Obama’s support for Mexico prioritizes investors over citizens

Mexican President Enrique Peña Nieto’s visit to the White House last week was greeted by a throng of protesters whose chants were so loud, they could be heard in the Oval Office. Peña Nieto was in Washington not to discuss the deteriorating security situation in his country, the discovery of still more mass graves in the countryside or the staggering irregularities that have been recently disclosed about his government’s investigation into the forcible disappearance in September of 43 students from the town of Ayotzinapa in Guerrero state. He was there to talk about the money.

Peña Nieto visited Washington under the auspices of the High-Level Economic Dialogue (HLED), an initiative meant to promote competitiveness and foster the growth of the U.S. and Mexican economies. While the Ayotzinapa students apparently came up during the presidents’ conversation, President Barack Obama ultimately reiterated his support for the Mexican government. In doing so, he ignored the criticisms of human rights organizations and the demands of protesters who have gathered in the streets of cities in the U.S. and Mexico. But why does the U.S. government continue its uncritical stance toward its southern neighbor?

At first glance, the answer might appear to lie in the United States’ problems with police impunity at home. When a Mexican official in Washington was questioned before the meeting whether Ayotzinapa would be on the agenda, he made an explicit comparison to the killing of Michael Brown in Ferguson, Missouri. “Within the United States,” he said, “we know there has been this kind of violence in the area of Missouri, to mention just one case.” Activists have used this line of criticism as well, arguing that those who live in glass houses can’t throw stones.

But hypocrisy in U.S. foreign policy is as old as the country itself. The disconnect between our government’s rhetoric and practice began with those truths that we held to be self-evident. It’s not a desire to avoid looking hypocritical that has kept Obama from speaking out; it’s economic interest.

The HLED was announced just as Peña Nieto was putting the finishing touches on his economic reform agenda, which includes overhauling education standards, shaking up the existing telecommunication monopolies and opening the energy sector to foreign investment. It’s clear that the HLED was created to support these reforms, with each of these areas explicitly addressed in the published list of HLED priorities.

Critics have argued that Peña Nieto’s economic reforms will do little to improve the standard of living for ordinary Mexicans while bringing big gains to Mexican and transnational banks and corporations. Ignoring the thousands who have taken to the streets to protest the reforms, the HLED shows how committed the United States is to the Peña Nieto strategy. Given the gains that U.S. companies stand to make from, for example, the newly opened Mexican oil industry, it’s easy to see why.

There is a financial motivation behind U.S. support for Peña Nieto’s security agenda as well. Much of the support that the United States has earmarked for Mexico under the Mérida Initiative — a George W. Bush–era bilateral program to combat drug trafficking and organized crime that Obama has continued — never leaves the U.S.: The $1.2 billion (PDF) that the U.S. government has spent on Mexican security so far has gone to providing training to Mexican security forces and judicial officials and purchasing equipment such as surveillance gear and Black Hawk helicopters. 

In other words, the billions of dollars appropriated under the Mérida Initiative go not to the Mexican government’s coffers but stay largely in the U.S. economy. Some of the funds underwrite training programs run by government agencies, such the Department of Justice’s Project Diamante or the Department of Defense’s Western Hemispheric Institute for Security and Cooperation, formerly known as the School of the Americas.

The bulk of the funding, however, goes to firms such as Sikorsky Aircraft in Stamford, Connecticut, which builds those Black Hawks, and General Atomics in San Diego, which builds the Predator drones used for border surveillance. In those places, politicians such as Sen. Richard Blumenthal, D-Conn., and former Rep. Buck McKeon, R-Calif., have political interests in increasing government contracts for the firms: not only to maintain the jobs that they provide locally but also to keep their campaign war chests full with contributions from the firms’ political action committees.

But even beyond the billions of dollars in material interests, Obama’s refusal to criticize Peña Nieto’s handling of the crisis of impunity and corruption in Mexico suggests a deeper motivation. Underlying Obama’s curt but unequivocal expressions of support is an economic force seemingly less tangible but no less powerful: investor confidence.

Investor confidence is really just about the stories that international bankers tell themselves about their work and the places they do it; it is, at its core, what the economist John Maynard Keynes meant when he referred to the “animal spirits” that shape the economy. Nonetheless, economists have devised means for measuring investor confidence, and there is a stable of firms whose entire purview is to create indices to gauge it.

Investor confidence is at the core of Peña Nieto’s reform strategy. It was not simply to gloat that he took to the rose-colored pages of The Financial Times in August to trumpet the success of his reform agenda. Coming from the president who allegedly “changed the narrative in his narco-stained nation,” as a Time magazine cover story put it, the op-ed presented a new — and reassuring — story about Mexico to the paper’s Wall Street readers.

But Ayotzinapa upended Peña Nieto’s narrative, and the corruption scandals that have emerged since have only made it less credible. In November members of the Peña Nieto administration laid their cards on the table: The unrest after Ayotzinapa, worried Mexico’s finance minister, could have “adverse effects on foreign investment.” Once again, investor security trumped citizen security in Mexico.

In this uncertain climate, any action from Washington that conveyed a lack of confidence in the Mexican government could send investment into a tailspin and seriously endanger new U.S. ventures in, for example, the oil industry. But the protesters, to their credit, have refused to be written out of Mexico’s narrative — and they’ll continue to insist that solving Mexico’s problems requires more than pretty stories on pink paper.