Luis Rubio Ph.D.
Chairman, Mexico Evalua
Woodrow Wilson Center Global Fellow

The US-China-Mexico Triangle: a strategic assessment

 Testimony Before the U.S.-China Commission Economic and Security Review Commission
May 20, 2021

After four decades of extraordinary transformation, no one can doubt the enormous ambitions of China as a world power. This transformation was dramatically aided and abetted by the retreat launched by President Trump over the past four years, leaving it fertile ground for the political and strategic, as well as economic, expansion project it is building throughout Asia and Africa. Its aspiration to recoup its importance as a world power has further reached Latin America, where its presence has grown exponentially over the past two decades.

Mexico has been spared much of that process, and thus constitutes an odd character in this general picture. However, in a rapidly moving world dynamic, this picture has begun to change, and it is Mexico, not China, that is introducing new elements into the bilateral relationship. Yet more important, it was Trump’s threat to do away with NAFTA that triggered Mexico’s approach to China.

NAFTA’s importance for Mexico can hardly be overstated. More than a trade agreement, NAFTA was the main source of legal and political certainty for the country’s development ever since it came into force. In a country with a weak legal system and similarly frail institutions, and a propensity for every new government to attempt to reinvent the wheel, NAFTA became a bastion of legality and thus certainty for the future. Although not perfect and surely in need for an upgrade, the trilateral trade agreement that came into operation in 1994 was critical in compelling Mexico’s governments to stay the course in economic policy and pursue the gradual integration of the three North American economies. USMCA upgraded NAFTA but stripped the legal components inherent to the earlier trade agreement that made NAFTA so transcendent. In so doing, it opened up a Pandora’s box, which has a lot to do with how Mexico began rethinking its relationship with both the US and China.

Three elements were changed in the renegotiation of NAFTA. First, the new agreement was stripped of the legal protections to investors in the industrial sector, Mexico’s largest engine of growth; second, USMCA expires every six years, which means that it does not provide long term certainty. Much more important, the mere fact that the United States was willing to do away with the main source of stability and certainty for Mexico’s gradual evolution towards an open market economy and a thriving democracy, radically changed the political equation in Mexico. In one word, NAFTA was a straitjacket that forced Mexican governments not to stray away from the established course. By threatening NAFTA, President Trump unleashed a series of forces that had long wanted to distance Mexico from the US. For President López Obrador, Trump’s actions constituted the opportunity to rethink Mexico’s standing vis-à-vis the world as well as its long-term perspective without being blamed for it.

Mexico and China in a geopolitical context

Mexico is located in a geopolitical zone distant from that of China, which has conditioned much of the historical nature of the bilateral relationship. In plain terms, this has entailed a cordial diplomatic relationship but not close political or diplomatic ties. The paradox in recent years is that it was the attitude of the U.S. that began generating a mutual incentive to explore common alternatives. In addition, since 2018, a change in political vision in Mexico has helped advance a radically new perspective on what can be termed a new “geopolitical triangle,” namely: the US, China, and Mexico.

Historically, Mexico always sought diversification away from the United States. However, since the mid-1980s, Mexican governments began to realize that it was closeness to the US that could help Mexico achieve its development goals. This despite the obvious cultural, economic, political, and historical differences and contrasts that characterize these two nations.

For three decades, both nations, the United States and Mexico, worked together to address the multiplicity of issues that characterize the mutual border and that inevitably are the source of potential conflict. In this vein, two mechanisms were agreed upon in 1988 that made it possible to address problems without generating diplomatic crises. One was a common vision about the future (one of eventual convergence), regardless of the differences in perception about the implied timeline to reach it. The other was an agreement on the principle of compartmentalization, which allowed managing this complex relationship without causing endless conflict and the publicity that this brought with it. This worked well until Donald Trump’s arrival to the White House in 2017.

President Andrés Manuel López Obrador has long been a critic of both the economic policies of the previous decades and of his nation’s closeness with the United States. In the absence of a change in America’s position on NAFTA, his options to shift course would have been limited. However, his coincidence of vision with President Trump gave him the opportunity to devise a potentially new course for Mexico.

To begin with, the two presidents had in common a stark disapproval of the two principles that had prevailed in the management of the bilateral relationship since the 1980s. They disagreed on both the common vision and the principle of compartmentalization. In fact, they implicitly agreed on the opposite: distancing the two nations from each other and, rather than addressing the inexorable manifestations of conflict that stem from such a complex border, they sought to avoid the conflict altogether by negating its existence.

For Mexico’s President, that was an ideal arrangement, for it matched with his objective to reenact the old, twentieth century Mexican principle of distancing the country from the United States. Implicit in that perspective is the objective to diversify relations with other nations, especially with China and Russia. This is not a power play or a strategic, geopolitical ploy, but a domestic-driven objective of maintaining internal unity through opposition to the neighbor to the north. This is an old tactic that, for many years, served a useful political purpose. It is doubtful that, given the depth of the bilateral relationship both at the economic and peoples’ level, such a strategy could deliver any visible benefits.

On China’s side, it is important to realize that, as clear in its objectives and policies as China might appear, its actual behavior is, in the words of Philip Orchard,[i] “an odd combination of rising confidence and a permanent crisis mentality.” This impacts its behavior on a permanent basis and, as it pertains to Mexico, is probably an important source of the ups and downs that the bilateral relationship shows. Obviously, it also impacts everything else it does on every issue and front. However, this does not alter the relatively modest objectives of the current Mexican government, which largely sees China as a vehicle for its domestic agenda.

China’s perspective on Mexico

China has long had a keen geopolitical perspective on Mexico. If one looks at the investment patterns of its companies or at its diplomatic overtures, what is noticeable is the fact that these are few. Compared to Brazil or Peru, to cite two obvious examples, China has understood Mexico as part of what could be termed the American sphere of influence, and thus not a country of prime interest, despite its relative size.

Two circumstances altered this picture: on the one hand, the new U.S. tone under the Trump administration, which re-opened discussion within Mexico concerning the elevated concentration of economic ties with the U.S.  It is important to state that this rethinking took place before President López Obrador came into office. The context was a series of protectionist actions by the Trump administration and, especially, the threat to cancel NAFTA, that triggered demands to review the country’s national priorities.

On the other, on China’s side, its new assertiveness stemmed from its drive to exploit what it perceives to be growing American weakness. Establishing new geopolitical realities thus became its own national priority. China’s clarity of vision contrasts with the lack thereof in the United States and, as it pertains to Mexico, has provided an opportunity for Mexico’s government to attempt to diversify. Yet, if one looks at the numbers, these diversification efforts are tiny, inconsistent, and much more symbolic than substantive. Also, they are probably not devoid of potential opportunities for corruption.

Mexico has had a long relationship with China: from the establishment of diplomatic ties in 1972, the political relationship has been profound, albeit not so the economic one. Despite Mexico being the second largest Latin American economy, its trade with China is one of the smallest with the Asian giant. In 2018, two-way trade between both nations amounted to US$90 billion. China was Mexico’s fourth biggest export market in 2014 and second biggest import trading partner. Mexico’s exports to China amount to US$5 billion each year while Mexico’s imports from China amount to US$66 billion with a difference of US$61 billion in China’s favor.[ii] Several Chinese multinational companies operate in Mexico such as Hisense, Huawei, JAC Motors, Lenovo and ZTE.[iii] At the same time, several Mexican multinational companies operate in China such as Gruma, Grupo Bimbo, Nemak and Softtek.[iv] At more than US$677 billion in yearly two-way trade across the US-Mexico border, these figures dwarf Mexico’s economic ties with China.[v]

China’s ambitions in the world include Mexico, but it is only lately that Mexico began courting Chinese investment. Although the numbers are small, their relevance is political. The Mexican government has contracted Chinese firms to participate in the construction of the flagship Maya train project and the Dos Bocas refinery, while China’s State Power Investment Corp. has acquired Mexico’s largest independent renewables company. In previous years, Mexico contracted a Chinese company to build a fast train between Mexico City and Queretaro, but the project failed, as did a trade center, Dragon Mart, in Cancun.

