Archive for the ‘Western Hemisphere’ Category

U.S./Mexico: Improving Tone, But Nothing’s Final

April 20, 2017

Antonio O. Garza (U.S. Ambassador to Mexico, 2002-2009)

Cross posted from Ambassador Garza’s website

These past few weeks have presented the Trump administration with its first real foreign policy tests. Syria’s use of chemical weapons, the United States’ retaliatory airstrikes, the nuclear standoff with North Korea, and China and Russia’s constant maneuvering in this ever-moving foreign policy chess board. Yet in these globally-focused days and weeks, Mexico—once seemingly the administration’s top focus—has skirted below the radar.

Today’s U.S.-Mexico relationship is marked by a relatively thoughtful tone, which I for one interpret as good news. As the economic tensions have eased slightly, the continental conversation has begun to center more on fair trade, each countries’ interests, and job creation, a healthier tone for beginning NAFTA negotiations than the protectionist talk that dominated economic discussions just a few months ago.

On bilateral security cooperation, the discussion has also become more focused. Throughout the change in U.S. administrations, law enforcement on both sides of the border have continued to work together with little interruption. And at the highest level, DHS Secretary John Kelly has continuously heralded the United States’ cooperation with Mexico as both positive and critically important.

Yet while bilateral relations may be on more stable ground, Mexico continues to face its own range of domestic drama. In the ongoing saga of fugitive governors, there has been some recent success. Interpol and Guatemalan officials captured Veracruz Governor Javier Duarte in Guatemala and Italian officials nabbed former Governor of Tamaulipas Tomas Yarrington, with both now facing charges of corruption and collusion with organized crime. Yet, there are still governors on the run, with former Chihuahua Governor Cesar Duarte missing and possibly hiding out in El Paso.

The stories of corruption and ongoing violence will continue to play out as we move ever closer to Mexico’s presidential elections in July 2018. To get a sense of what Mexico’s population is feeling in the election’s lead-up, be sure to watch the State of Mexico’s election this coming June. President Peña Nieto’s PRI party has governed the state for almost a century, but the three opposition candidates are making it a close run. Also tellingly, insecurity has been a big theme of the campaigns with both the PRI and the PAN releasing TV spots that focus on the state’s security conditions.

However, one cautionary note before we fall back into a more predictable and comfortable bilateral relationship or get swept away in Mexico’s electoral intrigue. While the U.S.-Mexico bilateral relationship is on better footing, now is not the time for complacency. Ensuring cooperative economic and security relations requires consistent and tireless effort to protect what works and continually improve those areas where things could be better. This may always be true, but amid shifting policies, it’s critical.

Treat Mexico as a Strategic Partner

February 21, 2017

John D. Negroponte (Mexico, 1989-1993)
James R. Jones (Mexico, 1993-1997)
Jeffrey Davidow (Mexico, 1998-2002)
Antonio Garza (Mexico, 2002-2009)
Carlos Pascual (Mexico, 2009-2011)
Earl Anthony Wayne (Mexico, 2011-2015)

An edited version of this piece appeared in The Washington Post.

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Mexico is of enormous importance to the United States. We have strong strategic interests in a relationship of respect and collaboration with Mexico while we work through differences on trade, security, and migration.

US-Mexico relations touch the daily lives of more Americans than ties with any other country, whether through culture, commerce or travel. US prosperity and the security of our homeland are deeply affected by the type of relationship we have with our southern neighbor.

Much can be improved between Mexico and the US for the good of both countries, but tackling these challenges need not be a win-lose proposition. Both countries can gain security and prosperity. Reviving the animosity and “distance” that characterized our relationship in the seventies or eighties is dangerous and runs counter to our interests.

The six of us have served as U.S. Ambassadors to Mexico, managing the ever-improving relationship across Democratic and Republican administrations since the late eighties. We have seen firsthand the strategic value of working cooperatively with Mexico to tackle common problems, including crime, terrorism and global economic competition. Along the way, Mexico has become a more democratic and prosperous country, making it a better and more reliable partner.

We are now deeply concerned to see this foundation shaken. Public attitudes in both countries are being soured by exaggerated public accusations. Mexicans believe that their national “dignity” has been insulted. Champions of closer cooperation with the US are on the defensive. Nationalist voices are gaining traction. This is not in America’s long-term interest.

The United States and Mexico started our modern journey to closer partnership with the 1993 North American Free Trade Agreement. Collectively, the six of us have worked through every stage of NAFTA. This is not a perfect agreement, but neither is it the job killer some have construed. Since NAFTA was signed in 1993, U.S. jobs linked to trade with Mexico grew from 700,000 to 4.9 million. The value of our two-way trade has grown six fold, reaching $584 billion in 2015. Mexico is now the second largest market for US exports, larger than our exports to China, Japan, and Germany combined. Mexico is the third largest buyer of US agricultural products. We build many things together, with parts crossing borders in both directions – so much so that finished Mexican manufactured exports were found to have 40% U.S. content.

