Latin America

Trouble to the South

A typical segment when I’m doing a forecast for a client is a listing of 50-50 possibilities in a 5-year or longer time frame. I find it expands perspectives, provokes thought, and prompts a discussion of impacts.
A situation that gets a lot of comment is the emerging crisis in Mexico. When a huge trading partner is facing loss of control of large areas of its nation it signals bad news to come. The current government in Mexico is facing the convergence of several forces:
The powerful drug cartels have not only gained control of several provinces but face up readily to federal troops. They have equivalent if not better armament and intelligence sources.
The wage gap vs. the United States continues to drive illegal border crossings. Much of the revenue paid by Central and South Americans now flows directly to the drug cartels. It’s a multi-billion dollar business.
A precipitous drop in oil field productivity. The country has already become a net importer of oil. A key source of revenue and economic base is fading away.
The Calderon administration is wavering on the use of force to fight the cartels. The cartels get media coverage on their own terms at will. Public perception is the government is impotent.
Some of the impacts:

  • Which party wins the next election? Will the US eventually be dealing with a cartel-controlled government?
  • When will the violence spill over the border? Will we see massacres of undocumented immigrants on the US side of the line? The deaths of 72 migrants recently hardly raised a ripple in the US press but how much longer will that last?
  • What is the long term effect on the Mexican economy? Will there be a leveling of income across the border or will the wage pressure continue to send a flood of immigrants north?
  • What is the effect on drug legalization deliberations in both countries? Will marijuana be legalized in both countries? Who will control the production and distribution?
  • When will the issue make its way into US politics and elections? Will a war being waged just south of the US border affect the next presidential election in 2012?