Beyond the stable, albeit shallow, political and diplomatic bilateral ties, the China-Mexico relationship ought to be understood within a US-China-Mexico triangle. It is the Unites States that, indirectly, implicitly, and usually without realizing it, drives the relationship. On the Chinese side, China benefits by challenging the American hegemony in the region, and, on the Mexican side, it fuels its drive to diversify away from the United States, though, so far, mostly in a symbolic way.

NAFTA -now USMCA- and China

Mexico’s composition of trade does not lend credence to the notion that China has been using Mexico’s duty-free access to the United States as a vehicle to sidestep existing restrictions imposed by the US to Chinese exports. In addition, not all of Mexico’s exports to the US enter as tax-free goods: major industrial companies, especially those involved in integrated supply chains, have become extremely deft at separating their intra-company exports that comply with the rules-of-origin required by USMCA from those that do not, the latter paying duty on entering the US. Some of those exports go through as items within the USMCA rules, others go through normal trade rules, paying their respective duty.

For its part, China was the United States’ main trade partner in 2018, accounting for 15.7 percent of the total US trade. It is the top supplier of the US economy, with a 21.1 percent share of all US imports, up from a share of less than 3 percent 30 years ago. However, China buys only 7 percent of that country’s exports. This difference resulted in a trade deficit of close to US$415 billion dollars in 2018.

During the first quarter of 2019, Mexico surpassed Canada and China to become the top trade partner of the US, with 15 percent of the total US trade. China’s share was down to 13.1 percent during the same period in 2019. The US allocated 6.4 percent of its exports to China during the first quarter of 2019, a number that is 1.6 percentage points below that of the same period in 2018.

In terms of imports, during the first quarter of 2019, 17.7 percent of US imports came from China, down from the 20.5 percent registered in 2018. The 2.8 percentage point’s variation in the demand for US imports equals 16.76 billion dollars, which is more than the total exports from Vietnam, the seventh largest US supplier, during the first quarter of 2019. In 2019 Mexico grew its share as a US supplier, reaffirming its position as the second largest supplier worldwide, with a 14.5 percent share of the total US imports.[vi]

The dynamic of North American trade over the past three decades has involved the rapid development of vertically integrated supply chains. These “strengthened the competitiveness of U.S. companies and helped Mexico accelerate its diversification of exports and imports. Vertical specialization was used in manufacturing production maquiladoras (Mexico’s export-oriented assembly plants) across the U.S.-Mexico border: maquiladoras use large amounts of imported materials produced in the United States and assemble them into the final product, and then export most of the final product back to the United States with duty-free status. Vertical specialization has allowed the United States and Mexico to leverage their economies by collaborating in the manufacturing and assembly of various products, including automobiles, computers, and electronics. Mexico is now one of the largest auto manufacturers in the world, producing almost 4 million cars per year.”[vii]

The original Transpacific Partnership (TPP) was meant to address two objectives: one was to upgrade NAFTA without focusing on a direct renegotiation among its three partners. The other was to effectively, create a free trade zone in the Pacific region to strengthen America’s ties with its Asian trading partners other than China. TPP entailed a strategic vision that matched the notion of an American-led world order of yesteryear. By abandoning it, the US wasted a major opportunity to achieve these two key objectives. Four years later, the political context has changed, but not the transcendence of the original goals, in both the Pacific region as well as in North America.

As it pertains to Mexico, no objective assessment of the trading and investment patterns of Mexico with the rest of the world could conclude anything other than its primary trading and investment relationship is with the United States. The aim of developing and expanding new markets is natural, but given today’s integrated supply chains, there is nothing that suggests that the essence of these facts will be altered anytime soon.

Despite what some Mexican politicians might claim in their rhetoric, the fact is that the US constitutes the main engine of growth of Mexico’s economy and its strongest source of stability, both economic as well as political. More important, the closer and deeper the level of integration, the more difficult it becomes to alter these patterns. Furthermore, USMCA would not have been concluded without the active participation of President López Obrador. This was the case both to conclude the negotiations themselves, when he had just been elected president, but before his inauguration, and later, during the process of its ratification by the US Congress. Hence, it is critical to separate rhetoric from substance and, no less important, preferences from realities.

China’s influence in Mexico

China and Mexico have increased cultural and political exchanges in the past two years. Although the leaders of both nations have paid visits to each other for many years and signed cooperation agreements of various types, it is only recently that Mexico has made a concerted effort to upgrade such ties. The driving force for these ties is twofold: one, as has been mentioned, is a belated response to Trump’s degrading of NAFTA; the other is a politically motivated attempt to distance Mexico from the US. The numbers show that this remains largely a symbolic relationship, but China is a long-game player and may be hoping to take advantage of the current nature of Mexico’s government to increase its influence over the long term.

Roman Ortiz argues that “A significant increase in Chinese influence over Mexico would have strong implications for U.S. security. Washington has, until now, maintained a ‘special relationship’ with its southern neighbor in terms of security cooperation.”[viii] Limited economic ties have meant weak political relations between the two countries, and while Chinese and Mexican leaders have exchanged visits periodically, diplomatic dialogue has lagged behind that of other Latin American countries. Although Mexican government officials have called for a strategic partnership with China, the foundations for such a venture are weak. However, they do signal the underlying intent and that is what ought to be considered relevant from a strategic perspective.

Much more important than trade or cultural penetration, China’s influence in Mexico is particularly significant on two fronts: as supplier of inputs to the illegal drug industry often based in Mexico, particularly fentanyl; and as an illegal point of entry by Chinese migrants into US territory.

Chinese migration to the US through Mexico has grown exponentially over the past decade. Detentions at the border increased from 48 to 752 from 2015 to 2016, while the estimated illegal Chinese population in the US, the third largest, was assumed to be of three hundred thousand in 2016.[ix] These numbers would appear to be minor when compared to other nationalities, but it is their link with organized crime that is relevant.

On the drug front, Mexico has long been the largest single avenue of entry into the United States. Starting with marijuana produced in Mexico, almost a century ago, the Colombian mafias introduced cocaine since the 1950s. In the 1990s, Mexican criminal organizations took over the distribution business of South American drugs into the American market. In response to changing US demand, they have moved to synthetic drugs in the past decade. In contrast with marijuana, which was grown in Mexico, the only thing Mexican about synthetic drugs is the fact that they are manufactured in Mexico with mostly foreign raw materials, most of them of Asian origin, China being an important supplier. The significance of this is that the laboratories that produce these drugs establish themselves in Mexico since they face less risk of police interdiction than they would in the US. The latter touches at the core of Mexico’s vulnerability in this and other areas: lack of governance.

China has long seen Mexico through a geopolitical lens and acted that way: understanding that this is a triangular relationship regardless of temporary swings in mood by any of the parties involved. However, should the structural factors that tie the US and Mexico continue to weaken, it is to be expected that China would continue responding to Mexican overtures and exploiting every opportunity that presents itself.

The structural factors in the triangular relationship

China’s attractiveness to Mexicans stems largely from its size and exceptional ability to transform itself into an economic powerhouse in a generation. Not being the United States, Mexico’s powerful neighbor, adds to the picture. Much more significant is that Mexicans see themselves in the Chinese mirror and see, with envy, the lost opportunity that it has become. Very few Mexicans understand China or its nature. Yet, it stands out as a successful nation, which many Mexicans would therefore want to imitate.

Mexico’s attractiveness to China is twofold: on the one hand, it is a large country and a significant consumer market. On the other, it is another road of access to the largest market in the world.

