MXPE Weekly Essentials

Reforms recap, downsides of formal employment, Mexico’s most mysterious billionaire, and other highlights in Mexican politics, policy, and markets from the past week.

Nov 04, 2024

Not a day goes by without the government announcing or passing a deep constitutional reform that will change the way Mexico works for generations to come. Some have been watered down, others tweaked, others still passed without a change. Here’s a quick select recap of where the constitutional overhaul is at a month since president Sheinbaum took office:

Passed

Constitutional supremacy: A contentious law makes it so no court can overturn a constitutional amendment approved by supermajority in Congress. It is in response to the Supreme Court declaring certain parts of the government’s judicial reform unconstitutional. The final version was watered down to secure the support of the Green Party. Even so, the opposition and NGOs accuse the government of setting Mexico up for conflict with its international agreements.

Going through Congress

New government departments: A Womens Secretariat and a Science, Humanities, Technology, and Innovation Secretariat will be created, empowering previous lower-level government agencies that covered these issues. The Secretariat of the Civil Service will turn into the Anti-Corruption and Good Governance Secretariat, which will seek to stop being a reactive and “corrective” institution to proactively fighting corruption within government. In concentrating all transparency initiatives onto itself, this new secretariat faces accusations of a conflict of interest. There will also be a Digital Transformation Agency, which though not a secretariat in itself, has become the place where many of the government’s more ambitious digital plans of all sorts get thrown. These include open data and free internet initiatives.
Energy: Mexico’s oil and electricity companies—Pemex and CFE—will go from being state-owned to state-run operations. CFE’s electricity output will be prioritised on the grid.
Social programmes: Old age and disability pensions, apprenticeships, grants for farmers and fishing communities, and other hand outs are to become constitutionally mandated. They’ll have to keep up with inflation.
Passenger trains: A reform that opens up all 18,000 kilometres of rail—currently used for cargo—to passenger trains. Currently just 7.55% of railways in Mexico carry passengers.
Social Housing: The federal mortgage fund (Infonavit) will be transformed into a social housing building company to provide workers in formal employment with homes.

Proposed

Crime fighting bills: A series of laws are to be proposed to bind the Security Ministry to the independent attorney general and the local law enforcement in close collaboration, both for investigation and intelligence. The latter is to become the civilian administration’s main focus in combating organised crime as the armed forces face it in the streets.
“Super-powers” for electoral agency president: The commissioners of the National Electoral Institute (INE) rejected a law giving its pro-government president the ability to bypass them. In response, one congressman from the ruling coalition proposed giving the INE president these powers through a constitutional amendment.

There are several more promised reforms ranging from anti-fentanyl, to animal rights, to vape regulation laws. So, the whirlwind is set to continue.

The rush to pass all these laws has to do with the understanding within the ruling coalition that they’ve only got until the midterms to transform the constitution in their image. Their assumption is that the supermajority will only last until 2027—which highlights the need to stop the courts from challenging their constitutional changes.

Critics warn that the ruling party, Morena, is destroying exactly the sorts of checks-and-balances that they fought for when they were in opposition.

Uncharted Mexico: The downsides of formal employment

Mexican administrations have failed miserably in turning the 54% of working Mexicans into formal employees. This has been because formalisation drives have sought mostly to extract taxes from workers rather than focusing on affording them the benefits of formality (pension and mortgage funds, healthcare, etc). Perhaps most distressing is that, even though informal work pays half as much on average, those in formal employment are worse off than they were two decades ago. Informal workers, meanwhile, have never been better.

Oxfam/México, ¿cómo vamos?

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Last week’s highlights:

It’s not TV, it’s Mexico’s most mysterious billionaire—Mexico’s historic television titan, Televisa, is in trouble because its owner and president, Emilio Azcárraga, stepped down after it was revealed that he was being investigated for FIFA-related bribery in the US. Soon after, it was reported that David Martínez—a mysterious billionaire with a penchant for aggressively taking over of some of Mexico’s largest companies—snapped up 7.8% of Televisa’s stock. He is now the third largest stockholder in the company. Mexico’s other great TV company, TV Azteca, is also in trouble, with its owner also in financial and legal strife.
Vibecession—The peso and the Mexican stock market are in decline on the uncertainty of the US elections, but look at Mexico’s biggest companies and you get a completely different picture. Some of the country’s largest firms reported double-digit growth this past quarter. That includes Bimbo, the world’s biggest bakery, Bafar, a food packer, Traxión, a tech and logistics company, and La Comer, a supermarket chain. Meanwhile, e-commerce giant Mercado Libre and retailers Coppel are investing millions of dollars in their Mexican expansions.

Don’t get distracted by… Supreme Court justices’ resignation

This is really important news, but some media have made it out to mean that the justices who have resigned leave a vacant Supreme Court. In fact, they are following the established procedure set out by the law and will be stepping down next year.

As opposed to claims that they quit to ensure they got their pensions, it is clear that the resigning justices did so because they do not believe in or do not feel qualified to enter the electoral process that judges and magistrates will have to undergo from 2025.

Meanwhile the Supreme Court has its plate full, with one justice proposing a kind of ‘negotiated’ exit from the constitutional crisis the judicial reform has unleashed. Justice Juan Luis González Alcántara Carrancá has offered a list of what can and what shouldn’t be allowed to go ahead in the reform. He argues that the vast majority of federal judges and magistrates should not be elected, while allowing for the country’s top courts to face the voter scrutiny at the polls.

Local zoom in: A ‘Google Map’ into Campeche’s Mayan past

An archeologist “accidentally” found an ancient Mayan city in Campeche using lidar (like radar but using lasers instead of radio waves) to see past tree cover. He discovered monumental buildings still protruding from the ground. The term accidental isn’t quite right, since scientist Luke Auld-Thomas knew that the area was chock full of ancient cities. He also stated that locals have long known about and lived among the hidden ruins. However, what new technologies allow is for archaeologists to look at entire cityscapes from a bird's-eye view without so much as having to pick up a shovel.

This is a crucial advancement, given the push to quickly develop Mexico’s southeast, destroying archaeological patrimony as cities, roads, and railways plough through the jungle.

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