De Remes Alain 2006 Power Index

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Universidad Nacional Autnoma de Mxico

University of California Institute for Mexico and the United States

Democratization and Dispersion of Power: New Scenarios In Mexican FederalismAuthor(s): Alain De RemesReviewed work(s):Source: Mexican Studies/Estudios Mexicanos, Vol. 22, No. 1 (Winter 2006), pp. 175-204Published by: University of California Press on behalf of the University of California Institute for Mexicoand the United States and the Universidad Nacional Autnoma de Mxico

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Democratization and Dispersion of Power:

New Scenarios In Mexican Federalism

Alain De Remes*Oficina de la Presidencia para las Polticas Pblicas

Focusing on political bargaining between the national and subnational realms,this article considers how the dispersion of power in different regions of acountry may become a crucial factor shaping the rules of democratic gover-nance. First, it analyzes changes in power dispersion of the last two decadesin Mexico, highlighting how alternation in power at the national level in 2000implemented horizontal checks and balances and revived a federal pact. Sec-ond, it shows that changes in the rules of the Mexican political system fos-tered a window of opportunity for new subnational actors to shape the na-tional political agenda on re-engineering of the institutions of Mexicanfederalism.

Enfocndose en la negociacin poltica entre el nivel nacional y el subnacional,este artculo reflexiona sobre cmo la dispersin de poder de diferentes regionesde un pas puede convertirse en un factor crucial al modelar las reglas del gob-ierno democrtico. Primero, analiza los cambios en la dispersin del poder enlas ltimas dos dcadas de Mxico, haciendo notar que la alternancia del podera nivel nacional del 2000 implement balances y contrapesos, y revivi el fed-eralismo. Segundo, muestra que los cambios en las reglas del sistema polticomexicano fomentaron el surgimiento de opciones para que nuevos actores sub-nacionales moldearan la agenda poltica nacional rediseando las institucionesdel federalismo mexicano.

*The author thanks Todd Eisenstadt, Rafael Aguirre, Armando Palacios, Francisco Sar-miento, Melissa Ovalle, Diego de la Mora, Helios Becerril and Isaac Arteaga for their helpand useful comments and Mony de Swaan and Juan Molinar for allowing the use of theirIndice de Concentracin de Poder. While the author is a Mexican public official, the viewsexpressed here are strictly his own, and do not reflect the positions of any public agency.

Mexican Studies/Estudios MexicanosVol. 22, Issue 1, Winter 2006, pages 175204. ISSN 0742-9797

electronic ISSN 1533-8320. 2006 by The Regents of the University of California. All rights reserved.

Please direct all requests for permission to photocopy or reproduce article content through the Uni-

versity of California Presss Rights and Permissions website, at www.ucpress.edu/journals/rights.htm.

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A significant portion of the literature on transitions to democracy over-looks the fact that the advent and consolidation of democracy in a

country with a protracted and incremental transition may be the end re-sult of political bargaining between national and subnational levels ofgovernment. By focusing on the subnational realm, it is possible to un-ravel how the dispersion of power in different regions of a country canbe a crucial factor in shaping the rules of governance and the practiceof democratization.

This article is divided into two sections. In the first, I briefly analyzehow power has been dispersed in Mexico over the last two decades. Ihighlight how alternation in power at the national level in 2000 not onlyhelped to foster a horizontal system of checks and balances between pur-portedly co-equal branches of government (executive, legislative and ju-dicial branches), but also reinforced vertical accountability, among thenational government, state governments, and municipalities, reviving afederal pact which had been dormant for more than seven decades. I alsoillustrate how this new dispersion of power is causing important changesin the behavior of the Mexican political system. Among the most im-portant transformations are new patterns of recruitment and mobility forpolitical elitesopen primaries, responsiveness to the local electorate,and a longer time span for local politicians to advance their careers.

The second part of this article argues that dispersion of power andchanges in the rules of the Mexican political system fostered a window

of opportunity for new subnational actors seeking to shape the nationalpolitical agenda on a range of issues which have brought a new impe-tus to a long-needed re-engineering of the institutions of Mexican fed-eralism. The advent of the Conferencia Nacional de Gobernadores(CONAGO) signaled a dramatic change in the political and economic re-lations between the federation and the states. This later section of thearticle concludes by analyzing the main themes of the federalism agendathat emerged from the creation of this and related organizations and eval-uates some of the opportunities and challenges emerging from the 2004Convencin Nacional Hacendaria.

Measuring Alternation and Dispersionof Power in Mexicos Democratic Transition

The main characteristic of the Mexican democratic transition is that na-tional-level democracy arrived only after a protracted and incrementalprocess of electoral reforms that began in 1977 and ended in 1996. Thisdemocratic transition was mostly conducted election by election, ratherthan through any overarching pacts. The dominant Partido Revolucio-nario Institucional (PRI) did not vanish from the political scene, despite

176 Mexican Studies/Estudios Mexicanos


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losing the 2000 Presidential election, but rather won back some of itslost congressional seats in the mid-term elections of 2003.

To assess how this incremental transition took place, I use Molinarand De Swaans Indice de Concentracin de Poder (ICP), measuring thedegree of decentralization of political and economic resources from theexecutive branch. This index is particularly helpful in showing differentsteps in the process of national democratization closely related to two

variables: electoral reforms and economic crisis. The ICP can vary from0 to 100, in which zero means that political and economic resources arecompletely decentralized among different branches and of governmentat the national and subnational levels. In contrast if the ICP reaches 100,this means that the party of the presidency has overarching control ofall political and economic resources vis--vis other branches that com-pose the national and subnational political system. A complete descrip-tion of all variables included in this index can be found in Annex 1.

As shown in Figure 1, dispersion of power at the national level be-gan in 1986. This can be partially attributed to the fact that in 1983, re-form of Article 115 of the Constitution gave more autonomy to muni-cipalities. As a result, the local political arena experienced some degree

De Remes,Democratization and Dispersion of Power 177

Figure 1.Indice de Concentracin de Poder

Source: Mony de Swaan and Juan Molinar Horcasitas,Movimientos Graduales Pen-dulares: Transicin democrtica y dispersin del poder. Paper prepared at the Confer-ence of Ibergop El Gobierno Dividido en Mxico:Riesgos y Oportunidades Mexico May7, 2002 CIDE. The calculus for the year 2002 and 2003 was made by the author using themethodology established by De Swaan and Molinar.

2000 a) Before 2000 federal election. 2000 b) After 2000 federal election.


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of electoral competitiveness amid an economic crisis.1 This increase incompetitiveness led, for the first time ever, to alternation of power in the

state of Baja California in 1989, when thepanista candidate Ernesto Ruffobecame Mexicos first opposition governor since before World War II.The second important event affecting the ICP in 1995 and 1996 was

the Zedillo administrations so-called Error of December 1994. Finan-cial mismanagement triggered an unprecedented national economic cri-sis that left at least one million people without work, brought the indus-trial and banking systems to the verge of collapse, and impoverished thelower and middle classes when interest rates, wage freezes, and infla-tion radically diminished their purchasing power while fiscal austeritymeasures diminished social spending.2 The Partido de la RevolucinDemocrtica (PRD) and, especially the Partido Accin Nacional (PAN)capitalized on the discontent fostered by this era of economic hardship.However, despite the PRIs electoral losses at the subnational level, theIndice de Concentracin de Poder did not shift dramatically, although itdid continue on a downward trajectory.

