Former Mexican President Carlos Salinas de Gortari (1988-1994) was in London this week giving a talk on NAFTA at the London Business School.   The argument of his presentation was that NAFTA was intended to be an instrument to making the Mexican economy more competitive and robust, not an end in and of itself.  He presented a number of statistics which demonstrated that Mexico had lost competitiveness in the decade since NAFTA on a number of metrics, and was highly critical of the lack of progress in reforming the Mexican economy further during the Zedillo and Fox administrations. 

He made a persuasive argument, but surprisingly for a man who has a PhD from Harvard in political economy, he didn’t address the underlying issues for this lack of progress in reform.  It is not just that political will is missing in Mexico - the Mexican political system is blocked by its party configuration and several other institutional characteristics of its democracy.  With three almost equally powerful parties (the former ruling party, PRI; the right of centre and currently governing PAN; and the left of centre PRD) it is hard to find support in the legislature for bills of any sort, especially ones that do not enjoy the support of the public like privatisation of the state-owned oil company, PEMEX (an issue which is enshrined in the Constitution, making it even harder to amend, and linked to the Mexican political identity through the legacy of the Mexican revolution).  Political scientists argue that this distribution of power amongst parties combined with a lack of re-election for Mexican deputies makes it almost impossible to get business done since deputies have no long term interest in building cooperative relationships with members outside of their own party. 

The features of a three party system need not be a permanent block – the UK parliament manages to get business done despite having a relatively strong third party – but the issue is that there is a strong social, economic and political division amongst Mexicans which underlines these party lines and is unlikely to fade in the coming years as it is related to deep structural problems in the economy.  The north and the south are increasing bifurcated both in terms of wealth and opportunity, leading to situations like last year's presidential election, where López Obrador or the PRD lost by the slimmest of margins to PAN candidate (and now president) Felipe Calderón and refused to accept his victory, staging a long, drawn out and very public protest at what was considered to be electoral fraud.

While Salinas didn’t address any of these issues in any depth, he did charm the crowd with his relaxed manner, interesting jokes, facility with complex economic issues and knowledge of Russian literature.   It was both substance and style – though we could have used a bit more insight into how politics and economics are inextricably linked in Mexico…