Whatever way one sees it, the biggest factor in this relationship is neither Mexico nor China, but the United States. For different reasons, both China and Mexico see opportunities in each other that stem from the fact that the US is a natural and inevitable vertex in this triangle. And yet, the structural factors in this triangle make it clear that the drivers of this relationship are and will remain weak for a long time:

• In contrast with the United States and other developed countries, China is a nation that competes with Mexican products in the most diverse sectors; in fact, it has displaced entire industries, such as footwear, clothing, textiles, toys, and electronics.
• Mexico and the US produce different products (or similar products at different stages of the production process), thus sustain a naturally complementary economic relationship.
• As China reorients its economy towards consumption, the competitive nature of the Mexico-China relationship might diminish, which might open up opportunities for Mexican exports to its market.
• The size of the Chinese market today is unmatched by any other. India’s might one day be larger but, as of today, expanding into the Chinese market represents a potentially unique business opportunity.
• In economic, political, and military terms, China is a rising power that, in the long run, could rival the United States.
• In its consolidation process, China is building what has been called a “logistics empire,” through the construction of the One Belt, One Road initiative, to which it plans to dedicate hundreds of billions of dollars in the coming decades. Beyond logistics, it is a strategic project that entails top-down decision-making ability which contrasts with the decentralized nature of the United States.
• Some Latin American countries have been important factors in China’s growth plans, both as originators of raw materials and as markets. The rise and fall of economies like the Brazilian one in the last three decades exemplify China’s modus operandi: the Chinese remain a transactional power.
• China, as an emerging power, is challenging the so-called “world order” established after World War II, generating fear and rejection in the Asian region. There too, the United States is the factor of power that is being challenged.
• China’s strengths are obvious, but so are its weaknesses. It is a nation that has grown rapidly, but still suffers from the contradictions inherent to a country with extraordinary internal contrasts, an ageing population, and an authoritarian political system. Its challenges facing the future remain vast, both in terms of political stability as well as in surpassing the so-called middle-income trap, but so far it has proven capable of surmounting them. Should it succeed without altering its political system, the lesson to the rest of the world would be extraordinary, to the detriment of democratic systems.
• In contrast with other Latin American nations, especially Argentina, Brazil, and Peru, Mexico has not been a significant exporter to China. The latter results, first and foremost, because Mexico’s economy is not a relevant producer of raw materials, grains, and foodstuffs. On the other hand, China operates under a clear geopolitical conception and does not deviate from it. From this perspective, its distance from Mexico (leaving aside failed projects such as the Querétaro-Mexico fast train and the Dragon Mart) is explained more by the closeness that Mexico has with the US economy -that is, a geopolitical logic- than a strictly pecuniary one.

China unleashes passions in Mexico. Some see it as a model to be imitated, others as a threat to their markets and the country’s wellbeing. Beyond emotions, the structural factors of this triangle explain why Mexico’s economy is so tightly aligned to the US. Politics, however, could distort the economic rationale.

The true challenge that Mexico faces has nothing to do with China or with the United States. It has to do with its own weak system of governance that produces frequent crises, those that NAFTA was meant to allay and did successfully for decades. In the absence of that anchor of stability, Mexico would have to develop its own sources of trust and stability. From this perspective, it is critical to understand that Mexico’s problem is not corruption, drugs, or violence, but the lack of governance duly anchored in the rule of law. NAFTA was meant to help advance and strengthen the rule of law, which it did, albeit for the modern economy only. The so-called “China card” is not more than a symptom of the absence of a proper structure of governance and legality.

Conclusion

Mexico’s aims in its overture to China are limited and more emotional than substantial. An objective assessment of the three bilateral relationships in this triangle reveals that both China and Mexico are exploiting an American vulnerability, albeit with different goals. There is no reason to conclude that there is, as of today, a concerted strategy to profoundly change existing patterns in this triangle anytime soon.

Mexico’s government is exploiting the current situation to distance Mexico from the United States, at least politically, to satisfy an ideological view as well as internal politico-electoral objectives. As such, it represents a small danger to the United States. However, should this turn into a pattern, the long-term implications could become important. Thus, the main conclusion is that it is the US-Mexico relationship that needs addressing, for China is not a challenge at this juncture.

Most important, in contrast with China’s keen geopolitical eye on every action it takes, Lopez Obrador has much more limited aims and those relate to being left alone by the Americans, not leading an earth-shattering break like Cuba or Venezuela did in their time. In fact, the only way a strategy meant to really transform the China-Mexico relationship would succeed is if were conceived within the relationship that Mexico currently has with the United States.

In other words, any future relationship would probably be within the US-China-Mexico triangle, which could easily be expanded depending on the way the US-China relationship itself evolves. By the same token, it is obvious that Mexico could be a natural beneficiary of disinvestments in China, but the Mexican government is doing absolutely nothing at this time to make this possible or help it along.

But the truly relevant strategic piece in the US-China-Mexico triangle is the United States itself, which has been absent for the last four years and shows no sign of realizing the challenges it faces in its southern border and is oblivious to the (relatively easy) alternatives at its disposal.

Recommendations for Congressional Action

Rationale

Two forces attract a Chinese presence in Mexico. One is the nature of the Mexican political system, where President López Obrador is looking to distance Mexico from the United States, even as he weakens internal checks and balances; the other is the transactional nature of the Chinese government. The connection between the two is an extremely weak system of government and governance which was designed, whether intentionally or not, to function through a network of corruption that made the government work. It is in this context that NAFTA was such an important factor in the gradual process of reform that the country was undergoing. The core of my recommendations has to do with the quality and strength of Mexican governance, for therein lies the key to a stronger southern neighbor and border, as well as a lesser participation of China in the region.

1. First and foremost, strengthen ties between the two countries

The strongest supporters of democracy in Mexico are also the most reliable friends of the United States. Many of them are former students of American universities. The virtuous circle never fails, and it must be deepened and expanded in every area of life and the economy. There is no better antidote to Chinese interference than a citizenry that feels comfortable with its neighbors, on both sides. Hence, getting Americans and Mexicans to know each other better and eliminating sources of conflict is in both nations’ long-term interest.

Support all and every effort to continue reducing and eliminating obstacles to trade, investment and overall economic integration. Reinforce the supply chains among American and Mexican companies on both sides of the border. Help all efforts to increase students studying in each other’s country and increase scholarships to that effect. In a word, help both societies appreciate the others’ virtues. Foster active exchanges among judges, justices, legislators, regulators, and mayors. Promote workshops among teachers of both nations and fund cultural exchanges among actors, cooks and academics.

1. Help strengthen Mexico’s institutions

Mexico’s traditional political system was based on a strong presidency and a powerful political party that served both as a mechanism to channel disputes and conflict as well as a counterweight to the executive. Over the past three decades, a new system began to develop without a preordained design, but with a strong institutional and transparency bias. Since the 1990s, a strong credible supreme court was developed with proper anchors of independence and autonomy. A similarly autonomous national electoral authority and its respective tribunal was consolidated. An entity to make functional the freedom of access to information was founded, as were human rights commissions, a competition commission, a telecommunications commission, and several regulatory entities for the energy sector. These institutions gained standing and credibility over time. As of two years ago, all of them are under attack. Some have been eliminated, others neutralized, and most have been packed with individuals who are loyal to the president and usually neither independent nor technically competent.

Help strengthen these institutions and entities by exposing their growing weaknesses and supporting independent non-government organizations that are in the business of assessing, exposing, and improving the quality of these institutions and provide them with strong political backing. Foster and fund the training, professionalization, and capacity building of analysts and activists in the anti-corruption and transparency fields, preferably by observing best practices and ethics in American public and private institutions.

1. Help the adoption of digital technologies that do not support authoritarian practices

China’s (and other) technologies are a perfect match for a government bent on exerting increasing control over the population. These technologies have been used to persecute political rivals, independent institutions, and reporters. Instead of persecuting and prosecuting criminals and organized crime in general, these technologies have been diverted to use against political rivals and independent entities.

Support local and international efforts to combat the use of these technologies, expose their existence and help the growth of a strong liberal-democratic citizenry. Support independent institutions in the human-rights arena, those advancing democracy, and, especially, those developing better governance practices.

