Ambassador’s Brief: The Election, The Economy and Mexico

It may be just a distant memory for some, but the first week in September once unofficially signaled the start of the U.S. presidential campaign season. That seems unfathomable considering that the 2012 campaign has been going full throttle for months. Now that the Republican and Democratic conventions are on the books, their candidates and the country have entered the final phase of the race.

If this were a normal election year, we’d expect to see each of the nominees move toward the center and moderate some of the harder-line positions they’ve taken to solidify their standings with the party faithful. But this is not a typical election year and what was once thought of as a post-convention strategy imperative—winning the hearts and minds of undecided voters and those in the middle—no longer is. Polls have indicated for some time now there are very few undecided voters, somewhere between 3-5% of the electorate according to recent reliable reports. While President Obama appears to have taken a slight advantage out of the Democratic convention (Mitt Romney showed no gains coming out of the GOP Convention), the race remains very tight. Both parties will direct resources toward galvanizing the base (yes, it means we’re in for more negativity) and turning out the vote, especially in key battle ground states.

The economy will certainly remain the overriding issue. The unexpected slowdown in job growth last month provides new fodder for the Republican ticket and casts a pall on the Democratic argument for reelection. Along with jobs, the stock market and debt problems are the other main factors thatanalysts say will decide the election. The October debates (three presidential and one vice-presidential) will offer voters the opportunity to judge the candidates side-by-side and in theory to understand their differences on the issues.

It should make for an interesting 55 days, especially for voters in the ten orso states deemed critical for the electoral prospects of either candidate. And, in this kind of race, the Electoral College may very well come into play. Thispiece from The Brookings Institution offers an insightful exploration of scenarios for how the election might play out in that process.

It’s only every twelve years that the US and Mexico hold presidential elections in the same year. For me, living through and experiencing these two pivotal elections has been tremendously interesting, and with trade between the U.S. and Mexico surging up 17 percent in 2011 to a record $461 billion, our economic relationship has never been more integrated.

In Mexico, expectations are high and the transition to the new administration is well underway. Incoming PRI President-Elect, Enrique Peña Nieto, who this month will take a goodwill tour of Latin America, will be sworn into office December 1.

The PRI Congressional majority has signaled its intentions for the current lame-duck session (which began September 1). The party will seek to pass measures designed to combat political corruption, including curbs against abuses of political power and tighter controls on election advertising. It’s the right place to start from a domestic standpoint and will be watched as a first test for what might pass for bipartisanship in the new Congress. It will also set the stage for the ambitious structural reforms that are needed for Mexico to become more productive and competitive in the global economy.

The US election is being closely watched in Mexico. With such a tight race as well as the change in administration on the Mexican side, there’s likely more attention being paid than usual. There’s widespread recognition that the bilateral agenda will be dominated by a familiar set of issues—security, economic growth and immigration—with perhaps a slightly heightened sense of urgency attached to them. Perhaps not so widespread—in either country—is the recognition that regardless of whom US voters elect on November 6, new opportunities will be opening up in Mexico. Among these will be some long-anticipated ones in the energy sector, as Shannon O’Neill of the Council on Foreign Relations explores in this piece.

And, when it comes to finance, infrastructure and energy, my colleagues here at White & Case Mexico are recognized as standouts in these sectors. Many have been recognized by their peers and leading publications as extraordinarily adept at understanding both the complexities and substantial opportunities these areas afford and, most recently, Vicente Corta was hailed by Poder y Negocios as amongst Mexico’s most strategic thinkers in operating at that nexus where business, politics and law converge.

Lastly, for anyone doing business internationally, the work of my DC-based colleagues including George Terwilliger is especially relevant. In spite of a more general call for reform to the U.S. Foreign Corrupt Practices Act, Congress remains content to let the Department of Justice weigh in through clarified guidance first. With the DOJ guidance expected later this year, our White & Case Client Alert on FCPA reform is timely and worth reviewing.