McALLEN, RGV – Former U.S. Ambassador to Mexico Tony Garza believes violence in Mexico threatens to undermine the sweeping reforms enacted by President Peña Nieto with investors lacking confidence that their contracts or investments will be respected.
Even more importantly an inability to fully impose the rule of law threatens Mexicans’ security, the former Cameron County Judge, Texas Secretary of State and Texas Railroad Commissioner argues, in a commentary written to usher in 2015.
Garza now serves as Counsel in the Mexico City office of White & Case LLP, a global law firm with 39 offices in 26 countries. White & Case was named one of the top five most innovative law firms in North America by the Financial Times in its FT North America Innovative Lawyers 2014 report. Additionally, Garza is chair of Austin-based Vianovo Ventures, a management consultancy with a focus on cross-border business development.
In his look ahead to 2015, Garza argues that while Peña Nieto’s ambitious reform agenda was “comprehensive in many ways,” it has yet to address some of Mexico’s most pressing challenges.
“This year’s reform agenda certainly covered a lot of ground, but it is now clear that it didn’t address some of Mexico’s most glaring weak spots. Most prominently, it did not include any serious push to address the country’s perennial challenge: rule of law. This oversight could threaten many of the reform’s gains—as investors lack confidence that their contracts or investments will be respected—but even more importantly, it threatens Mexicans’ security,” Garza wrote in his commentary.
Garza then focused on Mexico’s big national tragedy of 2014.
“On September 26, the horrific disappearance of 43 students in Iguala, Guerrero shocked the nation to its core, pushing tens of thousands to the streets across the country to demand a safer and more just future,” Garza wrote.
“The outrage only grew in November as news outlets began reporting that the first lady owned a $7 million house, registered to a company whose owner had just won a high-speed train concession from Mexico City to Querétaro. The train contract was canceled and the first lady quickly announced that she would sell the house, but just the hint of corruption was enough for Mexico’s public—beating down Peña Nieto’s approval ratings to slightly under 40 percent.”
Garza said many Mexicans view Peña Nieto’s new ten-point national security plan as “too little, too late.” The plan, Garza said, focuses on strengthening the police and judicial systems and investing more in impoverished areas of the country. He said they are a much-needed step in the right direction.
“Giving these rule of law initiatives the same attention as the earlier economic reforms will be critical to ensuring their full implementation and success,” Garza wrote. “If this doesn’t happen, the consequences will be steep—undermining the foundation for a safer and more prosperous Mexico and complicating the PRI’s path forward in next year’s midterm elections.”
Among the sectors where Peña Nieto and Congress enacted sweeping policy reforms were education, politics, banking and finance, government spending, telecommunications and energy. In his analysis piece, Garza focused on the energy reforms. He said the big challenge in 2015 will be implementation of the reforms. “While less exciting than the political negotiations, getting it right will be critical,” Garza said. “For the oil and gas sector, proper implementation will mean first hammering out the nuts and bolts of the contracts and then making sure everything is in line for the first auction early next year.”
Another major challenge in 2015, Garza predicted, will be coping with plummeting oil prices. He noted that the price of a barrel of crude oil had dipped to the mid $60s this winter, as compared to $105 in the summer. “While many of you may breathe a sigh of relief when it comes time to fill up your tank, for energy companies and oil exporting countries, this isn’t such good news. The low prices will dampen investment enthusiasm—also hurting workers and communities that rely on the industry—and mean less revenue for many governments across the region that rely on these revenues to fund their budgets.”
Garza concluded his commentary by pointing out that despite sluggish GDP growth across the North American hemisphere, economic integration continues to evolve in dynamic ways. “North American supply chains are now deepening their roots from Toronto through Querétaro, entrepreneurial ecosystems are increasingly spilling over borders,” Garza noted.