1. Support the fight against corruption, authoritarian technologies, and insecurity

As I argued, Mexico’s true challenge is one of governance. The efforts of the past three decades to develop a modern system of government, accountable to the people, failed because the core of the old political system never changed, the nature of its pervasive corruption (from the bottom up) was never altered, and all efforts to improve security and the system of justice never took root as they did not address the needs of the population. Instead of anchoring security from the lowest municipal level to the federal government, all effort, many of these actively supported by the US, were imposed from above, using the army rather than investing in local police forces and the local justice system. In a word, as imaginative and well-meant as many of those efforts were, none recognized that the problem was the basic structure of governance of the country.

***

China is an active player because it supports the status quo: sells technologies that can be used to control the population; and is willing to employ corruption methods to advance its objectives (and, in that, matches the nature of Mexico’s political system and practices). It finds in Mexico a potentially rich environment for its expansion because of the country’s weaknesses.

Mexico is a weak link in the North American region. Supporting a rapid transition to a stronger democracy is in the United States’ best interest not only to limit the growth of China’s presence in the country, but also to reinforce the North American region and the US’s weakest border. A more democratic and open Mexico was at the core of the NAFTA project. It is high time to rethink it and develop a more forceful approach to reach the objectives that are today as valid and relevant as they were when that program was first conceived in the 1980s.

Bibliography

Agendasia and Comexi, Hacia una agenda estratégica entre México y China, Comexi, México 2019 http://consejomexicano.org/?s=seccion&id=58

De la Calle, Luis, Tensiones Comerciales EEUU-China: Impacto sobre México, Comexi, Mexico, 2020, http://consejomexicano.org/index.php?s=contenido&id=5700

Ortiz, Roman, Mexico, China & the US: A Changing Dynamic, https://www.americasquarterly.org/article/mexico-china-the-us-a-changing-dynamic/

Runde, Daniel F, Sandin, Linnea, Opportunities for the U.S.-Mexico Economic Partnership under the Biden and AMLO Administrations, https://www.csis.org/analysis/opportunities-us-mexico-economic-partnership-under-biden-and-amlo-administrations?gclid=CjwKCAjw7diEBhB-EiwAskVi1-70ZwPp-KSh80y7CeG7Yx1T92OjQb-qTQoc4KmmVGucnUyyFZFG1xoCfbkQAvD_BwE

Luis Rubio

The old Soviet Union maintained cohesiveness due to the ideological monopoly that the Communist Party exercised during an era in which access to information was totally controlled by the government. In fact, says David Satter,* “the imaginary world of Marxist–Leninist ideology never really went away because the issue was never its validity but rather its political effectiveness. Mentally subjugated individuals can be treated as raw material for the purposes of the state, the reason why an ideology is so useful.” The pretention of the Mexican President to return to revolutionary nationalism obeys the same rationality.

But it was Marx himself who stated that history repeats itself, first as tragedy and later as farse. In contemporary Russia, ideological control has returned, but, as Marx anticipated, this time without believers, unadulterated authoritarian accommodation: a farse. There are no grounds to think that something different will be the result of a government dedicated to permanent manipulation without producing a sole positive outcome.

Lopez Obrador’s plan consisted of restoring power to the outdated presidency of the XX century and employing it to implement economic rectorship. To that end, the President has committed himself to eliminating any vestige of counterweights that could curtail his power. In the economic arena, he has dismantled the strategy of the development of the oil and electric industry that the previous administration had put together, with the express purpose of converting two unproductive and overly indebted companies into the main demand sources in the economy.

The restorer project is nearly concluded, and the result is a tragedy. Rather than a thriving economy, Mexicans have a moribund country, much more dependent today on the U.S. economy through exports than was observed during the past four decades, which the president vilifies so much. Investment, public and private, conspicuous by its absence; the old trade unionism is being replaced by a “new” unionism that is the same as the old one: corrupt and cacique-ridden, but this one dependent on the current president. Same song, different tune.

Civil liberties deteriorate by the day; the Supreme Court is impeded in exercising its function as counterweight, its justices silent in the face of abuses as monumental as those of eminent domain, preventive imprisonment and the extrajudicial faculties granted to diverse Executive entities. The old bosses (caciques in Spanish) of the education system carry on untouched, working at the service of the political control, thus denying present-day and future generations the opportunity of incorporating themselves into the development. In a word, instead of improving the lives of the poor (campaign slogan, “First the Poor”), reactivating the economy or truncating corruption, the government has recreated a farse of the idyllic world of the seventies that was never remarkable to begin with.

Should these trends persist, the present government will deliver a worse than pathetic result: a retracted economy, incapable of satisfying the needs of the population or the opportunities that the international world entails (starting with the U.S.–China trade conflict), exacerbated levels of unemployment (which translate into hundreds of thousands of migrants traveling headlong toward the U.S.), and burgeoning political conflict. Marx would say that it is a tragedy. Few Mexicans would contradict him.

The sought-after return to revolutionary nationalism is a farse because it entails an illusion: the belief that the world can adapt to a governor’s deliria. That era ended in crisis not (solely) because it spent in excess, but because the economic (and political) model that the president so craves ceased being viable in an open world in which information is ubiquitous. The president is trying to put the toothpaste back into a tube of reverie: one cannot return to the past, but one can indeed destroy the capacity of the country to develop itself and generate conditions for each and every Mexican to prosper.

The world of the last decades was replete with imperfections from which one administration after another fled, giving rise to an ambiance ripe for the arrival to power of a president whose only purpose was to return to the past: something different from which Mexicans had experienced but undefined, imprecise, thus attractive to many.

Three years later the evidence is overwhelming: the president has no plan other than that of elevating himself to be the country’s most powerful person, a myth in the making. To achieve this, he has destroyed rather than created and built, obstructed instead of promoted, and polarized rather than united. Tragedy or farse? Both: tragedy because he has impoverished the country and, especially, the poorest and most vulnerable population; and farse because he never had an alternative plan. It was all a caricature.

The Russia that Satter describes passed from the ideological control of Stalinist totalitarianism to the failed opening of Gorbachev, to the lustfulness of nineties criminality and now to the authoritarianism of Putin. Mexico’s president has demonstrated an absolute disgust for learning, heightening the risk of replicating the old authoritarianism without any of its benefits. Mexicans need effective counterweights.

*Never Speak to Strangers

www.mexicoevalua.org
@lrubiof
a quick-translation of this article can be found at www.luisrubio.mx

Mexico Today –  May 11, 2021
Luis Rubio

Order and chaos are two extremes of the same continuum. There are countries where order is paramount. Singapore is unrivaled in validating the major correlation between economic success and order: the rules are clear and are followed and enforced; punishment is accordingly exemplary, and therefore infrequent. On the opposite end are countries where chaos seems to reign, law enforcement is rather lax (if not non-existent), and yet economic success is undeniable. There are also countries with order aplenty (Russia, North Korea, Cuba) and others that are chaotic (Africa, Latin America), most with dismal economic performance. Where lies the difference?

An online video made me reflect on what makes things work. The video compares how people drive in orderly countries with those of a disorderly country like India. It clearly illustrates the contrasts between countries with established rules and those who forge them on-the-go. The video begins with several examples of cars arriving at an intersection and, in the absence of a traffic light or signal, continue straight ahead, presumably assuming the others will brake. The video ends with an intersection in India where no formal rule exists, but the system works nevertheless. Chaos creates its own order.

In countries characterized by the existence of clear and enforced rules, the population builds within itself a series of assumptions that make things work naturally, except when those rules disappear. A Canadian who comes to an intersection knows that, in the absence of a traffic light or a “stop” sign, he can cross carefree, something that no Vietnamese or Indonesian would take for granted. As the video illustrates, the Canadian (or German or Frenchman) ends up crashing because the two drivers instinctively applied assumptions that are invalid when there are no rules. On the other hand, everything adapts naturally in a country accustomed to chaos.

What works for street traffic doesn’t work for the economy. A stable economy requires clear, unchanging rules. More than order per se (or the absence of corruption), such stability creates conditions for savings and investment -hence growth. What makes Indonesia like Singapore is not order, but consistent rules of the game. In Indonesia, private investment legislation is not modified with each changing administration, nor do officials change how they work because of a new boss.

