Crisis in the U.S.-Mexican Relationship

A full blown crisis has erupted in the U.S.-Mexican relationship at a time when the U.S. is focused on domestic budget issues and events in the Middle East and North Africa. The summit between President Barack Obama and Mexican President Felipe Calderón this week is intended to focus on the essential needs of two neighbors. For several months, Mexican elites have been grumbling about U.S. interference, the inadequate financial contribution within the Merida Initiative compared to U.S. support for Plan Colombia, and U.S. failure to understand the nature of Mexico’s violent crime.

The crisis blew up on February 22, when in an interview with El Universal, President Calderón stated that U.S. cooperation in the Mexican drug war is “notoriously insufficient.” He added that American diplomats have “done a lot of harm [Mexico-U.S. relations] with the stories they tell and that, in all honesty, they distort so as to impress their own bosses.” Calderón sees the failure to coordinate a serious problem among U.S. federal agencies, including the DEA, CIA and ICE. The reference to U.S. Immigration & Customs Enforcement did not mention that seven days earlier ICE agent Jaime Zapata was murdered while carrying out his duties on the road to San Luis Potosí. President Calderón had no niceties for Zapata’s death, but instead chose to blame the lack of coordination among U.S. agencies for the failure to reduce drug consumption and the increase of weapons moving southward.

U.S. Secretary for Homeland Security Janet Napolitano responded immediately to the accusations that U.S. agencies were failing to coordinate. On February 24, the White House confirmed an outstanding U.S. invitation to hold a presidential meeting in Washington. However, whether this summit can calm down the Mexican leadership and restore trust among senior officials on both sides of the border is yet to be seen. Can this meeting restore a constructive relationship necessary to engage on trade, energy, competitiveness, scientific research, immigration and security?

Should security overwhelm the meeting agenda, President Obama can point to the recent DEA and FBI announcement of an ongoing investigation against drug traffickers in the U.S. On February 24, more than 3,000 federal officers conducted sweeps in nearly every major U.S. city, arresting more than 450 people believed to have ties to Mexican drug trafficking organizations (DTOs). They seized an estimated 300 kg of cocaine, 150,000 pounds of marijuana and 190 weapons. The investigation continues and more arrests and seizures are expected in the U.S., as well as in Mexico, Colombia and Brazil. Earlier, U.S. Operation Xcellerator, a multi-agency, multinational effort targeting the Sinaloa cartel seized $59 million in currency, 12,000 kg of cocaine and 12,000 pounds of methamphetamine. In that operation, 750 individuals were arrested in the U.S.

U.S. Treasury Department has also filed criminal complaints and imposed financial sanctions against more than 70 alleged drug traffickers in the U.S. who are linked to the Sinaloa drug cartel. The move targets the corporate empire of Jorge Cifuentes and bars U.S. persons from doing business with him. The director of the Treasury’s Office of Foreign Assets Control said that “targeting the finances of narcotics traffickers is at the core of our efforts to degrade these dangerous organizations.”

With the U.S. government now looking more serious in its efforts to combat drug trafficking and money laundering, Obama is in a position to respond, if not calm Calderón’s anger.

There is certainly more to the U.S.-Mexico relationship than just security. There are 11.8 million Mexicans that live in the U.S. and work in both low-skilled and professional jobs. Around 600 million vehicles cross the border each year, and $1.5 billion worth of two-way trade takes place each day. In 2009, 12.2 percent of U.S. exports were sent to Mexico and 80 percent of Mexico’s exports went to the U.S. The U.S. is Mexico’s most important partner in trade and investment and Mexico is the U.S.’s third largest trading partner after China and Canada. Assembly plants provide 5.5 million jobs in Mexico, most of them situated along the northern border. If President Obama wishes to double exports in five years, Mexico is a good place to discuss investment. Jeff Immelt, CEO of GE, is the chair of the President’s Council on Jobs and Competitiveness and his company is a major exporter of LED street lighting to Mexican cities, among other manufactured goods. It is in the interest of both GE and the council to maintain positive relations with Mexico.

Mexico is the seventh largest producer of oil in the world and is one of the top three sources of U.S. oil imports. Neither the private sector nor foreigners may invest in PEMEX, but the recent reforms create incentive-based service contracts which private companies are exploring. Furthermore, the potential for cross border investments in the alternative energy sector – namely wind, solar and nuclear – provides significant opportunity for private investments.

A test case for the meeting between Obama and Calderón is the resolution of the trucking dispute, where the U.S. denies Mexican drivers the right to drive Mexican cargo within the U.S. A pilot program allowing Mexican truckers to make pick-ups and deliveries in the U.S. ended in 2007. Since then, Congress has refused to extend the program, causing the Mexican government to retaliate with tariffs imposed on 89 U.S. imports worth about $2.4 billion a year. On January 6, President Obama tentatively agreed to allow Mexican trucks in the U.S. but so far no resolution has been reached.

In an interview with the Wall Street Journal last year, President Calderón said he felt he had gone further than any other Mexican president in cooperation with the United States. While there had been political costs to this partnership, Calderón believed it was working. The challenge of this week’s meeting is to return to the U.S-Mexico relationship to one based on openness and trust.