11/04/2014 01:29 pm ET Updated Dec 06, 2017

The Mexican State's Delusion of Grandeur

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The political crisis that Mexico is going through as a result of the tragic disappearance of 43 students in Iguala, Guerrero on September 26th is without a doubt the most severe test yet for the government of Enrique Peña Nieto. The kidnapping and likely murder of these young men has highlighted the absence of the rule of law in large parts of the country and the abject failure of the Mexican state across its three levels - federal, state and municipal - in providing its citizens with the most fundamental right of any civilized society: security. The other problem is that it does not comply with the official narrative of the government, particularly the one promoted abroad: the one where the drug war is an afterthought, and the spotlight is focused on the structural reforms which, it is hoped, will transform the country into one of the great success stories of the emerging world in the coming decades.

In the face of this tragedy, Mexican society has expressed its frustration through protests, marches, and candlelight vigils, most of which have received scant coverage by the world media. But this is not the first time that society has mobilized in response to violence. Exactly a decade ago (and before the drug war began), a so-called mega-march was held in Mexico City in protest over the capital's wave of kidnappings at the time. Many others followed over the years and in each case it appeared that society's indignation over spiralling crime and government ineptitude in dealing with it had reached its limit. Every time it seemed that the government was finally on the verge of giving in to social pressure and would force itself to uphold its duty in protecting its citizens. But it never did.

Blame the state

The problem of insecurity cannot be pinned down on government, which in this case would implicate the PRI (as the Mexican left insists) for being the party in power, or the PRD which governs the municipality of Iguala and the state of the Guerrero. Rather, it is a problem of the Mexican state. To some extent, all of Mexico's political parties preside over sub-national entities that are captured by the influence of the drug cartels, or that are guilty of gross mismanagement that is all but known to the party's leaders. In the former case, the fact that politicians from all sides of the spectrum have been murdered by the cartels on various occasions is frightening evidence of the degree of political control that these organized criminal groups wield. Mexico as a whole may not be a "narco-state", but a very substantial part of it is. As for the mismanagement, there's no better example than the colossal rise in sub-national debt over the past decade. During this period, 23 out of Mexico's 31 states have seen their debt levels rise at a faster pace than the central government's (eight of them have seen it rise at more than triple this rate), with very little to show for it. One such state, Coahuila under Humberto Moreira, saw its debt rise by a factor of nearly 90 during his term alone. And yet his fall from grace came not during his stint as governor but only after he stepped down to become (briefly) the national leader of the PRI.

Rather than addressing their failures, Mexico's politicians make an art form out of minimizing them. The former governor of Guerrero, Ángel Aguirre (who was recently forced to step down) claimed that violence in his state was a problem only in Iguala despite the fact that its largest city, Acapulco, has the world's second highest murder rate outside a war zone. The governor of Veracruz, Javier Duarte (who is no stranger to scandals) recently stated that crime in his state was "limited to shoplifting", despite it being one of the three states with the highest number of kidnappings in the country. Amid a wave of femicides, the governor of the State of Mexico, Eruviel Ávila, denied a meeting with an NGO stating that "there were more serious matters to attend". In contrast to the U.S., where politicians instantly lose the backing of their parties in the face of a scandal, in Mexico parties inevitably close ranks in defense of the accused until the pressure is simply too much, although this is rarely the case. It took over a month for Aguirre to step down after the most horrible human tragedy of Mexico's recent history and he was hardly a party stalwart. In fact, he had been a lifelong member of the PRI until he was poached by the PRD in order to win a state election in 2011 that it otherwise had no chance of winning. All in all, it's a safe bet for most disgraced politicians in Mexico that they'll live to see the end of their terms.

A toxic equilibrium

These lengths to which scandal-ridden politicians are protected by their leaders even when the evidence is weighted irrevocably against them is possibly the most toxic expression of the short-termist mentality of the country's political class; one which researcher Edgardo Buscaglia recently labelled "the pact of impunity". Applying economic language, this suggests that the discount rate of these parties is extremely high, such that preserving their immediate political standing holds greater value than the longer-term electoral benefits of being perceived as a party with some semblance of integrity. Escaping this equilibrium is possibly the most important evolutionary step that the Mexican state could take this century, and would lay the basis for a political framework based on governability and the rule of law. Security would naturally follow, since crime and violence thrive where these two elements are absent. The economic impact would be extraordinary as well, possibly equal to or greater than the structural reforms themselves (according to the World Bank, corruption in its many guises costs the country as much as 9 percent of GDP).

It is on this last point that the political and economic consequences of the Iguala tragedy converge. Can we believe that the same state incapable of solving its internal security problems can somehow lead a radical transformation of the country's economic prospects? Can it guarantee that the same forces that drive this failure - the rent-seeking, the impunity, the bribery, the opacity, etc. - won't also have a noxious influence in the economic sphere? It seems almost delusional to think so. Disassociating these two spheres may reassure people that everything that Mexico get wrong is offset by what it will get right, and that the events in Iguala will have little impact on Mexico's economic destiny. Hopefully they'll be proved right, and maybe if economic success comes first then political maturity will follow as well (at least that's what many economists held as a dogma of faith not too long ago). But in a country whose history is rife with shattered expectations, don't count on it.

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