CUT IT OFF!

Mexico 2018 | DIPLOMACY | FOCUS: CORRUPTION

Though dealing with corruption is often equated with cutting out the bad individuals in good systems, Mexico is finding this strategy to be less than effective.

During the 2018 presidential elections, candidate Rodríguez Calderón, former Governor of the northern and prosperous state of Nuevo León and better known as El Bronco, consistently stated that if elected he would chop thehands off corrupt civil servants. Although a sad symptom of the banalization of violence in the country's public sphere, the comment is interesting because it sheds light on the political class' approach to tackle corruption. It is often framed as the activities of some “bad apples" who should be harshly punished for the institution to continue functioning normally.

Assessing the magnitude of the problem, the problem can hardly be the result of isolated misconducts. Mexico ranks 142th out of 183 in Transparency International's Corruption Perception Index with an aggregate score of 29 out of 100. This result places the country as the worst ranked of the G-20 and the OECD. Corruption currently costs Mexico MXN347 billion annually, roughly 9% of its GDP, according to the World Bank.

Some new approaches to fighting this issue have emerged. As Aristóteles Sandoval, Governor of Jalisco, points out, “Since corruption is systemic and not individual, the only way to fight it is by strengthening institutions with autonomy and independence, and empowering citizenry to deal with it in both private and public sectors." He aligns with scholars arguing that corruption lies at the perverse incentives of the political system.

Corruption has always been an issue in Mexico, but it has increasingly permeated all governmental layers and the private sector since the launch of the war on drug trafficking. Besides the growing power of cartels, a major factor has been the decentralization of local and regional spending. This evolution is associated with a wave of governors going rogue. An accounting technique known as “budget adjustments" has become more and more common. Though Congress votes on the yearly budget, each institution can modify the money allotted to each of its division. Ultimately, a good share of public spending is not accountable and is a source of corruption.

Contradictorily, Mexico performs well in terms of open data, highlighting that there is no correlation between transparency and lesser corruption. According to the Open Budget Partnership, Mexico ranks 6th out of 102 nations in open budgetary data, above the US and Canada. But even if data is open according to the law, in practice, access remains costly and burdensome due to technical and political barriers.

Some corruption scandals gained relevant attention during President Peña Nieto's mandate. At the regional level, at least 41 governors were accused of corruption between 2000 and 2016, according to the Mexican Institute for Competitiveness. International agreements act as pressure to toughen enforcement. In early 2018, as part of the sixth round of NAFTA negotiations, Canada, the US, and Mexico reached an agreement on the anti-corruption chapter. This chapter compels members to criminalize governmental and corporate corruption by asking companies to keep accurate books and records to notice and trace corrupt payments and by requesting parties to forbid the deduction of corrupt payments for income tax purposes. Accordingly, Mexico has launched a number of initiatives to make public spending more accountable. Platforms such as Compranet display a record of all public acquisitions and make it harder to adjudicate a contract based on biased criteria. In 2016, the National Anti-Corruption System was created, giving civil society a greater stance. Nevertheless, in 2018, members of the system have pointed out a wide array of hindrances placed before them by the government itself.

Corruption undermines the rule of law and competitiveness, and a systemic approach to fight it would yield economic and political dividends in the new administration.