The third crucial event came in 1997, when for the first time in re-cent history the PRI was not able to obtain a plurality of seats in the Cham-ber of Deputies, the lower chamber of Congress, after the mid-term elec-tion. The party also lost its qualified or two-thirds majority in the Senate.Hence, the PRI could no longer enact constitutional amendments on itsown. In fact it was during Zedillos term that for the first time in recent

history, the president sent to Congress several bills related to importantstructural reforms, and the national legislature either amended significantly(as in the case of the pension funds or the financial rescue of the bank-ing system, Fondo Bancario de Proteccin al Ahorro (FOBAPROA) or re-

jected the presidential proposals (as in the case of the electrical reform).Furthermore, in 1997 the PRI not only lost its representative hege-

mony in Congress, but it also lost that hegemony in Mexico City, wherethe PRD won Mexicos most coveted mayoral election.3 These two ele-


1. This crucial reform entitled municipal governments to expand their sphere of ac-tivities to include administration of water and sewage systems, public lighting, garbage

collection, markets and slaughterhouses, and public recreation facilities. Most important,this reform enabled municipalities to collect some local taxes, such as the property tax,that made it more attractive for opposition parties to seek municipal posts. Moreover, afterthe 1982 economic crisis, local politics became increasingly competitive, while the PRIbegan to lose important municipal strongholds in the northern part of the country. (Mizrahi1994:13758; Molinar 1991).

2. The number of insured workers in the Instituto Mexicano del Seguro Social isused as a proxy to calculate the number of layoffs. Between 1994 and 1995, the work-force went from 10.07 million to 9.45 million (Secretara del Trabajo y Revisin Social 2005).

3. The constitutional status of the Distrito Federal (Mexico City) is not exactly thatof the states: in contrast, the power of the chief of government of the Distrito Federal is


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ments triggered a significant shift in the ICP, which reached a thresholdslightly below 80 points. This meant that the traditional meta-constitu-

tional powers of the president began to fade at a slow pace, once elec-toral competitiveness became the norm.4

Even after these previous changes, the 2000 federal election emergedas the most important catalyst in the deconcentration of power. Alter-nation of power at the presidential level did not bring President Foxsparty a majority of seats in the lower chamber. The Senate remained un-der PRI control, two thirds of the state governments continued to becontrolled by parties other than Foxs PAN, and more than 65 percentof Mexicos 2,400 municipalities remained outside of PAN control.

Alternation and democratization in Mexico resulted in divided gov-ernment among the legislative and executive branches of government.Most importantly, alternation in power at the presidential level also pro-duced a dispersion of power at the subnational level, since a stacked elec-toral calendar favored those parties other than the presidents to retainpower in most state and municipal governments. In short, political alter-nation at the national level simultaneously produced a divided governmentand a pattern of scattered power at the subnational level, and this broughtnew life to the federal pact. For decades, Mexico had observed the coun-trys federal arrangement only in parchment. Decentralized power and lo-cal autonomy had not existed due to the lack of electoral competitivenessand an overwhelmingprista hegemony in which all governors behaved

as presidential agents (Eisenstadt 2004). Most municipalities were alsoheld within the tight grip of governors and had almost no latitude withinwhich to decide how to spend their budgets. In short, competitivenessand alternation of power at the subnational level also contributed to chang-ing most of the unwritten rules of the Mexican political system whichhad worked for decades, especially those mandating strict party disciplineand unconditional gubernatorial allegiance to the national executive.

During the first three years of the Fox administration the ICP con-tinued to decline marginally, reaching the threshold of 51.7 in 2003. Thiscan be mostly attributed to the excessive concentration of the PAN votein some regions during the 2003 mid-term election and the loss of the


limited by other federal powers on issues like procurement of justice, public security, anddebt. Nonetheless, the resources of the local government and the public exposure of themayor make this a highly attractive position for politicians.

4. The traditional meta-constitutional powers of the Mexican president until the Sali-nas administration were: the possibility of controlling the PRI through the appointmentof its leader; the power to nominate and remove state governors; complete control overthe national bureaucracy; and control of members of his party in Congress. Indeed, themost important meta-constitutional power of the Mexican president was to appoint hissuccessor. For further information on this subject see Weldon (1997: 22558).


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Nuevo Len governorship to the PRI. However, it is important to pointout that the ICP seems to have stabilized at a level characteristic of dem-ocratic federal systems where checks and balances operate horizontally(checks among co-equal branches of government) and vertically (nationalgovernments, states and municipalities).

In addition to the Concentration of Power Index, another way to as-

sess the dispersion of power is to look simultaneously at the nationaland subnational electoral outcomes and analyze how these results haveaffected the countrys governance in recent years.

Table 1 shows that the last two Mexican presidents faced very dif-ferent power configurations at the commencements of their terms. Theparty of President Zedillo in 1994 may have been losing ground slowly,but it was still firmly in control of subnational electoral politics. Con-trarily, Fox had to face what in practical terms resembled a minority gov-ernment, with checks and balances operating at the horizontal (co-equalexecutive and legislative branches) and vertical (states and municipali-ties) levels of government.

Although important scholarly evidence exists that divided or evenminority governments are not necessarily prone to deadlock, dynamicsof political confrontation have spread in Mexico along with alternation.In the double process of dispersion of power (vertical and horizontal),regions effectively grew more assertive and less responsive to the willof the central government. Simultaneously, the legislative arena also ex-perienced dramatic changes as Congress grew more prolific than the na-tional executive in the introduction of bills. Along with this intensifiedactivity, Congress began to activate capabilities to obstruct the execu-


Table 1. Concentration-Dispersion of Power, 1994 and 2000

Ernesto Zedillo (PRI) 1994 Vicente Fox (PAN) 2000

Absolute data % Absolute data %

Federal Representatives 300 60 206 41.2Senators 95 74.22 46 35.9Governors 29 90.62 8 25Population governed

at the state level 78,823,573 89.87 20,836,527 22.12Municipalities 2,187 91.6 308 12.7Population governed

at the municipal

level 65,767,271 86.43 32,578,653 36.68Source: IFE, INAFED, INEGI, and Alain de Remes.


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tive agenda, something extremely unusual throughout the golden yearsof the hegemonic party system.5

Table 2 illustrates the political situation that Ernesto Zedillo and Vi-cente Fox faced after the mid-term elections, halfway through their six-

year terms.6

Zedillo had to cope with a decidedly more adverse panorama in

1997, as the PRI secured only 48 percent of the seats in the Chamber ofDeputies, 12 percent fewer than in 1994. The PRI was reduced from ma-jority party to merely the largest minority in the lower chamber, a po-sition the party had not faced since the early post-revolutionary period(19201928) (Nava and Yanez 2003). The PRI also lost 15 percent of itsseats in the Senate.7

As evidenced in Table 2, the 2003 mid-term election also triggered


5. This is not to say, however, that Congress had been unconditionally deferent tothe president during the last decades. Even in the golden years of theAncien Regime, andnotwithstanding the presidential control of the legislature through the PRI, there was a

certain (yet negligible) degree of opposition between the two powers. This is shown bythe number of presidential vetoes to bills passed in the Congress (Weldon 1997: 236).

6. Mid-term contests tend to be overlooked by some scholars. However, one of theinteresting characteristics of this type of election is that they can effectively contribute toa noticeable shift in the balance of power, and also, these elections tend to produce di-vided government (Shugart 1995).

7. The loss of seats for the PRI in the Senate can be attributed to two factors: First,the COFIPE reform of 1996 introduced a proportional representation formula in one ofthe tiers, and thirty-two seats were distributed according to this principle. Therefore, plu-rality increased.Second, the country was recovering from one of its worst economic crises,and support for the official party decreased.

Table 2. Concentration-Dispersion of Power, 1997 and 2003

Population Ernesto Zedillo (PRI) 1997 Vicente Fox (PAN) 2003governed by:

Absolute data % Absolute data %

Federal Representatives 238 47.6 151 30.44Senators 77 60.16 46 35.9Governors 25 78.12 9 28.12Population governed

at the state level 64,456,018 68.44 23,311,864 22.84Municipalities 1,433 59.5 430 17.7Population governed

at the municipal level 40,530,166 48.74 32,129,810 34.51Source: IFE, INAFED, IFE and Alain de Remes.


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a further dispersion of power away from the Fox administration. Thepresidents party lost more than 11 percent of its seats in the lower cham-

ber, as compared with PANs gains in the 2000 election. This result ef-fectively diminished its capacity to block constitutional amendments. Inthe upper chamber, the numbers remained unchanged because senatorsare elected for six-year terms. However, PAN is the second force in theSenate, controlling 36 percent of the seats.

