Global Insight Perspective

Significance

It is not over yet as runner-up AMLO, a former mayor of Mexico City, prepares to launch a legal challenge, calling on supporters to gather in the capital’s main square or Zócalo to demonstrate against the inconclusive verdict.

Implications

Mexican markets responded favourably to Calderón’s apparent triumph, but such optimism will be dimmed at least temporarily if AMLO’s appeal drags on until September. The U.S. has repeatedly pledged to work with whichever politician is democratically elected south of the border, but there are more natural synergies between a conservative, business-friendly Calderón administration than any team AMLO was likely to put together.

Outlook

Calderón is seen as the safer pair of hands, lacking the uncertainty represented by AMLO’s alternative economic model. The centre-leftist pledged to maintain macro-economic fundamentals, but his promised social and public works programmes recalled Mexico’s crisis-prone past for a slim majority of voters.

Continuity Wins Over Change

Mexico has a reputation as a conservative country in social and cultural terms. The 2 July election, which restored the disappointing, but unthreatening National Action Party (PAN) to power, appears weakly to corroborate this stereotype. Calderón celebrated his apparent election as Mexico’s next president with a majority of just 243,934 votes. With just over 15.28 million ballots included in the final count, it was hardly a compelling victory, but it may just be enough for “Felipe”, his familiar campaign identity, to become President Calderón. “Change or continuity?” is the final question posed in most democratic elections. After months of mudslinging, hurled first by the PAN and subsequently by the moderate leftist Democratic Revolution Party (PRD)-led coalition, the election came down to this perennial question. The impoverished south and poorer parts of the central belt emerged in favour of the promised economic transformation offered by AMLO and his For the Good of All alliance. The vote confirmed deep-seated economic and political polarisation with Calderón supporters clustered in the wealthy, industrialised north of the nation that has benefited the most from the North American Free-Trade Agreement (NAFTA) with the U.S. The PAN also held onto gubernatorial seats in its heartlands of Jalisco, Guanajuato and Morelos state. The PRD reasserted its predominance in the Federal District with AMLO’s protégé Marcelo Ebrard securing a landslide victory to lead the capital’s government with 47.05% of the vote.

The presidential contest is far from clear cut. Days and possibly months of uncertainly lie ahead with AMLO demanding a manual recount. Once the Federal Electoral Institute (IFE) formally declares a winner, candidates have four days to file a complaint with the Federal Electoral Tribunal (TRIFE) that might justify the opening of ballot boxes for the counting process to recommence from scratch. The fact that the IFE acknowledged inconsistencies early on, with some three million votes excluded from the preliminary tallies that ultimately turned out to be resoundingly in favour of AMLO, gives credence to calls for a full recount. The computerised check that confirmed Calderón’s razor-thin advantage yesterday relied on the individual ballot box calculations from 2 July. Tensions tightened yesterday with the two leading candidates exchanging pole position (see Mexico: 6 July 2006: Main Runners Continue Vote-by-Vote Battle for Mexican Presidency). AMLO’s call for supporters to join him in the Zócalo at 5pm tomorrow for an “informative assembly” on the contested electoral process appears to be playing into the hands of his opponents who have always asserted that the popular — and arguably populist — left-winger would rally his party faithful onto the streets if his presidential bid failed.

Outlook and Implications

Mexico’s electoral and constitutional legislation does not provide for a second round, meaning that a president can lack a strong mandate now that genuinely competitive elections are taking place. Electoral reform ought to be on the agenda for the new government, but there is a lesser incentive for probable winner Calderón to promote this given that he is likely to have benefited from a razor-thin victory in the first round. That said, reformist members of the Institutional Revolutionary Party (PRI), which ruled Mexico for over 70 years until President Vicente Fox triumphed for the PAN in 2000, would be more likely to cast the ballots for a Calderón victory. Roberto Madrazo, candidate for the PRI, conceded an early defeat with a margin of around 13% dividing him from the top two. The 2 July was historic for several reasons. Not only was it the most competitive in Mexican history, but for the first time a party other than the PRI dominated both chambers of the legislative branch. The pro-business PAN became the most powerful force, although it still fell well short of an absolute majority, with just shy of 34% in the Senate and the Chamber of Deputies. The left-leaning PRD also celebrated its most successful election on record, doubling its representation in the Senate and increasing its presence in the lower house by 50%.

Calderón is set to share the challenge of his predecessor, requiring congressional alliances in order to progress postponed energy and fiscal reforms. With the PAN’s improved showing in the bicameral Congress, he has an easier task ahead of him. However, PRD legislators are unlikely to negotiate with the ruling party on any scale owing to ideological differences and latent bitterness from the tightest of presidential contests. Working with the PRI is more promising, but deep divisions in the once-monopolistic party present ongoing barriers to joining a PAN coalition. Reform prospects would no doubt improve with Calderón as president, while foreign investors may gain further opportunities in Mexico’s traditionally closed energy sector; the latter remains a sensitive issue and one that is important to national pride. Securing the two-thirds of the legislature required for Constitutional reform that would allow foreign money into Mexico’s under-invested energy industry would be a major challenge for the Calderón government.

Mexico’s most important foreign relations will come under the spotlight once its president-elect is confirmed. Bilateral ties between the U.S. and Mexico should fare better with Calderón rather than AMLO in the presidential palace of Los Pinos. Ongoing tensions include the issues of migration, with the U.S. Congress considering a guest-worker programme that would legalise millions of Mexican migrants, and residual trade disputes within the NAFTA bloc. Markets responded favourably when Calderón retook the lead in the presidential election, but testing times lie ahead. Strains include AMLO’s decision to rally popular movements as he reprises his traditional role of victim that has won him a die-hard support-base in the past. The fact that the IFE admitted errors in the early calculation process casts a shadow of doubt over the barely conclusive outcome. The PRD itself has recalled the 1988 presidential vote in which future founder Cuauhtémoc Cárdenas lost his lead after machines computing the vote crashed and mysteriously handed the advantage to Carlos Salinas de Gortari. Mexican democracy has made impressive strides since then, with elections now in the hands of the independent IFE and not the Interior Ministry. None the less, the close verdict of the 2006 election is left subject to question without a manual recount. Reopening each ballot box may be an exhaustive and inconvenient process, with potentially destabilising consequences in the short term, but it is arguably the best means of demonstrating that Mexico’s democratic institutions will do everything in their power to ensure a fair election.

Raul Dary

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raul.dary@globalinsight.com

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