Five Questions about Mexico and U.S.-Mexico Relations in 2012

Selee

Al Día: News and Analysis from the Mexico Institute, Andrew Selee, 1/18/2012

This Article by Andrew Selee lays out 5 key questions that will become increasingly important for Mexico and the U.S. Mexico Relationship in 2012. Read the full article here Five Questions 2012

1. What Will Happen in Mexico’s 2012 Elections?

2. Will Organized Crime-Related Violence Increase in 2012?

3. How Will Mexico’s Economy Perform in 2012?

4. Will Migration from Mexico Continue to Decrease in 2012?

5. What Issues will be on the U.S.-Mexico Policy Agenda in 2012?

1. What Will Happen in Mexico’s 2012 Elections?

Mexicans go to the polls on July 1 to select a new president, congress, mayor of Mexico City, and five governors.  Elections in democratic societies have a way of confounding even the most seasoned political analysts, so there is no way of knowing how this one will turn out.  The most recent polls suggest that the PRI is far ahead in the presidential and congressional race.  However, the incumbent National Action Party (PAN) won’t select its presidential candidate until February and the general election campaign won’t really start until then, according to Mexico’s electoral rules, so anything can happen.

The PRI has some clear advantages.  Enrique Peña Nieto is ahead by 20 points or more in most current polls,[i] and it remains the largest party in Mexico, with more than half the governorships, effective control of the lower house, and by far the largest public campaign financing (in coalition with the Green Party, PVEM, and New Alliance Party, PANAL).  However, the PAN’s likely candidate, Josefina Vázquez Mota, is a highly popular former cabinet secretary and congresswoman known for her charisma and public appeal, and the PAN has the advantage (and disadvantage) of being the party in power.  Meanwhile, Andrés Manuel López Obrador, the candidate of the left-of-center Democratic Revolutionary Party (PRD) and two smaller parties (Workers’ Party, PT, and Citizens’ Movement, PMC), is a talented and popular politician who nearly won the 2006 election and has spent the past five years building a support base in each one of Mexico’s municipalities, a base that has yet to be tested but could prove formidable if effective.  It would be unwise to discount any of the three parties, although the early advantage is clearly with the PRI.

There are at least three possible scenarios.[ii]  The first is that the current trends hold and that the PRI marches to an overwhelming victory, perhaps winning not only the presidency but also a majority in the lower house of Congress (which requires reaching a threshold of 42% of the vote) and the mayor’s race in Mexico City (where former PRI president Beatriz Paredes is set to compete).  A second, a probably more likely scenario, is that the election becomes much more competitive over time with either the PAN candidate or López Obrador – or both – competing effectively with Peña Nieto for the presidency and a much tighter race in the Congress.  There the outcome will depend a great deal on the candidates’ ability to convince voters of their qualifications and the parties’ mobilization strategies.  Finally, there is a highly unlikely scenario that Peña Nieto’s candidacy could collapse, leaving it once again a race between the center-right and center-left as in 2006.  The first two scenarios seem much more probable, however, given current trends.

2. Will Organized Crime-Related Violence Increase in 2012?

Here’s the good news.  As bad as 2011 was – and it included the discovery of over a hundred bodies buried in Tamaulipas and the murder of 53 people in a casino fire in Monterrey, as well as another 11,500-12,000 tragic deaths – the rate of growth in homicides actually slowed dramatically over the past twelve months after increasing dramatically each year from 2004-2010.  Statistics from the University of San Diego’s Trans-Border Institute show that the three cities that were the most violent in 2010, Ciudad Juárez, Tijuana, and Culiacán, violence actually dropped noticeably, though it still remained high in all three (especially Juárez and Culiacán).[iii]  There is some evidence that a combination of more effective federal strategies to dismantle the large organized crime groups, better local policing, and decisions by the organized crime groups themselves to lower the intensity of their conflicts – factors that may be interrelated – have actually succeeded in containing the worst of the violence.

But here’s the bad news.  Few of those arrested are still ever successfully prosecuted, even fewer corrupt public officials who are complicit with organized crime are convicted, and real reforms to the police, prosecutors, and courts are lagging.  Until these efforts – including a new federal code for the courts, state-level implementation of justice reforms, local-level police reform, and new investments in prosecutorial offices – take place, violence is likely to persist at a very high level for some time.

Indeed, the current trend appears to be a rise in “disorganized crime” violence, as some of the larger organized crime groups fragment and other criminal networks associated with the major crime groups engage in their own criminal activities, including extortion, kidnaping, and human smuggling.  Over the next couple years, violence in Mexico may well move from a problem of national security – where six or seven major crime groups threaten the state in parts of the country – to one of persistent public insecurity – which requires building the institutional structure for rule of law.  It is no small accomplishment to change a problem of national security into one of public security, but this will present a new set of difficult challenges.

