November 17, 1998
The Center for International Private Enterprise

Introduction

COPARMEX was founded in 1929 as a response to the increasing belligerency of trade unions supported by the federal government. The idea was to establish an independent organization, different from the existing chambers in which membership was compulsory, and with freedom as key and the basis of its representativness.

The legal concept that was chosen for the organization was as an employer's union that would group all types of private enterprise endeavors, regardless of branch and size.

Today the result is a nationwide Confederation with 48 Enterprise Centers and over 36,000 affiliates that provide more than two and a half million people with jobs. Some of the key topics to be fulfilled by COPARMEX as established in its Mission and Strategic Plan are:

• Plain democracy
• Market economy
• Social consciousness
• Rule of law

1. COPARMEX's Mission

With its declaration of principles and its voluntary membership, COPARMEX has been driven face to face with the government on several occasions in its history. The PRI, the Institutional Revolutionary Party, has been in power for over seventy years. It has been COPARMEX, the business organization that has represented and defended free enterprise from authoritarian dispositions.

On the question of whether COPARMEX is involved in political activities, the answer is yes, but in what we understand as the broad sense of politics, which is non-partisan. We believe in political participation as a way to endow democracy and encourage our membership to get involved in politics. In order to keep COPARMEX away from partisan politics, our internal rules ban membership from the Confederation for anyone having political party responsibility, running for any elected position, or participating in the government at any level, local, state, or federal. On the other hand, COPARMEX is proud to be a supplier or promoter of social leadership. Some of our former members have successfully joined different political parties or associations.

From a strategic point of view, COPARMEX switched from anti-policy positions to proposing and participating in proactive activities. In 1988 COPARMEX, joined by the Confederation of Chambers of Commerce, prepared a document, Proposals from the Private Sector to the New Government, 19881994. In 1994 both business organizations launched the 19942000 proposals. Each of the reports was presented to the presidential candidates at the time.

We believe this is this line of action will successfully guide us, as a social actor, to gain a leadership position and increasing influence with the legislative and executive branches.

2. Mexico Today

Today, the question we Mexicans ask ourselves is not if Mexico is moving or not, but rather what direction it is heading. In order to try to figure out an answer, it is useful to take a closer view of some economical, political and social characteristics of my country.

• Fifteen years ago Mexico's political and economic profile included the following characteristics:
• Closed economy abroad
• State-owned banking system, scarce and expensive credit
• Insecurity with respect to land ownership and impoverished rural areas
• Government ownership of hundreds of companies
• Deficient educational system that is anti-entrepreneurial
• Tight regulation on entrepreneurial activity
• Extremely high inflation attributed to entrepreneurs and business in general
• Unproductive and manipulative labor union corporatism
• Little competitiveness among companies and no incentives for increased productivity
• Exports highly dependent on oil
• Little electoral competition; scarce civic participation
• Public expenditure aimed at the state-owned enterprise
• Growing underground economy
• Deficient public sector, including corruption and police incompetence
• Legislative branch subordinated to the executive branch
• Precarious ecological awareness; deficient standards
• Uncertain monetary policy aimed at financing the government
• High taxes and strong fiscal evasion
• Inefficient monopoly in the social security and pensions system
• Precarious culture for entrepreneurial excellence

Today, Mexico's political and economic profile includes the following characteristics:

• Open economy abroad
• Reprivatized banking system; scarce and expensive credit
• Firm legal bases for agricultural development
• Decaying corporatism
• Economy still government-led due to its ownership of dozens of companies
• Conceptual and constitutional changes in the field of education; a new openness
• Decrease in the regulation of entrepreneurial activity
• Control of public finances
• Companies with structural incentives to increase productivity
• Exports less dependent on oil
• Growing electoral competition and civic participation
• Public expenditure being reoriented
• Uncontrollable growth of the underground economy
• Increasing personal insecurity
• Ecology in crisis. Growing ecological awareness and standards
• Monetary policy aimed at fighting inflation
• Complex fiscal legislation with multiple taxes and complex procedures
• Improvment in pension and housing schemes
• Drop in purchasing power and weak internal market
• Initial development of a culture of entrepreneurial excellence

3. THE MEXICAN TRANSITION PROCESS

It seems clear that we are in a middle of a Transition Process, meaning that we are moving from one system to an other. Authoritarian systems at some point always come to an end. The first symptom is a crack, followed by a break or fracture.

