200 Years of U.S.-Mexico Relations: Challenges for the 21 st Century Symposium Rapporteur s Report

Transcription

1 200 Years of U.S.-Mexico Relations: Challenges for the 21 st Century Symposium Rapporteur s Report This symposium was made possible by the generous support of the Consulate General of Mexico in New York and the Mexican Cultural Institute of New York, and CFR s Civil Society, Markets, and Democracy Initiative. The event marked the Bicentennial of Mexican Independence and the Centennial of the Mexican Revolution. Mexico is one of the United States's most important foreign policy relationships. No other nation directly affects U.S. stability, security, and prosperity across so many dimensions. Mexico increasingly influences (and is influenced by) U.S. domestic policy--no other country is as intertwined with the U.S. economy, environment, culture, and society. Although bilateral relations have always been significant to both nations due to the shared 2,000-mile border, the deepening of business, personal, cultural, and community relations over the last two decades have drawn the United States and Mexico closer. Yet on the tenth anniversary of its democracy, Mexico is facing one of the most challenging times in its modern history. Rising insecurity has revealed the weakness of the country s police and court systems, and rule of law. As it emerges from a deep recession brought on by close dependence on the U.S. economy, Mexico continues to struggle with low levels of productivity, unequal education, and a lack of public spending on infrastructure, hampering higher economic growth levels necessary to widely improve the standard of living for its citizens. At a symposium convened by the Latin America Studies program at the Council on Foreign Relations (CFR), 200 Years of U.S.-Mexico Relations: Challenges for the 21 st Century, policymakers, academics, and journalists discussed the opportunities and complex challenges facing Mexico and the U.S.-Mexico partnership, and how U.S. policy might help Mexico follow a path of stability and prosperity. They reflected on the array of issues on the bilateral agenda including security, the border, political and economic development, and immigration, and the constraints to and prospects for future cooperation. And, during two sessions dedicated to security and economic cooperation, they took a close look at the two facets of the bilateral relationship that will determine whether Mexico follows a path of stability or prosperity, or whether it is consumed by its challenges. The stakes for the United States are undeniably high, as its future, too, depends on Mexico's path.

2 Session One: U.S.-Mexico Relations Today During the first session, U.S. ambassador to Mexico Carlos Pascual and Mexican ambassador to the United States Arturo Sarukhán discussed key elements of the U.S. Mexican bilateral relationship, focusing on the destabilizing effects of narco-violence, economic ties, immigration reform, and, following on the heels of the U.S. midterm elections, the implications of a Republican Congress for the relationship. In a discussion moderated by PBS NewsHour senior correspondent Ray Suarez, both ambassadors stressed the importance of the relationship and the need to turn common challenges into shared opportunities. The ambassadors started out by emphasizing the need to transform the way the bilateral relationship figures in the public debate in the United States. Pascual urged that the perception that the United States is helping Mexico with their security be changed, in recognition of the benefits that the partnership brings to both sides. With Mexico the United States second largest trading partner and, through its highly integrated production supply chain, the United States depends on Mexico to remain competitive in the global economy. To this end, Sarukhán argued that what has to be told very clearly to citizens on both sides of the border is that we will succeed or fail together. To succeed together, they underscored the importance of strengthening the partnership, highlighting the need for the new Congress to understand that Mexico is a partner and not a problem, whether on the issue of security, the economy, or immigration. According to Sarukhán, getting immigration right is the most important part of the relationship. Pascual urged Congress to understand the benefits a normalized immigration system would bring to both countries. Although comprehensive immigration reform has become a bad word in the United States, Sarukhán noted that polling data showed that once the elements of reform a secure border, a pathway to legality for those in the shadows, and legal access to competitive labor markets are disaggregated from the phrase, over a majority of Americans supported reform. On the security front, both ambassadors urged that the United States keep in perspective that the surge in violence in places like Ciudad Juarez is not representative of the country, and that Mexico despite the narrative shown by the international media -- has a lower homicide rate than Brazil and other nations that do not have to contend with such image problems. In the same vein, countering fears about spillover violence, both noted that the four safest large U.S. cities were in border states -- San Diego, Phoenix, Austin, and El Paso. The latter sits directly across from the war s epicenter in Ciudad Juarez, showing that U.S. law enforcement works, Pascual said. Both Pascual and Sarukhán stressed that Mexico is at a critical juncture in the drug war and that a change in policy direction would be ill advised. Pascual noted the importance of learning lessons from the U.S.-supported Plan Colombia, citing in particular the strategy of targeting and extraditing kingpins to the United States. Like Colombia, increased extraditions would take pressure off the judicial system while the broad reforms to that system passed two years ago become operational. In a similar vein, Sarukhán defended the Calderón administration s deployment of the military as a stopgap measure, while police reforms, including a newly vetted and trained Federal Police force as well as the consolidation of municipal forces into their state counterparts take effect. The two ambassadors also discussed the devastating effect that the U.S. repeal of the automatic assault weapon ban has had, with Sarukhán noting that a simple reversal of this policy would have a sizeable effect on curbing violence in Mexico. Debating whether Calderón s war was a war of necessity or one of choice, Pascual emphasized that the upsurge in violence that began at the onset of the last decade preceding the Calderón

