Mexico’s New President Faces Big Challenges

Stockbyte/Thinkstock(MEXICO CITY) — When Enrique Peña Nieto was sworn in as Mexico’s president on Saturday, he agreed to lead a country of 115 million people that ranks as the world’s thirteenth largest economy and has become one of the top ten tourist destinations in the world.

Peña Nieto will make use of such data when he seeks foreign investors. But when he looks inside his massive country, the new president will also have to handle a territory plagued by extreme poverty, drug violence and special interests that can block the road to prosperity.

So what does he need to fix in this up-and-coming nation? It’s a long list, but after consulting with several economic and political experts, we’ve broken it down into the following:

Economy

The Economist points out, the tide now seems to be turning in Mexico’s favor. Higher labor costs in China and skyrocketing oil prices are once again turning this country into a good base for manufacturers who want to export goods to the U.S., and other places, too. Mexico now has free trade agreements with an astonishing 44 countries.

Yet, oil production has recently tanked in Mexico due to low investment in exploration, shrinking from over 3 million barrels a day at the beginning of this century to just 2.5 million barrels last year. This helps to make gas and electricity more expensive in the country, and has some economists insisting that the Mexican government open up the oil sector to competition, so that other companies aside from Pemex (the state-owned petroleum company) can also look for oil in Mexico.

But monopolies in other areas must also be tackled. Mexicans are forced to get most of their bread from Bimbo and almost all their cement comes from Cemex. Companies owned by multi-billlionaire Carlos Slim control 70 percent of the mobile phone market, and 75 percent of all broadband internet connections. According to The Economist, this situation makes connecting to broadband in Mexico twice as expensive as in Chile.

Education

Mexico currently has one of the lowest educational standards among the world’s larger economies. According to the Organization for Economic Cooperation and Development (OECD), only 18 percent of Mexicans aged 18 to 64 are college graduates. OECD figures say that in Chile, 24 percent of people in that age group have a college degree, while in Israel that number shoots up to 45 percent.

To improve Mexico’s education system, Peña Nieto will have to tackle strong teacher unions that administer posts to family members and not to those who are best qualified to teach. He will have to implement measures that are unpopular with the unions, like forcing teachers to take standardized tests and linking teachers’ tenure to results. It will be a complicated task, as many leaders from Mexico’s one million-strong Education Workers Union have close links to PRI politicians at the state and national levels, and the union actually forms part of the PRI’s electoral base.

Security

Peña Nieto takes over a country plagued by violence. NGOs estimate that more than sixty thousand people have died from drug violence over the past six years. The number of cartels with the capacity to export large drug shipments to the U.S. also increased from four to seven during outgoing President Calderon´s six-year term, according to the BBC.

To tackle the drug violence problem, Peña Nieto will have to work with the U.S. on decreasing the smuggling of weapons across the border. He’ll also have to work with Mexico’s northern neighbor on ways to reduce demand for drugs, and he’ll have to decrease impunity in Mexico, where more than nine out of 10 homicides go unpunished.

Corruption

The growing influence of drug cartels in Mexico also means that the country has become more corrupt. In just two years, from 2009 to 2011, Mexico fell from 89 in Transparency International’s “Corruptions Perceptions Index” to 100, where first place equals “least corrupt.” Meanwhile, Mexico ranked only above Russia and China in the 2011 Bribe Payers Index, a survey that ranks 28 different countries according to the likelihood that their companies will pay bribes when working abroad.

One issue Peña Nieto will have to look at is how to make state governors more accountable with the money that they receive from the federal government. Currently there is no pressure on them to disclose what they are doing with those funds to the general public. Another challenge for the incoming president of Mexico will be to provide local government officials with incentives to please people and not local party leaders.

Copyright 2012 ABC News Radio