In Mexico we identify the crack as occurring in 1968, when Luis Echeverria Alvarez manipulated the political situation so he could be nominated as the PRI candidate to succeed Gustavo Diaz Ordaz as President of Mexico. The break comes twenty years later, in 1988 when Carlos Salinas de Gortari introduces a new group , his own group, to cabinet positions, putting aside the old group.

In authoritarian systems there is a nucleus of power and around it some satellite groups. The opposition is dispersed and scarce. In Mexico the power nucleus was identified as the Revolutionary Family that utilized the PRI as the structure for its own operation. In the process, after the break is perceived the power nucleus starts to polarize and clusters appear: Immobilists and Reformists.

The opposition becomes more dynamic but the situation is similar. There is polarization and two big clusters appear: Maximalists and Gradualists.

In the immobile cluster you can locate individuals who refuse any kind of change. Sometimes they don't even recognize the change. In the Mexican case the names that the media have given to them are the Dinosaurs, the Jurassic Park , Old Guard, The Dinos, the Tough Ones. The side of the Reformists can be characterized by young, more educated people, interested in adapting the old nucleus to the changing environment, in many instances without the input from their own grassroots or the civil society. They get names like: Renos, Softies, Young Turks, Moderns.

(Transiciones desde Un Gobierno Autoritario. O'Donnell, Schmitter, Whitehead. Vol. 1 Europa Meridional. Editorial Paids Estado y Sociedad; Problems of Democratic Transition and Consolidation. Southern Europe, South America and Post Communist Europe. Juan J. Linz & Alfred Stepan.)

From the opposition side, the Maximalists want the changes to happen immediately. Their proposal is fundamentalist : all or nothing; My proposal or Nothing. Often, they don't care about the means to achieve their goals or the costs to the society. The names they get in the Mexican case are Extremists, Radicals, Noisy, Violents, Buffaloes.

The Gradualists insist on legal, pacific means to achieve the change, and consider the participation of the civil society in the process. The names that cluster has got are: Doves, Moderated, Templated, Pondered.

During a Transition Process the old structure in the power groups disappears and, instead of a mononuclear system, many nuclei appear as part of power nodes, formal or informal networks, and political operators.

In every casenodes, networks and operators it is possible to identify names of key actors or instigators. As examples, it is useful to identify in the PAN the Old Traditionalists and the Pro-business Newcomers; in the PRD the Social Democrats and the Socialists.

In the PRI some nodes appear from the Jurassic Park, for example, nodes from Carlos Hank Gonzalez, from Fernando Gutierrez Barrios, from Luis Echeverria, and from Javier Garcia Paniagua.

It seems that the civil society has moved ahead and wants to be an active part of the process. The turning of the IFE (Federal Elections Institute) to the civil society is a serious move in this direction , even though in some Federal States this movement has been slow. The progress of Civil Society has been evident with the appearance of new groups such as the Agrupaciones Politicas which is a new scheme that includes those citizens who want to take part in the Transition Process, but do not feel comfortable or don't fit in the big political parties.

Following the experiences of other Transition Processes in the 20th century , we can identify three stages :

• Liberalization
• Democratization
• Consolidation

The key notes of each of these stages are as follow:

• Liberalization
• Democratization
• Consolidation

• Opening
• New Actors
• New system

• Deregulation
• New sequences
• Definitive rules

• End of monopolies:
  • Economic
  • Educational
  • Media
• New rules are established
• Provisional system ends

• Plurality
• Laws are made suitable to the new reality
• End of the uncertainty

• Uncertainty
• Multiple parties enter the scene
• No actor considers another alternative besides democracy to access to power positions

