Loyal opposition.

Vicente Fox Quesada is Mexico's first president elected from the ranks of the opposition after 71 years of uninterrupted rule by the Partido Revolucionario Institucional. A member of the Partido Accion Nacional, Fox took office in December 2000 and promised progress on the biggest problems facing the world's 10th-largest economy, including poverty, corruption and unemployment. As his term ends, Mexico's macroeconomic figures are in good shape, but the mandate wasn't enough to overcome the country's main obstacles to growth, among them pending tax, labor and energy reforms. Fox spoke with LATIN TRADE Editor-in-Chief Greg Brown and LATIN TRADE Mexico Correspondent Marisol Rueda about the economy, his achievements and the country's future.

As your time in office nears an end, what would you say you have accomplished?

Evaluations are the job of the Mexican people; I would not evaluate my own self in this regard. What I would say, on the one hand, is that the polls clearly show a 70% approval rating of my management and my work as president. On the other hand, there have been important advances and achievements on several fronts.

First, there has been a stable transition to democracy accompanied by social equanimity and economic stability, which has allowed us to build a strong foundation for many more things, for instance, a strong financial system. Last year alone, mortgage loans increased by nearly 100%. Mexico now has an impressive financial market thanks to economic stability as well as government and public-spending discipline. Today you can get financing of whatever amount you want in Mexico, in Mexican pesos, at fixed rates for a period of 30 years; if you recall, in 1995 in Mexico you couldn't get a loan, not even for a period of one year. Today confidence and certainty in the Mexican economy is at its highest levels. The fundamental variables of the economy, inflation and interest rates, are practically in line with those of the United States, our main economic partner. In fact, inflation in Mexico in 2005 was less than inflation in the United States.

Mexico's foreign reserves are greater than its foreign debt. Very few countries can say that. That sends a very powerful message of long-term stability to the markets. Mexico's country-risk rating is at 110 points. In 2000, when I took office, it was at more than 400 points. So, there's been a very impressive advance in terms of the economy. Many people ask what benefits are to be had from economic stability. Here in Mexico we've been able to see and demonstrate the positive nature of macroeconomic stability and fiscal discipline. This year we're going to build 750,000 homes; in 2000 we built 220,000 homes. This year we're going to invest in highways and infrastructure, in one year more than was invested during the entire six years of the previous administration. We are able to finance extraordinary amounts of investments in energy, 32 electricity plants financed privately, US$2.50 billion invested in the Coatzacalcos refinery, while the Fenix Project and the recovery of the petrochemical sector is under way. The economic indicators are very strong. But what, in the end, is our gain? That people benefit from all this. The purchasing power of Mexican workers in five years has increased by 15% in real terms. In the previous 25 years the paychecks of workers lost purchasing power each year. Stability pays, and it pays very well in terms of workers' incomes.

There is an important, significant emerging middle class in Mexico that today is becoming our consumer base. Their consumption is becoming the economic driver in Mexico, on top of our exports. Now the Mexican economy has a domestic motor: Last year, 1.13 million automobiles were sold domestically, a record figure never before achieved.

What were you unable to accomplish?

First let me speak to social issues, because it was there that during the past five years we achieved the most, and because this is the real work of government. According to World Bank measurements, in the first four years of my administration we managed to reduce by 30% the number of families living in extreme poverty. We created a new social safety net, making it universal through the Seguro Popular. This means that we will be able to provide now every citizen across the entire country access to social security and medical and prescription drug guarantees. The Seguro Popular gives families access to doctors, medicines, surgery, hospitalization, an insurance policy for the entire family, and an annual medical checkup for every member of the family at no cost. That's 5 million families, 25 million Mexicans, that this year were covered by a Seguro Popular policy.

In education we've guaranteed equal access through 6 million scholarships. Today, I can say that in Mexico any young person that wants to get ahead in his or her studies and go to a university can do so, even if they come from a poor family, because they will have a scholarship. We are achieving quality in education by bringing information technology to all of the schools in the country. In each and every school in the country an electronic, digital blackboard will be installed, connected to the Internet, leading to a true educational revolution in the country's public education system.

