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Sunday, Mar 29, 2015

Tea party trends: Mexico and Australia

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The political trends of two of our closest allies and trading partners indicate a clear shift to the right in both economic and social policies.

Mexico is the second largest export market for the U.S. - just behind Canada - and the U.S. is the largest global market for Mexican exports (even excluding the tsunami of their illegal immigrants).

Now here's a shocker: Recently elected President Enrique Pe?na Nieto, in a sweeping reform of Mexico's education system after seven decades of corruption, arrested the head of the powerful teachers' union on charges of fraud.

Shifting for a moment to Australia, perhaps our most reliable ally in the Far East - in a somewhat surprising result - the Labor Party was crushed in a general election, returning the Liberal-National coalition to power after a six year absence. The new prime minister, Tony Abbott, a Rhodes Scholar and a conservative, campaigned on a tough line on migration, balancing the budget, skepticism over climate change and opposition to gay marriage.

Just how far right of center can our two allies go? Some of these changes have a ring of the dreaded tea party to them.

Elba Esther Gordillo, who headed Mexico's National Union of Education Workers for 23 years, was arrested for embezzling $160 million from union funds. Not unlike the teacher trade unions in U.S. Democratic strongholds, Gordillo treated the union and the education system as her personal fiefdom. Reform was never an option until Nieto was elected and proposed reforms to the education system. As in the U.S. the teachers' union was considered a political powerbroker.

Think about these changes in Australia and Mexico - a balanced budget, being tough on immigration, reform of the education system - unheard of reforms in any liberal progressive administration.

Tony Abbott was a former member of Conservative Prime Minister John Howard's cabinet in 2001. Readers will recall that John Howard, staunchly pro-American, once described himself as George Bush's " deputy sheriff" in Asia.

Abbott campaigned on a promise to abolish Labor's unpopular carbon tax, but ever the pragmatist he made a blatant play for women voters by proposing an astonishing government-funded maternity leave up to a cap of $75,000 for up to six months. He proposes to pay for this pro-child policy by a combination of levies on selected big businesses offset by corporate tax cuts across the board. Labeling paid maternity leave as "workplace justice," he certainly took a page from Labor's playbook.

Political experts say that Abbott benefited from an electorate that was sick of the infighting within the Labor Party, a closely divided parliament and three continuous years of negative campaigning and bickering. So they punished Labor. One can see a similarity between Australia and the U.S. where people are weary and cynical about all politicians.

Mexico's Piņa Nieto's most interesting proposal is to remove the long-standing ban (1938) on private investment in Pemex, the state-run oil industry, a source of great pride to Mexicans. Production has floundered in recent years, and experts agree that privatization will open up investment in new technology for deepwater drilling, fracking and natural gas production in areas where there has been very little drilling. Some potential investors could balk because they will not be given ownership of the oil and gas reserves but only a contract right to share in the profits.

The reform is expected to meet strong opposition. Not unlike in the U.S., political tensions are obvious, and the left-wing Party of the Democratic Revolution has recently called for protest demonstrations. To overcome the opposition Piņa Nieto will rely on a time-honored populist ploy: offer to increase spending on social programs. (Anything he can do that keeps his people on their side of the border is fine with this writer.)

According to many sources, Pemex has a long history of corruption. Conservatives would argue that is par for the course with any government sponsored or state-owned enterprises. Corruption includes inflating contracts, giving contracts to friends, inexplicable wealth or benefits to the highly placed - all the usual stuff one would expect in a powerful SOE. To further demonstrate the hazards of SOEs, both parties have corrupt politicians who are players in Pemex, so Piņa Nieto doesn't want to open this can of worms until he begins his reform.

What is perhaps most interesting about these two pragmatic political leaders is their willingness to dip into the progressive liberal playbook and go left - to move their country to the right of center.

John Reiniers is a retired attorney and regular columnist who lives in Spring Hill.

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