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AMERICAS

Mexico Preident in Crii I Loing Support of iguine TH ASSOCIATD PRSS F. 26, 2015, 12:16 A.M. .S.T.

MEXICO CITY — The full­page ad in Mexico's national newspapers wasunusual, if not unprecedented: 20 powerful business groups and think tankspublicly scolding the government for not doing its job.

They demanded "conditions necessary to do their work ... in total security,in all of the country." The ad, published last month, urged government officialsto "honor your oath to observe and enforce the constitution."

The public criticism by Mexico's business community underlines theeroding support for President Enrique Pena Nieto's administration as heenters the third year of a six­year term. Business leaders are angry overreforms that have increased the tax burden without sparking economic growth,scandals over apparent favoritism and acts of lawlessness that are hurtingcommerce.

Last weekend, Coca­Cola halted its operations in the capital of Guerrerostate due to attacks and abductions of its workers. In Guerrero and elsewhere,businesses complain they are losing merchandise to highway hijackings. Anti­government protesters have commandeered toll­booths, sacked governmentoffices, blocked shipments and shut down airports. Drug cartels rule large

27/2/2015 Mexico President in Crisis Is Losing Support of Big Business ­ NYTimes.com

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swaths of land, extorting business owners, buying off authorities anddisrupting important industries such as agriculture and tourism.

The public rebuke "reflects for the most part the fatigue, the exhaustionfrom many searches for solutions on a regional level, many promises on theregional and federal level that they would fix things. And, they haven't fixedthings," said Luis Foncerrada, director general of the Center for EconomicStudies for the Private Sector, the think tank for one of Mexico's most powerfulbusiness chambers, the Coordinated Business Council.

Foncerrada said the impact of crime and impunity on businesses hasbecome "absolutely intolerable." Business leaders also are hammering at ruleof law and codes of ethics in response to recent cases of public corruption andconflict of interest.

Complaints have reached those closest to Pena Nieto, including his wifeand finance minister. Both were found to have bought luxury properties,including the first lady's white­walled "Casa Blanca" mansion, from agovernment contractor that was part of a group awarded a lucrative high­speedtrain project. Both defended the purchases as legal.

Pena Nieto also took heat for the government's handling of the Septemberdisappearance of 43 college students, allegedly at the hands of police inGuerrero state who handed them over to be killed by a drug cartel. The casehighlighted ties between local authorities and organized criminals as well asthe administration's inability to defuse public anger over the crime.

"What you are hearing in conversations among business people, and nolonger in the whispered tones ... is that the president needs to seek input froma wider circle of people, grab hold of an ethical compass and get serious aboutrule­of­law initiatives and security," said Antonio Garza, former U.S.ambassador to Mexico and now counsel in the Mexico City office of White &Case, a U.S. law firm that represents banks and businesses.

Pena Nieto's office responded to The Associated Press' request forcomment by saying the government maintains an "open relationship" with thebusiness community and has taken several anti­corruption and securitymeasures, including requiring public servants to declare potential conflicts of

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interest and creating a new, independent attorney general's office. It also notedthe government has launched operations to stop the blockading of highwaysand airports "with total respect for the right to protest."

Since the early 1980s and the presidency of Miguel de la Madrid, Mexico'sbusiness sector has more or less worked closely with the government in power,which has been Pena Nieto's Institutional Revolutionary Party, or PRI, for allbut 12 of the last 86 years. The late head of the nation's giant Televisa network,Emilio Azcarraga, once said, "I am a soldier of the PRI," in part because thegovernment tolerated his near­monopoly of broadcast television.

The criticism from the business community for the most part has beenmuted. Business leaders know that confronting the ruling party carries greatrisk since government agencies wield a lot power, and government contracts,permits and concessions are so discretionary, so lucrative and such a big partof the economy.

The business sector helped restore the PRI to power by backing PenaNieto in 2012, following two presidents from the National Action Party. Theycheered the commerce­friendly reforms he pushed through: opening the state­controlled energy sector to private investment; breaking up communicationsmonopolies; and weakening the power of the national teachers union.

But the discontent started with Pena Nieto's fiscal reform, because hefailed to generalize taxes, extending them to food, medicine and other goods asthey had hoped, and instead raised income taxes, a move businesses say iscounter to investment. In addition, "there's no transparency in the way themoney is spent," said Dwight Dyer, senior analyst for Control Risks, a globalrisk and strategic consulting firm.

To top it off, Mexico's economic growth was a sluggish 2.1 percent in 2014,and just 1.1 percent in 2013. The economy could suffer more in 2015 if globalprices remain low for oil, which provides about a third of the Mexicangovernment's budget. The value of Mexican crude has plummeted sincetopping $100 a barrel last year and is now trading under $50.

Last month, the government was forced to cut its 2015 budget, cancelingthe high­speed train project that Pena Nieto had promised would link the

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capital to the industrial city of Queretaro.The bidding process for the train already had frustrated the private sector

because it seemed designed to benefit one bidder, said Rep. Ricardo Anaya ofthe National Action Party.

Anaya is pushing his party's proposal to create a national anti­corruptionsystem that would give real teeth to prosecution and sanctions, and would beindependent of the president who now appoints the anti­corruption czar.

"There's enormous uncertainty," Anaya said. "The private sector sharesthe feeling that corruption has hit Mexico to the core, and without an anti­corruption system, they're not going to see any investment."

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