Despite recent uncertainty, Mexico remains crucial regional player

Mexico is the third-largest and second most populous country in Latin America. It is connected by language and culture to the countries lying to the south, while geography makes it part of North America and provides for close economic ties with the US and Canada. Memberships to the North American Free Trade Agreement (NAFTA), the OECD and the Pacific Alliance have been a major source of economic and political opportunities for the country, as well as some recent tensions with the US.

A Rich History

The country has an incredibly rich and complex history that has helped to shape contemporary attitudes and realities. Before the arrival of Europeans, the country – named after the Mexica tribe – was home to five major civilisations: the Olmecs, the Mayans, the Teotihuacans, the Toltecs and the Aztecs. Many of their languages are still spoken in the country today.

The Spanish arrived in 1521 and conquered the Aztec empire, seizing the stronghold of Tenochtitlán – today’s Mexico City. Spanish colonial rule lasted for three centuries and was exercised through the vice-royalty of New Spain, a sprawling territory covering what is today Mexico, Central America, and large parts of the central and south-western US.

The war of independence against Spanish colonial rule began on September 16, 1810 and lasted a little under 11 years, with Mexico declaring independence in 1821 as a republic with a federal constitution; however, the new country’s violent political turmoil did not end there. In 1836 the state of Texas declared itself independent, setting off a series of disputes that culminated in the Mexican-American war of 1846-48. The US was victorious and annexed almost half of Mexico’s territory, including what is today California, Nevada and Utah, along with parts of New Mexico, Arizona, Wyoming and Colorado.

Early Politics

Domestically, political tensions were rising between conservative and liberal factions, with the latter led by Benito Juárez, who went on to serve five terms as president between the late 1850s and early 1870s. This period saw many reforms including the approval of a federalist constitution in 1857 which limited the power of the Catholic Church. In 1861 the conservatives invited French intervention to help in their struggle against the liberals, ushering in a period that saw Maximilian I installed as Mexico’s second emperor in 1864, although he was defeated and executed in 1867.

The new Republic experienced its first prolonged era of stability during what came to be called the porfiriato, a period running from 1876 to 1911 and characterised by the near continuous rule of liberal army general, Porfirio Díaz. Because his rule ended with the outbreak of the Mexican revolution, Díaz is often remembered as a dictatorial figure that presided over great social inequality and exclusion, with particularly harsh conditions imposed on the landless peasantry. While that is a part of his legacy, he is also credited with modernising the economy with national finance, building infrastructure and encouraging foreign investment.

Revolution & Economic Nationalism

The Mexican revolution, which began in 1910, was one of the major social upheavals of the 20th century. Sparked by opposition to the fraudulent elections of 1910 – under which Díaz again claimed re-election – the uprising was led by a range of disparate and competing forces all vying for control.

In the north, revolutionary armies followed leaders such as peasant activist Pancho Villa and army general Álvaro Obregón. In the south, another peasant leader stood out, Emiliano Zapata. In the 10 years of fighting, the progress of these armies ebbed and flowed across the country, with no one army gaining full control. Land was seized by peasant cooperatives known as ejidos and members of the Catholic Church were subjugated and persecuted. In this initial decade of upheaval, approximately 10% of the population is believed to have been killed.

New Order

In 1917 a new order gradually emerged from the fighting and a new constitution recognised the rights of worker and peasant unions, disestablished the Catholic Church, and placed limits on property rights affirming the state ownership of sub-soil mineral deposits. Military presidents Obregón ( 1920-24) and Plutarco Elías Calles (1924-30), although rivals, each made a start on the process of stabilising the country. Obregón was re-elected in 1928, but was assassinated before he could take office. This crisis led for the first time to the creation of a formal party structure. The organisation that emerged, later to be called Institutional Revolutionary Party (Partido Revolucionario Institucional, PRI) was to dominate Mexican politics for the rest of the 20th century, creating a de facto one-party state.

One of the most famous and popular leaders of the PRI was Lázaro Cárdenas (1934-40), who nationalised the energy industry in 1938 by expropriating largely US- and UK-owned international oil companies and founding Petróleos Mexicanos (Pemex), a state-run monopoly. Cárdenas was viewed as a popular exponent of economic nationalism and a defender of Mexican sovereignty and self determination.

