Now, seven months into his six-year presidential term, Fox is discovering that good intentions and steely determination aren't enough. Although two-thirds of Mexicans still support him, Fox has made some serious missteps. So critics and supporters alike are urging the President to rethink his entire approach to governing. For starters, Fox needs to put some order in his Cabinet and settle on a more manageable list of policy priorities. He must also learn to negotiate with the opposition-dominated Congress, or risk making little progress on his bold plans to remake Mexico. "We really expected to see more disciplined teamwork, but it turns out that Fox is an inefficient manager," says Federico Est?vez, a political scientist with the Autonomous Technological Institute in Mexico City.HONOR AND TAXES. Fox has sometimes sent out the wrong message. Take the recent "Towelgate" scandal. A Mexican newspaper reported in June that the presidential residence had been outfitted with towels costing $443 apiece. Fox countered that since the purchases showed up on a government Web site, it showed he was honoring his pledge of greater transparency.
Yet such conspicuous consumption is hard to take from a President who wants to impose a 15% value-added tax on food and medicines. The measure is central to Fox's efforts to boost public spending on education and welfare programs. But the Mexican Congress has delayed voting on the tax at least until September, in part because Fox and his team failed to make their case to legislators and the public. Now, the President will have to put more energy into negotiating a compromise, which may exempt basic foods and medications.
Fox's management skills have also fallen short when it comes to his own Cabinet. His reluctance to appoint a chief of staff may have contributed to bickering among top officials. For instance, members of his administration are at odds over the merits of investigating past abuses of power. "In any undertaking, it takes time for the gears to function well," says Martha Sahag?n, who on July 2 resigned as Fox's spokesperson to become his wife. Some observers say that Sahag?n's exit from government will reduce friction, as her statements often conflicted with those of Cabinet officials.
It would also help if the President commanded the total support of his center-right National Action Party (PAN). The go-it-alone Fox has alienated many Panistas by failing to name key party members to his Cabinet. Local papers have reported that several Cabinet officials now are quietly working to form a new, left-of-center political party. The new group would appeal to the voters who cast their lot with Fox in the last election but who do not sympathize with the conservative PAN. The administration dismisses the reports.
Neither can Fox afford to alienate the opposition. Although Fox's election ended the Institutional Revolutionary Party's seven-decades-long reign, the PRI still holds the largest number of seats in Congress. Fox needs the PRI's votes to enact his reformist legislation, and prominent Priistas want him to reach out more. "The administration is seriously lacking in politically savvy Cabinet members who know how necessary it is to sit down to talk and listen and negotiate to reach agreements," says PRI Senator Silvia Hern?ndez. Learning on the job has never been easy, even for an achiever like Fox. Germany's parliament has finally scrapped a Nazi-era law that barred retailers from offering discounts of more than 3% on products outside the designated summer and winter sales seasons. The measure had largely kept German retailers from launching the frequent sales and discounts that have long characterized American shopping. Germany's large store chains lobbied for the law's abolition as the rise of Internet shopping left them at a disadvantage to foreign companies offering discounts on the Web. Rampant discounting is unlikely to happen soon, though, since margins in the industry are razor-thin. Instead, retailers will court consumers with loyalty cards offering deals to frequent shoppers. Four years after heeding the International Monetary Fund's advice to float its currency, Thailand's central bank is again intervening to prop up the struggling baht. The move comes soon after Chatu Mongol Sonakul, the reformist governor of the Bank of Thailand, was replaced by the more interventionist-minded Pridiyathorn Devakula. Since June, the BOT also has raised rates on domestic savings accounts in a bid to bolster the currency. The measures have helped stabilize the baht, which had sunk by 13%, to about 45 to the U.S. dollar, in the past year owing to slowing exports and a shrinking current-account surplus. Pridiyathorn insists Thailand won't rigidly fix the currency, a policy that led to a crash in 1997 that triggered the Asia crisis. But he says he will intervene "whenever the baht fluctuates too much."