MEXICO CITY (By Jorge G. Castañeda, LATimes) December 3, 2006 — Mexico's seemingly endless electoral ordeal has finally concluded: Felipe Calderon took office as president on Friday, albeit under hardly auspicious circumstances. Constitutional order has prevailed — though just barely — despite the onslaught of a strident and deeply wounded left-wing opposition bent on impeding Calderon's inauguration and a bitter, resentful Institutional Revolution Party (PRI) silently hoping and conspiring for the new president's failure.

The bad news for Calderon is that the telenovela that debuted on election day, July 2, is only the beginning. The toughest challenges lie ahead for him now that he has moved into Los Pinos (as the presidential spread on the edge of Chapultepec Park is called).

The conventional wisdom in Mexico doesn't fully appreciate Calderon's predicament. If Vicente Fox's term was largely a self-inflicted failure — as is broadly believed — then it would be relatively easy for the new administration to improve on this dismal past. So Calderon would set about imposing respect for the rule of law and the country's institutions, using political skills acquired as a party leader and legislator to broker deals with the PRI for the structural economic reforms Mexico needs to grow at roughly twice the rate of the Fox years (a meager 2% a year), downsizing expectations for dealing with Washington on immigration and cracking down on corruption that has remained rampant over the last six years.

That wouldn't prove so daunting. Alas, this simplistic narrative is not only inaccurate, it is devastatingly misleading.

Fox's six years in office, coupled with the four last years of former President Ernesto Zedillo's mandate, were a milestone. Not since the 1960s had Mexico enjoyed 10 consecutive years of economic stability, low inflation, low interest rates, a stable currency and constant, if mediocre, growth. For the first time, mortgages, automobile loans and consumer credit became available to the lower middle class: This year more homes were built and sold, and more cars were bought, than ever before. Fox can be criticized for indulging disruptive political protesters and an extremist opposition, but what's more important is that he did not resort to the bloody repression for which most of his predecessors came to be known. And as his foreign minister for a time, I am proud that Fox dragged Mexico out of its archaic foreign policy cocoon and put immigration and human rights front and center on Mexico's international agenda.

As far as Fox's inability to build coalitions with other parties (his National Action Party, or PAN, did not control a majority in the Congress, and still doesn't), perhaps it was their fault, not his. Even before taking office, Calderon was unable to accomplish his very first goal: building the coalition government — at least with the PRI — that he repeatedly proclaimed as the solution to the political gridlock that has cursed Mexico since 1997. There are advantages to having a uniform and disciplined, though probably disposable, PAN Cabinet, even one made up largely of lackluster, mostly unknown and untested archconservatives from the heartland, but this is not what Calderon said he wanted. Similarly, no deal was reached with the leftist opposition regarding the inauguration ceremony — thus the chaotic, depressing scenes of Mexican congressmen fighting it out at the podium of their chamber over the course of the last week.

Moreover, local conflicts like those in the southern state of Oaxaca have not been quickly resolved under Fox, either politically or through the use of force. It seems that Mexico's problems are more intractable than just not having Fox to "kick around anymore."

Actually, they may be more simple and complex at the same time. Mexico experienced an abrupt economic opening under former President Carlos Salinas de Gortari (1988-1994), a belated but successful political opening under Zedillo (1994-2000) and, at long last, a true rotation in power thanks to Fox (2000-2006). But all of these historical transformations took place while leaving the essence of the old PRI-inspired machinery intact: The foundations of the system (which political scientists would call "corporativist" because that system managed to subordinate all sectors of society — the party, business, labor, the church and so on under its control), created in the 1930s, remain untouched. They still represent the most formidable obstacles to Mexico's growth and success.

The first pillar of this structure is the public and private economic monopolies that dominate the country. The oil (Pemex) and electric power (Federal Electricity Commission) firms owned by the state are untainted by competition; the private virtual monopolies in telecommunications (Telmex), television networks (Televisa), cement (Cemex), bread and tortilla manufacturing (Bimbo and Maseca, respectively) and banking (Banamex/Citigroup and Bancomer/Banco de Bilbao) face only tepid competition at home, thanks to their cozy relationship with the state. Prices, supply, service and quality suffer as a consequence, and today these monopolies are stronger than ever.

The second pillar is formed by the unions that have controlled the Mexican labor movement since the 1930s. They were granted immense leverage in workplaces, tremendous resources and political power. The power of such organizations as the teachers union (the largest in Latin America), the oil workers union (the richest in Latin America) and the Social Security employees union (that has thwarted any attempt at pension or health reform for years) remains largely unchecked to this day. These unions obtained all their perks in exchange for 70 years of support for the PRI. They retain those perks, though they no longer owe any support to the government.

The third pillar is the political monopoly. For 70 years, one party had a complete lock on Mexican politics; now three parties do, and no one else can enter the political arena or have access to the taxpayer subsidies handed out to these parties (to the tune of more than half a billion dollars last year) without their consent. In Mexico, Joe Lieberman would not have been reelected to the Senate because, among other reasons, independent candidates are not allowed to run. The parties write their own antitrust legislation, vote their own subsidies and choose their own elected officials, who are just ratified at the polls.

Calderon's daunting assignment is to take on the pillars of the PRI's ancient regime, which have outlasted that party's seven-decade control of the presidency. His administration needs to liberate the union movement, upgrade and enforce antitrust laws to break up private monopolies and allow new competitors — even to the old public monopolies — to enter the marketplace. The barriers of entry into the marketplace of political ideas must also come down.

Can Calderon achieve all this? On one hand, the question might appear nonsensical. Given his weakness at the start, and the virulence and insidiousness of his opposition, taking on more enemies, including some of the powers that be that backed him, seems absurd and impossible. On the other hand, doing so may be the only way to strengthen his presidency. Moreover, his supporters can hardly break with him and join the Andres Manuel Lopez Obrador insurrection or the PRI silent conspiracy. They have nowhere else to go. Nor, indeed, does Calderon. He has to move forward and take up some formidable interests that are standing in the way of Mexico's future. It will not be easy.