In conclusion, it is important to stress that the last two Mexican ad-ministrations faced a greater dispersion of power, signaling the end of anera of strong governance where presidents always secured majorities inthe legislative branch. However the paradox of the Mexican process oftransition is that old political rules have not been replaced by new ones,since there has not been an overarching pact between the elites that set-tles how the system can effectively work under a framework of politicalplurality.

Subnational Democratization and New Political Trends

Little scholarship on Mexico has used the conditions and prerequisitesestablished by the literature on democratization at the national level toexplain the outcome of democratization at subnational levels. There isalso a dearth of explanation of how politics at the local level impingeon the pace and form of overall democratization of a country. The lack

of attention to local processes as a catalyst for democratization is per-vasive. Nonetheless, analyzing local politics is useful, as the result mayillustrate how an increase in electoral competition at the national andlocal levels may be changing parties strategies and the pattern of re-cruitment and elite settlement, and may establish a system of checks andbalances between the center and the periphery.

The trends at the subnational level clearly show that competitive-ness has increased, steadily bolstering plurality and as Figure 3 and Table3 demonstrate, the power sharing phenomenon is not limited to thenational arena.

In 2003, the PRI still controlled 53 percent of the state governor-ships. However, its overwhelming supremacy at the regional level hasbeen challenged by the PAN and the PRD, with the former controlling28 percent, and the latter 15 percent of the states.

Situations of complete hegemony in state legislatures are also quicklyfading, giving way to a norm of majoritarian or first minority govern-ments.8 In addition, the sub-national realm is also experiencing divided


8. The typology for local legislatures is the following one: 1) Hegemonic congress:if a party has at least 60 percent of the seats;2) Majoritarian congress: if a party has at least


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government (where the governors party is different from the one hold-ing a majority of the unicameral legislatures seats), as was the case in22 percent of the states by 2003. Thus, power sharing also is becomingthe norm in local legislatures, and in the near future governors will face

more checks from their legistlatures. This also means that governors willhave to find ways to create viable legislative coalitions if they are to passtheir agendas through more plural legislatures.

The dispersion of power between co-equal branches of governmentat the subnational level has brought interesting phenomena not seen inthe national realm. At least three states (Chihuahua in 1996, Nayarit in2002, and Tlaxcala in 2003) have experienced budgetary deadlock un-der divided government. Although it was possible to solve these crises,the states constitute a political laboratory for unprecedented politicalcircumstances. Furthermore, once the hegemonic grip of single-partyrule eroded, state constitutions were no longer mere mirrors of the na-tional chart. Today they include many institutional innovations that arenot yet present at the federal level, such as mechanisms for direct democ-racy, protection of indigenous rights, and more advanced electoral laws(Lujambio 2000).


50 percent plus one of the seats but less than 60 percent; 3) First Minority congress: if aparty has the greatest number of seats but does not have 50 percent plus one of the totalseats; and 4) Divided government: when a party other than the governors controls thelegislature.

Figure 2a. Governors by Political Party 19891996

Figure 2b. Governors by Political Party 19972003


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Table 3. Structure of Local Legislatures 2003

Absolute FirstEstado PAN PRI PRD Others Total % Hegemony Majority Minority Divided

Aguascalientes 10 12 1 4 27 44.4% PRI YesBaja California 12 10 2 1 25 48.0% PAN NoBaja California

Sur 2 6 11 2 21 52.4% PRD NoCampeche 13 18 1 3 35 51.4% PRI NoCoahuila de

Zaragoza 8 20 3 4 35 57.1% PRI NoColima 9 13 2 1 25 52.0% PRI NoChiapas 5 24 7 4 40 60.0% PRI YesChihuahua 11 18 2 2 33 54.5% PRI NoDistrito Federal 16 7 37 6 66 56.1% PRD NoDurango 8 13 2 2 25 52.0% PRI NoGuanajuato 18 10 4 4 36 50.0% PAN NoGuerrero 4 20 17 5 46 43.5% PRI NoHidalgo 4 18 7 0 29 62.1% PRI NoJalisco 17 19 2 2 40 47.5% PRI YesMxico 16 25 16 18 75 33.3% PRI YesMichoacan 5 17 18 0 40 45.0% PRD No

de OcampoMorelos 9 8 8 5 30 30.0% PAN NoNayarit 7 18 2 3 30 60.0% PRI Yes

Nuevo Leon 11 26 1 4 42 61.9% PRI NoOaxaca 7 25 8 2 42 59.5% PRI NoPuebla 10 25 2 4 41 61.0% PRI NoQueretaro 12 10 2 1 25 48.0% PAN No

de ArteagaQuintana Roo 3 15 3 4 25 60.0% PRI NoSan Luis Potos 11 12 2 2 27 44.4% PRI YesSinaloa 12 21 3 4 40 52.5% PRI NoSonora 10 21 2 0 33 63.6% PRI NoTabasco 2 16 12 1 31 51.6% PRI NoTamaulipas 7 19 3 3 32 59.4% PRI NoTlaxcala 3 14 11 4 32 43.8% PRI YesVeracruz-Llave 11 27 4 3 45 60.0% PRI NoYucatn 12 12 1 0 25 48.0% PAN-PRI NoZacatecas 4 10 13 3 30 43.3% PRD No

289 529 209 101 1128 46.9%

Hegemony: If the dominant political party at least have 60% seats in local congress.Absolute Majority: If the dominant political party has 50%+1 seats in state congress.First Minority: If the dominant political party has less than 50% seats in local congress.Divided Government: If the most important political party in the local congress is different from the governors

party.Source: Local Electoral Institutes, and Alain De Remes July 2003.


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However, we should keep in mind that federalism is a two-way streetin which the subnational realm is influenced by the national, and vice

versa. Indeed, another interesting novelty is that some governors are in-tensely lobbying, pressuring, and at times controlling the members oftheir party in the national Congress. For example, the final vote tally ofthe 2003 (rejected) fiscal reform clearly shows that PRI legislators fromthe states of Hidalgo and Veracruz followed the will of their governors.They were overtly in favor of this bill. Although at the time there wasan intra-party dispute over leadership of the PRI, congressional mem-bers from these states were not truly responding to one of the factions,but rather to directives from their respective governors. Therefore, wecan expect that in the near future the influence of regional issues on thefederal Congress will certainly increase. The risks posed by this realityare not negligible, as Mexico still needs important structural reforms toenhance its economic performance. Hence, extreme caution must betaken not to let regional agendas overpower national needs.

Electoral competitiveness and alternation in power at the local levelalso have prompted important changes in the recruitment and mobilityof politicians. Under the hegemonic party system, most governors hadties with the national government. Nomination to become a states chiefexecutive depended entirely on what the center wanted. However, dur-ing the late 1980s and throughout the 1990s, most opposition politicalgroups (meaning political groups not associated with the PRI) inaugu-

rated new patterns of elite mobility and recruitment. Most oppositiongovernors made their political names locally before becoming governors.This pattern also has been followed more recently by the PRI. The partysgovernors tend now to have attained a higher local profile than in thepast. In short, the pattern of political mobility from the center to theperiphery is rapidly vanishing, and today politicians who want to oc-cupy political posts in the regions need strong local ties to improve theirprospects.

Another interesting characteristic, also triggered by more competi-tive local processes, is that some parties (especially the PRI since 1998and the PAN in 2004) are beginning to rely on open primaries to choosetheir candidates for municipal and gubernatorial races.

The implementation of open primaries by parties has important con-sequences for the Mexican political system. Primaries are generally notregulated by national or subnational electoral laws. This loophole canbe used by parties to exceed the campaign-finance ceiling establishedby the regulatory framework. This process also has the effect of givingmore exposure to the winning candidate of the primary, a factor thatmay turn into a definitive advantage in a close general election race. Inaddition, primaries diminish the nomination power of party leaders and



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give more voice to the electorate to choose their preferred candidates.However, primaries also have been criticized, since they open the win-

dow for outsiders to win party nominations, and they also tend to in-crease the cost and duration of campaigns.Another noteworthy pattern is that losing gubernatorial candidates

in close races are no longer considered lame ducks, as they may evenhave chances to compete as frontrunner candidates in the next election.This was the case of Natividad Gonzlez Paras, the PRI candidate wholost the governorship of Nuevo Len in 1997, but who was again nom-inated in 2002. On that occasion he won the governorship. This strat-egy was previously used by the PAN in Chihuahua (19861992) with Fran-cisco Barrio, and in Guanajuato (19911997) with Vicente Fox. In short,as the subnational electoral level becomes more competitive, the timespan for local politicians to advance their careers also increases, and los-ing an election is no longer the end of a political career.

