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Mexico Needs to Change Course

Mexican President Andrés Manuel López Obrador (AMLO) is faced with an economic slowdown, an unsustainable migration policy, the continued threat of US tariffs, and a major trade agreement in limbo. The best – or the least worst – solution is a policy U-turn by AMLO’s government.

MEXICO CITY – Mexico’s political and economic malaise could go from bad to worse in the coming months. The Mexican economy has been stagnating since late last year. The migration crisis unleashed by US President Donald Trump is humiliating, and is straining the country’s resources. And the US Congress seems increasingly unlikely to pass the United States-Mexico-Canada Agreement (USMCA) – which is intended to replace the North American Free Trade Agreement (NAFTA) – before the 2020 US presidential election.

Faced with these mounting problems, the Mexican government, led by President Andrés Manuel López Obrador (AMLO), must now change course dramatically. In particular, it must abandon its left-wing rhetoric and domestic grandstanding, and end its undignified kowtowing to Trump on migration and border patrols.

Mexico is doing Trump’s dirty work on migration in two ways. First, some 58,000 asylum seekers, mainly from Central America, are currently stranded on the southern side of the US-Mexican border. Many are there as a result of the November 2018 “Remain in Mexico” agreement between the Trump administration and AMLO’s new government, under which Central American asylum seekers who reach the US are returned to Mexico to await their hearing before a US official. These people are placed in shelters under abominable conditions, or sleep in the streets of some of the world’s most violent cities. They have waited several months or even a year for a hearing, but now their wait will most likely be indefinite.

Second, Mexico has deployed more than 20,000 troops along its southern and northern borders since early June, when it agreed to take further measures to stem the flood of asylum seekers. The number of migrants reaching the US and requesting asylum has since fallen by up to 35%. But the cost for Mexico is large and growing, not least in terms of human-rights violations. Since June, the authorities, mainly military, have raided hotels, buses, and sanctuaries throughout the country. They request IDs that are not obligatory in Mexico and conduct flagrant racial profiling. Anyone who “looks” Honduran is arrested. And, for the first time, Mexican troops on the northern border are seeking to stop migrants from crossing without papers into the US.

The Mexican government agreed to introduce these extra measures only after Trump threatened in May to slap tariffs on all imports from Mexico, initially at a 5% rate, and rising to 25% by October. Additional economic problems were the last thing AMLO needed: his social programs and infrastructure projects were already in jeopardy, partly as a result of officials’ inexperience and incompetence, but also because of shrinking budget revenues.

Yet AMLO still has the threat of tariffs hanging over him – with Trump, one always does. Moreover, doing Trump’s dirty work has harmed Mexico. As in 2015-16, using the army to stem migration from Central America, Cuba, Haiti, and, on occasion, Africa, may reduce the northward flow for a while, but it contributes to escalating violence domestically. The most recent figures for willful homicides show that violence continues to rise throughout Mexico. The army can only be stretched so thin. And a stagnant economy means that the government has less money to spend on security and migration control.

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AMLO needs to address both issues, and he lacks attractive options. Ceasing to do Trump’s bidding on migration would be certain to infuriate the American president and might prompt him to follow through on his tariff threat. But it would stand AMLO in good stead with US Democrats, who oppose Trump’s border policies. And although the Mexican government’s anti-migrant policy is popular with the public, it is increasingly tarnishing the country’s image abroad.

Likewise, stimulus spending to prevent a recession would face serious obstacles. If the US enters recession later this year or early in 2020, nothing that Mexican policymakers do could make much of a difference. Furthermore, domestic private investment has fallen significantly so far this year, reflecting the Mexican business community’s lack of confidence in AMLO. And if the government continues to reduce all non-oil-industry public spending, the economy simply will not grow.

The fate of the USMCA, meanwhile, is essentially in the hands of Nancy Pelosi, the Speaker of the US House of Representatives. If she allows the House to vote on the agreement, it almost certainly means that enough Democrats will support the deal for it to pass. But Pelosi and her Democratic colleagues are more likely to let the issue lapse until after the 2020 US elections: they probably will not want to give Trump a win, even on an insignificant issue for the US, and risk dividing the Democratic Party and its presidential candidates in the process.

But the postponement of the USMCA could be devastating for Mexico, even if Trump chooses not to withdraw the US from NAFTA. As it is, US foreign direct investment in Mexico fell to 37% of total inward foreign investment during the first half of this year, well below the 50% average of the past four decades.

AMLO now has an unsustainable migration policy that he has pledged to pursue indefinitely; an economic slowdown with the added risk of a US recession; and a vital trade agreement in limbo. The best – or the least worst – solution is a radical change of direction.

Such a shift would allow AMLO to start delivering on his promise to reduce violence in Mexico, instead of having the authorities beat up Hondurans and Guatemalans. He could begin restoring economic growth at least to the levels of the past 25 years. He could partly implement his well-intentioned, if misguided, social programs. And he could launch his ambitious, albeit somewhat hare-brained, infrastructure projects.

None of this would be earth-shattering. But given the cards that Mexico has been dealt, it may be the best that can be hoped for.

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