Ricardo Pascoe Pierce
The Baker Institute, affiliated with Rice University in Texas, is an academic research center that has produced an annual report on the state of the U.S.-Mexico relationship since 2020. This is its fifth Report and presents a perspective on what can be expected to happen with Mexico in 2024.
First of all, it states that the bilateral relationship should be at its best moment due to the reorganization of the global economy after the COVID-19 pandemic. The relocation of production units, also known as nearshoring, places Mexico as the preferred candidate to take advantage of the situation.
Despite the Report’s promising beginning, the main body of the Report, including its conclusions, is rather gloomy. The Report argues that López Obrador chose to place himself within the current of populist presidents in Latin America. The Report considers that behaving as a populist has meant the weakening of the institutions of the Mexican State more than they were. There has been a loss of balance and accountability over the orders and levels of government, as had not been seen since the 1990s.
This institutional weakening, together with the centralization of decision-making, has introduced a high level of uncertainty and arbitrariness in the definition of public policies.
The most serious, the Report highlights, is the weakening of the electoral system and the certainty of the results of next June’s elections. Morena and the President are expected to interfere in the elections to try to ensure their candidates win. The elections will be less free and fair than the previous ones, opening the way to great social discontent after June 2.
This political-electoral environment will undoubtedly scare potential investors away from Mexico.
At the same time, the next government will face almost insurmountable challenges. Mexico faces a chronic decline in investment in education, health, and infrastructure, in addition to having destroyed the human workforce in the public sector by firing the most qualified and opting to hire incompetent but politically loyal people.
Additionally, the President has transferred many civilian functions to the military, the effectiveness of which is highly questionable. The next government will face the great challenge of the “demilitarization” of the civil service.
The government’s mega-projects, such as the Dos Bocas refinery, the Mayan Train, and the AIFA airport, are not alternatives to remedy the low investment in the rest of the sectors of the economy that require it.
The energy sector is in a crisis that is difficult to resolve. The Dos Bocas bet is undoubtedly a fiasco, and the Federal Electricity Commission (CFE) is not designed for a thriving economy but for a stagnant one with no clear prospects for the future.
Corruption and organized crime are of the most significant concern. Corruption has grown exponentially in Mexico under the 4T. Criminal organizations behave as Allies of Morena in the elections. There is apparently a “Pax Mafiosa” between the populist government and drug trafficking. The agreement allows criminal organizations to operate with impunity in exchange for securing votes for Morena candidates.
The foreign policy consists of irritating the United States in every action. It does not help with the immigration issue or with controlling the flow of fentanyl. There are disagreements on the energy issue and the permissiveness of allowing China to send its steel and aluminum to the United States via Mexico. Finally, Mexico’s friendship with dictatorial regimes such as Cuba, Nicaragua, and Venezuela. In addition, there is support for Russia and China regarding the war in Ukraine.
This Report should be taken as an academic analysis and a warning of situations to come with the next Mexican government.
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