The Big Leagues

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The reforms that began last year place Mexico, potentially, in the world’s big leagues, there where the players are professionals and the game rules transparent. The mere opportunity of our being able to play in that scenario constitutes an authentic milestone. At the same time, it is necessary to take note of the conditions that remain for the country to satisfy in order to put in at a good port, thus the fragility of the instruments with which it is arriving at the table.

The generic matter is that of the Rule of Law and the institutions that lend it form and make it possible, a theme of frequent concern for me. While a company of contractors can be administered by a middling and even parochial government, the awarding of contracts and concessions to the world’s leading oil conglomerates implies a quantum leap in these matters. These enterprises are at home all the countries of the world, work in the most amenable regions of the globe as well as in the most corrupt and mafia-ridden. Their experience is garnered by hundreds of attorneys and an instantaneous, sometimes irreflexive, disposition to litigate any significant issue before the courts. The question is whether Mexico is really capable of, and prepared to, play in those leagues.

While a discussion on the Rule of Law tends to be abstract and ethereal, the administration of complex processes based on first-world contracts is not abstract and theoretical but concrete and real. With respect to the coming into fruition of the reforms approved last year, above all that of energy, the country will find itself confronting the reality that the big leagues entail in this matter and, I have no doubt, it will become evident very fast that this is not a lesser challenge.

As in sports, being in the big leagues implies submitting to a regime of higher-level scrutiny, professional referees and arbitral tribunals, over which the government has no control. That is, it implies assuming the responsibility for professional conduct that is very distinct from the provincial practices typifying us. I ask myself how we will make the leap. The evidence available for assessing this contingency up to today is mixed.

In economic matters, one part of the country has clearly taken that step. The tourism industry has transformed itself into one that caters to and competes for the world’s most demanding tourism. The same is true for the exporters who have superseded Japan in the U.S. automotive market. That is, there’s nothing in Mexicans’ DNA holding them back from achieving a transformation or from competing successfully. However, the great difference between exporters or hoteliers with regard to the challenge of the big leagues is that, in the first case this is about individual actors who possess the flexibility to adapt with celerity and who are focused on very concrete affairs. The same is not true for the energy sector.

In the case of energy and, in general, of an investment regime and modern as well as in competitive trade markets, what will be required is legislation that is defendable in international tribunals. When a lawsuit comes about, prosecutors and investigators will have to be capable of supplying reliable and genuine evidence, regulator entities will have to be able to confront the government and impose themselves, judges will have to hand down rulings susceptible to the scrutiny of non-traditional arbiter bodies and so forth. To date, none of the country’s legislative, judicial or regulatory institutions could boast of such a benchmark. For the country to be successful in the big leagues it will be necessary to change everything about the way the Mexican State functions. This is a major summons and it will demand not only human capability but also exceptional leadership that, in addition, will have to be able to confront all of the injustices of our political and judicial system. I doubt that the government today comprehends the nature of the challenge.

One comparative index that evaluates the degree of the Rule of Law that characterizes the countries of the world employs eight indicators: limits to governmental authority, absence of corruption, governmental transparency, fundamental citizen rights, order and security, the capacity to make regulations complied with, civil justice and criminal justice. Each of these indicators carries with it a trail of analytical elements, but I doubt whether any Mexican would be surprised that the index ranks us in 79th place of 99. Taken together, the indicators attempt to measure only one thing: does the government (including the legislative and the judicial branches) work to protect the rights of individuals (including investors) or not? Unfortunately, the verdict furnished by the indicator does not lie outside of the reality.

The great question, perhaps key for making the success of reforms like that of energy possible, is whether the country, beginning with its government, is willing to undertake institutional reforms that would make possible the installation of a system of government capable of imparting continuity to the citizenry in terms of living in a safe environment, protected by laws and with ease of access to justice. If the response to this obvious question is no, the country is in big trouble; if Mexicans are not capable of making life simpler for the ordinary citizen, what makes one think that we’d be capable of attracting investors who have their own means of defense. The challenge moving forward is monumental.

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Luis Rubio

Luis Rubio

He is a contributing editor of Reforma and his analyses and opinions often appear in major newspapers and journals in Mexico, the US and Europe (New York Times, Wall Street Journal, Financial Times, International Herald Tribune, Los Angeles Times, Washington Post, National Public Radio).