3 administration and its military deployment is explained by fundamental changes in the international drug market. He thus countered the argument that a return to the past when the Mexican government had a tacit agreement with the cartels would stem violence. Such an agreement would not be viable today due to deeper, structural changes in cartel operations. The ambassadors agreed that the rise of Mexico s middle-class would be a potent force in the fight against organized crime. According to Sarukhán, due to the positive effects of NAFTA and fifteen years of sound macroeconomic policies, Mexico seemed poised to transform into a middle-class nation, which would strengthen its civil society. Coupled with a convergence of voices from Mexico s political and economic elite, whose lives are increasingly touched by the violence, a stronger civil society would strengthen civil participation on the issue of security. Perhaps reflective of these trends, the two main opposition parties the Institutional Revolutionary Party (PRI) and Democratic Revolution Party (PRD) are dedicated to continuing the war against organized crime in the next presidential term. This shows how, over the past three years, the war has transformed from an issue of party politics to one of the state, Pascual concluded. Session Two: The Future of Bilateral Security Cooperation The second session focused on the issue of insecurity and the rule of law in Mexico. The panelists examined Mexico s capacity to fight a war on organized crime that has claimed 30,000 lives over the last four years, and the prospects for bilateral security cooperation in the future. Alfredo Corchado, Mexico bureau chief at the Dallas Morning News and a visiting scholar at Harvard University, started by explaining how the war on drugs has affected cities that have borne the brunt of the violence. 30,000 people have left their homes in Ciudad Juarez to move across the border to El Paso in search of security and livelihoods. And, although those that have stayed continue to go to work and to school, the threat of organized crime over institutions -- the mayor's office, the municipal and state-level police, the judiciary, and the media has created silent regions in the country. Corchado warned that self-censorship in the press was also beginning to manifest itself in the United States, as papers withhold their bylines in border cities such as El Paso. Within this context, Jorge Chabat, a professor at Mexico s Center for Research and Teachings in Economics (CIDE), argued that the critical issue facing Mexico is that it does not have the institutions to fight this war. The Calderón government cannot draw on the far-reaching reforms to the judicial system and law enforcement it passed in the short term. And, by failing to curb insecurity, economic prosperity, too, will continue to lag behind, as investment is deterred and job creation is held back. The conundrum, Chabat noted, is that despite increasing evidence that the Calderón government lacks the tools to take on the drug trafficking organizations (DTOs), a confrontation could not be postponed any longer. A decades-long policy of tolerance, based on the belief that the DTOs could be controlled, unraveled as criminal groups began to actively confront the state, assert control over select pockets of the country, and assail citizens. On the issue of bilateral cooperation, Frances Fragos Townsend, an assistant to President George W. Bush for Homeland Security and Counterterrorism, argued that in spite of unprecedented levels of cooperation at the highest levels of government, a significant gap in trust between the bureaucracies in both countries persists, affecting the sharing of key intelligence. Townsend urged that if the federal government wants to control this (building trust), then they need to own it. Going forward, she argued that the sharing of human capital should be the most important part of the relationship, to build not only confidence but also the institutions that Mexico needs. U.S. officials from each agency

