What if Mexico collapses? This is much more than a rhetorical question or a question of exclusive interest to Mexicans. It is an increasingly likely scenario with profound implications for U.S. national security. Therefore, Washington, the states and private American companies should update or begin to develop contingency plans in case their southern neighbor falls into a generalized crisis.
The importance of Mexico
Mexico is not simply an inconvenient neighbor for the United States. On the contrary, it is its main trading partner, the protagonist (along with Canada) of its most important free trade agreement and the country of origin of a community (Mexican-American) that represents more than 10 % of the total population of the United States, which in turn has an expat community of close to one million people in Mexico.
This importance will continue to grow in the coming years, as geopolitical differences between the United States and China deepen. In short, every American company or product that sets up in China directly finances an enemy, expansionist regime determined to destroy American influence in the world’s markets.
It is evident that the United States cannot continue to bet on the Asian giant and Mexico is the natural choice to replace it, at least in part. The Mexican republic offers many advantages similar to those of China, with the enormous added value that, unlike Beijing, the Mexican government has no intention of becoming a geopolitical rival of its northern neighbor.
American businessmen and government leaders have understood this reality and for more than 30 years have been betting on Mexico. As a result, the production chains of Mexico, the United States and Canada have merged. They may have different currencies, but they basically share the same economy, in addition to the aforementioned social ties involving millions of people on both sides of the border.
Consequently, an eventual collapse of Mexico could not be handled as a simple foreign policy matter. Unlike Cuba and Venezuela, whose collapse under dictatorial regimes is handled from Washington as a diplomatic crisis, the effects of a similar scenario in Mexico would not only be felt in embassies, but in all regions, all sectors and all industries in the United States.
The nuances of collapse
How might this collapse occur? It could take three forms:
- That of a radical leftist tyrannical government, similar to Caracas or Havana.
- An open capture of the state by organized crime.
- That of a failed state where insecurity increases to the point of massively affecting the American community living in Mexico and preventing the inputs and products manufactured there from reaching the United States, something that would tear apart regional production chains.
In any of the three scenarios, the crisis would leap (in a matter of days) from the desk of diplomats to the streets and businesses throughout the United States. Almost immediately millions of jobs would evaporate (already in 2016 at least 5 million American jobs depended directly on trade with Mexico), the border would experience unprecedented migration pressure, and the resulting social instability would multiply the damage.
A question of national security
Mexico is certainly not a failed state at this time. Despite constant massacres and profound government incompetence, the country is functioning: cities are growing, businesses are operating, and exports are coming across the border. Should it happen, the collapse will not happen today, or tomorrow, or next month.
However, it is equally clear that Mexico continues to slide into the void, and in addition to the worrying signs of insecurity, economic alarms are becoming more and more evident. For example, on November 11 it was announced that so far this year foreign investments have left Mexico for approximately $13 billion dollars ($266 billion pesos) and Luis Gonzalí, co-chief investment officer of Franklin Templeton, explained that Mexico has already been the country that has lost the most foreign investments internationally for two years.
The risk of collapse would increase drastically if López Obrador succeeds in the approval of his constitutional reform that would destroy the electricity market, an initiative that has already triggered the alert of the American industry, Ambassador Ken Salazar and dozens of legislators, both Republicans and Democrats, who are seeking, at least, to postpone its approval.
The same attention should be paid to many other Mexican domestic policy issues, especially in the areas of public security and institutions of government and democracy.
In short, if the United States wants to wean itself off its dependence on China, it will have to get closer to Mexico, and that means being aware of what is happening south of the border. The good news is that, all things considered, such vigilance will be far less costly than the option of continuing to pump up Beijing.