The changes made to the Regulatory Law of the Railroad Service were one of the first results in the current ordinary session period within the Chamber of Deputies. After its approval on February 4, the draft was sent to Senators and it is expected that its discussion will soon take place. In words of the PRI parliamentary coordinator in Congress, Manlio Fabio Beltrones, the railroad reform will boost competitiveness, cheapen the costs of interconnection (use of routes operated by two or more dealers), will enhance the participation of new investors and will enable the entry of permit holders. On the other hand, the current head of the Senate’s Commission of Communications and Transport, PAN Congressman Javier Lozano, has stated that the legislation “is opposed to the judicial certainty that it requires, not only regarding railroads but also in all productive activities within the country. Beyond the technicalities of such a specialized area as railroads, what are the signs provided by President Peña’s administration regarding the management of private entities within essential sectors of the economy?
In the initiative’s exposition of purposes that was originally presented by PRI Deputy, Abel Guerra, there was a critical panorama regarding the current situation of the railroad system. It would appear to be that the document intends to blame the sector’s faults to an inadequate management from dealers, something that should be corrected through a tighter government control, via the Secretariat of Communications and Transportation (SCT). Nevertheless, there is an attempt to take advantage of the short historical memory and omit how, almost twenty years ago, the privatization of the “living dead” known as Mexico’s National Railroad (Ferronales) was key into the reemergence of the aforementioned way of transportation, especially freight.
After the railroad decentralization, the new capitals saved an ancient network, one that had slowly been abandoned by the government in the last quarter of the 20th century. Two factors explain the aforementioned neglect: firstly, the public policy decision of prioritizing the consolidation and growth of the freeway network over the expansion of the railroad system (it should be remembered that between 1964 and 1995 the latter barely increased from a little more than 23,600 km to levels close to its current 26,727 km); secondly, the enormous subsidy that the Secretariat of Finance granted to Ferronales in the company’s two final decades. Although it is true that the network has barely grown in the years after the opening, this has not been the sole responsibility of dealers. In plain terms, the last federal government that truly boosted the construction of railroads throughout the country was the administration of Porfirio Díaz, who, along with Manuel González’s interregnum, built a little less than 19,000 km of the network As a matter of fact, between 1995 and 2012, the “most serious” expansion proposal was the absurdity expressed by López Obrador regarding the construction of a bullet train between Mexico City and Tijuana. Although President Peña has proposed to set new networks, not only for the transportation of goods but also of passengers, the recent experiences (such as the failure of the Suburban Train) and the government’s infrastructure plan are examples of the continuation of the policy of prioritizing the freeways over the railroads.
On the other hand, the reform would be more focused on matters dealing with competition. This could be good news but there is an inconvenient. The reform aims to weaken railroad concessions, increasing the causes of revocation by linking them to matters such as interconnection or tariff regulation. How will these criteria may be activated remains to be seen. Although the Federal Commission of Economic Competition will have a major role in it, SCT will have the faculty to determine new rules, “regardless of what has been established in the respective concession titles”. Behind this effort of enhancing competition there is a sense of taking a step back in the economic liberalization, that is to say, retake some weakened government controls during the last two decades without reaching the enclosed scheme of the crudest period of PRI’s rule.
As time goes by, the trademark of Peña’s administration in perceiving economic openness gets clearer. The railroad issue and how concessions are going to be dealt reflect the logic of control that the current government is trying to implement. Another logical step is the signs sent to dealers of the radio-electric broadcast on what the government’s stance will be when it redefines contract conditions, referring to the “general interest” (as a matter of fact, this was done in President Calderón’s tenure, when TV networks were forced to provide slots for broadcasting IFE and political parties’ propaganda). Finally, and in other tenure, the recent tax increases to mining, operated by concessionaries turned out to be a “major strike”. The reform proposal does not resist an analysis that questions its viability of providing an improved railroad sector. But it does exhibit a federal government that, in the search of a greater control, is “about to cross the line”. Over the next weeks we will see an answer to the following questions: up to what point are authorities ready to undertake their own style of opening up the sector? And, what is the tipping point?
CIDAC
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