Bill
I don't think there are too many lessons from history to apply to Mexico.
The problems in Mexico are not unseen. Here's a list of what I found that could contribute to a collapse to Mexico:
1. Lack of oil revenue - it cannot be replaced by any other export. PEMEX is not allowed to modernize or explore because the revenue has been needed to subsidize the federal budget. There is some oil in the south of Mexico but it is splintered into many smaller fields. The Mexican government is going to face a massive funding gap within the next decade. I suppose they could open up Mexico to private exploration but that will only delay the inevitable. Mexican domestic demand is expected to rise 10-15% over the next decade, meaning they will have to spend more Federal money on imports.
2. The lack of revenue means the lack of services within Mexico. With the income gap growing significantly (10% of the population owns over 40% of the wealth), and adding the lack of revenue to the case will cause additional social friction. In 1994, Mexico denationalized over 1,000 companies, and the elite (also known as the 100 Families) bought almost all of them. The rich became much, much richer. The poor only benefitted a little bit if at all. Why support a government when it cannot provide anything of interest to you?
3. Mexico has been a classic "patron" political system since the 1920's. It's similar to the Baathist system - party members and their children are given better educations, more opportunities, more government jobs. The left leaning PRI has dominated the political scene from the 20's and the PAN, led by President Calderon - is struggling to hang onto power, as he won the 2006 Presidental election by less than 1%.
4. The drug cartels will not be defeated by the Mexican government. That's my big prediction. Too much money is flowing. Estimates are anywhere from $30-50B a year. The Mexican drug czar was arrested last year for taking $450K a month from the Drug Cartel. The cartels have influence at the local, state, and federal levels with every political party. Two potential outcomes: a. the people get pissed off from the violence and turn against the Cartels
b. the Cartels are assimilated successfully in the Mexican political process, the drug profits are seen as legitimate in order to replace the lost oil revenues. Calderon deployed 40,000 Mexican Army and Federal Police personnel earlier this year - and the violence is still raging. The nationalized Mexican banking system is almost certainly laundering drug profits.
4. Large indiginous population. 30M indigineous people. Two indiginous rebellions in the last 15 years - Chiapas and Oaxaca. Many of these people live in the dope and opium cultivating areas, and they become more populous the further south one goes. 90% of the cocaine in the US comes through Mexico. I would not be surprised if there are a number of tribes cutting deals for easy access into Mexico.
5. There are signs of hollow states occuring already in Sinaloa (home of the Sinaloa cartel) and Michochan. The Mexican government had over 2,000 "Zones of Exclusion" in 2007 and supposedly reduced that number to less than 400 last year. I am suspicious of both numbers and have not been able to find a great deal of open source info on this aspect of Mexico's decline. I would love to get some more info if it is available.
6. Violence and corruption are spreading into the US in the forms of gangs (MS 13 and M 18). Corruption rates in the Border Patrol, ICE and local law enforcement departments have been rising steadily since 2005.
How do I see it playing out?
Something like this:
Mexico's economy continues to get hammered by the global recession over the next two to three years. The middle class is getting smoked just like every other middle class in the world. The maquiladoras - from the high point of 4000 of them in 2000, at 3000 in 2009, continue to slowly fade away as cheaper companies in Asia take their place. Globalization has many side effects to many people.
The drug cartels continue to make big profits thanks to El Norte, and many people start joining them to get a full belly. in 2012, the PAN and Calderon are defeated, and the PRI regains power. The PRI looks to gain closer ties with other populist leaders in Central and South America. The drug cartels are allowed to operate with greater impunity as they continue to bring lots of much needed cash into Mexico. The drug violence along the border rises as the cartels bribe entire units of the Mexican Army and Federal Police to look the other way.
Mexican people are still ok with their government. The oil flow starts to dry up, and then Mexican government, regardless of party affiliation, becomes more an annoyance than anything else to the people of Mexico. They've lost the financial power to the drug cartels and the super-rich who own the corporations. The corporations and the cartels have deals in place - business will not be disrupted on either side of the coin.
By 2020, the Mexican government is a government in name only. The cartels have locked down the flow of drugs from the south, and own the Mexican side of the border. The political collapse has been slow - people just don't get anything from the government except for increased taxes (this is actually how Calderon expects to meet the shortfalls in oil revenue) over this period, and finally just ignore them. The state doesn't have the power to respond in any real manner.
The wild cards are the indiginous people, the US government, Chavez and other populist leaders, and the potential decriminalization of drugs both in Mexico (it's already happened for personal usage) and in the US.
Worst case scenario is the drug cartels become the government, form strategic alliances with Chavez, Cuba, and you have an unfriendly government - built on narco-economics on one hand and supra-national trade on the other - telling the US to get bent whenever they want to.
Of course, this reads like a dime store novel. But I really don't see how the Mexican government is able to survive all of this - mainly because it's visible now, and their response has been to increase taxes to make up for the lack of oil revenue, furthering the isolation betweent the government and the people. If the US economy sputters , the Mexican government will get hurt even more.
Originally Posted by Bill Moore
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