In a comparative study on how Asian and Latin American governments work, the authors quote a businessman: “I lived in Brazil and Indonesia and was responsible for a very similar operation. But in Indonesia I devoted myself body and soul to production and didn’t have to worry about anything else. Regulations were clear and didn’t change. Everything was different in Brazil. There I would wake up every morning wondering if I still had a job because not a day went by that regulations didn’t change”.

Over the last century, the Mexican government has been prone to inventing the wheel every six years. This created the phenomenon of the six-year economic cycle and was directly linked to the duration of the Mexican president’s term. Mexican savers, businessmen, and investors waited for the new administration to “show its true colors” before committing and risking their resources. For almost a century, each incoming Mexican administration changed the rules of the game, which prevented long-term projects from consolidating. Everything had to fit in the president’s six-year term. New economic tools like the NAFTA trade deal in 1993 began to change the six-year tradition because they created mechanisms that granted certainty and legal protection to investors.

President Andrés Manuel López Obrador disdains the need for certainty, clarity of direction, and the checks and balances that underwrite both. Bent on ignoring the world around us, the president imagines he can impose his own rules with no fallout. He tries to ignore things like the corruption inside his own governing coalition (as the recent collapse of a subway overpass in Mexico City shows). That’s why López Obrador’s actions will not yield better results than his predecessors’.  He does not understand (nor will he understand) that no one is going to save or invest in Mexico without certainty and credible sources of trust.

* Luis Rubio is chairman of México Evalúa-CIDAC and former chairman of the Mexican Council on Foreign Relations (COMEXI).  A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.

 Twitter: @lrubio

https://mexicotoday.com/2021/05/11/opinion-order-and-chaos-lessons-for-mexico/

 www.mexicoevalua.org
@lrubiof

Mexico Today –  May 05, 2021
Luis Rubio

In an old Prussian tale, famous in the legal world, a king decides to expropriate a miller’s estate because it obstructs the view from his palace. The miller goes to the higher court in Berlin, who agrees with him and forces the king to pay him compensation. Hence the phrase: “There are still judges in Berlin”. In the current Mexican context, three recent decisions handed last week by the country’s top electoral tribunal (TEPJF by its Spanish acronym) can be described as historic. At the very least, the rulings halt what seemed like an inevitable slide into chaos.

Two of the rulings addressed the candidacies of two members of Mexico’s Morena governing party attempting to run for the state governorships of Guerrero and Michoacán, along the country’s Pacific coast. In both cases, the aspiring candidates did not comply with submitting their pre-campaign expense reports before Mexico’s National Electoral Institute (INE by its acronym in Spanish) by the established deadline. It might seem like a trivial matter, but filing expense reports is required by Mexico’s law. President Andrés Manuel López Obrador’s Morena party, however, refused to accept the INE decision rejecting both candidacies. After a weeks-long tug of war -and several presidential press conferences brimming with the usual insults- TEPJF ruled in favor of the INE’s decision. This was particularly notable due to the fact that the electoral tribunal seemed hopelessly intimidated and subdued by president López Obrador.

The third ruling is much more significant because López Obrador’s Morena party and its allies had successfully managed to maneuver a higher number of seats in Mexico’s Lower House after the 2018 presidential election. The trick involved swapping members of Congress among those parties that are part of Mexico’s governing coalition in the Lower House. Morena’s electoral coalition ended up officially having 334 seats in the Lower House when in reality, the Mexican Constitution sets an absolute limit of 300 and an overrepresentation of no more than 8 percent when allocating proportional representation members. If this rule, as set forth in Mexico’s law, had been upheld in 2018, the Morena party would not have had the supermajority that it currently enjoys. This maneuvering has yielded success to Morena by passing one reform to the Constitution after another without the slightest interest in consensus-building. Originally that was the law’s original intention. One can prompt negotiation among parties by limiting the number of representatives per political party.

Regardless of the odds that the governing Morena party along its allies could obtain in the coming June mid-term election, last week’s TEPJF decision was historic. The ruling went against López Obrador own desires. Beyond the substance of the ruling (unexceptional in itself), the TEPJF tribunal dared challenge the Mexican President, a milestone in his administration and hence its extraordinary significance.

The TEPJF tribunal’s ruling against overrepresentation in the Mexican Congress touches the core of much of the disagreement that has consumed Mexico in recent decades. To sum up, the country has been engrossed since the 1960s in a disagreement over its future. Some politicians want Mexico to return to an era of “revolutionary nationalism” while others want a modern Mexico, open to the world.

The Mexican government’s decision in 1982 to nationalize Mexico’s private banks, a visceral decision by  then president López Portillo divided the country, and placed two camps at odds. It also ushered in an era in which the Mexican Constitution repeatedly (and contrarily) underwent reform with no attempt at building a consensus to confer longevity to the reforms. During the 1990s, reforms were hammered out between the longtime hegemonic party PRI and the center right PAN, excluding the PRD. Mexico’s 1996 electoral reform was agreed on by the three main Mexican political parties. In the end however the PRD didn’t back the regulatory law at the time. The reforms that followed, particularly those of the former Peña Nieto Administration, alienated half of the voters, opening the door for the reversal that López Obrador has now carried out. The point is that political conflict is reflected in how legislating is conducted, especially in constitutional matters, intensifying differences and polarizing the country. Instead of adding, it imposes itself on forces and ends up subtracting. López Obrador did not pioneer this course of action, he is only inflaming it.

Under normal circumstances, last week’s TEPJF tribunal rulings would have been run-of-the-mill, for they are neither exceptional nor unprecedented. However, in the current context, the court’s decisions constitute true milestones that cannot be overlooked or minimized. In line with the professional and courageous manner in which Mexican federal district judges acted to halt AMLO’s electricity reform and recently, the collection of Mexicans’ biometric data just for using a cell phone. The electoral court prevailed over the preferences of a President who doesn’t skimp on threats or insults to try to get his way.

Now the ball is in Mexico’s Supreme Court’s court, which has scores of pending issues, all of them burning and of the greatest significance. Confidently, the justices that sit on the Supreme Court will read the writing on the wall of this week’s rulings. The high court has three key decisions pending that directly impact Mexicans’ freedoms, the validity of the Mexican Constitution, individual rights, and countless relief proceedings frozen by orders of whom shouldn’t hold sway over them. Perhaps this is shooting for the moon, given the way that Chief Justice Zaldivar responded to the recent controversial provision to extend his term and that of his friends. Regardless, the INE and the TEPJF acted independently at a key moment for Mexico. One win after many losses.

* Luis Rubio is chairman of México Evalúa-CIDAC and former chairman of the Mexican Council on Foreign Relations (COMEXI).  A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition. 

Twitter: @lrubio

https://mexicotoday.com/2021/05/05/opinion-mexico-there-are-still-judges/

www.mexicoevalua.org
@lrubiof

Mexico Institute
4/28/2021
By  Luis Rubio

As the midterm elections draw closer, Mexico’s broken politics are beginning to take their toll. The independent electoral authority (INE), one of the country’s greatest institutional achievements after decades of fraudulent elections, is under fire by the AMLO and his party, which are also undermining the Supreme Court’s authority. The few remaining vestiges of the intentional, albeit still weak, institutional buildup that took place from the 1990s on is being subverted by a president who won a majority thanks to the existence of those institutions. The question is what the ongoing process of institutional destruction might bring with it, particularly if the president’s party ends up losing the coming June 6 contest.

Up to now, the Biden administration has done all it can to avoid addressing the increasingly chaotic situation in Mexico. Concerned with their own domestic priorities, the new US government appears to have taken for granted that López Obrador can and will maintain the lid on his country’s problems so that they do not spill onto the US, a dubious assumption at best as waves of mid-age Mexican migrants join with younger Central Americans, creating havoc along the border. Paraphrasing Trotsky, Biden may not be interested in Mexico, but Mexico’s troubles are likely to come back to haunt him.

