Calderón's Challenges

Felipe Calderón of the PAN party will become president of Mexico on December 1. He won by less than 1%. His party will not control either the Chamber of Deputies or the Senate. His main opponent, Andrés Manuel López Obredor of the PRD, does not recognize his victory and is promising more civil disobedience and a parallel government. He enters office after a bitter and divisive election that revealed the deep social and economic chasm that separates the better-off North from the shockingly-poor South. He inherits a stable economy that, at the same time, is losing its competitiveness in the global economy. And he will be facing a rapidly mounting crime rate driven largely by drug gang warfare.

All of this, and more, poses major challenges for a Calderón government. Here are some of the key issues that must be tackled to keep Mexico's political system intact, assure Mexico's competitiveness in the global economy, reduce social tensions at home, and enhance the rule of law and security.

Assure Governability

The most significant failure of Calderón's predecessor, Vicente Fox, was the failure to negotiate legislative coalitions among the three major parties. As a result, his calls for "change," which drove voters into opposition to the long-ruling PRI, were never translated into specific legislation. Calderón's razor-thin margin of victory means he will have to implement a major change in governing style and be willing to form coalitions around specific issues with the opposition PRI (the bitterness of the PRD will probably not allow it to participate in this process early on). In addition, Calderón will have to propose major reforms of the electoral process to make sure that the uncertainty of this election will not happen again, perhaps by requiring a second round of voting for the top two candidates if no one wins an outright majority. And Mexico clearly needs to review its congressional "no re-election" tradition.

Deepen Economic Reforms

Mexico is losing competitive ground because it has not undertaken the key reforms necessary to move it from being a "maquiladora-driven" economy to being a part of the modern information age. Specifically, Mexico's labor laws are hopelessly out of date for a modern manufacturing and service economy. Mexico must restructure its capital markets so that entrepreneurial activity is encouraged. The complex tax system should be radically simplified and tax levels reduced to encourage tax compliance (currently the government receives only 11% of GDP in taxes). Probably the most difficult issue will be the reform of Mexico antiquated energy sector. Both the state-run electrical and oil companies require massive outside investment now. Calderón will have to overcome constitutional prohibitions on foreign investment in these companies.

Education

Mexico's educational system is simply not adequate for a modern economy. At all levels, the quality and quantity must be raised substantially. In particular, the primary system must move from rote memorization to developing student reasoning, mathematical, and language skills. The academic standards of the public institutions higher education must be raised considerably. And there has to be much more collaboration between business and education.

Social Issues

The election exposed a much deeper rift between rich and poor than the government has recognized. Infrastructure programs must be developed to encourage job creation and economic activity in the South. Recently implemented and successful social programs should be expanded. Migrant remittances must be increasingly channeled into productive investments in the sending communities. And Mexico should use heightened US concern about illegal migration to develop bi-national job creation programs in Mexico rather than attempt to negotiate a wide-ranging immigration agreement.

Drug Violence

Much of the current violence is the direct result of the Fox administration's highly successful attack on the drug cartels. Most of the leaders are either dead or in jail. That has left a leadership void that has fueled a rapidly escalating war for cartel control. This is an area that requires intense US-Mexican cooperation. Both the US and Mexico must give up their reservations about working with the other and move aggressively to combine forces to put down the violence.

This is just the tip of what Mexico needs to become a highly competitive economy that also provides its citizens with political stability and social justice. What is absolutely clear is that Mexico can not squander another six years in unproductive political gridlock.