started business, driving down the price of domestic plane tickets once controlled by Mexico's two main airlines, Mexicana and AeroMexico.
And consumer banking has improved with the arrival of several major international players, including Citibank, HSBC and Spanish bank Banco Santander Central Hispano SA. Their investments have made opening accounts and borrowing money easier and cheaper, while lowering wire fees and increasing the remittances sent home by the millions of Mexicans living in the United States.
Even the largest business interests now acknowledge the problems of Mexico's vastly unequal social classes.
Slim has been promoting a new business accord - sort of a blueprint for the future Mexican economy - that recommends fighting crime, creating jobs and attracting investment. It's short on details, but supported by a who's who of Mexico's intellectuals, entertainers and business leaders.
Felipe Calderon of the ruling National Action Party and Roberto Madrazo of the Institutional Revolutionary Party have signed it, and Andres Manuel Lopez Obrador of the left-wing Democratic Revolution Party said he will add his support - with footnotes on poverty and corruption. Recent polls show Calderon and Lopez Obrador running neck-and-neck.
Mexican businesses used to avoid such public campaigns for fear of angering those in power. Before President Vicente Fox's historic victory in 2000 ended 71 years of rule by the Institutional Revolutionary Party, companies generally avoided publicly challenging political leaders, who controlled key unions as well as government largesse.
While some critics see the accord as propaganda, George Grayson, a Mexico expert at the College of William & Mary in Virginia, says industry leaders - including Slim - recognize the need for change.
Slim "likes to make money, clearly, but he's a nationalist," he said. "He loves Mexico."
If any candidate is going to try to shake up the business world, it would be Lopez Obrador, who accuses bankers of being parasites and promises to enforce Mexico's often ignored tax collection laws. Last week, he proposed subsidies to increase the family income of poor families by up to 20 percent.
Overall, Mexico's economy has shown little fear of a Lopez Obrador victory, in part because the fiery candidate is working with a moderate economic team.
And Josefina Camargo, a 37-year-old beauty products saleswoman, is among many who doubt any new president will challenge the ruling elite.
"They just look after their own interests," she said. "They just want to rob more."
http://www.mercurynews.com/mld/mercurynews/business/financial_markets/14771815.htm
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