Mexico: Is Centralization the Way to Battle Corruption?

By Daniela Stevens*

A large group of people stand on a stage.

Mexican President-elect Andrés Manuel López Obrador (center left) meets with current President Enrique Peña Nieto and members of his cabinet during the transitional government period. / Presidencia de la República Mexicana / Flickr / Creative Commons

Half way through Mexico’s five-month transition period, an effort by President-elect Andrés Manuel López Obrador (AMLO) to increase central government oversight over states’ affairs suggests an agenda that may go beyond the “republican austerity” he frequently calls for.  His plans to lower the numbers and salaries of high-ranking bureaucrats have been well received, but he raised hackles when he announced plans to appoint a single federal representative – a delegado – to liaise with each of the 32 states, eliminating the 20 to 30 central government representatives that until now have been dispersed throughout each jurisdiction.  He claims the measure is to save on the bureaucracy payroll, but many observers are concerned it will concentrate more power in his own hands.

  • Criticism has already forced AMLO to repackage his plan somewhat. He uses mixed language to refer to the responsibilities of the delegados.  While he has strongly defended his legal ability to appoint a single delegado, he more recently reassured aggravated governors that his representatives would maintain “institutional relations” and respect local elected officials’ autonomy and authority.  Olga Sánchez Cordero, AMLO’s appointee as Secretary of the Interior, further clarified that the delegates would only be in charge of social development programs, constituting a “layer of proximity to citizens” currently or potentially enrolled in social programs.  Under AMLO’s proposal, delegados would take over all kinds of programs, including youth scholarships, conservation efforts, health care, and social security programs for special populations – a herculean portfolio for a single representative.
  • Critics argue that the appointment of single delegados reporting directly to AMLO will undermine federalism. Electoral and administrative decentralization were integral to Mexico’s long democratization process.  For decades, the president was not only the predominant force over the legislative and judicial powers; he also appointed governors from the hegemonic party to the states.  The delegados would potentially create a power structure that parallels and rivals that of the state governors.  Some governors argue that the constitution does not recognize intermediate authorities, and wonder whether persons with partisan agendas will get too deeply involved in local budgets and policies.  In addition, the position would be coveted for its discretionary power and direct link to the president – giving politicians from AMLO’s party, Morena, a leg up as potential candidates for governor.

If done right, however, the measure could alleviate the plague of corruption that permeates the states, and the governorships in particular, and which AMLO has repeatedly condemned.  Governors routinely abuse their powers and engage in serious acts of corruption and financial crime.  As Agustina Giraudy has documented, undemocratic governors have used their offices to perpetuate “subnational undemocratic regimes” in the wake of Mexico’s 2000 transition to electoral democracy at the national level.  Former Governor Javier Duarte, of Veracruz, stole hundreds of millions of dollars from the public budget, and others, like Humberto Moreira in Coahuila, left their state with large debts.  Oversight from an anti-corruption executive in Mexico City might not necessarily be a bad thing.

Ideally, state legislatures – rather than the president or his delegado – would constitute the brake on governors’ decisions, providing a real counterweight anchored in local political dynamics.  AMLO’s efforts to turn Mexico into an “authentic democracy” will miss the mark – and amount to a crass political move – if the transformation does not include an institutionalization of leadership.  His party, Morena, is extraordinarily dependent on his personal leadership; it is an amalgam of politicians who abandoned other parties or joined it because of personal ties to him.  AMLO, who plans to preach integrity by example, cannot alone be the foundation of the “fourth transformation” he purports to lead (the first being independence, the second the “Reforma,” wars, and the third the 1910 Revolution).  With institutionalization, AMLO and Morena could put appointees and delegados through a transparent, legal vetting process – based on merit – and give them clear, legal operational responsibilities.  Failing that, their reforms may prove to be a primarily partisan project.

September 14, 2018

* Daniela Stevens is a Ph.D. candidate in Political Science in the School of Public Affairs at American University.

Cuba: Can Official Labor Meet the Needs of Private Workers?

By Geoff Thale*

Alberto Yoan Arego Pulido / Flickr / CC BY-NC 2.0

Alberto Yoan Arego Pulido / Flickr / CC BY-NC 2.0

As Cuba embraces a new but still undefined economic model, it’s unclear whether or how the country’s old labor laws and regulatory systems will be adapted to accommodate the interests of employees in the growing private and cooperative sectors, or in the newly autonomous state enterprises.  The trade union structure cannot play the social role it played in the past with the emergence of businesses owned by both individuals and cooperatives, a growing role for foreign investment, and increasingly decentralized state enterprises.  During a recent trip to Cuba, our research team met with representatives and staff from a range of officially recognized trade unions.  We met with the national labor federation – the Central de Trabajadores de Cuba (CTC) – and with national and local officials from some member unions, including the national president of the health care workers’ union; local trade union officials in the hotel and restaurant workers union in the tourist sector in Old Havana; and local officials representing self-employed and small-business owners who have joined the union for retail and commercial workers.  A Labor Code approved by the National Assembly in December 2013 changed some aspects of the legal framework for labor relations.  It continued to privilege the CTC as the sole labor federation, while also taking some steps to recognize the new issues that confront workers in the emerging sectors of the economy.  It established a maximum number of hours of work (44) for private-sector employees, required the self-employed or small-business owners to pay into a social security fund and ensure social protections – health care, pensions, etc. – for employees.  And it guaranteed private-sector employees seven days paid vacation per year (though less than the one month given to state-sector workers).

