Another Angle

Luis Rubio

Perhaps the worst blow that Trump has unleashed on Mexico does not lie in his attacks and insults, but rather in his having reopened the dilemma –now historic- of Mexican development. For the second time in four decades –the third from the sixties-, the direction of the Mexican economy -and that of the country in its entirety- appears to be in dispute. What is strange is that, on this occasion, the trouncing does not originate, principally, from Mexico, but instead from the “anchor” of certainty into which, from the eighties on, the U.S. had become.

NAFTA was the culmination of a process of change that began in a debate within the Mexican Government during the second half of the sixties and that, in the seventies, led the country to the brink of bankruptcy. The dilemma was whether to open the economy or to maintain it protected, draw nearer to the U.S. or keep ourselves distant, privilege the consumer or the producer, more government or less government in individual and business decision-making. That is, the way in which we Mexicans would have to conduct ourselves to achieve development was debated and disputed. In the seventies, the decision was more government, more spending and more autarky, and the result of this was the financial crises of 1976 and 1982. The limits were stretched to the maximum, until the reality caught up with us.

In the mid-eighties, in an environment bordering on hyperinflation, it was decided to stabilize the economy and to initiate a sinuous process of economic liberalization: hundreds of enterprises were privatized, public expenditure was rationalized, the foreign debt was renegotiated and imports were freed up. The change of signals was radical and, notwithstanding this, the much-anticipated growth of private investment did not materialize. It was hoped that the change in strategy would attract new, productive investment liable to raise the economy’s growth rate and, with it that of employment and incomes.

NAFTA ended up being an instrument that unloosed private investment and, with that, the industrial revolution and, above all, of exports. While there are many criticisms, some absolutely legitimate, regarding the insufficiencies of this strategy, the country became an exporting power that no longer confronts restrictions in the balance of payments which, for decades, were sources of crises. But NAFTA was much more than a commercial and investment agreement: it was a window of hope and opportunity.

For the ordinary Mexican, NAFTA became the possibility of building a modern country, a society based on the Rule of Law and, primarily, a ticket to the prospects of development. That may explain the strange combination of perceptions with respect to Trump; on the one hand, contempt for the person, but not downright anti-Americanism among the population in general; and, on the other hand, extreme uneasiness: as if the dream of development were on trial. This is accentuated even more so by the fact that, during these years, the economy has not attained high growth rates or an appreciable increase in the per capita GDP.

In “technical” terms, NAFTA has fulfilled extensively with its objectives: it has facilitated the growth of productive investment, generated a novel industrial sector -and an imposing export power- and conferred certainty on investors regarding the “rules of the game.” Indirectly, it also created a sensation of clarity with respect to the future, even for those not participating directly in NAFTA-linked activities. In a word, NAFTA became the access portal to the modern world. The threat that Trump has imposed on NAFTA entails a menace not only to investment, but also to the vision of the future that the majority of us Mexicans share.

In its essence, NAFTA is a manner of limiting the capacity of abuse of those who purport to govern Mexico: on imposing upon them limits to changes in the rules of the game, a base of trust was established within the model of development. The effect of that vision rendered possible the political liberalization that followed, which although fragile, reduced the concentration of power and changed the power relationship between the citizenry and the politicians. At the same time, a paradox of NAFTA (and of the availability of jobs in the U.S.), the existence of that mechanism permitted the politicians to continue living in their world of privilege, without even bothering to carry out the basic functions that corresponded to them, such as governing, creating a modern educative system and guaranteeing the security of the population.

No one knows what will happen with NAFTA, but there is no doubt that the blow has been severe. Trump has not only exposed the political vulnerabilities that characterize Mexico, but he has additionally destroyed the certainty that this “ticket to modernity” inherent in NAFTA involved. Even if at the end of the day we end up with a transformed and modernized NAFTA, what’s done is done. The perceptions -and, with that, the hopes and certainties – will no longer be the same.

It is not by chance that proposals reappear to once again look inward, to take revenge on the Americans and to bring back the effective (?) government of yesteryear. Those advocating that do not understand that NAFTA was much more that an economic instrument: it is, at least was, the opportunity for a distinct future.