It would be impossible to make a state visit to Mexico and not address the war on drugs, and last week, as President Barack Obama prepared for his trip there, that topic and how it relates to the security of Mexico and the United States were clearly on his agenda.
Obama’s visit happens six months into the presidency of Enrique Pena-Nieto, former governor of the highly populated state of Mexico, whose campaign platform included plans to stem the continued escalation of food prices in the country, open the state-run energy sector to foreign investment and, above all, reduce violence nationwide.
To that end, Pena-Nieto also made it plain that his approach to the drug cartels and the violent crimes, murders, extortions and kidnappings to which they are inexorably linked and that have dogged Mexico for years, would be tough, but less bellicose than that of his predecessor, Felipe Calderon, during whose term close to 70,000 drug-related deaths took place.
But even though Mexico’s drug problems have become less the subject of headline news than they were before, and government statistics state that narcotics-related deaths have actually decreased since Pena-Nieto came to power, Mexico’s security issues are still a huge source of concern for foreign investors, according to Richard Segal, head of emerging markets strategy at Jefferies International in London, making it tough to take note of the progress Latin America’s second-largest economy has made in different areas.
“On the macro side, Mexico looks pretty good, and with all that’s happened there and the constant, negative headlines, the numbers have still been pretty consistent through the years,” Segal said. “Mexico has a reputation for being a tough place to pass real reform measures, but the reforms that were made 20 years ago have been effective, particularly monetary policy, which has allowed for flexibility and growth in the private sector, and this is the big difference between countries like Chile and Peru, for example, which are considered poster children for Latin America.”
Arguably, Chile and Peru are easier nations to govern since they are smaller and their populations are more homogenous than Mexico’s. They are also not plagued by the security issues that Mexico faces, Segal said, and if Mexico is to get to “the next level,” then the government must sort those out. Otherwise, “economic growth really doesn’t make a difference.”