Calderon picks are free-market advocates

MEXICO CITY —  President-elect Felipe Calderon on Tuesday named a University of Chicago-trained economist as finance minister and announced five other Cabinet members, the core of an economic team endorsing free-market policies as the solution to Mexico’s ills.

In a move that was widely anticipated, Calderon selected Agustin Carstens, a respected former official with the International Monetary Fund, as Mexico’s equivalent of the U.S. Treasury secretary. Carstens has pledged to keep government spending in check and endorses job creation as the way to reduce Mexico’s grinding poverty.

“This is exactly what Wall Street was asking for,” said Alberto Bernal-Leon, an emerging-markets economist with Bear, Stearns & Co. in New York.

Bernal-Leon and other analysts praised Calderon’s team as technically skilled and more politically savvy than that of Calderon’s predecessor Vicente Fox, whose administration failed repeatedly to pass legislation aimed at helping Mexico’s economy grow faster.

But the party of Calderon’s bitter rival, defeated presidential candidate Andres Manuel Lopez Obrador, criticized the selections as more of the same for a nation that has struggled to create employment and opportunities for its people.

“Today it was decided to continue with an economic policy that has restrained the country’s growth, that has generated more poverty and social inequality over the last 25 years,” said Guadalupe Acosta Naranjo, secretary general of the Democratic Revolutionary Party.

Mexico’s stock market closed at a record high Tuesday. But the peso sank to its lowest level in six weeks on fears that a determined leftist opposition would undermine the ability of the conservative Calderon to govern when he takes office Dec. 1.

On Monday, Lopez Obrador, who claims he was cheated out of victory in July’s whisker-close election, declared himself Mexico’s “legitimate president” in an elaborate ceremony in the capital’s city center.

Many have derided Lopez Obrador’s self-coronation as a farce meant to enhance the negotiating power of his party, which now holds the second-largest number of seats in Congress behind Calderon’s National Action Party. Calderon, Carstens and other members of the new Cabinet are veteran negotiators known for their ability to forge consensus.

Still, the shadow government has raised fears that Mexico’s legislature will be paralyzed by gridlock.

“In the end it takes two to tango,” said Alberto Ramos, emerging-markets analyst with Goldman, Sachs & Co. in New York. “No matter how competent and skillful they are, much will depend on how compromising Congress wants to be.”

Calderon named Georgina Kessel Martinez, an economics professor and former Energy Ministry official, to be the next secretary of energy. Eduardo Sojo, a public policy coordinator for President Fox, will be the next secretary of the economy. The president-elect tapped Luis Tellez, a former energy minister and a member of the former ruling Institutional Revolutionary Party, to head the Ministry of Communications and Transport. The Institutional Revolutionary Party, which is struggling to remain relevant after a thumping in July’s elections, has formed an alliance with Calderon’s National Action Party.

Fox appointee Rodolfo Elizondo will continue in his current post as secretary of tourism. Javier Lozano, former president of Mexico’s Federal Telecommunications Commission, was named secretary of labor.

The biggest surprise to some observers was Kessel, the only woman named to the Cabinet so far and one with limited experience in the energy sector.

Modernizing Mexico’s state-dominated energy sector is one of the nation’s biggest challenges. Mexico’s electricity supply isn’t growing fast enough to keep up with demand, and rates are among the highest in Latin America.

Some have advocated opening the government electricity and oil monopolies to foreign investors -- a controversial proposition in Mexico, where energy resources are seen as a sacred national patrimony.

Some analysts see Kessel’s appointment as a sign that Calderon won’t be pushing hard on that front at a time when Mexico is so divided.

“It’s going to be extremely difficult and therefore quite unlikely that he get serious energy reform through,” said Pamela Starr, Latin America analyst for the Washington-based Eurasia Group. “This is recognition of that reality.”

Another of Calderon’s Cabinet choices would appear to reveal his unwillingness to take on the business oligopolies that analysts say are stifling competition and economic growth.

Lozano, a Calderon loyalist and a telecommunications expert, was seen as a natural to head the Ministry of Communications and Transport. Some believe he was given the labor post instead because he had spoken out against the dominance of Mexico’s telephone and television giants, whose backers were instrumental in getting Calderon elected.

“Lozano criticized the communications monopolies. That was his sin,” said Leo Zuckermann, a researcher and political analyst at the Center for Economic Research and Teaching in Mexico City.

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marla.dickerson@latimes.com

Times staff writer Cecilia Sanchez contributed to this report.