Overview Mexicans could be forgiven for thinking they were in hell on earth last year. The economy skidded into recession while drug violence ravaged Juárez and other major cities, leaving more than 5,000 dead. North of the border there was scuttlebutt of Mexico becoming a failed state.

Turns out 2008 may have only been purgatory, this year things have actually gotten worse. As the federal government redoubled efforts to break the back of Mexico’s drug syndicates a crescendo of violence ensued. January was bloodiest month of drug-related violence since President Felipe Calderón came to office in 2006—over 1,000 were killed.

Concentrated crackdowns offered hope of leashing the gangs. The deployment of 45,000 federal troops to 18 locales teetering on chaos, coupled with the arrival of US security aid in the form of the Merida Initiative, produced a sizable drop in violence over the first quarter a year on.

Unfortunately the respite proved seasonal. Several high-profile arrests of drug kingpins this summer spurred a backlash of grisly beheadings and coups de grace. Off-duty policemen, prosecutors, and rival gang members were the usual victim profile. While the scale of the killing had been seen before increasingly innocent bystanders were victimized.

As of this writing, news is emerging that one of the biggest fish of them all, Arturo Leyva, the “boss of bosses” of Mexican drugs, has been killed in a raid by Mexican commandos. The likelihood of indiscriminate gang reprisals certainly has officials waiting to exhale, but the elimination of such a kingpin, as opposed to his arrest, may prove a shrewd tactical, as well as legal, move. Without the chance of bailing out a crime boss there will be less incentive to amp up the violence. And the command structure of the gangs may well be disrupted as result. On a legal front, while Calderón has done a commendable job of organizing raids, the rate of successful prosecution of suspected traffickers in Mexico is lackluster.

The Great Recession The severity of economic contraction stands in marked contrast to the rest of the region. A recent study by the Brookings Institution begins: “With the exception of Mexico, many large Latin American economies have shown a respectable resilience to the global financial crisis.”

The vast majority of government revenues come from the state-owned petroleum industry, remittance payments from Mexicans working in the US, and tourism. All depend heavily on consumption north of the border. As the American consumer went on hiatus, Mexico’s economy went into tailspin, contracting by over 10% from July ‘08-’09. Economic performance for 2009 will likely be the worst of any sizable economy.

Heaped atop these ongoing crises, Mexico’s grand surprise this year came in the form of a new infectious disease, the H1N1 strand of influenza. Swine ’09 trained the world’s worries on Mexico. Other nations proved quick to overreact, further ostracizing Mexico in the midst of its woes.

Mexico received latent praise by the CDC and WHO for its handling of the H1N1 outbreak, scarce consolation for the tourism industry no doubt, which saw revenues drop by over 30%. An estimated 100,000 tourism-related jobs were lost as a result. As spring turned to summer and the flu season headed south of the equator, the hysteria around H1N1 gave way to insouciance. By the time the WHO declared H1N1 a pandemic in August, global worries had turned to anticipating the illness’ return in the fall.

Mexico held mid-term elections in July. Apparently what’s old is new again; the centrist PRI that governed Mexico for seven decades, until 2000, staged a death-defying comeback. Beyond the headline of a privival, the election underlined the non-ideological nature of Mexico’s political parties. The ranks of the two major parties, the PAN and PRI, are filled by a precarious group of technocrats and political opportunists. The PRD, the major leftish party in Mexico as recently as 2006, is quickly unwinding. The ‘Green’ party, which gained some 10% of the seats in the July election, has a platform that shies away from environmental advocacy in lieu of supporting a death penalty. This may offer the hope of pragmatic governance in the future, but just as easily may point to a trend of bald party opportunism as opposed to platform coherence.

As a result, it seems professionalization, rather than persona-based politics, is taking hold of the highest echelons of government. For all the hardships Mexico has endured over recent years, a whopping 69% of Mexicans approved of the president’s performance going into the election. This should have helped President Calderón’s PAN. Still the PAN was roundly defeated. If caudillo politics are alive and well in Mexico, as many insist, the phenomenon no longer reaches as deeply into national politics.

The most likely explanation is that while the president is viewed as a politician acting in good faith, the PAN is just as riddled with corruption as Mexico’s other main parties. A well-publicized round-up in the president’s home state of Michoacán led to the arrest of 28 officials suspected of having ties to La familia, a notorious crime syndicate. Two of the ten mayors arrested were PAN members.

