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As Mexico Moves to Political Left, American Relationship Put to Test By Richard Miles

 

 

On July 1, Mexicans are poised to elect a seasoned left winger as their new president. Under any other U.S. administration, his election would pose a challenge for American interests. But with a White House with Donald Trump at the helm, the “better than it looks” bilateral relationship may be about to drastically change for the worse.

Leading in the polls by more than 20 points, Andrés Manuel López Obrador has pledged to bring an end to endemic corruption and violence, the two most critical issues in the campaign. Known colloquially as “Amlo,” the former mayor of Mexico City and twice-failed presidential candidate stands in stark contrast to the polished establishment candidates of the Institutional Revolutionary Party and the National Action Party, the only two parties to have held the presidency in Mexico’s modern history.

A persistent critic of “neoliberalism,” Amlo longs for a pre-NAFTA, state-run economy. He is skeptical of U.S. advice and influence and rejects a leadership role for Mexico in Latin America or the world. Leaving aside the general wrecking ball effects of a Trump-Amlo personality clash, as López Obrador is also fond of provocative putdowns, there are at least four specific ways the relationship may go into reverse.

Energy Exploration and Development

Mexico finally opened its energy sector to foreign investment in 2013. It now buys 60 percent of its natural gas and more than half of its gasoline from the United States. Meanwhile, Mexico’s crude oil production continues to decline because of a lack of investment in PEMEX, a massive state-owned enterprise. As Mexico switches all its electrical generation facilities to gas-fired plants, builds out its pipeline network, auctions off deep-water oil and gas blocks in the Gulf of Mexico, and eyes new refineries, it needs more U.S. direct investment.

Amlo said he will “review” all existing contracts, while his proposed energy minister has said that she will “stop the looting” of Mexico’s oil. If he stops the momentum, Mexicans will face higher electric bills, and thousands of potential U.S. jobs in energy exploration and infrastructure will disappear.

International Security Cooperation

In 2007, Presidents Felipe Calderón and George W. Bush crafted the Merida Initiative, a $4 billion package to help Mexico fight the cartels and strengthen the rule of law. While violence remains high, the initiative has paid off in excellent working relationships between Mexican and U.S. military and security officials. But even current President Peña Nieto has said this cooperation may be at risk in the face of hostile U.S. rhetoric.

Yet, despite White House criticism, Mexico has been actively helping control the flow of Central American migrants across its own southern border. It has been making slow but steady improvements to its very inefficient justice sector, in which 93 percent of crimes go unreported. That is partially a result of U.S.-funded training for everything from police investigators to prosecutors, as well as defense attorneys and judges. Amlo has mused about an amnesty for cartel leaders and some drug legalization. Given that the United States already gets 90 percent of its heroin and massive amounts of synthetic opioids from Mexico, this shift could result in even more hard drugs in the United States.

Trade and Investment

Given his reflexively statist views, López Obrador is surprisingly amenable to non-energy-related trade. He has said he would continue NAFTA negotiations, reflecting a broad societal consensus that joining NAFTA turned out well for Mexico. By effectively holding Mexico to global trading norms, the treaty helped create a system of rules and standards that might not otherwise have been achieved within the Mexican political system. But if NAFTA disappears and punitive tariffs remain, the economic intertwining of the last 24 years could unravel.

Of great concern to U.S. investors is the Trump administration demand that “investor-state dispute settlement” panels be removed from a new NAFTA. Such panels would prevent, say, a left-wing government from nationalizing billions of dollars worth of oil rigs, pipelines, rail lines, or modern manufacturing plants. If the United States were to pull out of the existing treaty, Mexico would be under no obligation to keep the dispute panels in place. If given the opportunity to return Mexico to a statist economy, López Obrador may take it.

Mexican Support for Democracy

An Amlo government would reverse Mexico’s active support of democracy and human rights in the region. López Obrador and his pick for Mexican foreign minister have said they will return the country to a policy of “noninterventionism,” meaning silence on Venezuela and Cuba. This would be a setback for Latin America, given Mexico’s leadership on protesting Venezuela’s slide into tyranny and famine and the useful role it could play in an eventual democratic transition in Cuba. Mexico had also been considering participating in UN peacekeeping missions. Under López Obrador, no such thing would happen.

The Trump administration appears not to care that its anti-Mexican rhetoric and “zero tolerance” border rules is giving López Obrador plenty of political space to harden Mexico’s stances on energy, security, trade, and support for democracy. A year ago, “only” NAFTA was at risk of falling apart. If López Obrador decides to follow Trump down the path of nationalism, a quarter century of gains may come to a halt.

(This essay originally appeared in the June 20, 2018, edition of the Hill. It is reprinted here with permission.)

Richard G. Miles is director of the U.S.-Mexico Futures Initiative and deputy director of the Americas Program at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2018 by the Center for Strategic and International Studies. All rights reserved.

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The Center for Strategic and International Studies (CSIS) is a bipartisan, nonprofit organization founded in 1962 and headquartered in Washington, D.C. It seeks to advance global security and prosperity by providing strategic insights and policy solutions to decisionmakers.

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