LatinFinance - March/April 2014 - 29

Diligent team
Peña nieto rose through the ranks to become governor (2005-2011) of the heavily
industrialized state of mexico, which adjoins mexico city. today, his closest aides
are officials and operators who served
him then: finance minister luis Videgaray,
widely regarded as a multi-purpose troubleshoooter, and aurelio nuño, his private
secretary. Government minister miguel
Àngel osorio chong is the exception: a key
player, he was previously governor of the
state of Hidalgo.
"He really is about the personal machine," says estevez of itam university. "He
and his central team make no mistakes."
Given the scale of mistakes of some
previous administrations in mexico - nationalization of commercial banks in 1992,
episodes of mismanagement causing massive currency devaluations and economic
collapse - a more diligent team is perhaps
cause for some relief.
Peña nieto has not shied from flexing his
muscles. His government arrested a PRi ally
and leader of the million-strong teachers'
union, elba esther Gordillo, a year ago, on
charges of diversion of funds and money
laundering. the capture of drug kingpin "el
chapo" Guzmán, leader of the Sinaloa cartel, in february was also claimed as a major
achievement in tackling drug violence.
Guzmán had escaped from federal prison in
2001 when Vicente fox was president.
Peña nieto's politics, however, are not
those of right-wing liberals such as former
presidents ernesto Zedillo and carlos Salinas de Gortari. the energy policy defends
the long-standing principle that the natural
resources in the mexican subsoil belong to
the nation and opens up investment in production sharing, for example. this some-

what left-of-center position harks back to
an older PRi, before the technocrats gained
control of the party in the 1980s.

FORGING CHANGE: Enrique Peña Nieto's
reforms could transform Mexico. His legacy
rests on their success

It's the economy
Getting the economy moving has been Peña
nieto's top priority. this is more urgent
now as economic growth was an imperceptible 1.1% last year, surpassed by annual
inflation of 3.9%.
in 2014, mexico is
likely to get a push
from a US economic
recovery - albeit still
mild - benefiting
mexico's manufacturing sector, in
particular its surging
automotive industry. another boost to
the economy will be
a bigger federal budget - 9% larger than
the 2013 spending
program-boosted
by congressional
approval of a 1.5%
primary deficit.
the reform package will ultimately, it
is hoped, boost the
economy by bringing in more foreign
direct investment.
the opening in energy and electricity,
for example, could
attract huge investments into offshore
exploration, power generation and tapping
the shale gas reserves.
"Pemex says 500,000km2 with oil
potential in the mexican portion of the Gulf
of mexico have yet to be explored," says
George Baker, publisher of energia.com, a
Houston-based oil and gas consultancy.
©REUTERS

"He played congress absolutely beautifully; he was a good political operator," says
John Welch of ciBc World markets.
Just 46 when he assumed the presidency, enrique Peña nieto's political origins
are in the city of atlacomulco, the breeding
ground of PRi's powerful "atlacomulco
Group" - leaders who swing their weight
with traditional schemes of political patronage.
Such a background has led to concerns in
some quarters over whether Peña nieto is,
at heart, an old school príista determined to
regain the kind of control that PRi wielded
when it ruled from 1929 until 2000 as a
state party with nearly hegemonic power
across mexico.

Walter Molano, BCP SeCuritieS

"Mexico is Moving in
the right direction,
the reforMs are a
big advanceMent.
the MoMentuM in
Mexico is good"

Devil in the Details
the flow of funds and launch of projects
could be two years off, assuming tenders
are held 18 months from now, analysts
say. "By 2018, in oil alone, there could be
investment commitments of $50 billion,"
says Baker. "However, actual dollars in the
door might reach only $5 billion. most of
the investment money will come after Peña
nieto leaves office."
as things stand, the reforms are still
broad brushstrokes and they could subsequently be watered down. congress must

March/April 2014 - l atinfina nce.com 29
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