In the 1980s, the United States and Mexico learned to cooperate and work together on the issues that inevitably spring from such a complex border between two nations as different as these two are. The foundation for that cooperation stemmed from an agreement on two basic principles: The first principle was a shared vision regarding the future of the relationship among the two neighbors. This included greater economic integration, an agreement not to let historical grievances be used to distance the U.S. and Mexico, and the opening of greater student exchange between the two countries.

López Obrador and Trump shared a vision of the bilateral relationship that had nothing to do with what was agreed to in 1988. Two inward-looking nationalists, both wanted to distance their nations from the other and, in this, they found common ground. López Obrador responded to Trump’s threats, in exchange for which he got Trump not to focus on López Obrador’s ever more destructive domestic policies causing domestic disarray and ever greater organized-crime-related violence.

The second principle was agreeing to solve the bilateral issues that afflicted the US-Mexico relationship without them contaminating each other. The countries adopted the principle of compartmentalization, which allowed managing this complex relationship without too much fuss. This worked well until Donald Trump’s arrival to the White House in 2017.

With both the shared vision and the agreement to compartmentalize gone, the two nations have little to anchor the relationship on and to address the daily issues that regularly emerge without advance notice. And yet, with about two billion dollars of daily trade between the two nations, and a border that becomes more complicated by the hour, the two governments will soon find they cannot avoid dealing with each other. But it’s not clear how they can address the looming issues in the absence of a basic set of rules of coexistence.

The midterms are likely to provide ample incentive for the US to change its approach. Odds are that the president’s party, Morena, will, at best, get a flimsy majority in the Chamber of Deputies, nothing to do with the artificial overrepresentation it garnered back in 2018. It is even conceivable that the opposition parties might steal the majority out of Morena’s jaws. Nothing is guaranteed at this stage but, whatever the outcome, the one certainty is that neither scenario -a big win nor a big loss, however, the latter is defined- will satisfy López Obrador, who sees himself as the nation’s savior.

López Obrador is certain that he will change the course of Mexican history and is thus willing to entertain any action or policy that might make that possible. Therefore, he is likely to radicalize his policies in both political and judicial terms: incarcerating emblematic people without proper judicial authority and regardless of whether there is merit for such an action; attacking the few remaining independent institutions, such as the National Electoral Institute (INE); further undermining the Supreme Court’s authority, and further dividing Mexicans. Inevitably, the spillover will hit the United States. What is coming will not be enticing for both countries, but it will demand their close attention, for Mexico is the US’s weakest border. Much more transcendent, the deeper the chaos in Mexico, the dearer the bill and consequences for the American people.

Luis Rubio
Mexico Institute Advisory Board Member; Chairman, México Evalúa; Former President, Consejo Mexicano de Asuntos Internacionales (COMEXI); Chairman, Center for Research for Development (CIDAC), Mexico

https://mexicoelections.weebly.com/op-eds/biden-and-the-mexican-midterms

 Mexico Today –  April  29 , 2021
Luis Rubio

The Supreme Court stands alone among the three branches of government in Mexico to have undergone an in-depth reform in 1994 to match the political reality of the 21st century. This has conferred the Court a special character that its members have not fully embraced, however. Although Mexican presidents up to 2018 respected its rulings, the Supreme Court’s justices have never taken a leading role, which the separation of powers would entitle them to. This has prevented them from earning the respect and regard of the general public. That vacuum allowed president Andrés Manuel López Obrador to force the ouster of a justice in 2019 and manipulate the Court’s president who, at least in theory, is entrusted with protecting citizens’ rights above everything else.

Obviously, no multi-member body is born with overall legitimacy. Particularly, in a country that entertains so poor an opinion of its judges. The judiciary is, after all, an uncomfortable power, whose constitutional role is to settle disputes between the other branches, ensuring that its actions and rulings abide by the constitutional framework. What’s crucial isn’t popularity of the judiciary’s decisions, but their soundness. Supreme Court justices gain (or lose) their credibility through day-to-day decisions proceedings. Prestige, legitimacy and, therefore, independence, are earned. These are attributes that come about automatically. Moments of conflict are key in defining the nature of a country’s constitutional court. It is in such moments when the Court’s relevance, integrity and significance is tested. That is the juncture the Mexican Supreme Court it finds itself in today. It either addresses the burning issues at its doorstep or it flounders. In other words, it is the time that the Court has to choose between opportunity or irrelevance.

A constitutional tribunal is an independent but equal branch in a system of divided government. It is dedicated that the the letter and spirit of the Constitution -the document that regulates life in society- is respected without worrying about the political ups and downs of the moment. Its core function is to protect citizens’ rights without having to worry about the limits, difficulties or imperatives of governing. Now that President López Obrador is threatening the Supreme Court’s future -by ramming a law through Congress extending the term of the current Court’s president- either the justices act or they let Mexico collapse. At the end of the day, their relevance depends on how they see themselves and how significant they consider their responsibility. As the arbitrariness of the executive and legislative branches grows, the Mexican Supreme Court becomes the only remaining rampart.

The point is key: once the justices commit to being employees of Mexico’s president, their function can only be to ratify his decisions. Either they embrace the freedom that their term as justices confers or they lose their reason for being. In the history of the Supreme Courts around the world there is always a turning point that forces them to define themselves. Either they meet the public and history’s needs or they surrender to the leader of the moment.

It is obvious that López Obrador’s power to “persuade” the court to favor the president’s interests is enormous. Violently removing a Supreme Court justice in 2019 -with the blessing of the Court’s own president- demonstrated that there are no limits to López Obrador readiness to prevail over everyone and everything. That leaves the Supreme Court justices facing a dilemma: to legitimize the arbitrariness and interests promoted by the executive branch or commit to their historical responsibility as guardians of the citizens’ rights enshrined in the Constitution. So far, only the federal judges at the district level have been willing to fully shoulder that responsibility.

The dilemma of committing to serve as an effective constitutional court is not exceptional. However, the Mexican Supreme Court has sidestepped it time and time again, as it happened in 2020 when it allowed López Obrador’s referenda on whether or not to prosecute the former Mexican presidents. The landmark case of Madison v. Marbury (1803) in the United States seems almost identical to the one facing the Mexican Supreme Court today: if the Court issued a decision forcing Madison to do what Marbury demanded, the president would ignore it, weakening the Court’s authority and legitimacy. On the other hand, if the Court denied Marbury’s right, its decision would appear biased in favor of the executive office for fear of retaliation. For the Chief Justice, either ruling would have undermined the elementary principle of the Constitution’s supremacy and legality. In the end, the Court’s decision in Madison v. Marbury -establishing the principle of judicial review- gave it the enormous legitimacy it enjoys to date.

The challenge for the Mexican Supreme Court is to break with the inertia of Mexico’s old presidential system, which produced tons of legislation without ever cementing an actual rule of law. Amid a midterm electoral process and enormous political fragility, the Mexican Supreme Court has before it the opportunity to elevate itself as an actual independent branch of government that not only safeguards citizens’ rights, but also the most basic constitutional principle: to prevent the abuse of power. Justice is not something abstract: they are the key rules for social coexistence.

“There are still judges in Berlin!” Are there justices in Mexico?

As Montesquieu wrote, freedom does not exist if the power to judge is not separate from the legislative and executive powers. For better or for worse, the future of Mexico is in its hands.

* Luis Rubio is chairman of México Evalúa-CIDAC and former chairman of the Mexican Council on Foreign Relations (COMEXI).  A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.

 Twitter: @lrubio

https://mexicotoday.com/2021/04/29/the-supreme-court-and-mexicos-future/

www.mexicoevalua.org

  Mexico Today –  April  26 , 2021
Luis Rubio

For years, Mexican citizens have been disenchanted with politics. First, economic reforms in the late 1980s were supposed to restore Mexico’s capacity to grow, and then the arrival of democracy around 2000 was supposed to curb corruption and bring Mexican politicians –allegedly the people’s representatives- closer to their constituents. Neither happened, at least not entirely. Several Mexican administrations have come and gone since the year 2000. First, there was Vicente Fox’s administration that promised to cast out the PRI party “out of Los Pinos” (Mexico’s presidential residence). Then came Enrique Peña Nieto’s administration attempting to “move Mexico”. Now, Andrés Manuel López Obrador’s administration promises a period of “brave honesty”. Changes, many changes, but the country’s reality remains the same for the overwhelming majority of the Mexican population.