Our interviews, however, turned up more questions than answers.  Newly autonomous state enterprises have greater latitude in setting wages, incentives and working conditions, but it remains unclear how these decentralized enterprises will handle labor relations issues, and what kind of negotiations might take place on compliance with regulations on workplace safety and protection, wage requirements and employment opportunities.  Indeed, it is unclear how the current worker organizations will represent workers in these decentralized enterprises.  The growth of the private sector presents another challenge.  The CTC has sought to organize the self-employed into the unions in the industries in which they are functioning – the food service and restaurant union, the retail and commercial sector union, and so on – but it is unclear how the union will represent the interests of both owners of independent small businesses – cuentapropistas – and the 15 percent of “self-employed” who are actually employees in those enterprises.  Similar queries are popping up in the cooperative sector and in enterprises run as joint ventures with foreign corporations or as wholly foreign-owned companies.

Cuba’s new labor policies are clearly a work in progress, but they signal recognition that there is an emerging stratum of non-state sector employees – and that they need social protections.  It also reflects a balancing act between ensuring stable employment and benefiting from the flexibility that private sector employment models provide.  The new Labor Code requires, for example, that employers sign year-long contracts with employees while guaranteeing them access to health care, parental leave and other benefits during that period.  New challenges will emerge, especially in terms of the structures that represent the interests of these groups and advocate for them.  But for now, there appears to be progress in establishing a system of social protections for the self-employed and for their employees under the new labor code.  Concerns about the burden of compliance appear likely to be muted for at least the near term because, as it was clear to us during our visit, the self-employed and their employees are earning substantially higher incomes than are workers in the state sector.

*Geoff Thale, program director at the Washington Office on Latin America (WOLA), in October led the research team’s fifth visit to Cuba examining the impact of economic change on workers.

December 9, 2014

Downsides of Decentralization: Lessons from Peru

By Eric Hershberg
Embed from Getty Images
Decentralization – the buzzword among Washington-based specialists on governance during the 1990s and well into the first decade of the 21st century – failed to fulfill technocrats’ lofty expectations wherever it was implemented in the absence of a strong central government.  In one country after another, the World Bank, Inter-American Development Bank, and USAID prescribed political and administrative decentralization as a recipe for deepening democracy and boosting efficiencies in the delivery of governmental services.  An alliance of strange bedfellows united behind the “good governance” cause of decentralization, including grassroots democracy activists of the left who, in the aftermath of authoritarian rule, valued the notion of devolving decision-making authority to the citizenry.  Neoliberal economists, in turn, were attracted to virtually any initiative that would diminish the authority of central states, which they considered to be incorrigible bastions of inefficiency, rent-seeking and patronage.  Cautionary notes from skeptical political scientists were routinely dismissed as anachronistic.  At a seminar in Lima around a decade ago, USAID staff were utterly perplexed by the suggestion that, in the absence of central institutions holding the new regional authorities accountable, the headlong quest to political decentralization in Peru could bring extremely serious adverse consequences for democratic governance.  In their view, the capabilities of the central government had nothing to do with the success of decentralization.

Their enthusiasm was not entirely misplaced – but in many places the reforms eventually backfired.  The authoritarian regime of Alberto Fujimori (1990- 2000) had centralized power excessively, eliminating the handful of regional governments that had been created during the 1980s and ensuring that the social programs they had administered would be entirely dependent on the executive branch.  Fiscal decentralization, already minimal, was eliminated to make provincial municipalities completely dependent on transfers from the central government.  The few regional authorities who survived the Fujimori period were appointed by the president.  When President Alejandro Toledo (2001-06) and his Peru Posible party took office, the need to restore some decentralization was clear, but the two traditional parties – the APRA and Acción Popular –gradually coopted the movimientos regionales, creating clientelistic networks employing mafia-style tactics.  In the Ancash Department, for example, a rogue president is associated not only with corruption scandals – common in regional governments – but also with the assassination of his political enemies, including a political opponent murdered in March.  President Ollanta Humala has frozen the region’s assets, thereby putting a stop to some of the corruption but at the same time delaying needed infrastructure projects and social services.

The emergence of authoritarian enclaves was predictable of fledgling democratic regimes in Latin America, and the phenomenon is not unique to Peru (click here).  Sub-national authorities have access to vast resources to distribute to their clients (and themselves), and all too often the central state lacks the capacity or control over the purse strings to rein them in.  Social scientists have long been aware of the “paradox of decentralization,” and indeed at American University it is a concept that we typically teach freshmen in Comparative Politics – that decentralization only promotes democracy when it follows the consolidation of a strong central state.  This insight escaped the gaze of the technocrats so enamored of decentralization in Peru.  There, as elsewhere, the absence of horizontal accountability – that is, the ability of different branches of government to check one another’s authority – is aggravated by the inability of civil society to hold leaders accountable and allows for the emergence of local mafias in control of sub-national institutions.  Decentralization took on such steam at a time when Latin America’s national governments had been weakened by the economic crisis of the 1980s and the ideological assault on the central state that continued well into the current century.  It will take many years to rectify the damage.