Baxico pick consolidates Calderon's economic agenda

In nominating Finance Minister Agustin Carstens on Wednesday to become governor of the Bank of Mexico, President Felipe Calderon seeks above all to "coordinate" and "harmonize" the relationship between the central bank and the federal government on fiscal and monetary policies.

The selection of Carstens removes current Gov. Guillermo Ortiz, who has dueled publicly with the president on the management of interest rates and economic forecasts, and installs a trusted partner with whom Calderon has been working in close collaboration since before taking office three years ago.

In addition, the selection of Ernesto Cordero to replace Carstens as Finance minister and Heriberto Felix to take the reins at the Ministry of Social Development elevates two men in the narrow circle around the president, although they have few credentials for their new jobs.

Cordero, who like Calderon was a student at the clubby, private university ITAM, served at his side during the presidential campaign as coordinator of public policy.

The president's consolidation and elevation of like-minded officials comes amidst growing criticism that Mexico has failed to make significant economic advances addressing its global competitiveness and widespread poverty because it is guided by a system of crony-capitalism with too many vested interests to maintain.

"For too long," notes ITAM political science professor Denise Dresser, "government officials have tinkered with Mexico's economic structure through piecemeal reforms that seek to ensure political stability but do not address the key obstacles to greater innovation and competitiveness."

Carstens encountered these same charges when he promoted the president's 2010 budget proposal in Congress. He faced criticism at how he - and Calderon - faced the economic crisis.

Although some senators took issue Wednesday with his selection, the Senate is expected to approve with little dissent Carsten's appointment to rule the central bank from 2010 to 2016.

In the nomination ceremony at the Los Pinos presidential palace, Calderon acknowleged the concerns about the selection of someone who so closely shares his views.

While saying that the federal government will work in coordination with the Bank of Mexico to design and implement monetary, fiscal and exchange rate policies, the president stressed that the Bank of Mexico will continue to operate independent of the administration.

His government would work in "close coordination" with the bank, Calderon said, but without detriment to its full autonomy.

Diane Lindquist is the publisher of mexbiznews.com