The phenomenon is neither new nor particularly Mexican in nature. In an essay on citizens’ political skepticism in democracies (The Need for Political Skepticism, 1928) British writer Bertrand Russell speculates on the voter’s motivations each time he goes to the polls: “Most [citizens] are convinced that all the ills they suffer are remedied if a certain party comes to power. That is why the pendulum swings. A man who votes for one party and remains unhappy deduces that the other party is the one who was going to make him successful. When he has become disillusioned with all the parties, he is already old and death stalks him; his children retain their youthful faith and the ups and downs continue.” Is Mexico condemned to that pendulum of mediocrity?

Mexico’s 2018 presidential election has been correctly described as a result of citizens being fed up with tons of politicians’ promises and grandiose speeches for decades. The Mexican population was exhausted and overwhelmed. Although majoritarian, the vote for López Obrador in 2018 was also, in a significant part, a vote against the Mexican administrations that preceded him. López Obrador won the Mexican presidency after three successive attempts -not because of the mere election- but because his project (or his promises…not much project exists). it was repulsive for the majority of citizens. It was the mistakes, corruption, and failures of López Obrador’s predecessors that decided the election.

The ease with which president López Obrador has been dismantling the Mexican politics’ status quo demands we Mexicans reflect on what had been built and how. Beyond a few complaints by specialists and opinion-makers, the president López Obrador has been able to eliminate, disassemble, or make irrelevant various entities and organizations that he deemed an obstacle to his centralizing goal. The message is clear: these independent agencies might be important (and, in some cases, key) for certain functions or markets, but they did not enjoy social recognition. That might have been a pipe dream in the case of highly technical or specialized institutions, but all have been equally victimized. It is symptomatic that the government itself has been careful with the two institutions that are best known to the general population, the Supreme Court and the National Electoral Institute (INE), implicitly realizing that eroding them further would be costly.

The lesson I glean from this experience is twofold: on the one hand, that to have validity, relevance, and significance, institutions must enjoy widespread public recognition. Many times -especially when it came to technically-oriented government agencies- the idea that it would be burdensome but above all unnecessary to go through the legislative route to elevate an institution, led to the creation of institutions by decree, which expedited things, but also made them politically vulnerable. Of course, the López Obrador government’s onslaught has not spared constitutionally created bodies, so this assessment is only partially valid. The broader point is that Mexico’s institutions are not for technicians or specialists but for citizens and consumers who in the end are, or should be, the government’s reason for being, and it is they who must be won over to achieve policy objectives.

The other lesson is that the Mexican population clearly cares less about labels than about results. The priorities for the average Mexican citizen is not ideological. It’s not having to elected between a market or state economy, but rather that there is growth, good jobs, and greater benefits for the community. The discussion regarding how Mexican the best way to achieve these objectives is disputed. There’s no doubt in my mind that Mexico requires highly competitive markets to do so- but it is clear that what’s important for the consumer is optimum performance. The same holds for the political system: Mexico democracy is not only fragile, but also puny and dim. With each passing election and opinion poll, the Mexican public has grown less and less optimistic about democracy and more eager for a system of government that works and makes commendable results possible.

In light of the coronavirus, how to best achieve development is much debated around the world. China has been forceful in its fierce, unequivocal and unapologetic defense of authoritarianism as a better system of government, superior to democracy. What’s clear is that the only thing that matters to Mexican citizens is the quality of governance, that is, the government’s ability to create conditions for progress and prosperity. The rest is pure demagoguery.

* Luis Rubio is chairman of México Evalúa-CIDAC and former chairman of the Mexican Council on Foreign Relations (COMEXI).  A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.
 Twitter: @lrubio

https://mexicotoday.com/2021/04/26/opinion-votes-and-mexicos-government/

www.mexicoevalua.org
@lrubiof

 Mexico Institute
By  Luis Rubio

   “All politics are local,” Tip O’Neil famously quipped. In Mexico, all politics today are about elections and especially about the midterms of June 6. From his inauguration, President López Obrador turned this election into a referendum of himself; in fact, he wanted to be on the ballot by creating a new figure, that of “revocation of mandate.” His objective in trying to create a new device was pragmatic and explicit: to attempt to turn a typically local election into a national one. That attempt looks increasingly like a big mistake.

It is too early to forecast what will happen in two months, and it would be a foolish errand to bet on any result, but several pointers make it possible to speculate about how Mexican politics are likely to evolve from here to there. First, the way each party nominated its slate of candidates for governorships, municipal governments, and Congress, evidenced both the enormous tensions inside the political system at large, as well as the extraordinary inability of the establishment to come to grips with how much has changed in the country’s politics both as a result of López Obrador’s election in 2018, as well as due to the pandemic. It is now all but clear that the president was elected not because the electorate loved his policy proposals, but because people were fed up with the status quo, the corruption that had been the trait of the previous administration and, in general, shattered expectations after decades of unfulfilled promises.

Second, the polls show a huge gap between the president’s relatively high (though not unprecedented) popularity and that of his government and its policies. The government’s performance was dismal from the start (the economy entered into negative territory from the very beginning) and the pandemic made everything worse. This was then compounded by the president’s refusal to support businesses or even people losing their jobs. Thus, a key question for election day is whether people who maintain a quasi-religious belief in the president will vote with their hearts or with their pocketbooks. Although some polls suggest the former, fear may well be built-in into the answer. Nobody knows.

Third, the opposition political parties have joined forces in many states and about half the federal congressional districts. Their objective is sheer pragmatism: to defeat Morena and hinder it from getting an absolute majority in Congress. Given the way the electorate relegated the three (previously) large opposition parties -PRI, PAN, and PRD- to minority status, their pragmatism was warranted, but it proved both too optimistic and rather shallow. Optimistic in that while the theory of fielding a candidate that could win and to avoid splitting the opposition vote made sense, getting the actual pre-candidates to accept the new rule proved extremely difficult and conflict-ridden: politicians traditionally combatting each other do not join forces easily. And shallow in that all the opposition is offering is a return to where things were before AMLO’s win in 2018, precisely what the majority of the electorate wanted to run from. Attempting to sell yesterday’s failed product to a crowd that wants a radically different one does not bode well for these complex alliances.

Finally, there are too few polls at the local level to make any judgment about what is likely to happen on election day. National polls are likely skewed because of the weight of the president’s figure, so they say little of relevance about how a voter might choose among candidates and political parties right there in their neighborhood: the difference between a presidential election where almost nine of every ten voters typically pick their preferred presidential candidate and vote straight for his or her party in all other contests, and a local election where national politics matter less. To the extent that local issues drive voters’ behavior, June 6 is a toss-up.

The only reason to be optimistic is the ever more evident fear the president, his government, and the Morena leaders evince in their actions, statements, and the way they conduct themselves. Their ever-growing attacks on the electoral authority more than suggest that they do not believe their rhetoric suggesting that they will once again hold a supermajority. In fact, everything seems to indicate that they would be extremely lucky if they barely reach a tiny lead over the rest.