One trend has become increasingly important for gubernatorial con-tests. Once alternation of power occurs, the framing of the following lo-cal electoral campaign tends to concentrate on local, rather than nationalissues. Thus, performance of the state incumbent governor may becomethe most critical factor in retrospective evaluations by voters. As demon-strated by Mizrahi (1999), Chihuahua helps illustrate when and why goodadministrative performance is important. Furthermore, as politics be-comes more locally focused, voter turnout also increases. The 2003 mid-

term elections offer an example. While in 2003 participation at the na-tional level was the lowest of the last four elections (42 percent), stateswith concurrent federal elections reached a 54 percent turnout, 12 pointsabove the national average. Thus, we may conclude that people are be-ginning to show more interest in elections that are not based on nationalissues. Local politics are increasingly important to voters. People havemore incentives to vote when local issues directly affecting their livesare at stake.

Once electoral competitiveness at the subnational level has been es-tablished as the norm, state and municipal governments respond betterto the needs of their constituencies, and are less concerned about fos-tering political ties with the center. However, the importance of stress-ing local independence vis--vis the center has political and economicconsequences, as manifested in new research on state budget deficits inMexico. According to Velzquez, the states where governors have astriking local profile (in other words, governors whose political careersare based entirely in the periphery) possessed substantially higher im-balances, since they have to respond more actively to the needs of theirelectorates (Velzquez 2000). This could produce future national macro-economic management problems.



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To conclude, federalism is being re-ignited through electoral com-petition and a consequent new political dynamic in the local realm.

Among the important changes have been those in patterns of recruit-ment and mobility which were unthinkable under a single party regime.Open primaries, responsiveness towards the local electorate, longer timehorizons for local politicians to advance their careers, and a more promi-nent place for regional issues on the national political agenda are all pos-itive balances on the ledger of the new subnational democratizationprocess. However, on the negative side, party discipline has weakened,support and cooperation with the president to implement his nationalmandate have diminished, and potential risks exist that extreme localpolitical competition could trigger national macroeconomic imbalances.

The increasingly pluralistic makeup of subnational electoral politicshas prompted a clamor for greater resource shares and greater roles indecision-making. Important new actors in Mexicos centrifugal open-ingare seeking to consolidate electoral gains and ensure that these gainsalso translate into pluralistic governance. Unlike the era of PRI domina-tion, when Mexico looked like a centralized system rather than a feder-ation, the new actorsorganizations of elected officialsare trying tocounter the traditionally executive-heavy and centralized authority.This, in turn, has encouraged them to seek increasing flows of revenueto the states, home rule, and taxation authority, as I shall describe inthe next section.

New Subnational Actors Seekto Consolidate Electoral Gains

Dispersion of power at the national and subnational levels has been cap-italized upon by new actors seeking to mold the national politicalagenda. The second part of this paper describes the origins and devel-opment of CONAGO and the Conferencia Nacional de Municipios deMxico (CONAMM), two organizations created since 2000, that havebeen extremely active in promoting federalism, and particularly in seek-ing increased revenue flows from the federal government to the states.9

The following analysis considers an ongoing process where the agenda,the strategies, and results are contingent, and hence the conclusions of-fered are tentative.

The origins of CONAGO must be traced to a previous organization,ANAGO (Asociacin Nacional de Gobernadores), formed less than a year


9. Revenue flows are understood as the amount of resources that the federal govern-ment transfers to the states, either after they were originally collected in the state or as newallocations.


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before the 2000 election by the PRD governors of Nayarit, Mexico City(the Federal District), Zacatecas, and Tlaxcala. The ANAGOs motivation

was to create a forum to consider decentralizing resources and functionsof the national government and to improve delivery of state-based serv-ices such as health care and education. In fact, in 2002 ANAGO becamemore dynamic and confrontational, as the governor of Tlaxcala threat-ened to devolve the failing state educational system under his controlback to the federal government if the Fox administration did not offermore resources. This action prompted other governors from the PRI,such as Jos Murat from Oaxaca and Melquiades Morales from Puebla,to petition for a similar deal.

As the dispute escalated, the PRD-governed ANAGO member statesalso threatened to devolve health care back to the federal government,and to release all prisoners convicted of federal crimes, pardoning theirsentences in state prisons.10 Eventually, the Fox administration and thelocal ANAGO governors were able to solve their differences through anadditional transfer of resources from the federal governments to thesestates. The two skirmishes sent clear signals that the governors werebuilding a space to unite and voice their concerns, and thus, relationsbetween President and governors were not going to be easy to manage.

Once the PRD and PRI governors decided to combine their effortson the education issueand form the Conferencia Nacional de Gober-nadores, most of the agenda and activities of ANAGO were taken over

by CONAGO. However, the former organization is still in place and servesas a coordinating mechanism for PRD state executives.In July 2002, twenty-three governors (seventeen from the PRI, five

from the PRD, and one independent)11 met in Cancn, Quintana Roo,to form CONAGO. Initially, the PAN governors decided not to partici-pate in the new forum. However, they have attended most meetings asobservers.

CONAGO was designed as a permanent institutional space for dia-


10. The governors threatened to devolve all the prisoners purging their sentencefor federal crimes in state prisons to the Federal Government. However, it was out of the

question to release the prisoners since they had already been convicted. Furthermore,Governors do not have the power to release prisoners convicted for federal crimes, butthey have the power to transfer these prisoners to Federal precincts or jails.

11. Pablo Salazar took office as governor of Chiapas in December 2000, after lead-ing an unprecedented coalition among the PAN, the PRD, and five other parties. This al-liance was instrumental in defeating the PRI in one of its traditional strongholds. Nonethe-less, shortly after taking office, and because he wanted to build an encompassing base ofcitizen support which cut across different partisan lines, Pablo Salazar declared his inde-pendence from the organizations that supported him in the election. This is a rather un-usual strategy, since most governors elected through a coalition of several parties sooneror later pick one of the parties and adhere to it.


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logue, debate, and negotiation aimed at equilibrating the power betweenthe national and state governments. The organization has emphasized

several times that its main objective is to strengthen the states so theymight contribute more effectively to national development. The groupalso seeks to increase state government resources and to enhance theircapacity to respond to community demands. Finally, CONAGO also hasgiven assurances to the central government that it does not wish to with-draw from the federal pact, but rather seeks to promote a new decen-tralization process that strengthens all levels of governments.

For several reasons, an organization such as CONAGO was un-thinkable under a one-party regime. First, during the golden years of theprista hegemony all governors were members of the PRI, and althoughepisodes of intra-party competition among different factions of the PRIdid occur (Hernndez 2000; Langston 2002), party discipline was ex-tremely strong and almost impossible to break, since the president hadcomplete control of his party and his congressional delegation. Second,the president had metaconstitutional powers allowing him to nomi-nate and remove governors at will, and these were exercised frequentlyduring the Salinas administration. As long as the president could pullthe strings of the PRI, most governors acted as agentsof the presidentand offered little resistance to orders from the national government.12

This centralization of the political system created incentives for each gov-ernor to bargain with the president over transfers of additional resources

for his/her state on an individual basis rather than through a collectiveinterest group.In short, the creation of a national association of governors cannot

be dissociated from an increase in electoral competition and pluralityand with alternation in power at the national and subnational levels.Once the governors began to build their careers locally, their completeallegiance to the president was simply not necessary, especially if thepresident came from a different party.