In other realms, social policy has oscillated between greater liberalization and conservative retrenchment. Personal drug use of everything from marijuana to heroine was decriminalized in August, a stark response designed to more directly target traffickers. Yet state abortion bans have become so widespread that a federal ban may be in the offing. The fits-and-starts character of social liberalization in Mexico is broadly representative of much of the region.

2010 promises more challenges for Mexico. The economy will almost surely return to positive growth by mid-year and there are already signs that exports to the US are ticking up. The major economic concern is the strength of recovery. Recent statements from high-level policymakers indicate Mexico’s commitment to growth through NAFTA is being redoubled. In my opinion NAFTA promises diminishing returns for Mexico for several reasons, chiefly because the US will plausibly remain an unreliable partner, as Congress’ refusal to allow Mexican trucks on US highways indicates. Instead Mexico should look southward, seeking closer trade ties with Brazil. This would provide Mexican exports a second large market and possibly spur Brazilian FDI to Mexico.

The major security challenge will be localizing drug violence. Extirpating the drug gangs is hopelessly naïve given America’s huge appetite for drugs. A realistic goal should be to decrease the number of gangs operating in Mexico, and try to insulate civilians from the gang’s ire. Seemingly frustrated by haphazard US cooperation, President Calderón signaled a strategic shift in his efforts to reform last month. In a mid-term address he spoke of the need to alleviate Mexico’s poverty. A fight against poverty seems likely to be the hallmark initiative of the president’s last three years in office.

Reforms will need to be strategic and structural in order to put Mexico back on track. Not just to produce signs of recovery next year, but for the economic and security challenges of a new decade.

Mexico seemed to be on a progressive track this year: the centrist PRI wrestled legislative power from the center-right PAN in mid-term elections; personal drug use of everything from pot to heroine was decriminalized; and major investments in wind farms were made in Baja. Such overtures stop short of abortion rights, however.

Last week the state of Veracruz passed a ban emphasizing that life begins at the moment of conception. That makes 17 of 32 states that have instituted a ban on abortion. Many state bans penalize abortion as homicide. In Veracruz, a stipulation was added that will permit women who have an abortion to avoid jail time by submitting to psychological treatment. Exceptions run the gamut, ranging from reasonable (pregnancy from rape) to ludicrous (an absolute ban).

This spat of abortion bans are a backlash to Mexico City’s decision to decriminalize abortion, during the first 12 weeks of gestation, in 2007. The furor was immense. President Calderon’s PAN took their protest to the Supreme Court, which eventually upheld the decision on an 8-3 vote. Many speculated this would open the floodgates to a slew of legalization amendments throughout Mexico. Turns out, the opposite has been the case. Aguascalientes and Michoacán may soon follow Veracruz, effectively banning abortion among two-thirds of Mexican states over the last two years.

Of more significance, the Veracruz legislature sent a proposal to Congress for federal action. Any state legislature can send amendments to Congress for consideration as national law. Any amendment is then sent back to the states, and if the majority of states vote in the affirmative federal law is made. A congressional ban would penalize abortion as murder throughout Mexico, as state support of a federal amendment is certain.

Historically, discussion of abortion and other hot button social issues was moot because of the prominent role of the Catholic Church in Mexican society. If religion remains the reason for the recent ban, that’s understandable. But given the Mexican legislature’s responses to other social problems this appears to be selective piety, to put it mildly.

The decriminalization of drug use in Mexico is bound to have unintended consequences. Beginning last Friday, possession of small amounts of drugs, including cocaine, heroine, LSD, marijuana and meth, is permitted. Such wholesale legalization is crude, but may prove beneficial to the Mexican economy.

Having up to four joints on you (the legal limit is five grams) isn’t going to have a societal impact. Prosecutions for possession were already non-existent in Mexico. Studies commissioned under the tenure of Gen. Barry McCaffrey, President Clinton’s “Drug Czar”, concluded that marijuana is not a “gateway” drug. It is widely believed not to be addictive, and it is not known to induce violent behavior.

If anything, this law will undercut corruption among local police, as they will no longer be able to hassle those with a joint in order to get a bribe. Marijuana is one thing, but should Mexico have legalized cocaine? Crystal meth? Heroine? LSD?

I for one don’t think so. Little good can come of legalizing such powerful and addictive drugs. Drug-related violence may well increase, even if cartel violence decreases, as the desperation of addiction grows in Mexico’s cities and towns.

