Violent Crime Plagues Businesses in Mexico – An Expert Take

By: Eric Olson, Associate Director of the Latin America Program at the Woodrow Wilson Center

Co-authored by: Georgia R. Baker, Outreach & Communications Intern at the Mexico Institute

8/19/15

 

Beyond the human tragedy wrought by violent crime, its detrimental effects on businesses and economies can also devastate communities. Businesses are shuttered, employees flee, investments and tourism dry up, and budgets are skewed towards providing greater security. And while it is difficult to calculate the exact economic cost resulting from violent crime and insecurity, the numbers are certainly high. In 2011, the World Bank’s World Development report specifically documented the manner in which organized crime, ranging from human trafficking to drug smuggling, directly threatens and impedes economic development, especially in Fragile and Conflict-Affected States (FCS).  According to the report, “the Mexican Government estimates that crime and violence cost the country 1 percent of GDP from lost sales jobs, and investment in 2007 alone.” This is well before the spike in violent crime in 2010 and 2011.  Moreover, when the indirect costs associated with crime and violence are considered, such as trauma and injuries, the costs are “staggering.”

Source: Vision of Humanity, Mexico Peace Index Report
Source: Vision of Humanity, Mexico Peace Index Report

Over the past nine years, Mexico has engaged in a very public battle with international criminal networks involved in illicit trafficking of all kinds; but, they have also faced ever-stronger local criminal networks devoted to extortion of individuals and businesses, kidnapping, and auto theft, among other illicit activities. Drivers of oil tankers are constantly targets of extortion and theft, and Insight Crime reported in February that the state owned oil company (PEMEX) “will cease transporting fully refined gasoline and diesel fuel through its pipelines”, in order to combat pervasive oil theft.

In January 2015, Kathryn Haahr, a specialist in international security threats and risk management, addressed the challenges and concerns facing Mexico’s oil industry at a Wilson Center conference. She also authored a case study for the Mexico Institute titled “Addressing the Concerns of the Oil Industry: Security Challenges in Northeastern Mexico and Government Responses.” In it she noted that “homicide, kidnapping, extortion, attacks on facilities, and organized public unrest challenge regional governance and have the potential to impact a number of stages of the oil and gas value chain.” Despite these challenges, Haahr also expressed optimism about the country’s energy reforms and its inclusion of a specific role for the Mexican military in protecting key oil installations in Veracruz and Tamaulipas. Unfortunately, with the recent embarrassing escape of drug kingpin, “El Chapo” Guzman, and the disappointing outcome in the first round of public sales of shares in Mexico’s oil sector, it appears that organized crime has once again exacted an economic cost on Mexico.

Similarly, in the deeply troubled state of Guerrero, criminal networks have also exacted a heavy toll on local economies and jobs.  The 2015 Mexico Peace Index Report ranks Guerrero the least secure and most violent among Mexico’s 31 states and federal district. On June 24th a local Pepsi executive was kidnapped while driving on the highway. According to press accounts from Forbes and many others, this was not an isolated incident but one that “mirrors a string of other kidnappings and killings in the area.”  Moreover, Coca-Cola recently decided to shutter its facility in the nearby town of Arcelia, “due to on-going security problems,” while Cemex has reportedly considered shutting its doors in the same area. Overall, Forbes reported that “10% of Iguala’s businesses have shuttered their doors,” according to Zacarías Rodríguez Cabrera, the Chairman of the Iguala chapter of Mexico’s National Chamber of Commerce, Service and Tourism (Canaco-Servytur). Thus, despite the overall decline in violent crime in Mexico in 2014, there are still major security concerns facing communities and businesses in several states such as Guerrero, the State of México, and Michoacán among others.

Source: Vision of Humanity, Mexico Peace Index Report
Source: Vision of Humanity, Mexico Peace Index Report

In Mexico and throughout Latin America the understandable response of the business community has often been to spend more to protect its employees, its facilities, and its investments.  This has led to a burgeoning private security sector that in some cases, such as Guatemala and Honduras, has grown to twice and three-times the size of state police forces.  Often times the public and business community support private security firms because they are justifiably distrustful of police forces that are weak, poorly trained and remunerated, and easily corrupted by criminal networks. Yet, abandoning the state to create a parallel system of security, which is mostly unregulated, can be tricky and result in many abuses while making reform of the state even harder.  At times, private security can contribute to improved security for a business or its clients while the overall security situation worsens.

