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Mexico in the News
by Andrés Martinez | Bloomberg Businessweek | May 01, 2013
Mexico: The Stranger Next Door
Not so long ago, if you believe what you
read in the papers and see on TV, Mexico
was the next Afghanistan. It was poor,
lawless, and plagued by drug violence, a
failed-state-in-the-making whose problems
and people would soon cascade over the
border. In early 2009 a U.S. Joint Forces
Command report speculated that, in the
next quarter-century, Pakistan and Mexico
could prove the most worrisome flash
points for American security. According to
a study by Roberto Newell for the Wilson
Center, more than 60 percent of all stories
about Mexico in major U.S. papers were
negative in 2007; that figure had risen to
more than 80 percent by 2010. A survey of
U.S. attitudes toward Mexico in 2012 found
only 14 percent of respondents called it a
“good neighbor.” Type “Why is Mexico so”
into Google (GOOG) and the first four
adjectives suggested are “dangerous,”
“violent,” “bad,” and “poor.”
In the last year, however, Mexico’s image
has witnessed a dramatic transformation.
In the eyes of U.S. media and policymak-
ing elites, the country’s gone from being
the next Afghanistan to the next China.
The new narrative crescendoed with the
swearing-in last December of President
Enrique Peña Nieto. Journalists covering
the event learned, among other things, that
years of effective economic policies and an
embrace of free trade are turning Mexico
into a solidly middle-class society. The
Financial Times called Mexico, whose
economy grew 3.9 percent in 2012, an
“Aztec tiger.”
In February came the ultimate confirmation
of Mexico as a foreign-policy darling:
Thomas Friedman wrote two columns
about it. “How Mexico Got Back in the
Game” read the headline of one column,
which must have come as news to Mexi-
cans who were unaware they’d ever left it.
Friedman opened by saying there was a
new answer to the question of whether
India or China would be the more dominant
economic power going forward: Mexico.
The absence of more nuance in the cover-
age of Mexico isn’t surprising. The country
remains surprisingly exotic to many worldly
Americans who’ve long obsessed over
other parts of the world—the Middle East,
the Soviet bloc, the Middle East, East Asia,
the Middle East—while paying little atten-
tion to, or even bothering to visit, our own
neck of the global woods. But no relation-
ship is of greater importance to the U.S.’s
well-being than that with Mexico. Two
decades since the signing of the North
American Free Trade Agreement, the
cross-border partnership has yet to reach
its true potential, even though manufactur-
ers already view the U.S. and Mexico as a
single market for production purposes.
Among the issues now on Washington’s
agenda, immigration is directly affected by
Mexico’s economic health, and Mexican
cooperation and sound governance will be
instrumental to the effectiveness of any
regulated temporary worker program such
as the ones currently being proposed in
the Senate. Yet Mexico is rarely mentioned
in congressional discussions on immigra-
tion reform.
President Obama can build on his May 2
visit to Mexico by acknowledging that
Nafta and centuries of intertwined histo-
ries, cultures, and peoples shouldn’t be
shrugged off like a one-night stand. The
president has often talked about the need
to “pivot” American attention and resourc-
es to Asia. But he can leave a greater
legacy by pivoting to North America and
giving Mexico the sustained, strategic
engagement it deserves.
Mexico, with all its challenges, represents
a success story in global terms. After the
1995 peso crisis roiled international
markets, Mexico started practicing what
Washington only preaches: living within its
means. The Organisation of Economic
Co-operation and Development now
classifies Mexico, the world’s 14th-largest
economy, as a majority middle-class
society. Average income has doubled in
the past 15 years; a quarter of the coun-
try’s homes were built within the past two
decades; and the average number of
school years Mexicans attend has doubled
in the past four decades. Mexico is the
world’s top per capita consumer of
Coca-Cola (KO) and has more Walmarts
(WMT) per person than the U.S. Mexico’s
consumer market is vital to large compa-
nies ranging from Citigroup (C) to Procter
& Gamble (PG) to Ford (F) and GM (GM).
Plenty of Americans may think Mexico is
dirt-poor, but our neighbor imports more
U.S. goods than any country besides
Canada, and more than Germany, France,
and the U.K. combined. It’s also the
third-largest provider of oil to the U.S.,
behind Canada and Saudi Arabia. It used
to rank second, but mismanagement of the
state-owned behemoth Petróleos Mexica-
nos (Pemex) has diminished Mexico’s oil
output. This may be a blessing in disguise
for the country’s overall economy, which
has diversified its export base to the point
where oil now only accounts for less than
20 percent of export revenue. For the
federal government, however, the failure to
expand production has been a disaster, as GRAPHIC BY BLOOMBERG BUSINESSWEEK DATA: PEW HISPANIC CENTER, WORLD BANK
Mexico in the News
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Pemex accounts for about 34 percent of the government’s budget.
That’s why Peña Nieto is eager to encourage foreign investment in
Mexico’s oil sector.
The Mexican president also wants to shift attention away from the
war on drug cartels—he’ll still prosecute it but would probably not
lose sleep over the cartels’ existence if the violence could be brought
under control—which has claimed more than 60,000 lives in the past
six years. Peña Nieto has been energetically taking on other powerful
interests in his attempt to prove he’s a man of reform. He’s impris-
oned the once-untouchable head of the powerful national teacher’s
union and advanced education reforms contrary to the union’s
interests; he proposed a new telecom law to open up the telephone
and cable-TV markets; and he’s pushing financial reform that pours
more credit into the economy.
A Gallup poll of public attitudes earlier this year reflected the country’s
buoyant mood. Asked whether they’d want to leave Mexico perma-
nently, only 11 percent said yes—the same percentage of Americans
who answered in the affirmative—down from 21 percent in 2007. Net
migration across the border has declined from nearly half a million a
year before the 2008 recession to almost zero, the result of reduced
demand for imported labor on this side of the border, tougher border
security, changing demographics as Mexico’s population ages, and
greater optimism about the country’s future.
As a rapidly modernizing nation whose economy is deeply enmeshed
with that of the U.S., Mexico continues to represent plenty of
untapped potential. But Americans have to realize that the story of
Mexico is neither all bad nor all good. It’s counterproductive to insist
on such a caricature. Mexico’s subpar education system is holding it
back, and the nation’s rule of law remains underdeveloped. Public
institutions are weak, and many local and state governments have
been far slower than their federal counterpart to embrace a demo-
cratic, transparent culture. The judiciary continues to be a disgrace.
Corruption is the cancer threatening the long-term viability of the
modern Mexico Friedman has discovered.
Just as the U.S. should appreciate Mexico’s progress, it shouldn’t
turn a blind eye to its neighbor’s problems, which pose a threat to
North America’s broader competitiveness. Mexicans need U.S.
support and engagement, and the emergence of a true North Ameri-
can common market, to help overcome a tradition of corruption and
impunity that benefits only the nation’s ruling elites. Mexico’s
economic stability stands atop a weak legal and political foundation;
it could all come undone again if that foundation isn’t shored up.
The Obama administration should embrace and proclaim Nafta as a
strategic cornerstone of both economic and foreign policy in the
coming years. The rest of us can also play a role in strengthening ties
with our indispensable partner: We can follow the president’s lead,
disregard the excessively alarmist coverage of the past, and head
south for a visit.
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