Portugal decriminalized drug use in 2001 in order to focus on rehabilitation. Unlike Portugal, Mexico does not have the facilities to treat a potential surge in drug addiction. The cartels, for their part, will continue to target America as the destination of their product. So if low-level violence and/or addiction-related deaths increase in Mexico, poorly crafted legislation will be to blame.

However, the Mexican economy stands to benefit. Tourism, the nation’s third-largest source of revenue after oil and remittances, is reeling from recession in the US and H1N1. Mexico relies on American tourists coming to its shores for bouts of sun-laden escapism. Knowing they do not risk arrest, they might now stay an extra day or two, aiding Mexico’s bottom line.

This law may mark the beginning of a new trend in Latin America, historically the world’s most socially conservative region. On Tuesday, Argentina’s Supreme Court decriminalized possession of marijuana for personal use. Other nations may soon follow. The Catholic Church, a bulwark of Latin American society for centuries, is quietly retreating from the public sphere. As it does, legislatures and courts would do well to remember II Corinthians 3.6: “The letter killeth, but the spirit giveth life.” Policy catching up to reality is one thing, but some drugs are illegal for good reason.

The centrist Institutional Revolutionary Party was the big winner in Mexico’s mid-term elections held Sunday, as widely forecast. Results show the party, known as the PRI, gained 37% of the vote, while President Calderón’s conservative National Action Party (PAN) garnered 28%.  The left-wing Democratic Revolution Party (PRD), which enjoyed substantial support in the 2006 presidential elections, is now much weakened, and tallied just 12% of the votes.  In addition to doubling its number of seats in Congress, the PRI also won 5 of the 6 gubernatorial races held.

Many commentators previewed the election as a referendum on Felipe Calderón’s presidency. After his election in 2006, his efforts to combat the drug cartels were sure to aid the PAN. “He’s going to get a positive vote, said Larry Birns, director of the Council on Hemispheric Affairs, just before the weekend, “The nation feels he is doing a better job than they imagined he would.” Even if Calderón provided a boost, the PAN suffered from being in power at the wrong time—the economy is in freefall and drug violence has left more than 10,000 dead over the past two years.

Conversely, the PRI has benefitted from being out of power. (Interestingly, the one governorship that the PAN won was in Sonora, where the PRI state government was roundly faulted for mishandling the day care center fire that killed 48 children last month.) As the PRD imploded, thanks to party infighting and Andres Manual López Obrador’s histrionics after his narrow loss to Calderón in 2006, the PRI became the only organized alternative to the PAN with a nationwide presence. 

The PRI’s resurgence may owe to nostalgia for PRI rule, forgetting the party’s corruption and poor economic track record.  Political analyst Victor Hugo Michel states that the electorate simply “doesn’t remember what the PRI was.” The PRI oversaw massacres in 1968 and 1971, cut Mexico off from outside assistance after an earthquake killed at least 5,000 in 1985, and governed over financial collapse in 1982, 1986, 1988, 1994, and 1995.

Drug violence was certainly less prevalent under PRI rule. The PRI institutionalized corruption between drug cartels and government during its seven decades of one-party rule that ended in 2000.  As discussed by Shannon O’Neil in the current edition of Foreign Affairs, after 1945 the PRI forged a patron-client relationship with drug cartels, wherein officials and civilians were protected from cartel violence. In return, high-level cartel members were insulated from prosecution.  This bargain defined the rules of the game for traffickers and cordoned the violence until the PRI’s hold on power dissipated.

The outcome of Sunday’s election had little to do with any party’s platform. Mexico is not in the throes of an ideological sea change. Mexicans are simply disaffected by rampant corruption, drug-related violence, and a crippled economy.  Reviving the PRI may be an act of collective dementia or a willful return to the illusory era of PRI security. Either way, this is unlikely to produce meaningful change in Mexico.

Historically, the Interior Minister in Mexico has been the second most important politician in the country. Last week, Juan Camilo Mourino, the Interior Minister and a close ally of President Calderon, died in a plane crash. He has been replaced by Fernando Francisco Gomez Mont Urueta, an influential lawyer and high-ranking member of the ruling National Action Party (PAN).

The appointment has taken place during unexpected circumstances, and given the importance of the Interior Ministry, it was imperative to name a new minister in Bucareli. In spite of this, President Calderon carefully appointed a man who will be constructing bridges between important sectors within the increasingly fractionalized PAN. His background as a prestigious lawyer will also help him to reach across the aisle and build consensus between political parties. This is an important task and Gomez Mont is likely to succeed at it. However, key government agencies like the National Security Agency (CISEN) are part of the Ministry. This places the Interior Minister at the center of the national security apparatus and Gomez Mont is not particularly famous for his experience in national security matters. Clearly, President Calderon is relying on some other ministries to protect the country.