Not all Mexican businesses and economic elites have responded in this manner. Some have been a voice for reform in their communities.  Several examples were documented in the Mexico’s Institute 2014 report, “Building Resilient Communities: Civic Responses to Crime and Violence.” It describes the contributions of businesses and professionals in Ciudad Juarez and Monterrey to improving public security generally, not just for their own private security.  While businesses need to take measures to protect their employees and investments, this should be part of a broader approach that contributes to reform of state institutions and public security for all.  Otherwise, the crisis of public confidence in local and national governments will only deepen.

Economic Impact of Violence in Guerrero

Subcommittee Hearing: Threats to Press Freedom in the Americas – An Expert Take

By: Eric Olson, Associate Director of the Latin America Program at the Woodrow Wilson Center

Co-authored by: Georgia R. Baker, Outreach & Communications Intern at the Mexico Institute

7/31/15

Press Freedom in the Americas has been in a general decline for the past 15 years. According to Freedom House’s latest findings (2015), only 43% of the countries in the Americas are ranked as having ‘free’ press. The remaining countries fall in the range of ‘partly free’ (43%) and ‘not free’ (14%). Moreover, the report states that “as journalists faced violence and intimidation from both government authorities and criminal elements, several countries in the Americas, including Ecuador, Honduras, Mexico, Peru, and Venezuela, received their worst press freedom scores in over a decade. The regional average score fell to its lowest level of the past five years, with declines across the legal, political, and economic categories.”

In light of this decline, Chairman Duncan of the Subcommittee on the Western Hemisphere in the House Committee on Foreign Affairs heard testimonies from five witnesses on July 29th in order to address the ongoing issue of press freedom in the Americas. The four panelists were: Carlos Ponce, Director of the Latina America Program at Freedom House; Carlos Lauría, Senior Americas Program Coordinator for the Committee to Protect Journalists; Claudio Paolillo, Chairman of the Freedom of the Press and Information Committee at the Inter-American Press Association; Nicolás Pérez Lapentti, Co-Director of El Universo in Ecuador and; Alfredo Corchado, former fellow at the Wilson Center and the current Mexico Bureau Chief at The Dallas Morning News. Chairman Duncan opinion of the hearing is as follows:

“The ability to speak openly without censure or fear of reprisal is a hallmark of free peoples everywhere, and freedom of the press is critical to sustaining democracy and the rule of law…In the Western Hemisphere, the growing trend of conditioning or even curtailing press freedoms is deeply disturbing. From severe government repression and outright targeting of journalists by Cuba, Venezuela, and Ecuador to organized crime, corruption, and impunity in other countries in Latin America and the Caribbean, journalists have very difficult jobs, often risking their very lives and their loved-ones  to bring information and the truth to their fellow citizens… I look forward to considering how the U.S. can better engage in the region to more effectively promote press freedoms and defend every persons right to freely express themselves.”

Source: Freedom of the Press 2015, Freedom House.
Source: Freedom of the Press 2015, Freedom House.

Mexico, more specifically, ranks 31st out of the 35 countries in the Americas, followed only by Ecuador, Honduras, Venezuela and Cuba. Mexico’s global ranking is not any better, ranking 139th out of 199 countries. Out of 100, its press freedom score fell at 63, placing it in the category of ‘not free’ by Freedom House’s standards:

“Mexico remained one of the world’s most dangerous places for media workers in 2014, and freedom of expression faced new threats with the adoption of the Federal Telecommunications and Broadcasting Act in July. Multiple attacks on journalists and media outlets were carried out during the year, reporters faced police aggression while covering protests, and self-censorship remained widespread. While the telecommunications and broadcasting law allowed greater competition in both sectors, it also granted the government powers to monitor and shut down internet activity during protests.”

