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Enrique Peña Nieto has Much to Prove in Mexico

The election of Enrique Peña Nieto has returned Mexico’s Institutional Revolutionary Party (PRI) to power after a 12-year absence. Having earned 38 percent of the vote, the PRI has been given a second chance to transform a Mexico from decades of mismanagement, corruption, and an infestation of drug-related violence. Mr. Nieto ran a solid campaign, promising to pursue a new direction for Mexico. Now, he must deliver on that promise. The question is, is he actually capable of doing so?

In trying to assuage fears that his presidency would lack transparency and end up resembling the PRI prior to its defeat in 2000, Mr. Nieto told supporters gathered on Sunday night shortly after the election results were announced that: “…The Mexican people have given our party a second opportunity. I will be a modern, responsible president, open to criticism, ready to listen, and taking into account the views of everyone,” emphasizing his campaign pledge to have a transparent government.

Nieto gained victory with a 6 percent margin – smaller than many analysts had expected, which means the PRI will be dependent on a coalition government in order to pass much-anticipated legislation that should if passed, herald what could be a genuine era of reform in Mexico.

Apart from overhauling the country’s byzantine tax collection system, Nieto intends to open foreign investment in the country’s monolithic oil company (PEMEX) – a move with enormous symbolism.

This is ironic because it was the PRI that prevented significant reform of PEMEX during outgoing President Calderon’s administration. It remains to be seen whether Nieto will have the political clout, acumen, and strength to push reform of PEMEX through Mexico’s sclerotic and entrenched political system.

It could turn out to be the case that the absence of an inherent legislative mandate will become an excuse for the PRI to fail in its stated primary objectives, in which case it would likely revert to a well-worn habit of meeting its own needs through an alliance with Mexico’s wealthiest and most powerful business interests. However, if Nieto is successful in crafting an alliance with progressive parties, and is true to his word, he will fend off those interests – who will undoubtedly be nipping at his heels from day one – and instead, consider what is in the country’s best long-term interests.

With Brazil’s economy faltering, Mexico actually has an opportunity to make up some lost ground. If PEMEX can indeed be successfully opened up to private investment, made more efficient, and upgrade its infrastructure, if tax receipts can be meaningfully increased, and if the war on the drug trade can continue to make real progress, it is certainly conceivable that Mexico can compete with Brazil to become Latin America’s number one economy. However, just as Brazil pays a price for being so closely linked with China for its economic health, the same may be said of Mexico vis-à-vis the U.S. Ultimately, Nieto’s future success will become dependent on a sustained economic recovery in the U.S., which accounts for approximately 80 percent of Mexico’s trade.

Times have changed since 2000. As this election has shown, Mexico’s political culture is much more open and free than it was a dozen years ago. Mexico’s youth, in particular, had a powerful voice in this election, and they are expecting Mr. Nieto and the PRI to deliver. It will probably not take long to determine whether Mr. Nieto is not only a man of his word but capable of steering Mexico toward a more hopeful and productive future.

His tenure will also be a test of whether the past 12 years has truly marked a sea change in Mexico’s political culture, or whether its worst political habits were merely hibernating.