Is Mexico undergoing a transformation? Ricardo Fuentes on AMLO’s first 100 days.

March 19, 2019

     By Duncan Green     

In September, I interviewed my friend and Oxfam Mexico boss Ricardo Fuentes about the incoming president and his promises of a ‘4th transformation’ of the country. 100 days into the presidency of Andres Manuel López Obrador, I asked Ricardo to update us:

A hundred days into the administration of Mexican President Andres Manuel López Obrador one thing is clear: his historically high levels of approval show widespread support for political, economic, social and cultural change. It is understandable: the stubborn poverty levels that have barely moved in decades; the perennial low economic growth; the endemic violence and the gaping inequalities that millions of people experience on a daily basis make change not only desirable but indispensable. A large majority of people in Mexico clearly support the president’s mandate to transform a political, economic and social system that has generated marginalization and vulnerability for millions of Mexicans, while creating vast riches and fortunes for a handful.

Where there is less consensus is over how this change has been implemented in AMLO’s first three months. Despite the fact that a significant number of presidential initiatives (a bold strategy to stop fuel theft; the creation of a National Guard; eliminating pensions for former Presidents) have a high level of approval, there have been other decisions that have generated a strong rejection, in particular the rolling-back of programs for child-care and shelters for women victims of violence without a clear, well-thought out alternative.

The conversation has so far focused on specific programs. But it needs to shift to rethinking the overarching welfare system. One of the central questions in moving to a more comprehensive welfare system is the type of relationship that the State will build with citizens. In other words, at this moment of change, what will be the social contract that will govern the exchange and relationship between authorities and citizens? Historically, the interaction between the State and citizens in Mexico has been weak, fragmented and ambiguous – it is enough to visit a rural community or a neighborhood in the urban periphery to see that the role and responsibility of the State and authorities is unclear even to those in positions of public power.

In order to truly transform the country, the new government needs to strengthen and clarify this citizenship-State relationship, with a new welfare system at its core. The components of the ideal system are clear: they must be rights-based, universal, gender-focused, and managed responsibly and transparently. However, what is not so evident, especially in a country where oil revenues continue to fall and tax collection is low, is how it should be financed and what are the democratic accountability mechanisms in case the State does not fulfill its task.

The weak Mexican social contract is due, in part, to a fiscal weakness that limits the possibilities of public investment based on universal and inalienable rights – Mexico’s tax revenue is half the OECD average and well below that of countries like Brazil or Argentina. ‘Tax morale’ is low: the quid of readiness to pay of taxes is not linked to the quo of State guarantees to spend them well. Paying taxes does not translate – because of corruption and mismanagement – into quality public services. This dynamic weakens both citizenship and the State. It is a vicious circle that is easily overlooked, but needs to be fixed.

During the first 100 days of President López Obrador the idea of social change has been strengthened, a message well received by the majority of the population. However, there are still many doubts about the specific actions – or even the vision – required to develop and strengthen the relationship between the State and citizens. The government’s constant criticism of organized civil society, or indeed any public actor outside the administration, does not help. Nor does it help that the central prerequisite to strengthening the social contract – a progressive tax reform – is completely absent from public discussions.

Finally, it is a concern that the government wants to replace the provision of public services with direct cash transfers with no clear operating rules, no monitoring and evaluation systems or checks against corruption and clientelism (the diversion of public funds for political gain). Distributing money to create political clienteles has weakened the social contract in Mexico throughout its history. The true transformation of the country requires a strong State, built on a progressive fiscal reform, and an active and healthy citizenry, protected against the clientelism that has done so much damage to Mexico in the past. It would be a terrible missed opportunity if the current desire for change is squandered on reliving the mistakes of the past.

March 19, 2019
Duncan Green