Politics: Dark Cloud Envelops Business-Government Ties

MEXICO - Report 11 Aug 2016 by Guillermo Valdes and Esteban Manteca

Relations between government and business soured early during the administration of President Enrique Peña after passage of a fiscal reform that raised rates and closed loopholes. Worse yet, business leaders felt that the door had been closed to the sort of dialogue they had been accustomed to. The private sector was encouraged, nevertheless, by the government’s success in passing other major structural reforms as part of the Pact for Mexico.

But tensions began to grow anew during the past year over the government’s inability to crack down on corruption. The situation especially heated up after the PRI pushed through Congress as part of long-awaited anti-corruption legislation a law that would have required anyone hoping to have any business dealings with the federal government to submit their tax statements and declarations of their financial interests and assets. Following many protests by the private sector and others, the president rescinded that aspect of the law, but it had already sent a clear signal that the authorities were once again flexing their muscle against business associations that had raised the tone of their protests against the government and the PRI. This forced the business community to negotiate amendments to the legislation from a position of weakness. The relationship between the government and the business community was damaged.

The resurgence of the conflict between the National Teachers Coordinating Committee (CNTE) and the federal government has taken on a new dimension in relation to the private sector. The Center for Economic Studies of the Private Sector (CEESP) released some figures on the damage the conflict with the CNTE has inflicted on the national economy. According to its estimates, the economic impact in the states where the conflict has been playing out has already exceeded 4.20 billion pesos.
The government is now in a serious bind: risk the social and political fallout of cracking down on the teachers or the political and economic might of business owners.

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