For the aforementioned reasons, it is notable that, aside from its de-clared official goals, CONAGO served another implicit purpose in thenew context of Mexican politics: helping to bridge the suddenly in-creased distance between the president, on the one hand, and the ma-

jority of governors, on the other. This issue must not be disregarded.With the alternation of the national executive, the old rules of commu-


12. The deference of the governors, and of the PRI itself, started to wane as the elec-toral conditions turned more competitive all over the country. Although Carlos Salinasmanaged to concentrate control over the political leaders of his party (mainly through hispersona), the relations of Ernesto Zedillo with the PRI (governors included),were not easyat all. The electoral defeats of the PRI strained its relations with the president throughoutthat sexenio (19942000). For further information, see Hernndez (2000).


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nication and bargaining between the governors and the president wererendered obsolete, and they have not been replaced by other institutional

channels.Over the last year, CONAGO has sought to promote two issues. Thefirst, the groups short-term objective, was to increase state shares of fed-erally generated revenues from higher petroleum prices. More specifi-cally, CONAGO pushed for a new mechanism for transferring resourcesto a new agricultural program established in 2003 to improve living stan-dards of peasants and small producers.13 This short-term agenda also hasincluded issues such as coordinating public security between the statesand the central government, and addressing problems of migration,health care, education, and natural disaster response.

Despite its very recent founding, the CONAGO has already loggedfour important results. For the first time since opposition governors be-gan to win office in 1989, the CONAGO was able to bring together gov-ernors from different political groups and regions. The importance ofthis accomplishment should not be underrated, since the challengesfaced by each governor in his/ her state are quite diverse and so are thegovernorspreferences as to how decentralization should be carried outor how the fiscal system should be reformed.14

Despite these obstacles, in a relatively short period of time,CONAGOconstructed an agenda identifying the most common difficulties gover-nors faced in their daily relations with the central government. In only

two years, the group has become an institutional space for framing thepressing issues of federalism, and has become the agenda setter on thissubject. This is an especially remarkable achievement in that members haveovercome collective action problems unheard of under the prista presi-dencies, when each governor relied on personal connections with offi-cials from the center and on individual bargaining skills to obtain a greatershare of national transfers and national public infrastructure projects.


13. Mexico is still extremely centralized in revenue generation. In 1996, 94.7 per-cent of the total revenue was concentrated in the federal government. This proportionputs Mexico among the most centralized systems in this respect. Most of the developed

nations show much lower levels of centralizationfor instance, Norway: 79.9 percent,Germany: 72.8 percent, the United States:66.3 percent, Canada:50 percent. (CADE, 1999).

14. Different needs and a sense of fairness in sharing revenues for each state are ele-ments to illustrate this situation. For instance, the poorer and highly populated southernstates such as Oaxaca and Chiapas have great and permanent need to receive an inflowof federal transfers, since they have weak fiscal bases on which to collect revenues. Also,other southern states such as Tabasco and Campeche have expressed a strong preferencefor retaining a greater amount of locally-generated oil revenues. In contrast, the more af-fluent northern states have been pushing for a new taxation system that would allow themto retain a greater portion of the taxes they collect in their polities and which are auto-matically transferred to the central government.


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Second, CONAGO successfully pressured the national governmentto allocate more resources to a new fund called the PAFEF (Programa

de Apoyos para el Fortalecimento de las Entidades Federativas), estab-lished in 2000 to strengthen state finances. These new resources camefrom surplus revenue generated by oil price increases. In order to moreefficiently use these resources, the federal government created spend-ing limitations, forcing states to allocate at least 50 percent of this addi-tional income to infrastructure projects. However, PAFEF seems to al-low a great degree of latitude for governors, since in 2003, thirteen statesdid not report in their annual budget accounts how this fund was used.

The third important achievement was the involvement of CONAGOin the Agricultural Pact (or Acuerdo Nacional para el CampoANC)signed between the national government and the most important peas-ant organizations. In fact, the governors will receive oil revenue surplusresources to support agricultural programs in their states.

The fourth and most important result was the capacity that CONAGOshowed to call for the Convencin Nacional Hacendaria, which waslaunched in February 2004. At this convention, the national, state, andmunicipal governments tried to redefine crucial aspects of the fiscal andfederal pacts. The main objective of the convention was to set a com-prehensive agenda of reforms, which were presented to Congress in Sep-tember 2004.

The 2004 Convencin Nacional Hacendaria

On October 28, 2003, the national, state and municipal governments aswell as the national Congress, decided to sign a protocol launching theConvencin Nacional Hacendaria. Fifty-seven years had elapsed since sucha comprehensive exercise had last been undertaken in Mexico, and fewsimilarities exist between the motivations for the three previous conven-tions and the most recent one. The misfortunes of some of the early con-

ventions warrant consideration here,as they are illustrative of the politicalunderpinnings of Mexicos fiscal structure during the twentieth century.

In the first and second fiscal conventions (1925 and 1933), the mostpressing necessity was to build a unified, coherent. and reasonably strongfiscal authority for a national economy that was still very fragmented.Notwithstanding the urgency of this purposeaddressed in the pro-posals for each conventionthe accomplishment was postponed fordecades, because, even as they followed a centralizing rationale, somedelegates sought to defy regional interests which were well-representedin Congress at that time. In the aftermath of the Mexican Revolution,legislators were highly responsive to regional bosses and revolutionary

warlords in their territories and in the districts that they formally rep-



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resented. Therefore, the federal legislature either diluted or rejectedmoves towards centralization of resources and responsibilities.

A unified fiscal system was attained only with the political central-ization completed with the rise of the nascent hegemonic party. The thirdconvention in 1947 did succeed in adopting a centralized fiscal system.This achievement by the national executive was reached one year afterthe PRI successfully centralized electoral processes under federal juris-diction (which also helped consolidate PRI hegemony for the next fivedecades). Presidential control over the political system, through the of-ficial party, was indispensable in fortifying a fiscal system that subordi-nated the regions.15

In 1980, the centralization of the fiscal system attained its pinnaclewith the enactment of the Sistema Nacional de Coordinacin Fiscal(SNCF). This new fiscal framework introduced the value-added tax (VAT)and gave states the option of signing a non-binding agreement through

which they would delegate to the national government what remainedof their income collection powers in exchange for greater transfers fromthe center. Given the abundant federal resources at their disposal whichhad been generated by the oil boom of the 1980s, all the states agreedto enter to the new system. However, in the long run, the SNCF further

weakened the fiscal autonomy of states, since they became even moredependent on transfers from the national government.

Over the last two decades there has been a move to decentralize the

Mexican fiscal system, or, more precisely, to reallocate resources and re-sponsibilities between the federal and subnational authorities. It is im-portant to note two aspects of this process: although decentralizationstarted earlier than the power dispersion described above, it has beenmainly driven by this redistribution of power; and decentralization hasmeant the transfer of administrative controls and resources, rather thana shift in responsibilities for collecting taxes. To give an idea of how ad-ministrative decentralization has evolved, it is worth mentioning that in1993, 25 percent of total federal revenue was redistributed to the statesand municipalities. By 2003, that figure had grown to 38 percent.16

The 2004 convention aimed to build consensus and propose meansof reassigning the distribution of resources and responsibilities at each


15. For more on these early conventions, see Courchene, Daz-Cayeros and Webb(2000:12325).

16. This figure results from the division of the expenditure of the states and mu-nicipalities by the total primary expenditure of the public sector. However, if we only takeinto account federal income from taxation (excluding grants from oil and other state ownedfirms), the change is more stark: in 1993 43 percent of this income was transferred to thestates and municipalities, whereas in 2003, that same figure grew to 70 percent (Presi-dencia de la Repblica 2004, 24045).


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level of government so as to give new, better form to the federal pact.Agreements and proposals of the convention spanned a wide range of

issues: public spending, income, public debt, public patrimony, admin-istrative simplification, inter-governmental work-sharing schemes and co-operation, and accountability and fiscal oversight.

The convention was a necessary political forum. There is little doubtthat a new, decentralized, fiscal structure could yield significant bene-fits for municipalities, states, and the entire national economy. As men-tioned before, currently, the federal government collects as high as 97percent of total taxes collected in the country. But the challenges fac-ing reform of the current fiscal structure are great.