The result of the coming election will be largely symbolic. Even though the lower house of Congress has sole authority over the budget, and thus whoever holds a majority determines what the executive can do, no small source of power, a weakened president at this stage would constitute an enormous victory for the opposition, one which has done little to merit a larger showing itself. Still, limiting or containing the president’s ability to keep on undermining and destroying each and every institution and potential counterweight is worth every vote.

https://mexicoelections.weebly.com/

Luis Rubio Mexico Institute Advisory Board Member; Chairman, México Evalúa; Former President, Consejo Mexicano de Asuntos Internacionales (COMEXI); Chairman, Center for Research for Development (CIDAC), Mexico

Mexico Today –  April  15 , 2021
Luis Rubio

 Inequality is a structural feature of Mexico: social background, geographical location, and the environment have built an uneven playing field since ancestral times. Mexico is not unique in having inherited a social structure and an orography that create unequal sociopolitical and economic conditions. Where Mexico does stand out (among countries with similar GDP per capita levels) is in having failed, or not even tried, to create conditions to improve the entire population’s odds of success, without distinction. In fact, the problem lies elsewhere: many Mexican politicians have gigantic, maximalist visions that turn into impossible dreams. Other politicians simply prefer for poverty to continue prevailing in Mexico.

The political discourse on inequality is generous in rhetoric, but lacking in solutions. Of course, there is no shortage of proposals to level down wealth via a radical redistribution of income. However, this would involve having many more poor, when what Mexican society demands is having many more rich. Other proposals focus on easing the symptoms of poverty or of those who lack access to social benefits. Usually, this involves subsidies in the form of conditional cash transfers to poor families while requiring them to fulfill specific commitments (like taking children to school and to health centers). This was the basis of social programs in Mexico such as Progresa (1997) Oportunidades (2002), and the like. Then, there are those who propose generalizing this principle through approaches like universal basic income which have the effect of erasing incentives for individual progress. Still, others seek magical solutions through more public spending (and its corresponding taxes) without changing either government expenditure goals or execution.

As German-born physicist Albert Einstein said, there is no reason to expect different results when doing the same thing over and over again.

On the other side of the Pacific Ocean, China has demonstrated that reducing inequality in a couple of generations is possible. What is required is a roaring economy that develops an education process focus in generating human capital in the form of capable individuals able to join the labor force. China’s success is so obvious that we should be ashamed because it is not the only country having achieved it. The Asian behemoth created incentives for private companies (national and foreign) to open and thrive, and devoted enormous resources to turn education into a means through which everyone, regardless of background, could join the 21st century labor market. With this strategy (pioneered by South Korea, Taiwan and others back in the 20th century), China managed to get more than 300 million citizens to join the job market, raise their living standards, and become taxpayers. A social mobility virtuous circle.

The challenge for Mexico is social inclusion: how to create conditions so that all Mexicans, without distinction, have equal access to the opportunities that the world offers. It involves changing the logic of Mexican public spending, the education system, and the development strategy overall. When the concept of social inclusion is embraced, the only thing that matters is that the economy grows rapidly and that the population is capable of joining it. That, in turn, sheds new light on the role of the mafia-like groups at the helm of Mexico’s teachers’ unions, other political bosses, and elected officials who have no greater goal than political control. They all know that a poor population is always easier to manipulate, which doesn’t prevent them from playing up inequality rather than taking action to eliminate it.

In the very different context of the 20th century, Mexico achieved accelerated social mobility thanks to the combination of political stability and public and private investment. In the 21st century of technology and knowledge, this is not enough. Success hinges on the ability of individuals’ to add value. Education, infrastructure and healthcare become critical assets in achieving that goal. Mexico’s progress requires creative social inclusion strategies, but the current government officially stuck in the 20th century.

The obvious question is why Mexico’s productivity grows so little -and, consequently, income levels- despite the success of economic sectors linked to the export markets. Again, when one looks at South Korea or China, the answer is obvious. Both countries have wagered on adding value, which is what has risen living standards in this century. You don’t have to be a genius to see that Mexican president Andrés Manuel López Obrador’s daily press conferences are a mere spectacle that distracts from the more relevant goal of implementing a proven economic development strategy.

Increasing social mobility is the only formula to reduce and eventually end inequality. Greater social mobility is the result of a government’s concerted action to create conditions for accelerated economic growth and for equalized opportunities -through human capital creation via education and healthcare- for the most disadvantaged members of society. Everything is based on leaders having economic development and social inclusion as their main goals, rather than political control and impoverishment.

* Luis Rubio is chairman of México Evalúa-CIDAC and former chairman of the Mexican Council on Foreign Relations (COMEXI).  A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition. 

Twitter: @lrubio

https://mexicotoday.com/2021/04/15/opinion-mexicos-challenge-inclusion/

www.mexicoevalua.org
@lrubiof

Mexico Today –  April  7 , 2021
Luis Rubio

China has become a topic of endless debate: Will China replace the United States as the next superpower? Is China’s trademark authoritarianism superior to democracy? Is China’s seemingly unstoppable economic pace sustainable? These are all relevant questions. The attempts to answer them and define future scenarios abound. The outcome carries huge implications for Mexico.

Countless authors of all stripes have tried to answer these questions. I relay two views here, interesting in that they offer contrasting answers.

In his most recent book (You Will Be Assimilated: China’s Plan to Sino-form the World, 2020) financial analyst David Goldman outlines the enormous transformation that the Asian giant has undergone and what drives it. His argument is sometimes counterintuitive. For example, Goldman says that China is a nation characterized by a relentless meritocracy that contrasts with Western benevolence: its educational system is so brutal and deterministic that children compete to the death because their future is determined by university entrance exams. The result is a society of few friends, where competition begins at birth, and to which two additional elements must be factored in: first, that in China most are only-child households, and second, because of the complexity of the language (and the extraordinary diversity of languages), Chinese households are practically silent. The social structure is pyramidal and the bureaucracy, since ancient times, and now commanded by the Communist Party, dominates all aspects of life and the economy.

The Chinese government, says Goldman, has succeeded in legitimizing its position vis-à-vis the population, overcoming a structural insecurity stemming from centuries of floods, invasions and other catastrophes. Chinese authoritarianism is not new, but has now become a banner because, from its perspective, it has proven to be more functional and successful than the Western capitalist model. Its bureaucracy develops long-term plans and acts rationally, surmising that the same is taking place in the rest of the world (a source of tremendous misunderstandings).

The ambition displayed by the Asian nation is unlimited and evident in all fields, but particularly in technology, where it aspires to dominate artificial intelligence, 5G broadband connectivity, and quantum cryptography, all with both civil and military applications. China has a comprehensive transformation plan where economic cost takes a back seat to political and geopolitical goals. Although Goldman’s argument isn’t infallible, it has the enormous virtue of explaining the consistency and coherence of the Chinese economic and political model.

In a more recent book (The Return of Great Power Rivalry. Democracy versus Autocracy from the Ancient World to the U.S. and China, 2021), political scientist Matthew Kroenig focuses on the geopolitical competition between the United States and China. Kroenig analyzes the contrast between the feasibility and permanence of the democratic development model versus the authoritarian one, which he calls autocratic. Analyzing history and literature, from the feud between Athens and Sparta to the present, the book is a fascinating study. It shows that, in each era, there was always a power that achieved enormous functionality and efficiency in its dealings, but at the same time always found limits to its development by the absence of checks and balances. Kroenig concludes that the virtue of democracy lies in the fact that citizen participation, while complicating and making decision-making less effective, has the effect of reducing or limiting bad decisions that usually take place in autocratic regimes. In other words, the approach is essentially institutional and its conclusion is that the Chinese system will inexorably lead it to make mistakes that will limit its progress.

Time will tell if China achieves its ambitious goals, much of which will depend on how the United States responds and acts in the future, especially on the technology front. However, what is interesting about the contrast between the determinism of each of these two readings of reality is that both are uncompromising.

Unfortunately, Mexico is doing nothing to improve its tech position or to attract investment located in China today. What is absolutely certain is that the competition between the United States and China can only increase. The opportunity for Mexico is obvious, but it will not come about by itself. It will depend on concrete actions on the educational front, infrastructure, and investment promotion, none of which are a priority for the current Mexican administration.

* Luis Rubio is chairman of México Evalúa-CIDAC and former chairman of the Mexican Council on Foreign Relations (COMEXI).  A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.

 Twitter: @lrubio

https://mexicotoday.com/2021/04/06/opinion-china-where-to-go-from-here-and-mexicos-opportunity/

www.mexicoevalua.org
@lrubiof