Shifting sands, and so little time.
Over the past few weeks, the U.S. Congress has been focused on impeachment proceedings. With so much activity and the situation very much in flux I recommend Axios for up to date coverage and Five Thirty Eight for polling on the ongoing constitutional process.
This week, Congress narrowly avoided a government shutdown, as congressional leaders have yet to reach a compromise on comprehensive spending bills. House and Senate leaders were eventually able to pass a stopgap measure, which President Trump signed yesterday hours before the deadline, funding the U.S. government through December 20th. But they will have to keep negotiating to reach a compromise on thornier issues, such as the President's desired border wall funding.
With the year’s end quickly drawing near, global trade agreements also appear to be increasingly out of reach. It it is looking unlikely that there will be a U.S.-China agreement by the end of the year, or even in early 2020. And, after more than two years, the U.S.-Mexico-Canada Trade Agreement is also not yet a done deal.
Yesterday, Speaker of the House Nancy Pelosi noted that even if they were able to get a deal soon, there wouldn't be enough time to finish the agreement by year’s end. Freshman democrats and U.S. labor organizations have continued to express skepticism that Mexico’s higher wage laws will be adequately enforced and reduce the differences among the salaries in the three countries. Without their support, it will be very difficult to move forward with the agreement.
For months, the United States' trade battles have dragged down global growth. Yet, assuming that the trade deals eventually come to fruition, there could be a slight reversal of the recent negative trends. Earlier this week, Morgan Stanley projected that global growth could shift upward from 3.0 percent to 3.2 percent, and Goldman Sachs published analysis suggesting that global growth should stabilize in 2020, as tariffs and monetary policy ease up.
Across Latin America, there has also been ongoing political uncertainty. In recent weeks, protestors have filled the streets and clanged pans to make their voices heard. Their discontent has been widespread and varied, taking shape against corruption, election tampering, economic malaise, and unfulfilled promises to reduce economic inequality.
The current wave of protests began in early October, as Ecuadorians paralyzed the federal government and country over a slashed fuel subsidy and austerity package. By mid-October, an uptick in the Santiago metro fare sparked protests and brought general discontent into the open and into the streets of Chile. On November 10, after several weeks of protests, and an international auditor confirming electoral irregularities, the Bolivian military pushed President Evo Morales to resign and ushered in a power vacuum and even more protests. And on November 16, Venezuelans took to the streets once again by the thousands to support Juan Guaido and stand up to Maduro’s grip on power.
In general, Mexico has largely stayed out of the protests rocking the region. However, on November 12, López Obrador’s administration dove into the fray and offered Evo Morales political asylum one day after he was forced to resign. A few hours later, Morales had accepted the offer and was heading north on a Mexican plane, with a photo soon emerging of the former Bolivian president holding up a Mexican flag. However, the move has not gained the support of all Mexicans. According to a Reforma poll, 58 percent of surveyed Mexicans opposed Morales’ arrival to their country.
Amid this shifting international environment, López Obrador and his administration have had to contend with a wide range of other challenges. Most significantly is the country’s ongoing security challenge. A month ago, armed groups killed 13 police officers in Michoacán and on October 18th, Mexican armed forces captured and then were forced to release one of El Chapo's sons, Ovidio Guzmán, in Culiacan, Sinaloa. The latter incident unfolded as tens if not hundreds of Sinaloa cartel members rushed to Ovidio's rescue, outnumbering the government forces and forcing the government into a humiliating retreat.
Less than a month later, cartel members also gunned down 9 women and children from the LeBaron family—members of a Mormon community that is based in the northern state of Sonora. The gruesome case, along with the others, highlighted once again the country’s inability to tackle impunity or lower its record-breaking number of homicides. The incidents have also taken a toll on López Obrador's popularity. His approval rating remains above 50 percent approval, but it has begun to slip in the wake of these security incidents.
Things have also been shifting on the energy front. On November 10, a hacker targeted Mexico’s state owned energy company Pemex, requesting $5 million in ransom payments by the end of November. The company has stated that it would not pay the ransom and fortunately, Pemex has maintained normal operations throughout the attack. However, it highlights vulnerabilities with Mexico's critical infrastructure around the country.
In other changes for Pemex, López Obrador’s administration is now reconsidering allowing Pemex to add partners for exploring Mexico’s oil and gas reserves, which would allow the company to expand into more areas and share the cost and risk with private sector companies. If the energy sector of particular interest to you, I hope you’ll feel free to call on me for more specific counsel.
- Shifting sands, and so little time. November 22, 2019
- The U.S., Mexico and migration: Time for cooperation, not coercion. September 9, 2019
- A sweltering summer, and market fall. August 15, 2019
- A Tariff, Gone Too Far… June 5, 2019
- Shutdown averted, USMCA and Energy Reform still big question marks. April 5, 2019