Mexico After the Pri: First Impressions Only Come Once

CAMBRIDGE: Credit where credit is due: Mexico's outgoing President, Ernesto Zedillo provided both the political opening and the economic stability that made his country's leap to full democracy possible. Until the last moment, no surprise, there was lingering fear that the Institutional Revolutionary Party (PRI) would steal the election. After all, that is what the PRI has done for 71 years to retain power and the ability to systematically loot the state. Not so this time. The opposition candidate won a sweeping victory with a mandate for democracy and a fresh start across the board. Mexico has done well enough economically to have the courage to change.

Now comes the hard part. Incoming President Vicente Fox will soon discover that you make a first impression only once. He is a new President without much experience, without a team and mostly without an agenda other than to oust the PRI. It is, of course, always easier to win than it is to govern. That task of governance will be extra hard because, with a real democracy, economics becomes more difficult as compromise is necessary, controlling budgets is harder, and shortcuts more tempting.

Capital markets, after a short elation with the arrival of Mexico as a full-fledged democracy, will soon start asking hard questions. President-elect Fox must either introduce sweeping change or opt for a conventional strategy of continuing along today's current not-so-bad lines B ie, keeping a few of the ruling technocrats, making generally favorable free market noises, really just muddling on.

Unless he stakes out a set of clear policies before he comes to the bargaining table, Mr Fox will find his powers and his mandate eroded in no time. But there is a silver bullet unlike any other which he can adopt and which can change Mexico dramatically: a currency board.