To be sure, six of the seven big organized crime groups continue to operate, and there are worrying signs that conflict between the Sinaloa Cartel and the Zetas may be intensifying in each other’s territory with strikes by the Sinaloa Cartel in Veracruz and the Zetas in Jalisco, while the conflict between the Zetas and Gulf Cartels continues to tear apart Tamaulipas and Nuevo León.  But, barring a major new front between these two groups, the trend over time may well be towards less violence by the (now) six big criminal groups and much more violence from smaller groups.  This will require a shift in strategy to lowering the violence, not just dismantling large crime groups.

In the past year, the rising prominence of the victims’ right movement led by Javier Sicilia, together with ongoing efforts by Alejandro Martí and other prominent leaders who have personally suffered the death of loved ones, has led to a new focus on the victims of crime and the ability to prevent further deaths.  This is providing a welcome shift towards a new focus on crime prevention in public opinion, though much will depend on how politicians respond to citizens’ demands for change.

3. How Will Mexico’s Economy Perform in 2012?

In macroeconomic terms, Mexico has come out of the severe 2009 recession well, growing by 5.4% and 3.8% in 2010 and 2011,[iv] respectively, and the IMF predicts a growth rate of just over 4% in 2012 (though Central Bank Governor Agustín Carstens has cautioned that it may be closer to 3.5%).[v]  Of course, much will depend on how the U.S. economy performs this year.  Despite an increasingly important domestic market, Mexico’s rebound has depended in large part on robust exports to the United States, especially in the automobile industry, so the Mexican economy is highly sensitive to changes in the U.S. economy.

One of the untold stories in Mexico in recent years has been the growth in the Mexican middle class, as Luis de la Calle and Luis Rubio have pointed out in a recent book.[vi]  Increasingly more and more Mexicans have sufficient assets to purchase a house, plan a vacation, or purchase consumer goods.  This is as much a function of a demographic shift producing a large labor force, a gradual expansion of credit, and lower consumer prices as it is of the slow expansion of incomes.

However, Mexico also continues to grow quite slowly compared to several other large developing countries like Brazil, India, China, or South Africa, and poverty remains high, especially (but by no means exclusively) in rural areas.  In a recent edition of Nexos magazine, four prominent economists debate the reasons for this, concluding that the root causes range from weak rule of law that fails to guarantee contract rights; inadequate expansion of private sector credit (roughly half of Brazil’s rate); high telecommunications costs, including limited penetration of high-speed internet; competition with China’s manufacturing exports; and a failure to pursue reforms to energy, labor, and fiscal laws.[vii]  Another recent study by prominent researchers has pointed to the regressive nature of agricultural subsidies as one of the underlying factors aggravating rural poverty.[viii]

One of the questions pending in the campaign is whether the candidates will propose anything new about economic policy.  All three parties appear to be interested in a major reform of the energy sector – and many people in Mexico agree that energy reform is the one major policy change that could truly detonate a major cycle of economic change in a generation.  However, there is no clear agreement on what to do yet.  Peña Nieto has talked about a constitutional reform to allow public/private partnerships for oil exploration.  López Obrador has floated the idea of following the Norwegian model.[ix]  Desires to change energy policy are driven in part by fiscal necessities; Mexican oil production is flat and is likely to begin to decrease soon, and it provides roughly a third of all federal budget revenues.  However, for some politicians, energy reform is part of a strategy to reposition Mexico as a destination for investment by doing the one major reform that might attract considerable international attention.

How the new Mexican government decides to address economic issues will have enormous consequences for the United States.   As Chris Wilson has shown in a recent publication on U.S.-Mexico economic integration, roughly 6 million U.S. jobs depend on trade with Mexico.[x]  Unlike trade with China, India, Brazil, or the European Union, trade with Mexico more often than not involves joint manufacturing operations shared between the two countries, where value is added to the same product in both the United States and Mexico.  (Something similar happens with Canada but with no other large country in the world.)  When Mexico grows, so does the United States, and vice versa.  Conversely, when one doesn’t grow, it hurts the other’s economy as well.

4. Will Migration from Mexico Continue to Decrease in 2012?

Probably.  What we do know is that illegal migration from Mexico to the United States appears to have reached net zero in 2011 – that is, as many people left the U.S. for Mexico as entered without legal documents– and there probably was a slight net decrease in the number of unauthorized immigrants from Mexico in the United States.[xi]  There appear to be three factors behind this: the slow U.S. economy which makes it less attractive to cross the border into the United States; the comparatively improving Mexican economy; and the increased risks of crossing the border, both organized crime violence on the Mexican side and increased enforcement on the U.S. side.  With the U.S. economy improving only slowly and increased U.S. enforcement continuing, it seems likely that there will continue to be very little illegal immigration from Mexico for some time.

