Of prisons and petroleum

Of prisons and petroleum

By: The Economist Staff

"Something weird is going on in Mexico as we are going deeper and deepr into troubled waters everywhere."

Erreh Svaia

Taken From: http://www.economist.com/

RARELY has a moment of glory been so cruelly sabotaged. On July 15th Mexico flung open its long-closed energy sector with an auction of oil-exploration rights that ends the 77-year monopoly of Pemex, the state-owned oil company (see article). It is part of a reform package that will add more than two percentage points to economic growth, the government hopes. As the bidding took place, the country’s president, Enrique Peña Nieto, was on a state visit to France with much of his government in tow. No doubt, he was hoping to be toasted as the man behind today’s thoroughly modern Mexico.

The toasts must have left a bitter taste. The first round of energy auctions was a flop. Just two of the 14 blocks on offer were sold, to a Mexican-British-American consortium; eight received no bids at all. The government may blame low oil prices for the weak demand. The odds are that badly written rules and the finance ministry’s inflated idea of the revenue it could collect also played their part.

These problems can be fixed, with luck in time for the next round of auctions in September. Harder to correct will be the spectacular escape of Mexico’s most notorious drug lord, who broke out of its highest-security jail just before Mr Peña landed in Paris (see article). Joaquín Guzmán (pictured), otherwise known as El Chapo (Shorty), disappeared through a mile-long tunnel, leading from the shower in his cell, that was equipped with ventilation tubes and a motorcycle mounted on rails (it may have been used to carry out dirt). The stylishness of the escape route was almost as much of a humiliation as the escape itself, Mr Guzmán’s second. Mr Peña had resisted pressure from the United States to extradite the leader of the Sinaloa drug-trafficking gang after he was recaptured in 2014. To let such a prize slip away again would be “unforgivable”, Mr Peña declared at the time. The interior minister, Miguel Ángel Osorio Chong, rushed back from Paris to lead the manhunt.

The escape of El Chapo is proof that the rule of law in Mexico is still shaky. He could not have broken out of the Altiplano prison without inside help—its security features include communications-blocking technology and a no-fly zone. Three senior prison officials have been dismissed; many more are being questioned.

Mexico will have to do better if it wants to carry off reforms needed to lift it to the status of developed country. Corruptibility and incompetence pervade the criminal-justice system. While some police and the army go after drug kingpins—25 of the 37 most wanted were killed or captured under the previous president, a policy Mr Peña has continued—others connive with them. Murders have fallen, from 23,000 in 2011 to about 16,000 last year, but are still 50% higher than in 2007. Lesser crimes, from extortion to petty graft, gnaw at enterprise and corrode civility. Disorder does not always deter investors who can afford armoured cars and bodyguards, but it puts off smaller businesses, Mexican and foreign. A lawless teachers’ union has disrupted a vital education reform. Unless the sanctity of contracts is respected, the energy reform could fail altogether.

Get Shorty

The president has been a wobbly champion of the rule of law. He once dismissed corruption as a “cultural” issue. His wife bought a house with financing from a businessman who won large contracts from the government. He manages security through an ineffective clique. The progress Mr Peña has secured—a revised criminal code to make trials fairer and a new system of independent watchdogs to reduce graft—will come to nothing unless he changes his security team. If El Chapo’s escape brings that about, it will have at least done a little good.