MXPE Weekly Essentials
Mexico’s security success is couched in opacity, a Mexican Eurovision is born, and other highlights in Mexican politics, policy, and markets from the past week.
Norway has just handed Mexico a damning indictment after its sovereign wealth fund sold all its fixed income investments in Pemex, Mexico’s State oil company. It cited “unacceptable risk of corruption” in investigations stretching back to 2004.
President Claudia Sheinbaum can arguably claim that her administration is being dragged down by the past sins of mostly opposition governments. Now she must pay the consequences of those past administrations having inherited this highly indebted company only a few months ago.
The president is not blameless though. Few moves have been made to deal with the longstanding corruption still rampant in many government institutions. Yet, even with this blow from one of the world’s most important financial institutions, there is just no real pressure to make the Mexican government less corrupt and more transparent.
The are two main reasons.
The first is inherent in the Norwegian verdict: No matter how badly the Mexican government screws up, it can always point at the opposition having done worse in all its years in power before 2018 (when Morena, the current ruling party, finally reached power).
It almost feels like every other day another facet of the opposition’s misdeeds while in government are revealed. Last week, a publication explored how the privatisation of Mexico’s security apparatus from the 1980’s led to much of the security disaster the country is currently going through.
Consequently, today, when the opposition (many of whom pushed through the privatisation of the Mexican security system) claims there is opacity and corruption in the government, it has become almost risibly easy to brush them off—especially as a growing corpus of evidence of their misdeeds continues to emerge.
The second reason for which there is no real incentive to increase transparency in government is that Sheinbaum’s opaque security strategy seems to be working. Murder is down by 25% in the past seven months. The lowest since 2016. It is being achieved through the empowerment of an increasingly untransparent military and the creation of a seemingly effective but shadowy intelligence apparatus.
To make matters worse, most steps towards transparency seem like they’re going in the wrong direction. A recent Transparency reform—which seeks to replace a previously independent watchdog—exempts large tranches of government from reporting to the public with the excuse of “national security.”
So long as Sheinbaum can continue to blame the opposition for present screw ups and reap rewards from current day opacity, she will feel no need to pay more than lip service to transparency.
Uncharted Mexico: Seeking binational hits
On paper it is an attempt to take on the narcocorrido—the genre of music that glorifies narcos which has taken Mexico by storm. Despite petitions to ban it, the Mexican government has instead decided to fight music with music, launching a sort of Eurovision contest. It is called México Canta.
The first contestants are in, and there is a sizable Mexican-American contingent. Of 5,821 inscriptions, 4,578 came from Mexico with 1,243 from the US.
In the graphs below, it might seem like there is an equal breakdown between Mexican-American representation—considering both Mexican-born US-residents and first generation Mexican-Americans—but it is worth considering that about half of that second cohort doesn’t speak Spanish. That might seem like a limiting factor, but México Canta actually considers this group specifically.
The binational element to the competition is not only allowed, it is encouraged and facilitated. Songs are explicitly allowed to be submitted in Spanglish, along with any Mexican Indigenous languages and Spanish.
México Canta is unlikely to win out against narcocorridos, but it certainly does seem aimed at building bridges with Mexicans north of the border. In an anti-immigrant age, Mexico’s government has been keen to communicate that a Mexican is supported by their government no matter where they live.
It is also reminiscent of past attempts to spread a State-backed vision of Mexican culture domestically and across the world. Might this be another facet of industrial policy; perhaps a step in the long road to Mexican Humanism?
Either way, it is certainly seeking to re-insert the government in the arts in a productive way, as it did back in the mid-twentieth century, launching the great Muralists—like Diego Rivera—and its first great cinematographers, who conquered hearts as far afield as Tito’s Yugoslavia.
Source: México Canta/INEGI
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Last week’s highlights:
Part and parcel—Mexican car-parts compliant with USMCA trade treaty rules will now be tariff free going into the US.
The Mexico Political Economist spoke to Mexican auto parts makers who said that, even without an exemption, they were prepared to continue working within an integrated North American market. This news now strengthens their hand considerably, virtually sparing North American cars not only from the universal 25% tax on cars, but on the many other smaller taxes that parts going in and out of the US and into Mexico would have been subjected to.
Concurrently, the government’s crackdown on its own customs evaders continues. This time cracking down on foreign steel (essential for auto parts) that does not comply.
Subbing in—The government says that it will be substituting 10% of what it buys from abroad with Mexican goods. This number may well be significantly higher than current estimations may believe, given the State’s assertive entry into the economy.
CFE, the government-run electricity company, is being given far more power in the sector, aiming to increase its share of electricity distribution and transmission from between 25-30% to up to 60%. All new ventures will aim to use Mexican cabling and steel.
The Finance Minister believes this form of import-substitution will add an extra 0.7% to growth in the coming year.
Local zoom in: Border drone army
The US Border Patrol has warned of a new threat across the limit between the US and Mexico: A swarm of drones used by criminal groups.
An estimated 155,000 drones are mostly used across the over 3,000 km border to do surveillance. This in turn facilitates drug and migrant smuggling by keeping an eye on both countries’ authorities. In some cases though, bigger drones have been found to be moving merchandise itself—over 100 kilos of narcotics in some cases.
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