Mexico’s Slow-Motion Disaster

Here in the US we don’t normally have much interest in the domestic politics of our neighbors Mexico and Canada. Mexico, for example, is part of our presidential election only insofar as immigration is a top issue. But we don’t ask “why are people from throughout Mexico and Latin America crossing our border in large numbers?”  

Mexicans aren’t just fleeing their homeland to enter the relatively safe and stable US – they are now leaving Southern Mexico for Guatemala, of all places, amid the near civil war there between feuding drug lords in Chiapas. As Mexico’s political system deteriorates, crime is increasing, and the outgoing president, Andres Manuel Lopez Obrador (or AMLO as he is known) completes his quest to eliminate the independence of the country’s judiciary. 

AMLO’s administration has followed in the footsteps of other left-wing populist leaders in the Western Hemisphere in Venezuela, Colombia, Bolivia and Nicaragua. He has decried “neoliberalism,” consolidated power, appealed directly to the poor, working class, and alienated middle-class of Mexico. During his time as president, AMLO had many confrontations with the Mexican Supreme Court specifically and the judiciary more broadly. Particularly in the last few years of his presidency as his power increased and his respect for the law declined, he and the court clashed as he tried to expand the power of the military, pull back from fighting crime and tried to ‘pause’ stable, productive economic relations with the US. This prompted him to push through a “reform” that will see every judge throughout Mexico subject to regular election, not lifetime appointment as American federal judges are, and Mexican judges were previously. 

He is promoting the reform as a way to eliminate judicial corruption, but this is a charade. The reform is merely a way for his party, the powerful Morena party, to exert control over one of the last independent institutions in the country. Judges will be beholden to political interests, not law. Voters in Mexico are completely unprepared to understand what makes a “good” or “qualified” judge. A voter in the capital of Mexico City, a metropolitan area of perhaps 20 million people, would be voting for thousands of judicial candidates with no information other than party identification, including for the Supreme Court. Money will purchase judges and corruption will far outstrip the problems the system now faces. 

Some US states, and some countries, have various forms of “elections” for judges, be it options for recall, yes or no votes on maintaining a judge, or even a few with regularly competitive elections. But federal courts are appointed for life, which provides some insulation from political forces. So why has Lopez Obrador decided to make this radical move? In Bolivia, which has judicial elections, the Economist just recently described the electing top judges as a “disaster” which poisoned the country’s politics. What’s bad for the nation as a whole, though, can still be very good for a power-hungry politician. In Bolivia, the two main competitors for the presidency are jockeying for support from the elected court and everyone understands that the court’s decisions are motivated by nothing more substantive than politics. 

In some ways, this looks like a return to the days of the monolithic PRI party that dominated Mexican politics in the 20th century. But there’s an additional reason why AMLO has proposed the reform. Destroying the judiciary as a counterbalance to the elected power in Mexico is straight out of the playbook populists have used to consolidate their control. In Venezuela, for example, President/Supreme Dictator Nicolas Maduro had his hand picked Supreme Court stamp his stolen election as legitimate, and AMLO has dreams of a similar scenario when the US or a future Mexican president comes after him for aiding Mexican drug traffickers or forces him to explain how he and his sons have bank accounts in the Cayman Islands or Switzerland stuffed full of pesos. Once the judiciary is under control, populists next take over the central bank and begin to intimidate independent media outlets. The institutional and social checks on majoritarian power are eliminated creating an opportunity for dictatorship, and lifetime rule and enrichment through graft. 

How is this related to immigration and relations between the US and Mexico? Those Mexicans who are leaving for other countries see very limited economic opportunities, no domestic security, and no hope in their political institutions after a six-year assault on foreign investment, the rule of law, and economic development under President Lopez Obrador. Daniel Ortega in Nicaragua, the Castro boys in Cuba, Maduro in Venezuela and now AMLO, all claim to be men of the people fighting for the common person against the evil forces of capitalism and imperialism. Shockingly, the situations in their countries deteriorate, their citizens flee, and they consolidate their grip on power. 

More than $35 billion in direct foreign investment in Mexico is now on hold according to the Wall Street Journal. The peso, which has historically been a very stable currency, has dropped 15 percent since the judicial ‘reform’ was announced. Protests from the legal community and the political opposition are intensifying. In at least five of Mexico’s states, battles between rival drug organizations have produced bloodshed and instability. The costs to the Mexican nation will be enormous. Eliminating an independent judiciary may very well force Mexico to pull out of the USMCA, the replacement for NAFTA. Remember Mexico is the United States’ largest trading partner, and vice versa. Such a shift will have devastating economic effects on both sides of the border. 

