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Mexico is Latin America's second-biggest economy and the third-biggest oil supplier to the United States. It could also prove an unexpected challenge for President Obama, says David Stevenson.
Why is Mexico on Obama's radar?
Top of President Obama's 'to-do' list is America's battered economy. But another big worry is growing right on his doorstep. In a November 2008 report on possible global security risks, the US Joint Forces Command (USJFCOM) said the greatest risk of a "rapid and sudden collapse" lay in two places on the planet. One was Pakistan; the other was Mexico. Narco-terrorism – intimidation and violence by drug traffickers – threatens to bring the country to its knees. Retiring CIA chief Michael Hayden recently said that Mexico could present an even greater problem than Iraq. "The prospect that America's southern neighbour could melt into lawlessness," says Traci Carl in the Washington Times, "provides an unexpected challenge to President Obama."
How bad are Mexico's problems?
"The Mexican government, its politicians, police and judicial infrastructure are all under sustained assault and pressure by criminal gangs and narcotraffic cartels," reported the USJFCOM. That translates as "indiscriminate kidnappings. Nearly daily beheadings. Gangs that mock and kill government agents," says Carl. Drugs are the key problem – Mexico's marijuana output rose 44% between 2004 and 2006, with the country now one of world's top two producers, says the UN. Organised crime is costing the economy 1% of annual GDP, says Finance Ministry chief economist Miguel Messmacher. As Mexican cartels take over more and more of the US drug trade, President Felipe Calderon's attempts to crack down on the barons are failing. His soldiers and police are being outgunned and outnumbered. Drug-related mob murders – mostly unsolved – doubled from 2007 to more than 5,300 last year. Warring cartels using illegally imported American weapons control vast sections of the country. Protection rackets and kidnappings have driven many rich Mexicans to the States.
Why are the US authorities so worried?
"There's a wave of barbarity heading toward the US," says Mexican architect Manuel Infante. "We're an uncomfortable neighbour." Former State Department counter-terrorism official Fred Burton agrees: "America is fixated on Iraq and Afghanistan, but from a homeland security perspective, isn't this more important?" Washington is also fretting, says Forbes. "The consequences for both our countries in the near and not-so-near future couldn't be greater," says John Walters, director of the White House Office of National Drug Control Policy. "If northern Mexico becomes controlled by terrorist mafias – well, we worry about ungoverned spaces far away from the US, and this is right next door." The US Justice Department said last month that Mexican gangs are the "biggest organised crime threat to the US".
What is America doing about it?
Last summer, outgoing Homeland Security Secretary Michael Chertoff, having already arranged for a 660-mile frontier fence to be erected, ordered plans for a "surge" of US law enforcement capability should the bloodshed spread across the border. Yet the US government has also been extremely supportive of the Mexican president, recently handing over $400m in an anti-drug aid package called the Merida Initiative. And in his first meeting with a president of another country since his election, Mr Obama applauded Mr Calderon's steps to improve Mexican border security, and has promised both to fight the illegal flow of US weapons and to collaborate in combating drug traffic. But as last year's $207m cash haul in a single Mexico City drug bust highlights, there are seemingly unlimited resources available to the drug cartels to corrupt public officials on both sides of the border. As Mexico's problems mount, much tougher action may be needed.
So what could be the next step by the States?
Direct military action. Outgoing US National Security Adviser Stephen Hadley has claimed that Mexico's worsening violence threatens its democratic existence. Any rapid descent by Mexico into chaos "would demand an American response", says investigative reporter Michael Webster. "Mexico as a failed state will require US military intervention." As Walter Mares says in the Eastern Arizona Courier, US intervention is tolerated elsewhere in the world, so why not Mexico? "America doesn't need to be a bully, nor must it become involved in secretive operations in Mexico. The US can be very up-front about calling for, and doing, all it can to bring about long-needed reform by our southern neighbour's government."
Is Mexico on the economic brink too?
Not yet. But its dependence on the US, which accounted for 80% of exports last year, is hitting it hard. "The explosion of narco-terror comes alongside a precipitous drop in oil prices and the crushing effects of a deep US recession", says Forbes. Mexico is the US's third-biggest oil supplier; state-owned oil monopoly Pemex contributed 37% of 2008 federal government income. With oil revenues falling, the Bank of Mexico's governor admitting that even zero economic growth this year looks "optimistic", and unemployment set to jump from 4.8% last November to 12% this year, "the climate of fear is kicking the life out of the economy". The peso has dived 28% against the US dollar in the last six months. Public debt at just 30% gives some breathing space, and Mexican sovereign bonds still have 'investment grade' status, but the cost of insuring against default has been climbing. With the added threat of civil collapse, things could well get worse before they improve.
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