What remains to be done? Where do we feel that more could be done? First I would say that, although we have taken 30% of families out of poverty, we have not done the same with the other 70%. We have provided 5 million Seguro Popular policies, but we are short 3 million more, a job that will have to be left to the succeeding government.

Crime has been the toughest problem we've faced, and it is the area in which I am the most dissatisfied. We have taken organized crime head on; we continue to do battle against them. We have in jail dozens of lieutenants of the biggest cartel bosses. We have jailed more than 50,000 foot soldiers in the cartels and it just isn't enough. They keep killing each other.

Some countries in Latin America are taking a decided turn to the left. Could the same happen in Mexico?

This is an observation that has been made by the media and it is accurate in part. There are also many centrist governments that have appeared in recent times. But the most important thing to remember is that Mexico has already tried leftism and socialism under [former president] Luis Echeverria Alvarez and things went very badly. We paid a brutal price for that and, what's more, we're still paying for it three decades later. Populism, demagoguery, irresponsible ideas and a lack of financial discipline, all it does is create more poor people. Mexico's debt today is the result of populist policies and irresponsible excessive spending. As we have seen, as I said before, that order in public finance, honesty and transparency in managing public finance pays and pays well to our own citizens.

Mexico is on the right track. Between 1995 and 2005 we have had political, economic and social stability. It has been 10 years of continuous public policy in which we have built up stamina for the long term. From my point of view, one of the main failures and inconsistencies in the process of development in Latin America has been that each government tries to reinvent the wheel. In the last decade in Mexico the economy has grown to $700 billion from $310 billion, more than doubling in size. In 1995, per-capita income in Mexico was $3,100, today it is $7,000. In terms of per-capita income, Mexico was in seventh place in 1995; by 2005, Mexico was first in Latin America and far ahead of countries such as Brazil and Argentina.

Why can't Mexico grow at the pace of countries like South Korea, Chile or China?

For two reasons. The first is that we haven't undertaken structural reforms. I proposed them on the first day of my government. We are the minority party in Congress, which has to approve the reforms, and that inaction has limited our growth. We could be growing now by 5% or 6% annually. Secondly, we are not going to grow at the same rate as China grows, a country where the per-capita income is less than $1,000, while per-capital income in Mexico is more than $7,000.

Mexico is no longer going to compete, nor does it want to compete, by selling cheap manual labor and by exploiting its workforce. In Mexico we are undergoing a profound transformation, going from an economy based on cheap labor to one that uses know-how and talent. In that lies the answer to creating a Mexico that can grow at a rate of 5% a year. It's also necessary to approve the structural reforms we have proposed, in the finance ministry, the government, and energy reform that allows for private companies to participate in generation, labor reform and pension reform.

Mexico needs these three reforms to increase growth, and you couldn't achieve that in a divided Congress. Many analysts have criticized you for concentrating on these reforms when there were other things to be done to increase competitiveness. Mexico is losing ground in terms of competitiveness.

This is not true. Nobody has a competitiveness figure, just surveys.

The World Economic Forum has one.

Yes, a survey of 10 businessmen, and drawing a rating from that is highly questionable. Mexico does need, in addition to reforms, a way to attract investment because the only way to grow is through investment. In terms of investment last year we did well: $17.84 billion, the highest in Latin America. It's true that one has to work on competitiveness, on productivity, and we are doing that in conjunction with business leaders.

Yet there are analysts who argue that Mexico could take in even more foreign investment. Speaking recently to a U.S. executive, he complained to us that he was expected to make payments out of contract to unions to keep a particular deal bid by the government. He refused and lost half the contract. This was only months ago.

I can't respond to direct examples from a given person. What I can say is that investment in the auto industry this year is going to be spectacular, as well as investment in assembly plants, during an election year, a time when, for some, there are doubts and for others confidence, because the Mexican economy is very strong. In terms of corruption we have achieved three profound changes. One of them is a new government-information access law, which puts the federal government's business into the open. Every citizen has the right to know what the government spends, what it is doing and to have a way to verify what it is doing. This is a powerful deterrent to corruption. Second, there is career civil service, proposed by my government and approved. Now those in the government are persons of quality there for their own merits and not because of political patronage or because of a change of government. In this sense, my administration will by November be, I believe, the only government in the world 100% certified through ISO 9000 in each and every one of its secretariats, departments and work areas.

