Contentious local elections in Mexico point to a tough road ahead for president Enrique Peña Nieto’s ambitious agenda.

When President Enrique Peña Nieto (EPN) took office last December, the essence of his promise to Mexicans was to usher in a new era of governance: one that reflected a modern PRI, reformed from the old days of cronyism and corruption, but with the political muscle to accomplish major reforms – unlike the previous PAN administrations.

EPN has wowed many observers in the first half year of his sexenio, Mexican presidents’ single six-year term. Without a majority in Congress, the president quickly signed up the two major opposition parties to the Pacto por México – an agreement to pursue 95 policy initiatives. Important education and competition reforms followed in rapid succession. With those victories under his belt, the administration is poised to tackle more challenging energy and fiscal reforms.

At least that is the narrative the president would like to present. The real story, however, is far more complicated.

Elections reveal vulnerability of the Pact – and of institutions

Fifteen Mexican states held elections on Sunday for state legislatures, mayoralties, and governor of the northern state of Baja California. The outcome in the key gubernatorial race remains uncertain 48 hours after polls closed. While the right-of-center PAN seems to have retained its control of Baja California by a slim margin, a technical failure has forced a recount that will begin Wednesday. In the meantime, both candidates have declared victory.

The uncertainty has exacerbated tensions between Mexico’s major parties after a bitter campaign in which accusations of vote-buying and other electoral abuses flew back and forth. Violence also marred the campaign in several states, with more than 10 candidates and party officials killed and others badly beaten in the months leading up to the vote. 

Given this backdrop, the government would like to put the elections behind it as quickly as possible. Ironically, Peña Nieto would likely have preferred a clear-cut PAN victory in Baja California. Such a result, the thinking goes, would have strengthened the Pact, making fiscal and energy reform more attainable. With the outcome hanging in limbo, however, politicians continue to find it opportune to launch accusations of corruption at their opponents and cast doubt on the future of the pact.

Just as I planned!

Political tension certainly presents a near-term risk to the pact and, by extension, to the president’s legislative agenda. Perhaps more critically, the lawlessness surrounding the campaign points to profound institutional weaknesses that threaten the full realization of the president’s well-intentioned reforms.

Educational reform – where is it today?

The much-praised education reform provides a good case in point. Last December large majorities in both houses approved the law, which stipulates standardized evaluations for teachers and wrests control of their hiring and firing from the national union. Earlier this year, 23 states ratified constitutional changes the law requires. Soon after, the government arrested the powerful, corrupt union boss, Elba Esther Gordillo.

Still, no reforms will be set in motion until Congress passes enabling laws, which are expected to be taken up in the coming months. When they are, they will surely be met by a rash of disruptive protests from teachers across the country – especially in the poorer Southern states of Guerrero, Oaxaca, and Michoacán, where teachers have already blocked highways, staged sit-ins and attacked party headquarters since the reform passed.

None of these tactics will stop the enabling laws being passed – the teachers’ unions have few political allies on the national level. Still, the fierce resistance of so many teachers raises a critical question: how can the government expect to effectively implement nation-wide reform with local institutions corroded from decades of mismanagement, underinvestment, and lack of accountability?

Or as Gabino Cué, governor of Oaxaca, put it: how can you insist on a national standard when a Oaxacan teacher has to travel five hours by bus to reach school and another in the capital drives an air-conditioned car? Peña Nieto’s bold, decisive actions have certainly played well abroad, but they may not be the best approach to complex local environments.

Teachers protest…police demand to see hall passes

Oil, meet water

Energy reform – Peña Nieto’s self-proclaimed signature issue – best captures the dissonance between the government’s ambitious reform agenda and the reality of politics on the ground. At a press conference in London before last month’s G-8 summit, the president told reporters his political pact had the necessary support to make “transformational” changes to the energy sector, including any “constitutional changes needed to give private investors certainty.”

He has since declined to specify which constitutional changes he had in mind, but that didn’t stop the left from pouncing. Marcelo Ebrard, the former PRD mayor of Mexico City, led the charge, criticizing the president for failing to reveal the details of his proposal and challenging him to debate energy reform mano a mano.

After initially playing down the controversy, PRD leadership coalesced behind the position that modernizing Pemex, the state-owned oil giant that has seen production plummet over the past decade, does not require constitutional reforms. In taking a hard line, the left clearly believes it has a winning issue – recent polls showed 65 percent of Mexicans opposed privatization of Pemex.

The left will certainly not go along with an energy reform that would allow foreign companies to book oil reserves. That would most likely entail amending Article 27 of the Constitution, which affirms the mineral resources of Mexico as the sovereign property of the nation.

A more moderate alternative would be to allow Pemex to form alliances with private firms who would be remunerated through royalties. It is unclear, however, whether such a scheme would attract enough foreign investment to turn around Mexico’s flagging production.

In either case, the more important issue is how to reform Pemex itself. Starved of funds by its fiscal obligations, burdened by mismanagement, and plagued by corruption, the company resembles the education sector. Rather than push through another “ambitious” reform measure, which would divide the country and surely undo the president’s political alliance, the government would do better to pursue a moderate opening while focusing on improving governance at the company.

Until that happens, it is difficult to imagine Mexico’s oil sector reversing its downward spiral, and it will be harder to accomplish if oil workers take to the streets.

It was so much easier to know who won when this stuff was rigged