But three sets of interests benefit from Lopez-Obrador’s plan. The first is the old institutional power brokers in public and private unions. The move towards economic and political liberalization undercut their ability to pursue graft, control jobs, and influence policy. They’d like a return to the “good old days” of no foreign businesses interfering with their rule of the labor market, which will increasingly become blurred as the private sector shrinks while the economy contracts. 

The second set of interests are those involved in the illegal drug trade. In the past, analysts argued that while the Mexican government lacked the capacity to effectively fight the war against the large cartels that once ruled the drug trade, under Lopez Obrador two things have changed. The first is that the days of the large cartels are in the past. The Netflix series Narcos is great television, but there is a reason it is set in the 80s and 90s. Now smaller operations, more prone to violent turf wars with unstable business operations, have replaced the once mighty cartels with bloody results. The second is that Morena has used local alliances with those in this new entrepreneurial drug “industry” to help ensure they have convincingly won local and state elections. 

Lopez Obrador in fact helped shield some of the larger drug organizations from US prosecution, which led to his infamous “hugs not bullets” policy. Whether he was motivated by a newfound interest in humanitarianism or following the requests of his friends in the drug industry, AMLO diverted military and police resources away from fighting the drug traffic. Unsurprisingly hugs did not stop the drugs, and the US responded by pressuring the Mexican government to work with them for high profile arrests, like that of the son of the notorious “El Chapo,” now in a US prison. According to press reports the Blackhawk helicopters and troops sent in to get him were not hugging anyone. 

Finally, this new system benefits the army, which is another important strategy in the populist playbook. As we’ve seen in Venezuela, once politicians control the formal political institutions and the criminal activities in society, they need the support of the army. Military coups are part of the landscape and history of Latin America.  

Lopez Obrador has adroitly freed the military from fighting the drug war, something they had no desire to do. Instead, he has placed the military in charge of lucrative endeavors like managing ports and airports. They have taken over the construction of major infrastructure projects. These activities are all in direct violation of the Mexican Constitution, and the Supreme Court ruled against these moves just last year in one of their many fights with AMLO. The possibility for political power and of course further bribes and graft at ports and large construction projects shouldn’t be difficult to predict. He has also essentially placed the police under military control, which has expanded the army’s power base. 

The third winner in all of this is Morena, and indirectly Lopez Obrador. His party controls Mexico, and should the judicial reform pass, their formal power may rival if not exceed that of the PRI. While some observers are hopeful that his successor Claudia Sheinbaum may pivot in a different direction and guide Mexico towards more moderation, it’s difficult to see how she might do so if she chooses to reject AMLO’s legacy. As one astute observer noted to me, while it is possible she may become her own leader and wish to escape AMLO’s shadow, a more likely alternative may be that she follows the Medvedev/Putin model and is simply complicit in allowing his rule to continue into a second term. After all, this observer said, it is AMLO who controls Morena, and Morena is the most powerful civilian force in the nation. 

The losers here are obvious. First and foremost, Mexicans of all social and economic classes will lose the lifeline that NAFTA/USMCA, economic liberalization, and attempts at political liberalism has created. Millions of Mexicans ascended from working class status “clase trabajadora” to the middle class through manufacturing jobs and foreign investment from the US and abroad. As others have correctly outlined, those treaties depended on a guarantee of an independent judiciary. While some of those commercial agreements may transfer to international commercial courts, many won’t. Existing investment may wither, and new investment will almost certainly go from paused to stopped.  

AMLO himself has a vision of Mexico that is very much anti-development. He has a romantic vision of an early twentieth century, rural Mexico. Whether his base will realize (too late) what that means for the future is difficult to tell. But if I were to predict the future, I’d return to the issue of immigration. While many across the political spectrum are falling all over themselves to oppose “illegal” immigrants, immigration has long benefited the US. Whether it was the waves of Southern European immigrants at the end of the nineteenth and start of the twentieth century, the Irish immigrants from the 1850s after the Irish potato famine, or even the many Venezuelans who have entered the US recently, running for their lives from Maduro and his Cuban handlers. Immigrants come with skills, and they are willing to take risks and work. Once we move past the political grandstanding, we will eventually see how good it is to get a new influx for our workforce. 

But in the short term, these developments will be problematic for the US because Mexico is right next door and heading down a very dangerous path. Empowering one party, strengthening the military, destroying checks and balances, and allowing criminals to have free rein throughout Mexico will not end well for other countries. The attractions of militarism and the reliance of a strong hand “la mano duro,” as it is known in Latin America, is tantalizing. But it is a fantasy, a mirage that leads to dictatorship. Mexico should reject the abolition of its independent, albeit imperfect courts. If they need more evidence of how this will end, they shouldn’t look to AMLO for promises but look to Venezuelans and how their courts have protected the only one person — the dictator, not his subjects.