At the same time, legal migration from Mexico to the United States remains quite high, and Mexico provides almost a quarter of all legal immigrants in the United States.  In addition, there appears to be a continuing trends for Mexican immigrants in the United States to naturalize at a far higher rate than in the past, which means that American citizens born in Mexico will comprise an ever growing part of the U.S. electorate in the future, and not just in the traditional gateway states of California, Texas, and Illinois.

How this will affect politics in the United States in the 2012 elections and beyond is  an open question.  Illegal immigration may continue to be a subject of political debate, although the dramatic decrease in illegal immigrants should make this a less politically sensitive topic and the rise in the number of U.S. voters of Mexican origin, especially in several swing states, makes it a risky gamble to overplay this issue.  These trends seem likely to continue even more markedly in future years.

In the long term, the key questions remain how to expand the legal immigration system in a way that takes into account existing demand for both high- and low-skilled immigrant workers and how to create the human capital and productive opportunities that give people in Mexico and elsewhere in the hemisphere opportunities to stay at home.  There are no easy answers to these questions, but a new Regional Migration Study Group of experts convened by the Migration Policy Institute and the Wilson Center is looking for some answers on how we can best do this in the future.[xii]

5. What Issues will be on the U.S.-Mexico Policy Agenda in 2012?

It’s an election year in both countries, so don’t expect much in the way of new policy initiatives over the next few months.  Most likely the current policy agenda will continue to evolve under existing parameters.  We are likely to see ongoing efforts to tackle organized crime, including perhaps some renewed efforts on money laundering, a continued expansion of the 21st Century Border Initiative, and ongoing implementation of the pilot program on trucking.

Politicians, however, will undoubtedly raise issues that relate to the U.S.-Mexico relationship, though perhaps more to seek votes than solve real problems.  One persistent theme in the United States is likely to be dealing with immigration, with contending perspectives between those who want tougher measures to slow immigration and those who want an integral approach to reforming the legal immigration system and enforcing it.  Comments made in the U.S. campaign are certain to produce reactions in Mexico, though relations with the United States do not seem to be a big part of the Mexican political campaigns.

One of the great ironies of U.S. politicians fixation on the border is that they almost invariably want to close down the border between ports of entry by building more fencing, adding technology, or adding new border patrol agents, yet all the available evidence suggests that the greatest threats to both countries are actually at the ports of entry, not between them.  Smugglers cross immigrants and low-value merchandise (mostly marijuana) between ports of entry, because the chance of discovery is so high.  High-value merchandise, including most cocaine, heroin, methamphetamines going north and weapons and drug money going south, cross at ports of entry, well-hidden in automobiles or trucks with legal cargo.  In the highly unlikely scenario that terrorist groups were to ever use the U.S.-Mexico border, it would almost certainly be at points of entry, not between them.

Since it is logistically impossible to check every vehicle crossing the border in both directions – and it would be economic suicide to do so – the best alternative is a risk-management approach that segments riskier cargo shipments from safer flows and gives greater attention to these.  Given modern technology, both countries can actually implement these systems, which would both facilitate trade and increase inspection capacity.  However, the lack of investment in customs inspectors and technology at border crossing points contrasts dramatically with the rush to fund efforts between them.  Ironically, the political drum-beat to “seal the border” probably makes both countries far less safe by focusing attention away from the real threats at the ports of entry in favor of the comparatively less threatening areas between them.  But then good politics does not always make good policy.

Finally, to will be particularly interesting towards the end of the year to see what, if any new proposals, come from the new Mexican administration that will be inaugurated on December 1.  Given the asymmetry in attention between the two countries, it is difficult for the Mexican government to get issues on the U.S. agenda that don’t fit within U.S. priorities.  At the same time, the same asymmetry of attention helps perceptive Mexican political leaders set the agenda with the United States if they identify issues that are in Mexico’s interest and can be hung on U.S. national priorities.[xiii]  Since the U.S. has multiple global engagements and Mexico one overriding one – with the neighbor to the north – the Mexican government generally does a better job at setting the priorities of the bilateral agenda, from NAFTA to migration to the Merida Initiative.  What one or two issues will a new Mexican government choose to engage with the United States on?  Security cooperation will certainly continue to be high on the agenda (and actual cooperation is unlikely to change), but will it have a slightly different focus or tone?  Will economic issues return to the fore?  Only time will tell…

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One Response to Five Questions about Mexico and U.S.-Mexico Relations in 2012

  1. [...] Selee has two interesting new blog pieces related to the electoral contest. First, he looks at three possible scenarios for the July election outcome as he answers “Five Questions about Mexico and U.S.-Mexico [...]

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