US jobs moved to Mexico, but others were created by NAFTA. A 2013 study estimated that the US is $127 billion richer each year because of extra NAFTA trade. New studies have made clear that the big causes of US manufacturing job losses are automation and trade with China, not NAFTA. NAFTA can be improved to help boost the US economy in such areas as “rule of origin,” services, e-commerce, border inefficiencies, and labor standards. Those are the issues that should be negotiated based on facts to strengthen a long-term relationship that makes both countries more competitive.

Energy deserves special mention. Under NAFTA, Mexico’s nationalized energy sector was still off limits to US companies. In 2013, Mexico opened investment and trade in oil, natural gas, electricity, renewables, and refined fuels to US and other companies. Today, the US exports more natural gas and gasoline to Mexico than to any country. In December, major US companies won licenses to develop Mexico’s oil reserves, while others are partners in new pipelines. These openings make North America more energy secure.

The US deficit with Mexico gets more public attention than it deserves. Mexico represents 8% of our deficit. Our deficits with China, the EU and Japan are larger. The deficit with Mexico declined by over 40% between 2010 and 2015, even as our trade grew 35%.

A sharp point of contention has been over the border wall and migration. The great irony is that today there are 1.1 million fewer undocumented Mexicans in the US than in 2007. Apprehensions of Mexicans at the border have reached the lowest levels of this century. Mexico has joined us to manage the surge in migrants from Central America, deporting over 165,000 from its southern border in 2015, more than the United States did. Publically demanding that Mexico pay for a wall that Mexicans don’t think is needed has fueled anti-American nationalism. That limits the capacity of Mexico’s government to work with us to find solutions.

Common borders also made Mexico and the United States partners in national security. Ever since 9/11, Mexico and the US have worked closely to stop potential terrorists from entering the US. We also work to improve the fight against illicit trafficking. The trafficking of heroin and other drugs into the US and the smuggling of weapons and drug profits into Mexico fuel violence, corruption, and deaths in both countries. Still, during the years of our collective service, law enforcement officials have built trust, competency and legal channels to act against criminal networks. That cooperation needs to be strengthened, not undermined.

Together, the authors have witnessed profound and positive changes in the US-Mexico relationship over the last quarter century. We urge that the US engage in serious, fact-based negotiations over differences on trade and other issues. Intimidating or denigrating remarks make it harder to reach outcomes that support American economic and security interests and fuel anti-Americanism in Mexico. Workers, companies, and communities of both countries will prosper with a long-term strategic partnership between the US and Mexico. Let’s keep building it.

Summer Doldrums. Not Quite.

August 3, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s August 2016 newsletter.

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It should be the summer doldrums, but the news out of Mexico hasn’t quite slowed down.

One of Mexico’s biggest stories was the debate, passage, veto, and then re-passage of the country’s anti-corruption package. These seven bills were designed to put legislative meat on the bones of the 2015 anti-corruption reform, and will greatly assist in coordinating corruption fighting across government institutions. The final package stopped short of embracing every part of the civil society written and backed Ley 3de3 (which would have forced government officials to publicly declare their assets, conflicts of interest, and tax records), but it did create what has been called “the most encompassing system to identify and sanction corruption that the country has ever had.”

In more welcome anti-corruption news, the Peña Nieto administration filed legal challenges this month against the governments of Veracruz, Quintana Roo, and Chihuahua for reforms that would have shielded outgoing governors from corruption investigations. These states are facing federal inquiries over financial irregularities under the governors’ tenures. And in the case of Veracruz, for at least twenty-six phantom companies that received some US$1 billion in unaccounted funds. (more…)

More Uncertainty but Message Clear: “Fix It”

July 5, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s July 2016 newsletter.

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This past January, I wrote that the coming year would be one characterized by our “Living with Uncertainty”. Looking back, while it was clear that this year would be tumultuous, I certainly misunderestimated what was to come.

It’s hard not to start with Brexit, when 52 percent of the United Kingdom’s voters chose to break with the European Union.  The vote marks the first departure from the grand European project, tacking an uncharted course for the United Kingdom and for the continent. But the contentious vote was really the easy part. The next two years will be filled with the tougher steps—sitting through painful negotiations, designing a brand new state framework, and calming jittery markets that are concerned with the future of both the United Kingdom and a strong and peaceful Europe.

The anger is not just a United Kingdom and United States phenomenon; voters around the world are frustrated. And Mexico is no exception.

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Mexico: It’s not (just) a PR problem, It’s the corruption

June 2, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s May 26, 2016 newsletter.

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It’s been nearly a year since President Enrique Peña Nieto pushed through a series of anti-corruption focused constitutional amendments.

These well-received reforms established a National Anti-Corruption System (to coordinate national, state, and local efforts), gave teeth to the Superior Auditing Office, and made the Federal Tribunal of Administrative Justice an independent court. However, passing these reforms was merely the first step. Members of Congress gave themselves twelve months (until this upcoming May 28th) to write and approve the necessary secondary legislation. Yet with the deadline rapidly approaching, the completed bills are still nowhere in sight.

