This year has reshaped the region and the world. In March, the global pandemic arrived in North America and the subsequent lockdowns pushed millions of people out of work. Yet, as we’ve attempted to gain our footing in the new reality, the news has only brought continuous turmoil and shifts.
At White & Case, we’ve been tracking Covid and are committed to helping our clients manage any business impact that may arise. Specifically, in Mexico City we are working on issues as diverse as the U.S. Mexico Canada Agreement (USMCA) implementation, regulatory and tax issues, and data privacy. You can find out more about our in-country team here.
In the United States, the news pace has been unrelenting. There have been nation-wide protests for racial justice, the loss of Justice Ruth Bader Ginsburg, the nomination of Amy Barrett to the Supreme Court, a hyper-polarized presidential election is only 24 days away, and a COVID-19 outbreak in the White House that includes President Trump.
In Mexico, there have also been many challenges. The homicide rate remains at a historic high, protestors have filled the Zocalo, and a referendum on prosecutions against former presidents raises questions regarding politically-motivated investigations.
And it’s October.
There are still a little over 10 weeks to go in 2020, but they will undoubtedly resemble the last six months. Despite social distancing, masks, and periodic shutdowns, life across the region has not and will not return to normal anytime soon.
COVID-19 has killed more than 200,000 Americans and 79,000 Mexicans, and recent estimates reveal that the Mexican toll may be even higher. In many areas, schools remain online, non-essential workers are still at home, and most restaurants and bars are still closed or at limited capacity.
The region’s economy is also poised to continue a slow recovery after a devastating contraction during the second quarter of the year. In the United States, the economy contracted by 9.5 percent, and in Mexico, the economy shrunk by 18.7 percent.
The Mexican and U.S. governments have responded differently to the pandemic, and their support (or lack thereof) for the economies will shape overall recovery trends.
Initially, the United States pumped trillions of dollars into the economy, but Congress has been unable to agree on subsequent recovery plans. Meanwhile, the López Obrador administration has largely embraced austerity since the beginning, with only targeted assistance for specific groups.
In this year’s budget negotiations, the López Obrador administration further slashed spending, except for general welfare, top priority projects such as the Train Maya, and infrastructure investment. This latter category dovetails with the October 5th announcement that the government and the private sector will team up on a US$14 billion infrastructure plan. It’s a worthy undertaking, but not enough to turn the economy around.
Over the past few months, Mexico has also had growing tensions within its political landscape. Since mid-September, thousands of protestors have descended on the Zocalo in Mexico City to demand López Obrador’s resignation. The protestors are part of the National Anti-AMLO Front, or FRENAAA, and claim that López Obrador has not done a good job handing the pandemic and subsequent economic collapse.
In response, López Obrador initially told the protestors that he would step down if they could rally more than 100,000 people. After they mobilized a mega-rally last weekend, López Obrador has brushed them off and polls show that he still has a 59 percent approval rating.
López Obrador has also moved forward on his own projects. These include a referendum—that Mexico’s Supreme Court recently approved—to ask citizens whether he could prosecute sitting presidents for possible crimes. However, even if the referendum’s result was affirmative, legal experts suggest it would be unlikely to lead to any prosecutions or jail time given time limits on allegations or a lack of evidence.
Finally, U.S.-Mexico relations along the border have also been tenser than usual. The culprit is the 1944 Binational Water Treaty that divides out how much water each country should send to one another.
For the past decade, Mexico has been running behind in its water allocations and this year is the final deadline to send more water to the United States. López Obrador has promised that the water will be delivered on time, but Mexican farmers have claimed that they won’t be able to grow their crops without the water.
In September, a group of Chihuahuan farmers took over the La Boquilla Dam to protest the release of water to the United States, and a subsequent skirmish with the National Guard left two protestors dead.
Meanwhile, on the U.S. side of the border, the international reservoirs (Amistad and Falcon) are already running low and a lack of water could mean higher expenditures or fewer crops for farmers in South Texas.
With 2020 moving quickly to its finish line the pace of the news is unlikely to slow down, so let’s stay in touch. I look forward to hearing your thoughts on everything that is going on throughout the United States and Mexico through Facebook, Twitter, or LinkedIn.
Editor’s Note: The above commentary was penned by former U.S. Ambassador to Mexico, Tony Garza. It first appears in the Rio Grande Guardian with the author’s permission. Garza can be reached via email at: [email protected]
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