According to Carlos Lauría, the inability of reporters to freely publicize the news is of the greatest consequence for the public: “Because of government repression, many journalists are not able to report the news. This is leaving many people in many countries to make informed decisions. I think that an uninformed society is a less transparent and less democratic one.” However, Lauría goes on to say, “The issue is not black and white. There are places where there is great investigative work going on the reveals and exposes corruption…Even in countries like Mexico, where areas are outside of the control of the government…you have great examples of courageous journalists doing investigative work on corruption.” On his part, Alfredo Corchado echoed what Lauría had to say, but noted that the consequences of the heroism in journalism is not without consequence, reminding the committee that many journalists from Mexico and Latin America have had to seek political asylum in the US, despite how many people still believe in journalism as a mechanism for holding the government accountable.

As such, the panelists called upon the US Congress to persuade the executive branch of the government to have a stronger voice in these issues: “There are legal dictatorships in place today. We need to look back at the Inter-American Democratic Charter. It is in place now, it is enforceable now.” Certainly, when one considers the decline in press freedom in our backyard, it seems that the US can no longer ignore these basic violations of human rights.

Freedom of the Press in Mexico Copy

Advancing Justice Sector Reform in Mexico – An Expert Take

By: Eric Olson, Associate Director of the Latin America Program at the Woodrow Wilson Center

Co-authored by: Georgia R. Baker, Outreach & Communications Intern at the Mexico Institute

7/28/15

On June 26, the Wilson Center’s Mexico Institute hosted a discussion about the current status and future prospects of Mexico’s justice sector reform. Since 2008, Mexico has been implementing a series of reforms that will transform the nation’s criminal justice system to make it more transparent and accountable, thereby improving the nation’s administration of justice and public security. Here are key aspects of that reform:

  • Introduction of oral trials using adversarial procedures, the creation of alternative sentencing options, and alternative dispute resolution (ADR) mechanisms;
  • Greater emphasis on the rights of the accused (i.e., the presumption of innocence, greater due process guarantees including adequate legal defense);
  • Modifications to police agencies and their role in criminal investigations;
  • Tougher measures for combating organized crime.

According to Wilson Center Global Fellow and panelist David Shirk, central to Mexico’s reforms, “is a package of ambitious legislative changes and constitutional amendments…that are to be implemented throughout the country by 2016. Together, these reforms touch virtually all aspects of the judicial sector, including police, prosecutors, public defenders, the courts, and the penitentiary system.”

With the deadline for implementation just around the corner, an update on the reform’s status seems timely.  As the map below shows, twelve of Mexico’s 31 states and the Federal District have adopted the new judicial system.  Of the remaining states, 14 have reformed their constitutions and adopted the new criminal procedures but have not yet fully implemented the reforms.  Only 6 states have yet to begin the reform process.  Mexico is also in the process of adopting a unified criminal code that all state and federal courts will have to follow. Overall, it’s been an ambitious and complex process of reformation that is still unfolding.

States that have implemented justice reform: • Baja California • Chiapas • Chihuahua • Durango • Guanajuato • México • Morelos • Nuevo León • Oaxaca • Tabasco • Yucatán • Zacatecas

In his presentation, David Shirk argued that while the introduction of oral trails in Mexico’s justice system are important, in his view, the most transformative aspect is the shift from an “inquisitorial” model of justice – where trails and judgements are made based on the written record – to an adversarial system of justice – where defense attorneys and prosecutors argue their cases before a judge in open court.  This system, for the first time, also allows for alternative sentencing mechanisms, such as a juicio abreviado, or plea-bargaining. The panel was hopeful that these alternatives would reduce the number of cases heard in court, and thereby reduce court congestion and back-log.

