Mexico 2009: Stimulus, Security and Neighbourly Assistance

This week brought some ever-growing attention on Mexico. With the decline in commodity prices as well as a sharp decline in consumer spending, the BBC World Service highlighted Felipe Calderon’s announcement to add to Mexico’s stimulus package and place an additional $150 million US dollars into Mexico’s export industries to keep them afloat. America’s neighbours were quick to address issues regarding export industries. The Canadian government was able to beat Bush and Obama to the punch by promising US automakers in Canada part of an auto industry support package with conditions in order to keep the 20% of North America’s auto industry within Canada’s largest province, Ontario and ensure future jobs for the large minority of Ontario’s workforce that are linked to autos. Mexico, while promising $150 million to its export industries will likely have a harder time pushing in billions of dollars like its neighbours into one industry. While Mexico in recent years has been a mark of economic stability in Latin America, the recent security situation in Mexico this past year and activities by the US to stop Mexico from becoming the next Drug War has pushed the US to form a smaller version of a Plan Colombia, spending millions on anti-narcotics support and advice for Mexico and Calderon’s administration. With the election of Mr. Obama as President comes the realization that he could have inherited one of the worst State of the Union’s in American history. The only person who could likely have a tougher job however is Felipe Calderon, as the economic crisis consumes Mexico’s well earned reserves and the export oriented economy becomes mired in the future losses of its main export market, one of the worst security situations in Mexican history has come at a time when there is little money to fight it. In addition, many of Mexico’s drug cartels have made a point of attacking government officials, killings many top officials and having others being caught in bribery scandals which could leave Calderon with as much security problems as economic. Some positive developments in the last few years may not stop Mexico’s worries, but has prepared Mexico with economic policies that might help Mexico and many other Latin American states weather the economic problems with development strategies that would be the envy of the world’s economic policy experts. Economic crisis have hit Latin America on average every 10 years since the 1970s and growth in countries such as Mexico and Brazil have placed them in the best position possible in a bad situation. With Mexico’s security situation finally coming on America’s radar screen in the past month, developments in Mexico in the last few years has likely opened a dialogue with similar neighbours such as Brazil who has had much success in its economic reforms and is poised to weather this economic crisis with stable growth for the future. In a January 7th FT.com article by Nick Rice, Brazil’s economic policies in the recent past has not been able to remove Brazil from the global crisis, but has placed it in a good position to weather the storm. Policies enabling Brazil to grow with commodity exports, conservative lending and well run industries has enabled Brazil to take advantage of slow growth rates and shield Brazil from the ills of excess lending and a lack of diversification. While Mexico differs from Brazil due to its close export relationship with the US and its dependence on oil revenues, the formula for economic growth is likely a topic of much dialogue between Mexico, Brazil and the rest of Latin America. With the future of Mexico’s security and economy likely to change greatly with the opening of world credit markets, the stabilization of oil prices and assistance from its neighbours in combating drug cartels and addressing issues of economic reforms, leadership, while an almost impossible job, is more important than anytime since the foundation of Mexico as an independent state. Decisions on future policies and a lot of luck are crucial for Obama and Calderon in 2009.

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