As discussions evolved, it became apparent that improving the fis-cal system is much more complicated than simply giving up the taxa-tion powers of the central government to local governments. First, whilegetting more transfers from the federal government is always desirable,not all of the states are administratively prepared to impose new taxesor to collect those currently in the hands of the national executive. More-over, even if all of the states were prepared, important disparities amongtheir fiscal revenue bases exist that require the use of redistributive mech-anisms. This is the reason why one of the greatest challenges for thestatesand the national executive and legislative branchis to strike anew balance between compensatory mechanisms benefiting the poor-est states and new incentives to reward those states that make signifi-

cant local efforts to collect more revenues. Also, from a political stand-point, even when overall efficiency gains could be attained, changes inthe current fiscal organization might imply undesirable costs for newsubnational governments, since each governor knows it is unpopular toincrease the tax base or simply levy more duties. Therefore, every stateexecutive has the incentive to pass the buck on this issue. 17

In August 2004, the Convencin Nacional Hacendaria ended, withmore than 350 proposals accepted by unanimity. However, there wasnot a complete consensus on how to implement a comprehensive over-haul of the fiscal system that could generate a substantial increase in rev-enue for the national and local administrations. In the end, the gover-nors and the president agreed that the national executive would sendthe 2005 annual budget to the lower chamber of Congress with a pro-posal to allocate 2 percent of the VAT to the states and 1 percent to themunicipalities. They also arranged to include in this package a mecha-


17. This panorama can become even more complicated when interests createdamong important political actors straddling state lines are considered. Paramount amongthem are the teachers unions, whose payroll and perks are received, via states, from fed-eral funds. (Merino 2003: 359).


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nism in which the Congress would determine taxation amounts on foodand medicines in order to offset national income redistributed to states

and municipalities through the VAT. However, these proposals were timidefforts by the CONAGO and the president to push forward a minor re-form in areas related to taxation, while falling short of a comprehensivereorganization of the fiscal system.

From a more optimistic perspective, there was consensus, indeed,on matters advocated by the CONAGO, like the need to cede constitu-tional ground to the fiscal system and to clarify areas where the twolevels of local government could act jointly.18Another positive aspect

was that the convention did not bring a proposal for radically alteringthe schemes under which states can borrow, leaving in place the con-servative but wise status quo. Under this framework the federal gov-ernment can use resources allocated for transfers to the states as col-lateral for their respective debts. Also, state governments cannot borrowfinancial resources from the international market since they are notbacked by the national government. With this system of incentives, Mex-ico has averted the vicious cycles into which other federal states in Latin

Americaspecifically Argentina and Brazilhave fallen. Another pos-itive result was that throughout the convention a recognition prevailedthat the principle of distributive equity (i.e., the imperative of transfer-ring wealth from richer states to poorer ones) is central to the Mexicanfederal system. The economic and social disparities between states and

regions in Mexico render unfeasible any move towards an extremely com-petitive federalism system, as in the United States, establishing predatorytax competition through revenue decentralization.

Other areas in which the convention met its original expectationswere the areas of transparency and accountability and fiscal over-sight[RAP1]. Many states are still lagging behind the federal governmentin this respect.Currently, almost half of the states still have cumbersomelegal frameworks which limit possibilities for transparent oversight oftheir budgeting and spending processes.19 Regarding access to publicinformation, almost two thirds of Mexicos states have enacted legisla-tion similar to the federal freedom of information act (The Ley Federal


18. These are, according to the proceedings of the convention, and in line with whatCONAGO has been advocating, public security and safety, environment, health, education,commerce, and economic and social development (SeeDeclaratoria Final2004: 84).

19. A Fitch report released in 2004 clearly signals that at the national level, Mexicogives information on fiscal and monetary policies that meet international standards of trans-parency. However, this report also mentions that at the state level, fiscal policy transparencyis still deficient. (Fitch Ratings 2004:1). Ambiguous areas in the budgeting and spendingprocess cover a range of issues, from public-servant wages to the use of federal funds ear-marked for municipalities.


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de Transparencia y Acceso a la Informacin Gubernamental). Thus, theconvention was a good chance to unify criteria on transparency mech-

anisms for the states and to underscore the importance of the issue.Perhaps one of the most interesting outcomes from the conventionwas the proposal to eliminate the inequitable amount of federal subsidiesfor education received by the government of Mexico City. This constitu-tional amendment passed by a coalition from the PAN and the PRI in theLower Chamber, represents a setback to its major opponent, Mexico CityMayor Andrs Manuel Lpez Obrador (PRD), who is still the most popu-lar contender for the presidency in 2006.20 This issue also revived tensionsbetween the center and the periphery, since most governors outside Mex-ico City considered that the capital had always been treated too generously.

Finally, one of the most favorable results of the convention was theachievement of a consensus on addressing two problems of public fi-nance in need of a forceful course of action: the growing burden of pen-sions and social security on finances of local and federal authorities; andthe need to halt or at least diminish the drain of resources from PEMEX,the state-owned oil company which provides a third of the federal budgetevery year.21 Underlying these two concerns was the enormous task ofcarrying out a comprehensive fiscal reform to endow the state with moreeconomic resources.22 Unfortunately, as explained below, Congress hasfallen short of adequately facing these challenges, and in ratifying theproposals of the convention.

Congress was not enthusiastic about the 2004 Convencin NacionalHacendaria. Historically, and even during the first decades of the post-revolutionary regime, the national legislature was reluctant to delegateor relinquish constitutional powers. As the hegemonic party structure

was dismantled and competition in local politics intensified, congres-sional members became more assertive and, thus, their inertia has


20. Through this amendment of its constitutional statute, the government of Mex-ico City will have to share with the federal government the cost of education under thesame scheme that other states do. In monetary terms, this new obligation for the gov-ernment of the Federal District represents around (U.S.) $382 million for the year 2005 (6

percent of its budget).El Financiero 2004: 8).21. According to official figures, money from mineral combustibles and their taxa-

tion generated 35 percent of federal revenue in 2003. (Presidencia de la Repblica 2004:239). In order to reduce the tax burden of the state-owned firm and stimulate its expan-sion, the convention agreed to impose lower tax rates on new production of oil and gas.Unfortunately, during its 2004 period, Congress did not turn the conventions proposalinto law. According to a Fitch Ratings report, in 2003 60.8 percent of PEMEX revenue wasdedicated to paying taxes (Fitch Ratings 2004b: 2).

22. Mexicos revenue from taxation (excluding grants) is very low:according to OECDfigures, in the year 2001 it amounted to 18.9 percent of the GDP. While the average formember countries in that organization is 36.9 percent (Clarke and Capponi 2004: 39).


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gained strength too. Therefore, the emergence of legislative power hascoincided with the expansion and reinforcement of legislators abilities

to offer local-level patronage. These new dynamics showed in the ne-gotiation of the 2005 federal budget. To an unprecedented extent, leg-islators in the lower house, the Chamber of Deputies, used their pre-rogatives to define federal expenditures to favor local constituencies atthe expense of federal government priorities.23

While governors can lobby legislators from their states to advancetheir interests in the Congress, the party leadership remains the mostimportant source of congressional member cohesion. In fact, the pro-posal endorsed by CONAGO and the president to transfer 2 percent ofthe VAT to the states and 1 percent to the municipalities and to imple-ment food and medicine taxes was killed in both chambers in October2004. This clearly shows that the convergence of interests between thenational and local executives did not pose a real threat to Congress. Infact, national legislators were clever enough to reallocate extensive re-sources from the national budget to specific infrastructure projects intheir states, effectively dismantling the coalition between the governorsand the national executive, and realigning the political allegiances of lo-cal executives to their party. In other words, the distribution of surplusrevenue from oil sales and the reapportionment of the 2005 nationalbudget can be explained more accurately by a simple political logic: con-gressional members favored their governors and constituencies, with a

direct form of pork-barrel politicsto advance their own political careers.In summary, the convergence of interests between the CONAGO,on the one hand, and the national legislature, on the other, can be seenonly as a short-term but extremely profitable alliance in which the pe-riphery was able to curb the priorities of the federal government.

