Which Mexico for Obama?
When President Barack Obama meets this week with President Enrique Peña Nieto in Mexico, he will be visiting a country that was much maligned throughout his first term.
Washington has viewed Mexico largely as a source of problems for the United States in the past six years. Many Mexicans, in a mirror image, consider the United States the origin of their troubles. They blame Mexico’s epidemic of violent crime on an insatiable appetite for drugs and loose control over gun and ammunition sales in the United States. In addition, the U.S. financial crisis left the Mexican economy reeling in 2009.
But in the past year, particularly since Peña Nieto’s election in July 2012, Mexico’s standing in the United States and internationally has increased dramatically — along with its national self-esteem.
Though organized crime and violence remain key concerns for Mexico, stories of economic and social reform are now among the headlines. A November Economist article about Mexico was titled “From Darkness, Dawn.” And that message has become a standard media refrain. Some in Washington talked about Mexico as a likely failed state, but that has been decisively debunked. Mexico is now viewed as on the rise, though its homicide rate has fallen only slightly and no one is sure that improvements can be sustained.
In fact, there are many Mexicos for Obama to deal with — the successful and prospering; the backward, corrupt and stagnant; and everything in between.
This mix is not unusual. It is characteristic of most nations, even the United States. Obama needs to bring an optimistic perspective with him to Mexico, reflecting the growing confidence that Mexicans have in their country — and the image they project internationally.
In this, Obama has little choice. No country is likely to affect the future of the United States more than Mexico, just as none will affect Mexico’s future more than the United States. No two nations have more to gain from energetically pursuing closer cooperation.
Mexico’s reinvigorated economy has proven more resilient and vibrant than anyone expected. It shrank by more than 6 percent in 2009, one year after the Wall Street financial collapse, but economic expansion since has been faster than at any time in the past two decades.
Mexico’s growth, while modest by Asian standards, has in the past three years been more robust than that of Brazil, one of the region’s strongest economies. It is also competing successfully with China in U.S. markets. Mexico will displace Canada as the largest U.S. trade partner within roughly six years, according to some economic projections. Close U.S.-Mexico economic ties, once seen as the culprit in our southern neighbor’s sluggish growth and sharp downturn, are now, as the U.S. continues to recover, a prime explanation for Mexico’s rising economic fortunes.
The future may be even brighter. Peña Nieto has launched an ambitious reform agenda to overcome the many obstacles to stable, rapid economic growth. He is demonstrating the political talent needed to get his policies approved and put into practice.
The Mexican president, for example, managed to negotiate the Pacto por Mexico, an accord among the country’s three major parties that bridged many of their long-held ideological differences and secured their agreement on a broad package of economic changes. Despite suffering some tangles and setbacks in recent weeks, the Pacto continues to provide a path forward to far-reaching reform.
Peña Nieto plans to revamp Mexico’s oil industry and open it to foreign investment could reverse the decline in oil production and assure that the country remains a leading exporter. Proposed changes would also pave the way for the systematic exploitation of Mexico’s huge, untapped deposits of shale gas and oil.
Other reforms are designed to augment government revenue and improve fiscal management. Peña Nieto wants to increase competition in telecommunications and other critical sectors, and upgrade the country’s mediocre schools and universities to raise productivity and create paths for social mobility.
This explosion of reform initiatives has helped change opinion in the United States about Mexico. Less than a year ago, Mexico was widely viewed as an increasingly dangerous neighbor. Today, it is talked about as a promising economic partner.
The partnership will be far stronger if — as now appears likely — Congress passes sensible and humane immigration reforms. The Mexican government seems most encouraged by the prospect of U.S. legislation that would include an expanded temporary worker program and would provide immediate legal status and a path to citizenship for most currently undocumented immigrants ‑ about half of whom are Mexican nationals.
These changes could substantially eliminate a persistent tension in U.S.-Mexican relations. Mexicans have long been angered and insulted by U.S. debates on immigration, including insistent demands that the border be walled up; the spread of anti-immigration (and often anti-Latino) legislation in many states and communities, and absurd and offensive proposals like GOP presidential nominee Mitt Romney’s call for migrants to “self-deport.” Equally important, immigration reform will offer an array of economic benefits to both nations.
Despite the Peña Nieto administration’s impressive start, however, there is reason for caution in thinking about the future of the country and its relationship with the United States.
Mexico clearly looks better than ever, but it was never as seriously endangered as it was reported to be. It was never close to being a failed state. It is true that its homicide rate and violence rose rapidly in the past five years — and the associated brutality was unparalleled. But Mexico’s murders per capita are still far from the highest in Latin America. They regularly trail those of Brazil, Colombia, Venezuela, most of Central America and the Caribbean.
On the economic side, yes, Mexico has only recently emerged from some 15 years of listless growth. During that period, however, the economy and banking system were well managed. Mexico maintained ample reserves and a low ratio of debt to gross domestic product. Inflation was kept firmly under control.
For more than two decades now, Mexico has been building a modern economy with vibrant manufacturing and export sectors well integrated into U.S. supply chains. The Mexican economy was never as troubled as it was portrayed — and now the opportunities for improvement are greater than ever.
Still, Mexico is not the sure bet that many believe it to be. It has to demonstrate that it can make its economy grow faster. The past 30 years offer little evidence that Mexico has the potential for sustained, rapid expansion, or for carrying out the reforms that such growth will require.
The Mexican economy has long suffered fundamental shortcomings that restrain its productivity, job creation and capacity to compete. The obstacles to change remain formidable.
Peña Nieto’s reform initiatives are just getting started. The legislature has already given its initial approval for changes in education, labor laws, telecommunication policy and some other sectors. But in many cases, original proposals have been watered down, additional legislation will also be required in almost every area and effective implementation is still to come. Success will depend heavily on Peña Nieto’s political skills — as well as the technical mastery of his advisers and managers. It will also hinge on whether the fragile inter-party consensus backing the Pacto por Mexico can be sustained and popular support mobilized for change.
Crime and violence are likely to remain unrelenting challenges for Peña Nieto. They could even take central stage again. In fact, public security may not improve anytime soon — despite the new government’s multiple initiatives.
Peña Nieto’s predecessor, Felipe Calderón, learned how arduous a task it is to reform Mexico’s police and its justice system, and restore public confidence in them. Now, Peña Nieto is making clear his deep dissatisfaction with — and his intention to overhaul — Calderón U.S.-supported approach to security and drug issues. The expected changes will almost surely irritate many in Washington and may even become a new source of friction in the bilateral relationship.
But neither the United States nor Mexico is perfect. The two nations cannot look at each other only as sources of opportunity and gain; cooperation is needed to address risks and problems. Neither country has much of an option, however, because their economies and populations are so deeply integrated. There is no turning the clock back.
Mexico and the United State have to solve their problems together and find ways to generate and exploit new opportunities jointly. If they can do it, the payoff will be enormous.
PHOTO (Top): Mexico’s President-elect Enrique Pena Nieto listens to President Barack Obama (R) in the Oval Office of the White House in Washington November 27, 2012. REUTERS/Kevin Lamarque
PHOTO (Insert): Mexico’s President Enrique Pena Nieto speaks during the presentation of a telecommunications reform bill in Mexico City March 11, 2013. REUTERS/Edgard Garrido