The strategic vision of Mexico

Manuel Bermejo. Professor. IE Business School

28 November 2006

Mexico and Spain have a long history of bilateral relations. Spain has invested heavily in Mexico and what happens there will have a direct impact on our economy. In the last few months, Mexico’s democracy has been put to the test and Spain has stood to one side and said nothing.

A quick overview of Mexican and Spanish bilateral relations

In this article I would like to give the reader a closer look at a country with close ties to Spain: Mexico. I am not going to make a long, exhaustive overview of the country’s economy or history, but rather I am going to highlight with some very telling data the important links between the two countries.

Hernán Cortés of Spain could never have imagined the important relationship that would develop between the two countries when he set sail for Mexico from the coasts of Cuba on 10 February 1519. Bilateral relations were established as late as 28 December 1836, only to be broken soon after, during Franco´s dictatorship. Mexico continued to recognize only the democratically-elected exiled government of the Republic. Bilateral relations were re-established on 28 March 1977. Since then, the two countries have set up several bi-lateral commissions to increase cooperation.

On the economic front, the relations have been intense, especially in recent years. In rounded numbers, annual trade between the two countries totals approximately $5 billion. Spaniards have stakes in more than 2,000 Mexican companies. Between January 1999 and June 2005, these same Mexican companies with a large number of Spanish share holders made investments totalling approximately $14 billion. Spain is the biggest EU investor in Mexico, accounting for almost half of all EU investment in the country. Not only are the large Spanish multinationals present there; a myriad of small and mid-sized industries also are present, as well. What is more, an increasing number of Mexican teenagers come to study every year at universities and business schools in Spain.

The results of Mexico’s elections
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Given the close relationships between the two countries, I believe we have not paid sufficient attention to the crisis that erupted after the 2 July elections. Interestingly enough, on that same day here in Spain, elections also took place, but in this case for the presidency of Real Madrid Football Club. There too, someone called Calderón won and there has been bitter controversy ever since. Compare the attention given to both processes and I apologise to Madrid supporters, many of whom are, by the way, Mexican.

Mexico is a young democracy, but also a very dynamic one. The presidency of the first non- ‘priista’ president in many decades is coming to an end. Vicente Fox, of the PAN will be leaving after his six-year presidential stint to make way for Felipe Calderón, also of the PAN. Calderón won the elections in July by a slim margin of 244,000 votes. The defeated incumbent, Andrés Manuel Lopez Obrador (better known by his nom de guerre – a very appropriate term - AMLO), a member of the left-wing PRD, did not recognise the results, and reported election fraud. The TRIFE (the tribune for the federal electorate) has investigated the accusations of fraud. In an attempt to force the situation even more, AMLO organised a demonstration and seized the Paseo Reforma and El Zocalo, where he installed a number of marquees. He then blocked President Fox from reading what would be considered the State of the Nation speech in Parliament and later from visiting El Zocalo to perform the traditional ‘shout’ which accompanies the celebration of 15 September.

To put it in terms that are more understandable for us here in Spain, this is the equivalent of the leader of the opposition party deciding not to recognize the results of a general election and, in protest, cutting off the Paseo de la Castellana, from Plaza Castilla to Neptuno, and disrupting the traditional parliamentary sessions in which the president of the government is to intervene. And to make things even more incredible, no one says anything. Hard to imagine, isn´t it?

On top of all of this, a few weeks ago, the Trife confirmed the election results and announced that Calderón had won. López Obrador also rejected this ruling and opted to create what, in his opinion, was a legitimate government.

A lot at stake

In Spain, we must watch Mexico more carefully and with a wider, more strategic vision. Spain has a lot on the table in Latin America. It has important socio-political and economic influence in the region and should encourage debate on the relevant issues that reach us from the other side of the Atlantic.

The hard road ahead for Mexico’s politicians

Many of our political leaders have lost elections by a narrow margin, but as a democratic opposition, and without destabilising the country, they have eventually come back to win the elections. This is what Lopez Obrador should do. He should try to put his strong convictions into practice, and if he curries the favour of the majority, he will win future elections. President-elect Calderón also has his work cut out for him. He must lay the groundwork for making his country safe for investment. He must also work with the opposition parties to introduce the many reforms the country needs and which have been left pending for the last six years. These same reforms are vital for reducing the level of inequality in this Aztec country.

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