Download 200 Years of US-Mexico Relations

200 Years of U.S.-Mexico Relations: Challenges for the 21st 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 21st 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.
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
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
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
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.