On Dec. 9, Mexican President Felipe Calderón tabbed Finance Minister Agustín Carstens to head the nation's central bank, known as Banxico. Carstens replaces Guillermo Ortiz, a highly respected official who had occupied the post for 12 years.
Despite a political climate increasingly hostile toward Calderón, the move -- which had been rumored for weeks -- brought waves of approval. The markets, the punditry, and that titan of Mexico's economy, Carlos Slim, were all pleased by the selection, with the latter raving, "[W]ithout a doubt, Carstens has all of the credentials to occupy the post."
Among Calderón's cabinet members, Carstens has always been one of the most trusted by the opposition. His long track record working in the foremost financial institutions -- both in Mexico (including Banxico) and beyond (the International Monetary Fund) -- also explains the widespread comfort level with his appointment.
Yet those gushing about Carstens' selection should not overlook the singularity of Ortiz's term. Before Ortiz arrived at Banxico, the value of Mexico's peso resembled a roller coaster ride, and inflation was a constant menace. By contrast, Ortiz orchestrated the longest stretch of single-digit inflation in Mexico in two generations, and under his guidance, the periodic self-inflicted economic crises that had buffeted the country since the 1970s ceased. Ortiz cemented the reputation of Mexico's newly autonomous central bank as an international model for responsible monetary policy. So although Carstens' vaunted resume is reassuring, it doesn't ensure that he will match Ortiz's steady hand in guiding Mexico's monetary policy.
Furthermore, as experienced as Carstens is, he's an ally of the president in a post where a certain degree of professional distance is preferable. That doesn't mean that Banxico will wind up subjugated to the political imperatives of the presidency. Such worries are, in the succinct analysis of economic historian Macario Schettino, "nonsense." But the appointment gives the impression that Calderón is trying to fix a machine that was already well-oiled and humming perfectly.
Replacing Carstens as finance secretary is Ernesto Cordero, another Calderón loyalist who had been serving as the secretary of social development.
Many interpreted Cordero's designation as a sign that he is being groomed for the presidential nomination of the National Action Party (PAN) in 2012. Yet before he begins polishing up his stump speech, Cordero has the herculean task of orchestrating Mexico's recovery from its worst economic slump since the Great Depression.
What's more, he arrives just as Calderón has begun calling for changes "of depth" to the political and economic system. The most pressing reforms involve modifying the fiscal regime to widen the tax base, close corporate loopholes, and replace declining oil revenue. At the same time, an oil reform is intended to facilitate the injection of private capital into the national oil industry. It will be Cordero's responsibility to hammer out reform legislation with opposition parties, which collectively hold a majority in both houses of Congress.
Shortly after his selection, questions emerged about Cordero's readiness for the post. Despite Cordero's experience in the cabinet and an impressive educational pedigree (he has an advanced degree in economics from the University of Pennsylvania), the reaction to his nomination was notably wary compared to the enthusiasm that greeted Carstens' selection.
According to a Morgan Stanley manager quoted by Bloomberg, "Agustín was very good at negotiating with Congress. I don't know whether Cordero has that ability or not."
Another analyst seconded, "We believe Cordero is not the best man for the finance minister post . . ."
The skepticism surrounding Cordero could turn into a major obstacle. Calderón's previous attempt to secure fiscal and oil reforms led to wholly insufficient legislation, and the negotiations will be just as tricky this time around. Given the stakes, one wonders if Calderón and Mexico would both be better served by someone perceived as having more independence from the presidency.
The cabinet changes offer an illustration of Calderón's somewhat alarming habit of handing all of the most important jobs that open up under his watch to stalwart loyalists. Of the almost three dozen officials who have served in Calderón's cabinet, only one was a member of an opposition party. (After serving for two years in the relatively low-profile Secretariat of Communications and Transportation, Luis Téllez, of the Institutional Party of the Revolution, resigned earlier this year when recordings of embarrassing private conversations emerged.)
Furthermore, most of the panistas -- as PAN party members are known -- sent to the top posts are Calderón confidants, rather than members of opposing currents within PAN. The president certainly has the prerogative to select subordinates with whom he feels comfortable. But as a result of being surrounded by loyalists, Calderón doesn't seem to have anyone nearby willing to offer him an alternative point of view.
Calderón's choices for the two posts will do much to shape the next 18 months in Mexico -- the same 18 months that will be decisive in determining Calderón's own legacy. How things turn out will reflect the wisdom of relying almost exclusively on bonds of loyalty to determine his closest collaborators.
**Patrick Corcoran is a writer based in Torreón, Coahuila, in northern Mexico. He blogs at Gancho.