By Manuel Suárez-Mier

President Enrique Peña Nieto / Photo credit: World Economic Forum / Foter / CC BY-NC-SA

After Enrique Peña Nieto’s first full year in office, the situation and prospects for his country are mixed. On the positive side, his structural reforms encompassing labor, education, taxation, finance, telecommunications, anti-monopoly and energy – the crown jewel – are unexpected and sweeping successes. Three previous administrations had failed to get such reforms through Congress in the preceding 18 years. The reforms, the success of which will depend on the implementing legislation, have attracted worldwide attention, generating a “Mexican moment,” and increasing substantially the flows of foreign direct investment.

On the dark side, however, Peña Nieto’s performance has been less than stellar regarding the pacification of the country from the violent onslaught over the last decade at the hands of bands of narcotraffickers. He changed the emphasis of the war on drugs from the stubborn fixation that it had in the Calderón administration (2006-2012), and he altered the terms of cooperation with the United States on this issue.  But he has been unable to stem the violence, which in some cases has worsened.  In the southwestern state of Michoacán, a new actor has emerged besides the narco and government forces: self-appointed groups of armed citizens that are battling the criminals while denouncing the government’s ineffectiveness.  Simply declaring victory in the war on drugs and moving on to other issues has not stemmed the violence.  Many observers believe that Peña Nieto’s security team is not up to par and that tolerating, and more recently collaborating, with the paramilitary groups is not the solution to the problem – and indeed will only worsen it down the road.  Also the terms of cooperation with the United States on the war on drug trafficking organizations are not clear yet.

It is too soon, of course, to declare victory on the reform front since the way these changes are implemented will determine their success or failure. We have had “Mexican moments” in the past, especially after NAFTA was approved in 1994, just to see them wiped out by government mismanagement and crises. But it is also too early to declare the final failure of the campaign to pacify the country since there have been some bright spots – notably in Ciudad Juárez. Coordination among security agencies has improved and the gendarmerie, a special rural federal police force that would replace the army in restoring the peace where violence rages, is being trained and will begin operations with 5,000 men in July.  But the appearance of paramilitary “self-defense” groups and the apparent alliance that they are forging with the federal government are deeply troubling considering what we have seen in other latitudes – especially Colombia – when such groups thrived. These contradictory trends explain why many people are enthusiastic about Mexico’s economic future while Peña Nieto’s approval ratings remain soft after a year of slow growth, tax increases, and unabated violence.

*  Manuel Suárez-Mier is Economist-in-Residence and Director of the Center for North American Studies in American University’s School of International Service.