The murder of Beltrán Leyva

Everybody in the whole world is well aware of Mexico's reputation of a country controlled by the drugs cartels, not to the extent of Colombia, but to a great degree. News about violence, decapitations, corruption, and murders in general appear in the headlines every day. This week, it was announced the death of lord drug Arturo Beltrán Leyva at a marine operation in Cuernavaca, Morelos, a few minutes from the country's capital.

What does this event mean? Abroad, Felipe Calderón, Mexico's President, has been praised for his labor in fighting the drug cartels. In Mexico, this successful operation will helped him to bolster his weakened government –by his limited management of the financial crisis and the lack of structural reforms–and to keep financing the millionaire anti-drugs operations.

The war against drugs is a lost war. Even with the support of the richest and most powerful planet in the world, Mexico has not been able to wipe out the drug cartels in Mexico. The most visible result from the attacks is the generalized violence in the territory. This fact combined with the meager results of the operations strengthened the voices claiming for other alternatives to combat the drugs. For some Mexicans, such as the ex President Ernesto Zedillo (1994-2000), the solution is to legalize drugs, an action that would be completely incompatible with the dictates of the U.S.

The very fact that this has been proposed by a political party, the extinct Social Democratic Party, and that it's being discussed right now as an alternative, leads us to think that in the near future this could be the possible.

But with this successful operation, the government is just getting time before the Mexican society and, more important, the political and economical elites demand a change in the strategy. So, for now, the result will be more wasted money and more murders resulting from the confrontations between the army and the drug cartels, and less money to develop the country.

But there is not only bad news. From this position of power, the President could negotiate with the Institutional Revolutionary Party (PRI), the political organization with the majority of representatives at the Mexican Congress, the structural reforms, which are necessary to reach higher rates of economic growth. In addition, the PRI is aiming for the Presidency at 2012, and better conditions to govern are a key factor to reconstruct the PRI regime.

Mexican Economy

Recently, there have been lots of newspaper and public figures criticizing the policies implemented by the Mexican government in order to lessen the impact of the global crisis in Mexico. The comparisons between Brazil and Mexico are inevitable: how is it possible that the Mexican economy has contracted 7% and the Brazilian only 0%? Moreover, why was Mexico the worst Latin American country dealing with the global financial crisis?

First of all, let's list some facts. According to the National Institute of Statistic and Geography (INEGI), Mexican exports are heavily dependent on the US market (75% of its exports are to the States). In Mexico, the states with the highest rates of economic growth (above 4%) are the northern ones: Baja California, South Baja California, Chihuahua, Coahuila, Nuevo León, Sonora, Tamaulipas as well as Aguascalientes and Quintana Roo, which is in the south. The northern states, which are the ones more integrated with the US economy, are export led economies, such as Aguascalientes and Quintana Roo, which is a famous resort state dependent on US tourists.

Now, taking into account that fact (that the Mexican states which are leading the economic growth in Mexico are export oriented economies with the US as the main destiny of its exports). It is not surprising that the Mexican economy has experimented that kind of economic contraction. In South America, there is no state so dependent on the US market like Mexico. The solution would be to diversify trade, but since the end of the XIX century, Porfirio Díaz, a Mexican "dictator", stated that diversifying the trade was a necessary condition in order to reduce the dependence of the Mexican economy on the United States.

If it happened that the Mexican economy would increase its net output following an export oriented solution, it would be through an increase in exports to the USA. There are trade models based on the fact that bigger economies tend to "attract" the exports from nearer countries. Unless Mexico manages to create goods which are not demanded from citizens in the United States -or strengthen its internal market-, Mexico will not be able to avoid the effects of the US crises.