State ranking of conditions for the implementation of criminal justice reform. (Source: Proyecto Justicia)
State ranking of conditions for the implementation of criminal justice reform. (Source: Proyecto Justicia)

A second key factor in the reform’s success is the transformation of law school curriculum to train new and future officers of the courts, as well as retrain those already in practice. According to David Shirk, a great deal of money and time still needs to be invested in training, as well as professional oversight of many of the current and future officers of the court that will be involved in putting the reforms into practice:”We have not properly prepared the other actors that operate in the new criminal justice system.” Ultimately, the success of the reforms will depend on revising the educational requirements and vetting procedures for applicants to practice law under the new system. Moreover, since federal, state, and local law enforcement officers have been delegated more responsibility within the reformed system, such as responsibility for the protection of the crime scene, the vetting procedures in each branch of government will also need to be reevaluated to incorporate higher standards of transparency and accountability.

To date, one important element of that retraining has been exchanges between law schools and legal experts from other countries (including the U.S.) with experience in the adversarial justice system. Still, according to David Shirk:

“Efforts to promote professionalism among lawyers are needed, as they will be primarily responsible for ‘quality control’ in the Mexican criminal justice system. Although Mexico has recently adopted a new code of ethics, Mexican lawyers are not presently required to receive post-graduate studies, take a bar exam, maintain good standing in a professional bar association, or seek continuing education in order to practice law. All of these are elements of legal professionalism that developed gradually and in a somewhat ad hoc manner in the United States, and mostly in the post-war era.”

Finally, according to another panelist, Leoba Castañeda, the Dean of the Law School at Universidad Nacional Autónoma de México, in order to ensure that the reforms are being implemented there should be a transparent evaluation done within five years of the 2016 deadline: “We have to change the way we administer justice now, but what is equally important is that in four or five years, an evaluation done.With time running out on the 2016 deadline, it will be up to the new generation of lawyers in Mexico to ensure that these reforms are taken seriously and implemented properly in the future.Judicial Reform MPI For Eric

Mexico: The Unbearable Cost of Distrust

By Arturo Franco, The Expert Take

justice - gavelTrust is at the heart of Mexico’s challenges today. The lubricant of the economic engine, trust enables market exchanges, reduces transaction costs for business, upholds security and peace, and makes institutions and the political system work. Distrust, in turn, creates unnecessary costs, incentivizes negative behaviors, and can become a huge burden for productivity and for growth.

Mexicans’ reported levels of trust and confidence in a wide range of institutions have been declining for many years. Between 2013 and 2014, virtually every institution, from the police to the church, from television stations and universities, to political parties, Congress and the president, have suffered from rising public distrust. What is worse, perhaps, is that investor confidence has also eroded.

Read the entire Expert Take here…

Falling Oil Prices: Changing Implications for Global Producers

02/04/2015 Woodrow Wilson Center

As the price of oil continues to fall, the Wilson Center’s Africa Program, Canada Institute, Kennan Institute, Latin American Program, Middle East Program, Mexico Institute and its Regional and Global Energy Series convened an expert global panel, assembled from Russia, Colombia, Canada, Iran, and Nigeria, to discuss the economic and political repercussions of depressed energy prices, as well as the effects of the lower prices on competitiveness and investment.

The U.S.-Mexico Border: Reporting on an Economy in Transition

chris wilsonThe Wilson Center’s Mexico Institute has released a new report, “The U.S.-Mexico Border economy in Transition.” The report provides insight into day to day life and commerce along the border, and provides a series of recommendations to strengthen competitiveness. We spoke with Mexico Institute Senior Associate, Chris Wilson, to learn more about both the unique process behind the report and also about some of the best ideas emerging from the year-long project. That’s the focus of this edition of Wilson Center NOW.

Better Late than Never: Lessons Learned from Mexican Truck Drivers in the United States

By Luis de la Calle

Truck2The opening of the United States to freight trucking companies from Mexico will change the border and its competitiveness.

Mexico must always demand the rule of law and compliance with commitments.

On Friday, January 9, 2015, the United States Department of Transportation made an important announcement that has not received the recognition it deserves: the Department of Transportation will begin to process applications of Mexican land freight trucking companies wishing to provide international services in the United States.

This announcement ends the pilot program that was established as a palliative measure in response to the longstanding dispute with Mexico. This topic is worth remembering for the lessons it leaves us with.

Read more…

This article was originally published in Spanish on El Universal