Corruption to dominate Mexican 2018 election campaigns

Subject Corruption and the election. Significance Former Tamaulipas Governor Eugenio Hernandez Flores (2005-10) was arrested on October 6, on suspicion of corruption. He is the latest in a string of former governors -- mostly of the ruling Institutional Revolutionary Party (PRI) -- to be detained. Public indignation at corruption has increased since September 4, when Animal Politico published the findings of an investigation suggesting that in 2013 and 2014 the federal government embezzled more than 7.6 billion pesos (406 million dollars). Sensitivities about this issue have led to mounting concern regarding the potential misuse of funds donated in the aftermath of September's earthquakes. Impacts Congress’s focus on 2018 budget talks will hinder progress on implementing the National Anti-Corruption system. Public sector corruption will not be significantly reduced under the current administration. Reports of misuse of donations following the earthquakes could trigger public unrest.

Significance A vote intention poll carried out by Buendia & Laredo and published on February 23 shows the conservative opposition National Action Party (PAN) well positioned ahead of the June 7 mid-term elections. The survey shows that support for the ruling Institutional Revolutionary Party (PRI) plummeted by 12 percentage points since its previous poll of November 2014 and is currently only four points above the PAN's vote intention levels, which increased by three points to reach 26%. Impacts PAN voting intentions fall within its historical range, showing its inability to capitalise on the loss of support for its main rivals. However, with many voters undecided, there is some scope for the PAN's support to grow as campaigning starts in April. The election outcome will have a significant impact on the balance of power between the party's main factions. Zavala's bid to contest the PAN's leadership in November will depend largely on the party's electoral success in June.


Significance The embarrassing jailbreak tarnishes the mandate Mexico's mid-term election gave the administration of President Enrique Pena Nieto to consolidate its reform programme. Furthermore, while the ruling Institutional Revolutionary Party (PRI) -- in alliance with the Mexican Green Party (PVEM) and New Alliance Party (PANAL) -- secured a simple majority in the Chamber of Deputies, overall trends show a steady decline of the PRI, and a failure to address some serious credibility gaps. Impacts The PRI's increasing dependence on alliance-building may preclude further fragmentation of Mexico's main parties. As corruption and human rights scandals intensify, PRI-PVEM-PANAL electoral prospects may suffer. El Chapo's escape will severely damage faith in Pena Nieto's ability to tackle insecurity.


Subject A profile of Andres Manuel Lopez Obrador. Significance With presidential elections due to take place in July 2018, the leftist National Regeneration Movement (Morena) is the only party so far to have a confirmed candidate. Andres Manuel Lopez Obrador will run for a third time, having come second on both previous occasions -- in 2006 and 2012 with his former Party of the Democratic Revolution (PRD). With the ruling Institutional Revolutionary Party (PRI) losing popularity, Lopez Obrador now looks well positioned for victory. Impacts Lopez Obrador’s mayorship of Mexico City gives some indication of how he might govern. A reduction of petrol prices could quickly garner him favour. Rejection of an alliance with the PRD could lose him crucial votes in 2018.


Subject Morena's election prospects. Significance On April 17, newspaper Reforma published the results of a poll (conducted between April 7-10) revealing the leader of the new, leftist Movement of National Regeneration (Morena) Andres Manuel Lopez Obrador to be the most popular candidate ahead of the 2018 presidential election. Although President Enrique Pena Nieto's Institutional Revolutionary Party (PRI) had the greater share of preferences, all its potential candidates came third after Lopez Oberador and former First Lady Margarita Zavala (2006-12) of the conservative National Action Party (PAN). Impacts While Lopez Obrador's popularity may boost Morena, conversely the party could hold him back, hindering his presidential chances in 2018. Coalitions with the PAN will boost the PRD's election hopes, but its failure to redefine itself may see it lose support to Morena. Morena's continued refusal to enter into coalitions could cripple the Mexican left for years to come.