4 should work side by side with their Mexican counterparts -- including on development programs, judicial reforms, and law enforcement efforts not only in Mexico, but by inviting them to work inside U.S. agencies. To conclude, the panelists debated the importance of turning around public opinion on the drug wars, both in Mexico and the United States. Corchado argued that President Calderón had one year left to demonstrate progress in achieving sustained levels of security before the Mexican presidential election cycle was in full swing. He noted that in this strategy, the argument for deeper cooperation with the United States would be an important component, as there were still notable regional differences in support for a U.S. role. He argued that while support for the United States was high in the border regions, areas less affected by violence, including Mexico City, showed greater skepticism, noting the role of the United States in the 1990s in training Mexican special forces whose members today have formed the Zetas, one of the most violent paramilitary groups and DTOs. On the U.S. side, Townsend argued that the federal government should make it a priority to unite public opinion behind comprehensive immigration reform. Immigration reform would be an important tool to regulate the increased flows of those crossing the border legally in search of security and better opportunities, and to better identify those who are a threat to the security of both countries. Session Three: Beyond NAFTA: Raising Cross-Border Competitiveness The third session examined the interconnected nature of the U.S. and Mexican economies, constraints to Mexico s growth, and the opportunities facing businesses across both sides of the border to boost their competitiveness in the global economy. Shannon O Neil, Douglas Dillon fellow for Latin America Studies at CFR, suggested that in the new Congress, where cuts to spending are likely to negatively impact foreign aid and prospects for comprehensive immigration reform look dim, economic cooperation might be one of the most important issues on which Mexico and the United States can strengthen their partnership. Juan Pardinas, director of Public Finance at the Mexican Institute for Competitiveness (IMCO), emphasized that Mexico could capitalize on President Obama s plan to double U.S. exports in the next five years as a way to help the United States grow its way out of recession. Mexico, he argued, could play a fundamental role in this effort, first, as the second largest recipient of U.S. exports, and second, as a key factor in U.S. companies supply chains and their global competitiveness. Debating this opportunity in light of Mexico s competitiveness in the global economy brought to light other factors that hamper Mexico s growth. Jorge Mariscal, a partner and director at the Rohatyn Group, a New York hedge fund, argued that Mexico s shortcomings compared to the BRICs, and Brazil in particular, was in part due to Mexico having made the wrong bet. While Mexico bet on the United States which experienced similar lackluster growth -- Brazil did so on the Asian tigers. If so, Pardinas contended, a U.S. export boom would not be enough to spur Mexico s growth in the future. Instead, Mexico would have to forge relations with more dynamic regions, and reconfigure its relations with China, which, instead of a supplier, became a competitor for Mexico, in contrast to the rest of Latin America. Although Mexico was a pioneer in opening up its economy in Latin America, the panelists agreed that growth and competitiveness would be constrained until a next generation of reforms -- including those affecting labor laws, the oil industry, and monopolies and oligopolies are in full force. In the case of oil (which makes up 40 percent of government revenues), the constitution bars investments in

5 the state owned company even as outputs dwindle; in telecommunications, oligopolies are backed by a judicial structure that prevents other companies from entering the market. Through the lack of incentives, Mexico is thus losing opportunities from investors both in foreign direct investment and in its capital markets. More broadly, Mexico is lagging behind in the region in addressing structural factors that will have a long-term effect on its growth prospects, such as an overhaul of its education system and fighting corruption. By contrast, these existing opportunities in Brazil mean that crime and insecurity take on a relative perspective for investors. O Neil highlighted that insecurity will have a long-term negative effect on the economy. She noted that crime disproportionately disrupts new and emerging sectors: small enterprises that gained access to credit for the first time in decades, and emerging housing and mortgage markets whose fabric will be difficult to reconstruct. According to Mariscal, the opportunity cost is even higher -- compounding the savings that currently cost Mexico 1 percent of its GDP, by 2040 Mexico could overtake Russia or Brazil. The panelists agreed that Mexico s middle class would be a key positive force for change. Numbering over a third of the population, according to O Neil, their demands will, over time, percolate through the institutions and the political system. As owners of small and medium enterprises, their demands for accountability, the rule of law, and transparency will drive economic changes. Indeed, the panelists deemed transparency a key factor in creating a more open and dynamic economic system and a level playing field for businesses of all sizes. They highlighted instances of progress, such as increased access to banking through non-traditional outlets that have the potential to spur job creation and bring companies into the formal sector. Nevertheless, Pardinas noted that in relative terms, small and medium size firms continued to be underbanked, with total private sector credit stagnant at 7 percent of GDP, in contrast to 18 percent of in Brazil. This has an effect on Mexico s macro environment, as these businesses currently contribute 20 percent to GDP, compared to 40 percent in Brazil. In closing, the panelists agreed that the dilution of executive power in Mexico s transition to democracy makes the far-reaching reforms necessary to put Mexico on a path toward growth and competitiveness a significant challenge. Across the board of policy challenges including economic and security reforms efforts by the federal government continue to be thwarted at the state and municipal levels by a status quo that is often not only resistant to change, but often also unaccountable to the electorate, due to Mexico s political system of proportional representation and no reelection.