Webcast Recap

Governor Fidel Herrera emphasized the benefits of enhanced cooperation between Mexico and the United States. Security cooperation between the two countries is necessary to shut the door on north-south arms trafficking and to keep terrorists out of the United States, while economic cooperation is necessary to lift both countries out of the current recession. Building barriers at the border is not a viable solution, he said. "We should be strategic partners and not distant neighbors," Herrera said.

Mexico faces simultaneous security and economic crises, Herrera said. These crises have been aggravated by the current economic recession, which has led to a drop-off in remittances from U.S.-based immigrants, job losses, and slowed output. Meanwhile, violent crime has increased throughout Mexico. The governor of one of Mexico's most populous states remarked on high levels of internal migration in Mexico, noting that 300,000 Veracruz natives make the northern border and manufacturing city of Ciudad Juárez their home.

Herrera said Veracruz was better prepared to weather the economic recession than other Mexican states. He said that the state has solid public finances and has used municipal bond financing to fund infrastructure projects (water systems, sanitation). He added that Veracruz, home to major oil resources and a major hydroelectric producer, has untapped potential in the area of renewable energy generation.

PRI Economic and Fiscal Stances

Herrera gave his talk on a day when the Mexican lower house of Congress was in the midst of its annual debate on the government's fiscal package and revenues bill. The governor said his Institutional Revolutionary Party (Partido Revolucionario Institucional, PRI), which holds a plurality in the lower house, had staked a conservative position ahead of the debate. He qualified as "prudent" an oil price forecast of US$59.50/bbl for the next year, at a time when crude currently fetches around US$80/bbl on the world market. Additionally the party leadership's support of a small increase in deficit spending was reasonable, he said. He indicated that the increase was not at a level that would spur credit raters to reevaluate the country's sovereign debt rating. He appeared noncommittal on whether his party would support, as reported in the press, an increase on the country's food-and-medicine-exempt value-added tax from 15 to 16 percent. Herrera added that the PRI broadly supports economic policies that boost employment, keep deficit spending in check, and that do not entail tax hikes "punishing" to the poor.

Mexican Foreign Policy and Image Abroad

Mexico remains an important voice in international affairs, but it needs to "get back to basics," Herrera said, indicating the need for a more publicly robust foreign policy. It is not a good sign, he indicated, that while Brazil is opening embassies, Mexico is considering closing some of its own. Mexico appears to be lagging behind Brazil on the world stage, he said.

NAFTA and Veracruz

Herrera lamented that Mexico's U.S. sugar export quota is unable to accommodate a larger share of the country's sugar surplus – a consequence of so-called "side" agreements to the NAFTA text. Limitations on Mexico's ability to freely export sugar to the U.S. market has prevented his state, a large sugarcane grower, from better perceiving the benefits of the trade agreement, he said.

By Robert Donnelly