Political Framework

The PRI that ran Mexico for the second half of the 20th century was a largely centrist and pragmatic political party, combining market-friendly policies in some areas with a tightly controlled public sector monopoly in others. Significant oil revenues, particularly after the 1970s, allowed successive governments to follow relatively expansionist fiscal policies.

Presidents were, and still are, elected for six-year terms known as sexenios. The outgoing president usually nominates his successor and typically, once in office, a new president will break with his mentor, build up his own power base and curtail the political influence of his predecessor. For historical reasons – particularly the long rule of President Díaz and the power struggle in the 1920s between Obregón and Calles, modern-day Mexico has rejected consecutive presidential re-elections. So while the 20th-century PRI was an authoritarian party, it was also deeply opposed to the extended rule of any single individual leader from within its ranks. Although it allowed limited democratic freedoms such as a critical press, the PRI ensured it had a dominant role in all election campaigns at both national and state level. It also carefully manipulated the political system by, for example, creating and controlling a number of smaller parties and ensuring a Congress that would support the government.

Election Turbulence

Despite being a successful and resilient party, the PRI eventually succumbed to political pressures and growing demands for a legitimate democracy. Typically, pressures would mount and become more intense in the last two years of each six-year presidential term as different political forces sought to influence the transition. Sometimes economic pressures also played a part, and for a time it looked as if the transition from one president to another would always be accompanied by a financial crises. A typical example was the currency and banking crisis – also called the Tequila crisis – of 1994 at the end of President Carlos Salinas de Gortari’s (1988-94) term. The government’s wide fiscal and current account deficits and heavy levels of debt were the main culprits behind the crisis. Ernesto Zedillo (1994-2000), who had replaced Luis Donaldo Colosio as the PRI’s candidate after the latter’s assassination, took office in late 1994 and was rapidly forced to devalue the peso. Zedillo is credited with restabilising the economy and ensuring that subsequent elections would be fair and free by ensuring that no political party would be able to exert power on or manipulate elections.

Even in the midst of a Tequila crisis, however, 1994 was a key turning point in the country’s recent history. Tensions in Mexico were underscored by the signing of NAFTA with the US and Canada, which underlined the outgoing president’s pro-market and pro-globalisation stance. The same year saw the emergence of a new guerrilla movement opposed to globalisation – the Zapatista Army of National Liberation – and the assassination of Colosio, the PRI’s presidential candidate.

21st-Century Mexico

A major political turning point for Mexico came in the July 2000 presidential elections when for the first time in seven decades a candidate who was not a member of the long-ruling PRI won at the polls. Vicente Fox of the National Action Party (Partido de Acción Nacional, PAN), a right-leaning opposition group, won with 42.5% of the popular vote, defeating Francisco Labastida of the PRI (36.11%) and Cuauhtémoc Cárdenas of the left-wing opposition Party of the Democratic Revolution (Partido de la Revolución Democrática, PRD). Fox served his full six-year term, and was succeeded in 2006 by another PAN politician, Felipe Calderón, who won with 35.89% of the popular vote. These were the closest elections ever held in recent Mexican political history, with the PRD candidate, Andrés Manuel López Obrador, coming an incredibly close second, with 35.31% of the popular vote, and the PRI being relegated to third place. Although López Obrador refused to accept Calderón’s victory for an extended period, the 2006 elections came to be seen as a sign that Mexico’s political parties had matured, ultimately accepting the rule of law and the non-violent transition of power.

In the 2012 elections the PRI achieved a comeback. The party backed a young and charismatic candidate, Enrique Peña Nieto, who presented it as a reformed, more modern, and more democratic organisation than it had been in the past. Peña Nieto won the election with 38.2% of the vote, again pushing López Obrador of the PRD into second place – this time with 31.59% of the vote. The PAN, whose popularity had been somewhat eroded after 12 years in power, came in third place with 25.41% of the vote.

Peaceful Transitions

The three elections of 2000, 2006 and 2012 established Mexican democracy in the 21st century and showed that it is possible to have peaceful alternation in power of competing political parties. Although political transitions are still sensitive periods, they are now considered part of normal, everyday politics, and in that sense are unexceptional. It was also highly significant that these three transitions took place without major economic turbulence of the type that had been experienced in the 1970s to the 1990s.