Indeed, national security efforts seem fractionalized. In order to solve this problem, the current administration has been working on a new law that will allow the Ministry of Public Security to place several federal police units under a central command. This will require Congressional approval and Gomez Mont will be a key actor during the negotiations.

Felipe Calderon has been in office for less than two years, which means that Gomez Mont will have plenty of time to make things happen. However, this is also enough time to make plenty of mistakes. Hopefully, the balance will favor the implementation of good policy (if there is such a thing) in Bucareli. This will help the PAN to win future elections in a context where the PRI is increasing its political capital across the country.

With the Mexican state failing to provide for the basic security of its citizens, violence is at an all-time high.  Since the beginning of 2008, the BBC reports that more than 2,700 people have been killed in drug-related violence.  The kidnapping rate in Mexico has now surpassed that of both Iraq and Colombia, with more than 300 people abducted so far this year.

It appears that Mexicans have had enough.  On Friday August 30, anti-violence demonstrations were held in all of Mexico's 32 states.  In Mexico City, more than 150,000 citizens flooded the Zocalo to demand an end to violence and government inaction.  A video clip of the demonstration is available here.

With the citizenry reaching a critical mass, Mexican authorities need to enact more far-reaching reforms.  President Felipe Calderon has deployed more than 20,000 soldiers in hot beds of drug activity, and the fight appears to only be getting worse.  In conjunction with a military approach, real judicial reforms need to take place in Congress.  Since the system of organized crime has until fairly recently enjoyed relative immunity from state prosecution - and indeed has been linked to the state - the latest crackdown has provoked the wave of violence from those that gain the most by exploiting Mexicans.

On August 7th, Mexican President Felipe Calderon announced that he will propose a new bill to Congress that includes the implementation of life imprisonment for kidnappers. The proposal is a result of a new wave of kidnappings that has shocked Mexican society in the last few weeks. In the most recent case, a 14 year old boy was kidnapped and murdered by a group of highly organized and violent criminals. It is believed that some of these criminals may have connections to police forces in Mexico City.

Although the potential bill has been well received in several circles in Mexico, it has also faced criticism across the country. In the first place, it breaks with legal tradition in Mexico, as the country has always been opposed to life imprisonment. Just a few days ago, the Mexican government officially protested the execution of a Mexican national that participated in the murder of two teenage girls. The Mexican government seems to believe that life imprisonment would be appropriate in Mexico, but the death sentence would be inappropriate in the state of Texas.

This brings us to the issue of effective law enforcement. The Mexican legal system is known for its corruption and lack of effectiveness. If members of the police forces are somehow participating in the kidnappings, there is no guarantee that other police members will not interfere with an investigation that might lead to a life sentence. In other words, it would probably be inappropriate to implement life imprisonment if the law enforcement agencies are not prepared to objectively and professionally investigate crimes.

Proposing and passing a bill in Congress does not take much time. Reforming the law enforcement agencies is a project that has been underway for decades and the Mexican society has not witnessed any encouraging results. The evidence indicates that the Mexican government cannot really handle the "solitary, poor, nasty, brutish, and short" state of nature that seems to be present‚ or at least reported‚ in the country.  This is unfortunate for citizens that pay their taxes in order to receive the basic service of security.

Today, the Mayor of Mexico City and the Local Assembly have organized an unofficial referendum on oil reform. The referendum opens a new chapter on the impact of democracy on strategic public policy. Indeed, the referendum‚ a democratic institution‚ has the potential to stop or dramatically alter the progress made during the open debate‚ another democratic institution‚ over oil reform that took place during the last two months.

The debate over oil reform is the central part of an agreement between Mexico's main political forces that took place in early May 2008. According to the agreement, the Senate would organize a series of debates over different aspects of the oil industry in Mexico. More than a hundred and fifty intellectuals, high-ranking officials, members of congress, and scientists, among other leaders of Mexican society, discussed potential solutions to the many problems of the aging Mexican oil industry. The series of debates ended in July 22nd.

The debate has proven to be a fantastic exercise on democratic principles. Indeed, the debate brought together opposing political forces, ideas, and positions in a forum of tranquility and democratic discussion. In spite of this, another democratic device, that is, a referendum, could threaten the progress made in the debate.