Conclusions

Electoral competitiveness is a necessary, but not the only condition neededto revive the federal pact. As pointed out by Eleazar (1987), federalism isa complex mechanism requiring a proper balance between self rule and


23. The opposition parties in the Chamber of Deputies carried out significant reap-propriations of the budget for the year 2005. Among the most important were the reductionof resources to payment of fiscal debts ($700 milion (U.S.) less, or half the sum proposedby the executive), payment of interest on funds to protect banking savings ($60 million(U.S.) less), and a general cut in administrative payrolls (40 percent less than that proposedby the executive). On the other hand, according to preliminary analyses, the states gov-erned by the PRD and the PRI got the largest share of reallocated resources: differencesrange from two to four times as much as the amount allocated for the PAN governed states(Reforma 2004).


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shared rule. Thus, federalism entails power sharing, but also competitionand cooperation among different units. It also requires defining clear re-

sponsibilities in some issues and overlapping sovereignties in others.Changing the rules of the fiscal system for the purposes of economicefficiency and reward are not sufficient to build a new federal pact. Nev-ertheless, in some respects these are indispensable; for instance, safety

valves must be created in case of deadlock in the budgeting process. Fur-ther discussion of a new federal pact would have to take into account,as well, new balances between local and national authorities in issuesrelated to education, economic stability and development, redistributionof income, and use of natural resources.

The new dispersion of power discussed here implies new spacesfor democratic participation. In overall terms this is a change for the bet-ter, and it is bringing the federalism to the center of political discussion.Still, from a national perspective, the strengthening of federalism is notalways intertwined with the fortification of democracy. In a nutshell, fed-eralism can be seen as enabling democracy (because it fosters pluralismand protects minorities) or as constraining it (when a minority has a vetopower over the will of the majority through the Senate or local legisla-tures), (Stepan 1999). The formal rules of federalism are useful as longas they frame these tensions productively and strike a balance betweenlocal and national interests.

True federalism in Mexico was impossible under a hegemonic party

system. That system inhibited political competition and pluralism. Asexplained in this article, economic and fiscal centralization were deeplyrooted in the political system that ruled Mexico for most of the last cen-tury. Although the constitutional foundations of the federal pact werenot eroded, its operative mechanisms were never developed: federalismremained dormant under the single-party regime. Unfortunately, past ex-periences of federalism in Mexico were of little help in establishing con-temporary formal institutions and behavioral rules: they belong to dif-ferent historical contexts and, in every case, they failed to live up to theexpectations of democracy under a federal pact.24

There is a worrisome reality to acknowledge. The new political bal-ance, under the current institutional framework, is generating problems


24. Throughout all of its independent history, Mexican federalism has been more afrustrated goal than a reality. The Constitution of 1824 failed to frame the tensions betweenthe center and the regions that, among other domestic and external factors, stirred up-heavals to which federalism finally succumbed. A centralist constitution was enacted in1836. Although a new federal pact was put in place in the Constitution of 1856, its prin-ciples and operative mechanisms were gradually undermined by continued instability,civilstrife, and, ultimately, by the political apparatus built by Porfirio Daz. The latter ensuredpeace, but concentrated all relevant political decisions (for the national and regional levels)


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which were unknown in the past and which could well jeopardize effi-ciency of the fiscal structure and even economic stability. There is a la-

tent contradiction between, on the one hand, the principles underlyinga federal pact (sharing responsibilities and gaining efficiency on thewhole), and on the other hand, the political dynamics and constraints thatlocal democratization has generated. This contradiction is best exempli-fied by the way the congress, and specifically a majority of congressionalmembers in the lower chamber, disregarded the conventions proposalsand engaged, instead, in a disorganized fight for resources for their con-stituencies, at the expense of large portions of the federal governmentsbudget. The outcome of these bargaining processes will benefit neitherthe national government nor the federal entities in the long term.

Some preliminary conclusions on the CONAGO and federalism canbe drawn. The members of the CONAGO achieved genuine progress inidentifying and publicizing a way to rationally predict and direct the fis-cal implications of the dramatic political changes that suddenly surfacedas a result of alternation in the presidency. There were also worthyachievements with respect to allocating resources in areas of local gov-ernment (infrastructure) and social organization. However, it is clear as

well that CONAGOS federalism agenda was designed around a strawman: the national government. Now that the fiscal convention is over,CONAGO must prove that it has constructed institutional mechanismsthat will allow the organization to continue as a permanent forum of de-

bate, coordination, and dispute settlement.This task looks all the more challenging when the role of Congress istaken into account. Thus far, in order to prevail against the presidency, orsimply to promote its proposals and turn them into pieces of legislation,the CONAGO has needed to align its objectives to those of a winning coali-tion in the Congress. The Chamber of Deputies has the last word on atleast one issue of the greatest importance for every years politics at thelocal level: the budget. Furthermore, all governors pursue their own leg-islative objectives with their respective legislative delegation or with theirpolitical parties. The CONAGOs multi-faceted agenda is a result of thenew imperatives of politics at the local level (on recruitment, competi-tion, accountability), explained in the first section of this paper. For thesereasons, although the CONAGO has proved to be an important forum for

voicing common concerns, it seems not to be in perfect tune with theneed for ad hoc alliances that define everyday issues at the national level.

Finally, although a balance of the CONAGO with regards to federal-


in the person of General Daz. The Mexican Revolution destroyed this structure, but thepolitical system that replaced it (based in the hegemonic party system ruled by the pres-ident) was very centralized as well.


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ism would be preposterous at this moment, it is possible to take pastexperience into account and elucidate two opposing scenarios for the

future.In the best-case scenario, the steps taken by CONAGO and the pro-posals of the Convencin Nacional Hacendaria could yield, gradually,institutional changes to strengthen economic efficiency, local governanceand accountability. This path of gradual change would need a strongercommitment and effort on the side of local governments to lobby in theCongress for every single reform. In this context, the CONAGO couldcontinue to be a forum to renew the necessary political will to carry outthese transformations.

In the worst-case scenario, the new interaction of local and nationalpolitics, specifically those referring to Congress, would bring on apredatory process at the expense of the national executives priorities.Unfortunately for Mexican federalism and for the overall well-being ofthe state, a comprehensive reform of the fiscal system is not in sight atthis moment. The structural condition of centralization in tax collectionremains, just the same as the very weak fiscal basis of federal and localfinances. Although pork-barreling is perhaps an inevitable conse-quence of power dispersion, it is important to note that it could put theMexican economy in an even more fragile situation. Unless the urgentstructural reforms (fiscal, energy, labor) are enacted shortly, Mexicoseconomy will be increasingly vulnerable to the contingencies of poli-

tics. In this scenario, the CONAGO could have a chance to prove its ca-pabilities by pressing its members to exert their influence in Congressin accordance to nationalnot localpriorities. But, for the reasons ex-plained throughout these pages, there are more reasons for skepticismthan optimism about this possibility.

Annex 1: Methodologyof the Indice de Concentracin de Poder

The methodology to construct the Indice de Concentracin de Poderwas devised by Mony de Swaan and Juan Molinar (2002) according tothe following formula:

Yx=F[(.5P)+(.225D)+(.05CLL)] + ( Ei[(.5Gi)+(.5Li)] + (Mi(Pmi)Where:Y=Degree of concentration of political and economic power from

the incumbent party for the x year.F= Number of resources allocated to the executive vis--vis the leg-

islative and Judiciary Branches as a percentage of the total annualbudget.

P=Dummy variable that signals if the PRI is in control of the presidency.



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D=Control of the lower chamber. If the party of the president didnot reach a majority in this chamber, D is computed as the percentage

of seats allocated to the party of the executive. If the party of the Pres-ident has the bare majority, but less than the qualified majority (this is2/3 of the seats of the lower chamber) needed to pass constitutionalamendments, D takes the value of .75. If the party of the President hasa qualified majority, D takes the value of 1.