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An Eye on Mexico

April 13, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s April 2016 newsletter.

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This past month, Mexico’s civil society groups handed the Senate president a new piece of anti-corruption legislation—the Ley3de3. The citizen led legislation looks to force public officials to disclose tax information and possible conflicts of interest, and increases the punishment for acts of corruption. After a widespread media campaign, the bill received 291,467 signatures (more than double the 120,000 signatures necessary to get it onto the legislative table), representing a new path for the country’s civil society to influence the anti-corruption agenda. You can read more about the Ley3de3 in my recent Dallas Morning News op-ed and the other ways that Mexicans are taking the fight against corruption into their own hands.

There have also been steps forward for Mexico’s energy reform. This past week, the Federal Electricity Commission (CFE) held its first long-term electricity tender with ultimately eleven companies (out of sixty-nine bidders) winning clean energy certificates and electricity contracts. The government’s goal is to have clean energy contracts producing 5 percent of the country’s electricity in the next two years. Meanwhile on the oil and gas side, the reform is also continuing apace, despite Moody’s downgrade of Pemex’s credit rating (along with Mexico’s general outlook) this past week due to its precarious financials. The next tender will be for deep-water exploration and production and is scheduled for the first week in December.

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Mexico: Time for a ‘Moment’, or a Miracle?

February 29, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s February 2016 newsletter.

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Last week, Pope Francis touched down for his first official visit to Mexico. Throughout the trip, he moved across the country, greeting crowds and speaking out about Mexico’s most pressing challenges. In particular, he laid into the Mexican political elite, denouncing the persistent corruption, violence, and narcotrafficking and pushing officials to do better. It seems, as I recently wrote, that Mexico needs another moment but this time in rule of law.

The Pope addressed Mexico’s most profound issues, but there is another nearly as urgent challenge: Pemex. After the country’s ambitious energy reform, low global oil prices have mercilessly battered the state company, decimating its investment budget and its ability to fund even basic operations. The state company’s debt will soon exceed $100 billion and it owes a shocking $7 billion to its service providers. Complicating things further, the country’s crude oil production has not yet picked up, steadily continuing what has been a long and painful downward slide. As private companies start oil and gas production across the over 30 newly placed fields—and in those placed through future bidding rounds—the hope is that this trend will slowly reverse.

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2016: Living with Uncertainty

February 2, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s January 2016 newsletter.

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We are nearly a month into 2016 and it’s already clear that we’ve inherited much of 2015’s tumult and uncertainty. Over the past twelve months, conflicts destabilized regions, the global economy threatened stagnation, and voters went to the ballot box to shake up entrenched paradigms. In each of these trends, Latin America was no exception. In 2016, the outcomes from these events will become apparent, with leaders grappling to resolve conflicts both new and old and to reorient their countries’ economies under new realities.

The past year’s news has been filled with horrific stories: Syria’s bloody conflict, terrorist attacks from California to Paris to Beirut, and Ukraine’s grinding crisis against Russian backed separatists. Closer to home, we hear about the gang and drug violence that has transformed Honduras, El Salvador, and Venezuela into some of the world’s most dangerous places. However, it’s not all bad. There are some bright spots with Guatemala and Colombia’s homicide rates continuing to improve. Similarly, Colombia’s peace agreement with the FARC is set to wrap up in March, ending the hemisphere’s longest running insurgency.

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Mexico: Pushing Past Pessimism

September 10, 2015

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s September 2015 newsletter.

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With drug kingpin El Chapo’s escape from a maximum-security prison and a disappointing first-round energy auction, Mexico’s summer was far from idyllic. As we move toward the end of the year, the Peña Nieto administration appears to be making an effort to chart a more responsive course, both with respect to its energy sector and in trying to contain what many have characterized as a political free fall. 

In Mexico’s energy sector, the second phase of round one will take place on September 30, for five production-sharing contracts across nine shallow water fields. The first bidding round, held this past July amid low global oil prices, awarded a disappointing two of the available fourteen fields. To avoid a repeat of these dismal results (and to compete with Brazil’s October 7 energy auctions) the Mexican government is responding to industry input. The changes—including clarifying controversial parts of the contracts (such as early termination conditions), lowering equity requirements, and announcing the government’s desired production share ahead of time—are all positive steps, suggesting that officials are now listening more closely to feedback.

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Wanted: Bold Steps and Rule of Law in Mexico

July 23, 2015

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s July 2015 newsletter.

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Less than two months after the PRI gained a marginal victory in Mexico’s midterm elections, the administration of Mexican President Enrique Peña Nieto has been hit by two stinging setbacks.
First was the humiliating escape of Joaquín “El Chapo” Guzman, the head of the infamous Sinaloa Cartel, and soon after was the energy reform’s less than stellar first bidding round. All is not lost on either front, but moving forward will require a dramatic change of tone and direction on security measures, and serious recalibration on the energy side.

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