The government of Mexico City has organized a referendum on the involvement of private companies in the oil industry and the approval of the initiatives produced during the debates. Depending on the votes, this could seriously halt the initiatives that the oil industry requires to survive in the following decades (high oil prices are not a sufficient condition for the long-term success of the industry). Although the results of the vote are not binding, the political tide generated by them might put pressure on the implementation and structure of the initiatives presented by the debaters.

However, the referendum might have the opposite effect. If voters decide that they support foreign involvement in the Mexican oil industry, and that they approve the initiatives produced during the debate; then the industry might experience changes in a short period of time. This is unlikely to happen (although voters can sometimes give some surprises). Indeed, the perceived role of the industry on national sovereignty, the rhetoric of the opposition forces, the conservatism of the ruling coalition, and the particular phrasing of the questions in the referendum, are not likely to produce support towards progressive oil reform.

Members of the Senate have declared that the Mexican Center for Research and National Security (CISEN) has been spying on them. According to some Senators, the executive branch, through the CISEN, has been gathering information about them without authorization. The Senators' outrage comes from three sources. First, information about them was collected without permission. Second, it was discovered that the Center did not collect the information itself, but hired a private company to do so. Third, the director of the company in charge of collecting the information happens to be closely linked to the ruling National Action Party. With this evidence in hand, it is not surprising or completely unreasonable that the Senate has asked for the dismissal of Guillermo Valdés Castellanos, director of the CISEN.

Of course, the appointment and dismissal of high ranking public officials is a prerogative of the President and not of the Senate. This was clearly stated by the Ministry of the Interior in a response to the agreement reached at the Senate. In the press release, the Ministry of the Interior denies any accusations of espionage and makes a reference to the outstanding record of Valdés Castellanos as head of the CISEN. In spite of this clear demonstration of support, it seems that members of the Senate will continue to keep this event as an issue in Mexican politics.

Manlio Fabio Beltrones, Senator from Sonora, has formally placed an accusation of espionage at the Attorney General's Office. This is quite a turn of events for Beltrones, a former high ranking official linked to the political police that was part of the PRI-led administration that ruled Mexico for more than 70 years. Beltrones, a fomer governor of Sonora, was accused by American intelligence of having ties to drug traffickers in the late 1990s. Today, Beltrones is the PRI leader at the Senate.

So for this month's scandal, the intelligence services hired a consulting company to collect information about members of Congress. The consulting company came up with a fictitious form that Senators had to fill out for the purposes of publishing an academic book. Naïve and not-so-naïve members of Congress fell for the trick. Once they found out they were subject to an unauthorized collection of information‚ espionage for short, according to them‚ they have asked for the resignation of the head of intelligence services.

If Valdés Castellanos becomes a political liability, Calderon is likely to remove him regardless of his past record as head of intelligence. Unlike Valdés Castellanos, who can be removed quickly, Beltrones and other Senators can only be removed‚ or in fact prevented from reaching office‚ by their electorates. This usually takes up to 6 years. For better or worse, that is how fixed terms work.

On June 30th, President Bush signed into law the Merida Initiative. The initiative is part of the Supplemental Appropriations Act of 2008, and provides $465 million dollars for the war against drugs in Mexico and Central America. Mexico will receive $400 million dollars.

The Senate passed the controversial bill on June 27th. The original bill had produced strong reactions in Mexico because it required the fulfillment of conditions that were considered unilateral and against Mexico's sovereignty. In addition, the administration of President Bush criticized Congress for jeopardizing a necessary initiative that would certainly contribute in the War against Drugs in both Mexico and the United States.

Having reached a deadlock, it seems that the inter-parliamentary session between members of the US and Mexican Congresses in early June contributed to the progress of the bill. After the usual exchange of comments between the US Congress and the Mexican and the American governments, the bill was modified and finally approved by everyone. The Bush administration finally got it passed in both chambers, which represents a victory for the administration; and the Mexican authorities stated that the new initiative does not infringe Mexico's sovereignty and even represents a new bilateral relationship.

This is not the first time that the US government has contributed with large amount of resources to the fight against drugs in Latin America. Although Plan Colombia‚ conceived in the late 1990s‚ did contribute to the war on drugs in that country, it was also correlated with instability in the region and human rights abuses. The situation in Mexico is not as volatile as it was in Colombia, but it is beginning to get there. Hopefully, the initiative will stop this process.