More turbulence ahead, keep seatbelts buckled.
The first month of the new year is nearly behind us, and everything suggests there is plenty of turbulence ahead, so keep those seatbelts buckled.
The Eurasia Group has made clear that 2024 will be the year of (at least) three simultaneous conflicts: Ukraine vs. Russia; Israel vs. Palestine; and the United States vs. itself. Against that backdrop, countries like Russia, North Korea, and Iran are taking advantage of this setting to sow chaos for their benefit. Meanwhile, Chinese firms continue acquiring land and investing in major infrastructure projects in the U.S. and Latin America. And tensions between China and Taiwan continue to simmer.
The sum of these geopolitical crises is taking a serious humanitarian toll, although a recent announcement by the Biden administration to attempt to broker a Middle East deal is an encouraging development. Ongoing conflicts are also resulting in corollary political tensions and supply chain effects. To compound matters, the world’s two largest trade corridors – the Suez and Panama Canals – are also being battered by proxy spillover and extreme drought, furthering global trade disruptions.
To add to this uncertainty, 2024 will be one of the largest election years to date. More than 60 countries will head to the polls this year, including seven in the Western Hemisphere. For the most part, we can expect political continuity in the world’s largest democracies – like India – and relatively straightforward transitions of power throughout. Just last week, Guatemala experienced a mostly calm, though slightly delayed, inauguration for President Bernardo Arévalo.
Global commentators have suggested that the political wildcard for 2024 will be the United States, and regardless of who wins the election, ripple effects will be felt at home and abroad. As we head into this massive election year, a key concern will also be the use of AI and the rise of misinformation.
Mexico is only 5 months away from their own election and as you might imagine, here at White & Case in Mexico City, we are monitoring activities closely. In the closing months of his administration, President Lopez Obrador announced a series of reforms intended to overhaul judiciary, electoral, and pension processes. While their passage in the near term is unlikely, they will be an issue throughout the campaign and could come back for consideration in a future legislative session.
Mexico’s presidential hopefuls continue to actively press on in their campaigns. Morena candidate Claudia Sheinbaum maintains her lead in the polls, with Frente Amplio candidate Xóchitl Gálvez in second place. And Movimiento Ciudadano finally announced their standard bearer, representative Jorge Álvarez Máynez. As it stands, Mexico seems bound for political continuity, as well as electing its first female president in the country’s history.
The overall global environment seems to bode well for the Mexican economy. The major investment banks have issued upbeat forecasts with BBVA increasing its own estimate of 2.9% GDP growth for 2024. Higher household consumption is also anticipated, with Banxico anticipated to finally lower rates by March, although news of continued inflation has a put a slight damper on that call.
Earlier this week, Chairman of the House Foreign Relations Committee, Rep. Mike McCaul, was in country leading a congressional delegation which focused on a number of issues, including elections and immigration. U.S. and Mexican cabinet officials also held a bilateral meeting on January 19, where the United States focused once more on tackling migration in Mexico. This comes after the U.S. apprehended more than 225,000 migrants at the southern border in December 2023 – the highest month to date. Domestically, U.S. officials are now deeply entangled in their own gridlock on how to address migration and border security.
For weeks, Congress has been working towards a border security, Ukraine, and Israel aid deal. The prospects for that grow dimmer each day as this issue has now become fully enmeshed in election year politics. Meanwhile, in Texas, the Supreme Court ruled on January 23 that U.S. Border Patrol agents could remove fencing placed by Texas officials along the border, although Texas’s standoff with federal authorities still appears far from resolved.
What was clear in last week’s bilateral cabinet meeting were the distinct priorities of both countries. U.S. officials were most concerned about irregular migrant encounters, while Mexican officials’ priority was an immediate investigation into how U.S. military-grade weapons, not accessible to U.S. civilians, are being used by Mexican criminal groups. Mexico appeared to receive some support for their position this week when a U.S. federal appeals court ruled that the $10 billion lawsuit filed by Mexico against U.S. gun manufacturers could proceed.
On a positive security note, the newly released criminal statistics for 2023 report a 4 percent decrease in homicides in Mexico compared to 2022. And, last week Mexican officials arrested Jose Alberto García Vilano (La Kena) for his participation in the kidnapping of four and death of two American citizens last year.
Lastly, I’d like to congratulate my colleagues here at White & Case Latin America who have been recognized by IJInvestor with three different Deals of the Year. On a more personal note, I was honored to be asked to give the December commencement at Southern Methodist University in December. That date marked the 40th anniversary of my own graduation from SMU Law. You can find the link here.
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