Mexico: Five Key Political Risks in 2013

The next year promises to be a challenging year in terms of politics and security. On the heels of a contentious presidential election and soaring levels of criminal activity, the country’s political transition opens the possibility for a new era of reforms and policy changes that could drastically improve the country’s outlook. At the same time, the prospect of a new opposition party embodying the most radical facets of the Mexican Left could lead to a more strained political environment and polarization of the debate over the legislative agenda. Finally, dynamics among Mexico’s largest criminal organizations are at a crucial juncture that could generate more violence and criminal activity.

Image: Andres Manuel Lopez Obrador and President Enrique Peña Nieto
Photo sources: Hasselbladswc and 

These trends will determine the country’s key political risks for the next year. This report explores a series of political risk scenarios based on these undercurrents, as well as other long-term trends that could lead to various negative developments. All of these scenarios are highly plausible; the key question is to what extent they will take form.

1. Dissident Movements Coalesce against the PRI

The 2012 presidential race generated a surprising amount of anti-PRI sentiment, particularly among young people. Although leftist leader Andres Manuel Lopez Obrador (AMLO) is commonly blamed for having ignited this strong sentiment, it cannot be denied that there already was a latent mistrust of the PRI among key sectors of the general population. The recent radicalization of the #YoSoy132 student movement as well as other nonconformist groups could take on bigger dimensions next year as the PRI attempts to pass politically delicate reforms. These groups are poised to join Lopez Obrador in his attempt to block key structural reforms such as energy liberalization and tax reform.

As seen during the recent protests during Enrique Peña Nieto’s inauguration, some of these groups are willing engage in rioting and violence to protest the government—an unprecedented development. Striking a balance between tolerance and enforcement will pose a difficult challenge for the new administration. Mistakes stemming from the use of excessive force could create a backlash and further empower these groups and their leaders.

2. Fragmentation of the Political Left – Lopez Obrador’s New Party

Since gaining momentum in the 2012 presidential race, Lopez Obrador abandoned the PRD and is creating a new political party, Movimiento Regeneracion Nacional (Morena). Lopez Obrador will easily meet the requirements for registering Morena as a national party in time for the 2015 mid-term elections. The creation of Morena will result in the institutionalization of Lopez Obrador’s radical leftist politics, the weakening of the moderate Left and a more fragmented political system.

The birth of Morena has already caused many important PRD members to abandon their current affiliations to join the new party. This has placed the PRD, the face of Mexico’s political Left, at a crossroads. Although the PRD appears to be trying to move to the center in its politics and rhetoric, this may cost it members and support as well as the electoral alliances it has come to rely on to remain competitive. Morena might strike a particularly resounding chord with young voters and concentrate youth movements’ energy into the party.

3. Further Atomization and Geographical Dispersion of Organized Crime

Recent blows to some of the country’s largest and most dangerous criminal organizations, like Los Zetas, the Gulf Cartel, and La Familia Michoacana, have added pressure within these groups to restructure and consolidate their areas of influence. We expect the Sinaloa Cartel to continue waging war against Los Zetas (the ongoing conflict between these organizations is a key driver of violence nationwide). We believe Los Zetas will not shy away from the fight and may even launch bolder offensives against their enemies. This is a risky strategy for Los Zetas given their recent loss of leadership, but not doing so could prove even more perilous for them.

Furthermore, we expect a continuation of the ongoing atomization and geographical dispersion of organized crime and related violence. This includes large groups splintering into specialized cells as well as smaller independent groups sprouting up in previously peaceful areas and adopting the violent tactics of the larger organizations. This ongoing trend will make policing harder since violence will no longer be contained to a few identifiable zones and will require better enforcement at the state and local level.

4. Peña Nieto Relaxes Government Posture Against Organized Crime

Mexico’s new president’s policy against organized crime remains vague. During his campaign, Peña Nieto promised that his administration would place less emphasis on drug trafficking in favor of focusing on crimes most directly affecting the general population (i.e. homicide, extortion, kidnapping, robbery).

Although crime reduction is sorely needed, the promise of reducing violence related to organized crime is worrying because this could be easily achieved by abandoning the tough stance former President Calderon took against the largest criminal groups. Loosening the pressure against these groups entails extremely important risks that could see Mexico lose the important progress it has made on this front. By easing pressure, the Peña Nieto administration would allow violent groups like Los Zetas to regain influence in geographical areas where their presence has been weakened. With less pressure on their operating structure, these groups would ultimately enjoy increased stability and regain their corruptive power.

5. Mediocre Structural Reforms; No Meaningful Change to the Status Quo

Mexico’s new president has forged a pact with the PAN, the PRD and other smaller parties (Pacto por Mexico) to pass key reforms to help improve business competition, public education and fiscal responsibility. This blueprint for reform also encompasses sweeping changes such as energy sector liberalization and comprehensive tax reform.

There is a great deal of skepticism regarding the breadth and feasibility of the proposed reforms. This is particularly true for reforms that would involve curbing large vested interests with ties to the PRI, such as labor unions and large monopolies. The PRI’s decision to eliminate measures demanding increased transparency and accountability from labor unions during the recently concluded labor reform talks is a strong indicator that the PRI remains entangled with the country’s largest vested interests.

Unless the PRI can find the courage to tackle establishment interests, Peña Nieto’s proposed reforms will not be transformative and will only scratch the surface of the problems they are trying to fix. Weak reforms would further delay economic growth at a critical time for Mexico to improve its position in the world economy.

18 Responses to "Mexico: Five Key Political Risks in 2013"

  1. Simple Mind   December 10, 2012 at 10:43 am

    I think combating "organized crime" with one massacre per day pretty much needs Obrador's radical solution, as the country is ungovernable.

  2. Chrmoztlan   December 12, 2012 at 6:20 am

    The only thing that is radical here are the views of the newly elect president. AMLO has the best plan to get Mexico back on it's feet without corruption. The PRI candidates and affiliates have always been involved in corruption and with the narco. As is Mr. EPN. Its proven.

  3. Leopoldo Nieto   December 16, 2012 at 10:53 am

    For most Mexicans the "government" headed by EPN, is hung with pins in the street feels upset by the economic and political situation, violence between organized crime, the army, the police and the navy, do of everyday life a hell, a malfunction of government agencies and economic downturn in all sectors are increasing hunger and misery.

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    We believe Los Zetas will not shy away from the fight and may even launch bolder offensives against their enemies. This is a risky strategy for Los Zetas given their recent loss of leadership, but not doing so could prove even more perilous for them.

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