Significance The bill aims to expand the accruable revenue for the federal government, crucial for meeting the government’s 2022 fiscal targets. In particular it looks to close existing tax loopholes rather than raising consumption taxes which could inhibit economic growth. Impacts Increased taxes will only have a limited impact on consumer spending and inflation. The bill will not appreciably increase state-level revenues. Broader institutional reforms in the public sector are unlikely due to powerful patronage networks.


Subject Mexico's main political parties have announced new leaders but none is likely to rejuvenate their party's fortunes. Significance Mexico's three main political parties announced leadership changes in August. President Enrique Pena Nieto's Institutional Revolutionary Party (PRI) confirmed the appointment of former Congressman Manlio Fabio Beltrones on August 20, and the conservative opposition National Action Party (PAN) elected Ricardo Anaya -- also a former legislator -- as its president on August 16. On August 6, Carlos Navarrete, head of the main leftist opposition Democratic Revolution Party (PRD), revealed that he was stepping down as leader following a disastrous electoral performance in the 2015 elections. Impacts Amid popular political disillusionment, all new leaders will face difficult conditions in leading their parties to victory in 2018. The new party presidents' abilities will be tested in the 2016 state elections, prior to the presidential election in 2018. The issue of PAN-PRD electoral alliances will fuel divisions within both parties, and may undermine the authority of their new leaders.


Subject Mexico City elections. Significance On July 1, Mexico City will elect a new head of government, 16 borough mayors and 66 representatives to the Legislative Assembly. Claudia Sheinbaum of presidential frontrunner Andres Manuel Lopez Obrador (AMLO)’s National Regeneration Movement (MORENA) is leading the race for the governorship, pushing Alejandra Barrales of the incumbent Party of the Democratic Revolution (PRD) into second place. The Institutional Revolutionary Party (PRI)’s Mikel Arriola, is running third. Impacts A Sheinbaum victory would bring some policy continuity with previous left-wing PRD governments. Contracts agreed during the current administration (particularly for refuse management and urban development) may be reviewed. Defeat in Mexico City would be devastating for the PRD, which is also in danger of losing Tabasco and Morelos to MORENA.


Subject The PRI National Assembly. Significance The ruling Institutional Revolutionary Party (PRI) held its National Assembly on August 12 amid rumblings of internal discontent and low levels of popular support. Members approves several key changes to party objectives and statutes, in an apparent effort to curb corruption among officials and boost accountability and inclusion. However, all eyes were focused on decisions regarding the nomination of the party's presidential candidate for the 2018 election. Impacts The government’s poor communication skills and ineffective crisis response leave it vulnerable to unforeseen challenges. Next to Lopez Obrador, Meade might appear a reliable, conservative presidential option, but his lack of charisma could let him down. Despite its problems, a PRI election win cannot be discarded; it has the largest network of supporters and resources of any party.


Subject Russian regional finances. Significance The Russia economic downturn is hitting the budgets of regional and local authorities. On March 30, four regional governments announced that they planned to issue bonds. The federal government was reported to be restructuring regions' debts to the federal budget, with a long grace period and a refinancing rate of 0.1% at a time of double-digit inflation. On April 1, the federal government said it would be giving 16.9 billion rubles (about 290 million dollars) in small-business subsidies to the regional authorities and plans for mortgage subsidies to halt the 30-40% drop in the pace of construction in the regions. Impacts Federal transfers to sub-national budgets will be increased from 2014 levels. Soft loans from the federal budget to regional administrations will also have to be increased. Public sector pay that is financed from regional budgets will fall.


Subject The government's security policy. Significance President Enrique Pena Nieto's December trip to the border city of Ciudad Juarez -- once 'the most dangerous city in the world' -- was designed to highlight an area where the government's security policies seem to have garnered impressive results. Pena Nieto claimed that since the Institutional Revolutionary Party (PRI) took power two years ago, homicides in the city had decreased by 50%. However, this improving situation is not representative of Mexico as a whole. Impacts Homicide, extortion, and kidnapping rates in Ciudad Juarez, Tijuana and Monterrey will continue to drop. Implementing the same security policy in states with warring organised crime groups remains much more problematic. In Guerrero, Michoacan and Tamaulipas, homicide, kidnapping and extortion rates will stay stable or rise.


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