Thirdly, every bid and government purchase is public and vendors have access to them weeks in advance. Transparency International participated from the beginning of the project through its completion. There's no way to skim money anymore; we've closed the door on corruption, and if it does occur it's highly likely that person will be caught and taken to jail.

The United States historically has been the biggest enemy of walls around the world. What do you think of the idea of some politicians there to build a wall on the Mexican border?

We continue to work on the assumption that migration is potentially a great opportunity and way for both countries to benefit. The United States needs labor and it needs Mexican labor to maintain its competitiveness against other economic blocs in the world. If there weren't willing employers hiring, there wouldn't be these waves of migration. I believe President [George W.] Bush spoke a fundamental truth when he said that, while there are people or businesses that want to hire and someone who wants to do the job, we should make it easy for that to happen. As a result, there is a bill in Congress that supports this view, and there are people in the United States who agree. I think we are, for the first time, very close to achieving an immigration deal in the U.S. Congress.

This fact has created uncertainty along the border itself, an uncertainty that in my view has been caused by people interested in blocking the possibility of reaching an immigration agreement. I would point out, for instance, the painful, mistaken charge that the Mexican military has crossed the border to protect drug traffickers. That is absolutely false. It's clear that since we are close to an agreement there are some who would try to block it. I am hopeful and confident that good judgment, intelligence and talent will prevail in the United States, and not something as anti-democratic as building a wall.

In terms of energy, there have been no reforms. What could have been done to move forward?

The Congress has, effectively, blocked my initiative, which was not to privatize [state-run oil company] Pemex but to add private investment to public investment. What have we done? Today there are thousands of wells being built in the Burgos Basin to extract natural gas, and private investment in the form of service contracts is behind that. Today, we are just about to build the first deepwater well in the Gulf of Mexico, in a field that is larger than Cantarell and that is being done through service contracts using private investment. We have built 32 electricity plants. In the past six years, construction responsible for more than 30% of all of the power generated in the history of Mexico has been built, and it was done with private investments.

The three largest sources of income for the country remain remittances, tourism and oil. Yet Mexico has more free trade agreements than any other country.

In terms of free trade agreements we are the seventh-largest country, in terms of trade balance, in the world. Last year the Mexican trade balance reached $435 billion, more than all of Latin America combined. That's why we are in favor of a Free Trade Area of the Americas, and why we are in favor of free trade, because we have benefited significantly as a result of opening our economy. Tourism is a winner, and it represents 10% of our gross domestic product, 10% of jobs in the country and it is growing at double-digit rates.

It would seem that macroeconomic success is not enough. Mexicans continue to leave their homes for the United States.

Not every problem in this country has been solved; there remains much to do. Among them, we lack jobs and productive employment. Yet some very good news came out two days ago: Population growth has now fallen to below 1%, while Mexico's economy is growing at a rate of 3.5%. This allows the country to reorient its development process. Mexico will go very quickly from a country of young people to one of older adults. The decline in the population growth rate will reduce some of our problems, such as job availability, housing and school infrastructure, since our population is not growing as fast. We have to continue to work to create opportunities for our countrymen here in Mexico. Today, most Mexicans who go to the United States go willingly, because they have decided to go, in order to make more money and for a better quality of life. Very few now go simply because they aren't getting enough to eat.

I am very proud of Mexicans who are in the United States now. They have succeeded. I know this because they are sending nearly $20 billion a year to their families. This speaks very well of them, in terms of their solidarity and love for their families.

Often Mexican presidents leave the country once they leave office. Where are you headed?

I am going to my ranch in San Cristobal. I will go for walks around my country, on the streets of my country, meeting people. I have absolutely nothing to be sorry for or ashamed of. I have not stolen a single cent, so I need [the presidential] pension. I will continue to work for the poor. That will be my job starting on December 1.