08/27/2024 – 20:28
Relations between Mexico and the United States, which form one of the most powerful economic blocs in the world, have been shaken by pressure from Washington against a controversial judicial reform, which is also generating fear in the markets.
In a new affront to warnings from US Ambassador Ken Salazar that the reform “threatens” trade relations and poses a risk to “democracy,” Mexican President Andrés Manuel López Obrador on Tuesday declared dialogue with the diplomat, with whom he has maintained close ties, “on hold.”
The relationship with Salazar “is good, but it is on hold,” said the leftist president, days after the ambassador called the press to express his criticisms of the amendment, which proposes the election of judges by popular vote and provoked a strike in the Judiciary.
“How are we going to allow him to say that what we are doing is wrong?” asked López Obrador, clarifying that this is not a “pause” in the relationship with Joe Biden’s government.
Last week, the Mexican Foreign Ministry had already sent a diplomatic protest to Washington over Salazar’s “interference statement”, which the Mexican president also called “unfortunate and imprudent”, insisting that the objective of the reform is to combat corruption and not to take over justice.
“I hope that there is a ratification on their part that they will be respectful of Mexico’s independence (…), but until this happens and they continue with this policy, then there is a pause with the embassy,” reinforced López Obrador this Tuesday.
Trade between Mexico and the United States reached 745 billion dollars in 2023 (around 3.6 trillion reais, at the time), according to official Mexican data.
– Politicizing justice –
Salazar’s questions were joined on Tuesday by a group of American senators, who assured, in a statement, that the changes to the Constitution would “undermine judicial independence” and put bilateral economic interests “in danger”.
Mexico, the second largest economy in Latin America and 12th in the world, is part of the T-MEC free trade agreement with the United States along with Canada, which López Obrador accused on Tuesday of appearing to be an American “associated state” for also criticizing the reform.
The Mexican president dismissed, on Tuesday, Salazar’s proposal to discuss specific aspects of the reform which, according to the ambassador, does not address “judicial corruption” or the strengthening of the justice sector.
“We are not going to give them advice there, nor tell them what is right and what is wrong (…) Of course we can talk, but there are things that only concern our country,” stressed López Obrador, who will hand over power to his fellow party member Claudia Sheinbaum on October 1. The next president supports the project without reservations.
The initiative will be debated during the legislature that begins next Sunday, in which the left will have a large majority, which would avoid having to negotiate with the opposition. The opposition, in turn, warns of the risk of authoritarianism.
– Economic fear –
US criticism is also shared by investors focused on the Mexican currency, bonds and stocks, who fear the reform could “result in a politicization of the judiciary,” warned British consultancy Capital Economics.
This scenario “could raise concerns” around the impartial resolution “of disputes between business and government,” the company added in a report to its clients.
Investment banks such as Morgan Stanley have already gone a step further by recommending that their clients reduce their exposure to Mexican companies listed on the stock exchange.
The company believes that “replacing the judicial system” will increase “risk premiums and limit capital expenditure (by companies)”, at a time when the relocation of factories in Mexico (‘nearshoring’) demands increased investment.
The Mexican peso also felt the blow and was quoted this Tuesday above 19.7 units per dollar, very close to the psychological barrier of 20 pesos.
“The peso’s movement is largely due to news surrounding the harmful effects of the proposed reform of the judiciary,” local bank Invex noted in a report.
López Obrador dismissed these comments on Tuesday and assured that “ratings and brokerages” are “aligned” in criticizing his government. “They are not to be taken seriously,” he added.
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