Furthermore, the new, more open political environment led to a revival of the legislature and Congress became much more important and influential. In the initial years of the Peña Nieto administration the Pact for Mexico, a political agreement between the three main parties, was signed, delivering the necessary majorities in Congress to approve wide-ranging economic reforms, including laws designed to end the seven-decade-old state monopoly in the energy industry and to increase competition within the telecoms and broadcasting sector.

Foreign Affairs

Mexico is well integrated into global trade networks with some 12 free trade agreements (FTAs) in place in 2016, while bilateral negotiations for a new FTA with South Korea have been announced, according to the WTO. The US is by far Mexico’s largest trading partner in terms of export sales, reaching $303bn in 2016, followed by Canada with $10bn, China ($5bn), Germany ($4bn) and Japan ($4bn). Mexico was seeking to expand its connections to Asia as a negotiating party to the Trans-Pacific Partnership, however the election of US President Donald Trump in November 2016 saw the US back out of the trade deal.

Us Relations

One positive achievement of recent Mexican governments has been to significantly improve relations with its close neighbour, the US, although that relationship is increasingly being challenged by the policy stance of the administration of President Trump, who took office in January 2017. It is clear that both governments are initiating a review of the relationship, with three major issues taking centre stage: trade and investment, illegal immigration and border security.

NAFTA, which created a single market between the US, Canada and Mexico, has been in force for 23 years. While there is debate on the costs and benefits of the agreement, over the years the consensus in Mexico’s business community has been strongly supportive of NAFTA. Mexico is the US’s third-largest trade partner and trade flows between the three countries reached $1.1trn in 2016, representing almost twice the volume of US trade with China. Mexico’s total exports in 2016 were worth $374bn, and $303bn or 81% of that total went to the US. Imports equalled $387bn, of which $180bn or 46% came from the US. As a result, trade across the Mexican-US border comfortably exceeds $1bn per day. The relationship is based on a highly integrated value chain as manufacturing processes frequently involve components travelling back and forth across the border. It is estimated that 40% of the value of Mexican exports to the US are components that were originally made in the US.

As the US administration continues to question the legitimacy and relevance of NAFTA, there is uncertainty over what the outcome of the renegotiation will be and the extent to which Mexico will have to reconsider its export and industrialisation strategy. What is clear, however, is that nearshoring – the integration of Mexican assembly plants into North America’s production chains – is deeply embedded and will prove difficult to overhaul in the short term.

Migration

Lawmakers are currently looking at initiatives to help protect and reintegrate a large number of migrants that are slated to be deported from the US. In February 2017, for example, the Senate approved education reform to help recently arrived students more easily access education and transfer credits from US to Mexican schools. A report by the US-based Wilson Centre notes, however, that the number of Mexicans seeking to enter the US has dropped significantly. Research from the Pew Foundation showed that from 2009 to 2014, for the first time in 40 years, more Mexicans migrated back south from the US to Mexico than went north from Mexico to the US. This is attributed to slow but steady improvements in Mexican living standards, education coverage, greater border enforcement and demographic change leading to a relative decrease in the size of the population of 15-to-29-year-olds – the age group most likely to emigrate. The Wilson Centre also notes that the number of US citizens living in Mexico has grown to nearly 1m.

Both governments have collaborated across a range of anti-crime and anti-terrorism issues. A key feature of this collaboration has been the Mérida Initiative, an agreement signed by Presidents Calderón of Mexico and George W Bush of the US in 2007 that set up a framework of shared responsibility for security matters. Under the initial version of the programme the US Congress provided $1.4bn worth of funding over three years beginning in 2008. The money was allocated into three baskets, with 62.6% of the total going to counter-narcotics, counter-terrorism and border security, followed by public security and law enforcement programmes with 22.4%, and institution-building and rule of law promotion with 15%. In total the US government has allocated $2.5bn to the programme from 2008 to 2016, with $129m expected to be spent in 2017.

Outlook

The once-amicable US-Mexico relationship has been strained under the Trump administration since January 2017 as Mexico is forced to renegotiate with its largest trading partner and reintegrate hundreds of thousands of Mexican nationals. Both the US and Mexico have much to gain from cooperating on issues such as trade and cross-border security. Meanwhile, the country’s corruption and organised crime will remain the prominent issues and are unlikely to be fully resolved in the short term.