Luis Rubio
In her speech before Mexican and North American businesspeople, the President delivered three messages: first, the free trade agreement between the two nations is key for Mexico and should be strengthened; second, foreign investments are fundamental for Mexico’s development; and third, the investments are safe, and there will be clear rules. She guarantees these. The big question is how credible that guarantee is for potential investors.
Madison, the U.S. President at the beginning of the 19th century, explained why the statement of President Sheinbaum is problematic: “It may be a reflection on human nature that such devices [checks and balances] should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary.” For the “guarantees” that the President offers to entertain credibility among potential investors, be they national or foreign, these guarantees must be sustained in institutional structures that enjoy legitimacy and permanence, precisely contrariwise to what Mexico is experiencing these days.
In fact, only a few hours had gone by after the end of the President’s address before the bilateral business council for her own words to demonstrate the fragility of those guarantees. Instead of stating that Supreme Court justices would resolve disputes in judicial matters, therefore providing support for the separation of powers and for the counterpoise that the latter power would represent, the President asserted that “The judge is exceeding her authority” and that she, the President, is not going to obey an order of a judge, in the case of an “amparo” (a judicial protection order or redress), because “the petition of that judge does not command legal backing.” I do not sit in judgment concerning the matter-in-dispute because I have no idea who is right in the specific disagreement; I only read the statements and deduct the obvious contradiction between what is being said in one forum and the other.
In the first forum, clear rules and guarantees are offered, while in the second, she makes clear that these rules and guarantees do not exist and that the President is the ultimate authority for determining what is legal and what is not. What would a company-associated corporate lawyer conclude from this situation regarding whether potential investors would be interested in investing in Mexico? As Madison in 1788 penned in Federalist Paper 51, checks and balances are the sole guarantees because human beings, the common man and the presidents, one and the same, are not angels and are prone to changing their opinion and embracing the vagaries of the moment.
Were clarity to be lacking in the presidential vision, some days later, she closed the circle by claiming that “No judge, nor eight justices, can stop the will of the people of Mexico.” I do not know the will of the people of Mexico since even with her broad margin of electoral victory, the President does not represent the totality of the population. In addition, what was being voted on back on election day was who would govern Mexicans, not the content of every decision or specific legislative proposal. As Ruchir Sharma wrote, “State meddling is rife [in Latin America]. Erratic stabs at judicial reform in Mexico, constitutional reform in Chile, and presidential interference in state-owned companies in Brazil are adding to the uncertainty and scaring off international investors.” If the President is right, investment will grow significantly; if Sharma is right, complex times are in store for Mexico and the new government’s project.
The question remaining up in the air is whether, as the President stated, “their investments are safe in Mexico.” In the phrase that followed lies the key: “We should all possess the certainty that this will be conducted with clear rules.” Whosoever has observed the way the judicial reform was approved or, worse yet, the secondary laws, will harbor severe doubts concerning what is being understood as “clear rules.” What I observed comprised a collection of chaotic processes, special (and powerful) interests skewing the content of the articles of the new laws, a pack of hounds seeing how to take advantage of the proceedings, and an overwhelming majority of legislators simply raising their hand without having any idea (or the slightest interest) about what was being approved. More than clear rules, the judicial reform (and its derivatives) portends true anarchy in the election of judges, many of which are chosen to respond to a certain political leader or criminal.
To an even greater extent than in the rules, the government is fostering a growing uncertainty concerning the future, precisely the opposite of what an investor requires to put their patrimony at risk in Mexico. Uncertainty is not a novel factor in the Mexican government; in fact, eliminating uncertainty was the reason why NAFTA was procured in the nineties; thus, it became the most important factor of stability and economic advance in the last fifty years. The problem today is that there are no guarantees of the permanence of the Agreement, while the Mexican government insists upon heightening the levels of uncertainty.
As the comedian Cantinflas said, “At voting time, it’s all promises… when it’s time to keep them, it’s all excuses.” Certainty is achieved with institutions, not with promises or personal guarantees. It’s never too late to start building it.
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