The last several months have been a turbulent time for President Enrique Peña Nieto. Perceptions of a lack of urgency on the part of the federal administration following the disappearance of dozens of students in the state of Guerrero in September 2014, evidence that police and political figures affiliated with the governing PRI colluded with drug gangs to murder the students, revelations of shady property deals involving First Lady Angelica Rivera and Finance Minister Luis Videgaray, and allegations of government intimidation of critical journalists have sent the president’s approval rating tumbling since mid-2014.
In addition to the scandals, Peña Nieto’s stewardship of the economy has come into question. While the country’s unemployment rate had dropped to 4.3% at the end of February, average wages have decreased since the 2008 financial crisis. Making matters worse for the president, hopes that approval of reforms to liberalize the state-controlled energy sector would produce a rapid boost for the economy have been deflated by a steep fall in oil prices, which has not only overshadowed the signal legislative achievement of Peña Nieto’s presidency, but also forced the government to reduce budgeted spending by $8.3 billion in an election year.
As parties gear up for mid-term congressional elections in June, the PRI remains the most popular party, but polling data indicates it will win less than the 33% vote share it took at the 2012 legislative elections. Assuming the PRI fails to make significant gains at the upcoming elections, Peña Nieto will struggle to achieve further legislative successes over the second half of his term, and the prospects will dim considerably if his party suffers a substantial loss of seats.
Separately, the center-left PRD is focusing its efforts on forcing a referendum to repeal the landmark energy-sector reforms approved in 2013. Organizers of the campaign contend that they have collected more than enough signatures to force a plebiscite, but that claim has yet to receive official confirmation.
Regardless of the outcome of the process, the near-term uncertainty will complicate the government’s efforts to attract foreign investors, an objective already made more challenging by the fall in global prices for oil. The government plans to auction exploration rights for 14 shallow-water oil blocks in July. However, barring a strong recover in oil prices, bids are likely to be disappointing, and there is a chance that the government will revise the timetable.