The U.S. is not the only country with murky money greasing its campaign machines. Mexican political campaigns could be benefitting from a major injection of questionable cash, according to a new report by Mexico City-based consulting firm Integralia.
The report, which analyzes data from Mexico's Central Bank, found some very suspicious correlations between Mexican election cycles and the amount of cash that's circulating in the economy. And we're not talking chump change either. During the last two national elections the economy's cash flows increased by an average of almost $2 billion.
Mexico doesn’t exactly have super pacs, but the country’s drug cartels have been known to take a serious interest in elections, whether it’s flat out killing candidates who oppose their agenda or pouring money into some campaigns. Plata o plomo as they say in Spanish—take the money or take a bullet.
Narco-pacs, as the case may be.
Gilberto Gil, an analyst with Integralia, says his firm looked at the amount of cash in circulation during an election year compared to non-election years, and found that the flow of physical money in the streets drops significantly in non-electoral years.
If the campaigns are indeed responsible for the dramatic infusion of cash in the streets, it's pretty compelling proof that the parties are using obscure cash flows to circumvent campaign finance rules, he says. “Cash makes it nearly impossible for electoral authorities to trace a transaction,” Gil told me.
According to the study, during the 2012 presidential race the flow of cash from February to January increased by $2 billion, representing a 5% increase in the actual number of bills and coins circulated in the street. It's a hard to attribute that to normal economic fluctuations, the report states.
“It’s a disproportionate increase and it’s not within the normal patterns of economic demand," reads the report. "A year before, the flow had decreased $160 million during the same period. And a year later, in 2013, the flow also decreased $276 million. All this means a significant portion of the cash flow increase in 2012 could be related to the electoral process.”
The report explains: “Plenty of campaign expenses are paid in cash. Whether it’s because the funds come from illegal sources (embezzlement of government funds, private donations that surpass legal limits, legal entities or even money from organized crime) or to pay for unlawful activities (paying for press coverage, electoral clientelism, buying votes) or to avoid surpassing legal campaign spending limits.”
Integralia warns that these trends are likely to be repeated during Mexico’s governorship elections this weekend. On Sunday, 13 states and Mexico City’s new constitutional assembly will be up for grabs.
The stakes are relatively high as Mexico’s ruling party (PRI) tries to hold on to its nationwide political control, despite President Enrique Peña Nieto’s low approval ratings. A flurry of independent candidates will also be competing, most likely dividing the opposition vote and helping the PRI maintain power.
Former leftist presidential candidate Andres Manuel Lopez Obrador, a charismatic and blunt politician (a “populist messiah,” according to critics), could gain momentum if his new MORENA party performs well.
But several incidents are already casting doubt on the outcome of Sunday’s election fiesta. Massive voter information databases have been leaked online in recent weeks, and politicians seem to be playing a very dirty game by allegedly releasing compromising wiretaps to smear opposition candidates. There’s also ridiculous scandals, such as the owner of a local soccer team in the state of Veracruz threatening to take his sports franchise elsewhere if the ruling party doesn’t win the election.
And now obscure cash flows threaten to stain the process even further.
You can read the Integralia report in Spanish here.