S= Control of the upper chamber (Senate). If the party of the pres-ident did not reach a majority in this chamber, S is computed as the per-centage of seats allocated to the party of the executive. If the party ofthe president has the bare majority, but less than the qualified majority(this is 2/3 of the seats of the lower chamber) needed to pass constitu-tional amendments, S takes the value of .75. If the party of the presidenthas a qualified majority, S takes the value of 1.

CLL= Control of subnational legislatures,operationalized as a dummyvariable. If the party of the president is in control of more than 16 leg-islatures, CLL takes the value of one; if not, the volume is 0. This vari-able was introduced since constitutional amendments need to be ap-proved by Congress and by at least 50 percent of local legislatures.

Ei=Percentage of annual resources transferred from the central gov-ernment to each state (transferencias y participaciones).

Gi=Control of the governorship by year operationalized as a dummyvariable. If the governor belongs to the same party of the president, Gi

takes the value of 1, otherwise 0Li= Control of local legislature by year. If the party of the president

has the majority in a local Congress L takes the value of 1. Otherwise Ltakes the value of the percentage of seats controlled by the party of thepresident in the local legislature.

Mi= Percentage of resources allocated to municipalities by states(participaciones y aportaciones)

Pmi= Percentage of the state population aggregated by municipal-ities governed by the party of the president.

The Index varies from 0 to 100, where 0 means absolute dispersionof power while 100 means an absolute concentration of power in thehands of the national executive.

Annex 2: CONAGO Meetings

From July 2002 to November 2003 CONAGO has met fifteen times:

Constituent assembly. Cancun, Quintana Roo. July 13, 2002. Partic-ipants discussed principles of federalism, as well as issues of health,education, and fiscal relations between states and federation.



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First ordinary assembly. Atlihuetzia, Tlaxcala. August 24, 2002. Gov-ernors analyzed some aspects that should be included in fiscal

reform. Second ordinary assembly. Pachuca, Hidalgo. September 28, 2002.

Members discussed strategies to participate in the negotiations ofthe 2003 federal budget.

Second extraordinary assembly. Metepec, Estado de Mxico. Octo-ber 16, 2002. Governors presented some of their proposals con-cerning federalism to the Secretarios of Gobernacin and Hacienda

y Crdito Pblico.

Third ordinary assembly. Chihuahua, Chihuahua. October 28, 2002.

The conference agreed on establishing a permanent dialogue withCongress and national political parties. The main objective of thismeeting was to increase the resources allocated to states and themunicipalities in the 2003 federal budget.

Fourth ordinary assembly. Cabo San Lucas, Baja California Sur, No-vember 22, 2002. Members discussed the path to materialize polit-ical agreements based on federalist principles agreed upon by par-ticipants of the Conference.

Fifth ordinary assembly. Manzanillo, Colima, December 8, 2002.CONAGO decided to establish a closer relationship with the nationalcongress in order to influence the annual budgeting process andamend some fiscal laws.

Third extraordinary assembly (first governorsmeeting). Leon, Gua-najuato. February 21, 2003. Members made a statement rejectingthe war against Iraq, and established a commission that would serveas a link with Congress and the president to negotiate issues re-garding La Reforma del Estado. The organization agreed to allocate50 percent of oil revenue surpluses that they would receive to lo-cal infrastructure projects.

Sixth ordinary assembly (Second governors meeting). Morelia.March 14, 2003. Members of the conference decided to review withthe Secretara de Hacienda y Crdito Pblica, the amount of re-sources that states would receive from revenues generated by oilsurpluses.

Seventh ordinary assembly (Third governorsmeeting). Boca del Ro,Veracruz. April 26, 2003. Members decided to elaborate a projectfor La Reforma del Estado.



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Eighth ordinary assembly (Fourth governors meeting). Aguas-calientes, Aguascalientes. April 8 and 9, 2003. The conference dis-

cussed with the Secretara de Hacienda which legal instruments andprinciples were used to calculate resources that each state wouldreceive from the revenue generated by the oil price hike.

Ninth ordinary assembly (Fifth governors meeting). Mexico City.June 5, 2003.

Unanimously, the twenty-four members who participated in this reuniondecided to analyze the convenience to call for a new Convencin Na-cional Hacendaria, as part of La Reforma del Estado.

Tenth ordinary assembly (Sixth governorsmeeting). San Luis Potos

San Luis Potos. July 30, 2003. CONAGO discussed the last detailsbefore the call for a Convencin Nacional Hacendara. At this meet-ing the president and the secretaries of Gobernacin and RelacionesExterior were invited as active participants.

Fourth extraordinary assembly. Cuatro Cienegas,Coahuila. August 20,2003.

The conference made the official announcement of the 2004 Conven-cin Nacional Hacendara. The governors belonging to the PAN becameadherents of the CONAGO.

Eleventh ordinary assembly. Monterrey, Nuevo Len, September 29,2003.

The members of CONAGO signed the Cuatro Cienegas Protocol whichapproved the agenda of the convention. Governors decided to analyzethe possibility of including federal administrative and fiscal justice tri-bunals in the workshops of the Convention. During this meeting,CONAGO invited CONAMM to participate in the fiscal forum.

References:

Centro de Anlisis y Difusin Econmica (CADE). 1999.La DependenciaFinanciera de los Gobiernos Locales en Mxico. CADE: Mexico City.

Clarke, Rory and Hielen Capponi (eds.). 2004.OECD in Figures:Statisticson the Number Countries. Paris: OECD.

Courchene, Thomas, Alberto Daz-Cayeros and Steven B. Webb. 2000.Historical Forces: Geographical and Political, in Marcelo M. Giugaleand Steven B. Webb ed.Achievements and Challenges of Fiscal Decen-tralization. Lessons from Mexico, Washington D. C.: The World Bank.

Declaratoria Final de la Convencin Nacional Hacendaria. 2004 MexicoCity: Talleres Grficos de Mxico.



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De Swaan, Mony and Juan Molinar Horcasitas. 2002. Movimientos Gradualesy Pendulares: Transicin Democrtica y Dispersin del Poder en Mxico,

paper presented at the conference:El Gobierno Dividido en Mxico:Riesgos y Oportunidades. Organized by CIDE-Ibergrop. Mxico.Eisenstadt, Todd A. 2004. Courting Democracy in Mexico: Party Strategies

and Electoral Institutions. New York: Cambridge University Press.Eleazar, Daniel J. 1987.Exploring Federalism. Tuscaloosa: University of Ala-

bama Press.El Financiero, 2004. Reforma al artculo 122 reducir presiones al presu-

puesto federal. 14 October, 8.Fitch Ratings. 2004a. Mexicos Fiscal and Monetary Transparency, Febru-

ary, 1.. 2004b. Fitch Ratings ratifica calificaciones de grado de inversin de

PEMEX, 24 November.

Hernndez, Rogelio. 2000. La historia moderna del PRI. Entre la autonomay el sometimiento.Foro Internacional40, no.2: 278306.

Langston, Joy. 2002. Federalismo, los gobernadores y la legislatura nacional.Paper presented at the seminaryEl gobierno dividido en Mxico: Riesgosy Oportunidades. Mxico.

Lujambio, Alonso. 2000.El poder Compartido: Un Ensayo sobre la Democra-tizacin Mexicana. Mexico City: Oceano.

Merino, Gustavo. 2003. La descentralizacin educativa y las decisiones pre-supuestales de los estados, in Jacqueline Martinez and Alberto DazCayeros eds.De la descentralizacin al federalismo. Ensayos compara-dos sobre el gobierno local en Mxico. Mxico: CIDAC-Miguel ngel

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Presidencia de la Repblica. 2004.Anexo estadstico del Cuarto Informede Gobierno, Mexico City: Talleres Grficos de Mxico.

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Velzquez, Cesar. 2000. State Fiscal Deficits in Mexico:a Political EconomyExplanation. (Unpublished PhD dissertation) Chicago: University ofChicago.

Weldon. Jeffrey. 1997. The Political Sources ofPresidencialismo in Mexico,in Scott Mainwaring and Matthew Soberg Shugart ed.Presidentialismand Democracy in Latin America. Cambridge: CUP. Pp: 22558.


De Remes Alain 2006 Power Index

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