• Provisional system
• Conditions that allow alternating in power positions
• Social peace is achieved

Multiple associations appear

Possible scenarios in the Mexican Transition Process:

1. Regression
2. Stand Off or Patronized Transition
3. Accomplishment or Full Transition

• Political Authoritarism
• Political Authoritarism
• Complete Democracy

• Economical Interventionism
• Market Economy
• Market Economy

• Impunity

• Rule of Law

COPARMEX has set as its goals

• a Free Mexico,
• characterized by the Rule of Law with solid institutions;
• upholding Ethical Principles and Values that lead us, by peaceful means to a
• Complete Democracy - representative and participative - with a
• socially responsible Market Economy

How do we foresee this COMPLETE TRANSITION:

• An open and competitive economy
• An efficient and strong banking system aimed at promoting development, with competitive credit
• A modern competitive agricultural system with capital and pride
• A government with no companies and which is not the guiding light, but rather a promoter of the economy , Singapore style
• Quality education that promotes values
• Maximum deregulation of economic activity
• Competitive inflation
• Labor unions that support employment and promote productiveness
• Companies that can compete world wide
• Growing diversified exports
• Full electoral competitions with participative democracy
• Decent and competitive social and economic infrastructure
• Solid formal economy that minimized underground economy
• Competent and honest police force that guarantees public safety
• Independent powers
• Reliable elections at local, state and federal levels
• Healthy environment, clean companies, effective standards
• Stable monetary policy. Independent Central Bank
• Simple and stable fiscal legislation. Competitive fiscal policy
• Competition between alternative Social Security and Health Care schemes
• Consistent increase in purchasing power. Stronger internal market
• Competitive educational systems
• Full development of an entrepreneurial culture

4. THE TRANSITION AND THE CIVIL SOCIETY

In light of these considerations, we in COPARMEX feel we can made a contribution by participating in the design of the new system.

I would like to focus on the impact of the 1994 and 1997 elections on the civil society in general and in COPARMEX in particular. The 1994 Presidential Election was the first unchallenged election since the foundation of the PRI in 1927. It does not mean that they were considered fair, but from a legal point of view, they were qualified by the society as clean.

From our point of view the Mexican society was entering a maturing process that was reflected in the new Electoral Law. In 1997 the lost of the absolute majority of the PRI in the Lower House of Congress confirmed the winds of change and marked one of the most important changes in the modern Mexican history: For the first time the Executive branch could not control the Legislative in an environment where the manipulation of the federal elections was very unlikely. Similar situations have followed in some individual Mexican states.

As part of the civil society, we in COPARMEX have always known that part of our role is to establish an efficient communication link between our membership and the authorities. Since the inception of COPARMEX, almost 70 years ago, we dealt only with the Executive Branch, and particularly with the President. The decisions were taken more from subjective points of view and with very little accountability.

The new situation demanded a different approach. We had to adapt. In October 1997, with the support of CIPE, a small group from COPARMEX spent a week learning, in the field, how the American business organizations deal with the Legislative branch of the government. We also had a chance to learn how the people in the US Congress see the advocacy efforts of the business community. After that week we realized that lobbying meant a complete change of culture. We had entered a new era in the democratic life that neither we nor anybody in Mexico had ever dealt with. We had to learn it fast and try to share it with our colleagues on all sides.

Last October, also with CIPE's help, we had a one day seminar on advocacy, directed to the members of COPARMEX and other business organizations. Internally, COPARMEX had to reinforce its Committee Structure, including new professionals; we had to look at the problems in a more objective way and look for allies. During the first months of 1998 we launched a survey within our membership in order to establish the advocacy agenda for the year.

Two particular projects have profited from our study of advocacy: The New Labor Culture Project and the Mid-Size Business Project. We consider that Mexico and the Mexicans are not only in a time of changes, but more precisely in change of time. The Mexican Civil Society is growing up and moving .

In COPARMEX we consider our responsibility to actively work for a successful end of the Transition Process characterized by the Rule of Law, Complete Democracy with a representative and participative government, and a Socially Responsible Economic Market.