MEXICO CITY - Mexican President Felipe Calderon's bold move to shut down a money-losing state electricity company is more likely a one-off event than the start of a big shake-up of the country's bloated public sector.
Many residents of the capital, tired of poor service, hailed the surprise closure this weekend of Luz y Fuerza del Centro (LFC), the monopoly power distributor in the greater Mexico City area.
"That company was a robbery, I'm glad the president did this," said Juan Jose Porras, owner of a hardware store in central Mexico City who suffered frequent power cuts.
The move was popular with Wall Street too. Some analysts say the closure helped boost the Mexican peso 1.5 percent against the dollar this week, as investors bet Calderon next will take on oil and teacher unions seen as corrupt and inefficient.
"We would not be surprised if this were only the first of a series of moves to improve the quality and costs of public utility services," Goldman Sachs economist Paulo Leme said.
Calderon has vowed to shake up the public sector, including state oil monopoly Pemex. But further moves will be much harder than LFC, where the union was allied with a weakened leftist party.
"This is an easy political move for Calderon since he doesn't lose any political support," said Eurasia Group analyst Allyson Benton. "Other (public sector) unions have much stronger political protection."
For instance, Calderon has an alliance with the leader of the powerful teachers union, often cited as a major obstacle to reforming Mexico's notoriously poor public education system.
Calderon also needs the support of Mexico's main opposition, the Institutional Revolutionary Party, or PRI, to pass key tax reforms by the end of the year.
The PRI is close to the huge oil workers' union, which signed a new contract this summer similar to previous agreements -- signaling the government is not trying to break the union's power.
Calderon's predecessor, former President Vicente Fox, from the same conservative National Action Party, or PAN, struggled in vain for six years to overhaul the public sector.
While Calderon has passed modest pension, tax and oil reforms since taking office in late 2006, analysts say Mexico needs more radical action to reach its potential and catch up with other big developing economies like Brazil.
Angering oil workers and teachers would hurt Calderon's party, which faces an uphill struggle in 2012 presidential elections. The country is mired in its worst recession since the 1930s and a drug war has killed more than 14,000 people since late 2006.
Unlike LFC, which was loathed for power outages and billing errors, other public companies such as Pemex have greater support and Mexicans are wary of reforms in the cherished oil sector that was nationalized in 1938.
The government, looking to avoid provoking a nationalist backlash, has stressed that there are no plans to privatize the electricity sector. But opponents of the shutdown still have sought to link it with a privatization agenda.
LFC union members are already trying to mobilize popular protests against more reforms. Outside the company's offices in Mexico City on Thursday, they carried placards saying "today LFC, tomorrow Pemex, next you."
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