Three Amigos No More? US and Canada Warn of Dire Economic Consequences if Mexico Persists With Judicial Reforms

Mexico’s President AMLO responds by putting relations with US and Canadian ambassadors on hold while giving the Mexican people a history lesson on US interference in Latin America.

Well, that was quick.

Just a week ago, we wagered that the US and Canadian embassies would soon begin piling pressure on Mexico as the outgoing President Andrés Manuel López Obrador (aka AMLO) seeks to pass sweeping constitutional reforms to its mining laws, energy laws and judicial system, among other things, in his last month in office. Just two days later, the US Ambassador to Mexico, Ken Salazar, sent a communique warning that the proposed judicial reforms could have serious consequences for the US’ trade relations with its biggest trade partner:

Based on my lifelong experience supporting the rule of law, I believe popular direct election of judges is a major risk to the functioning of Mexico’s democracy. Any judicial reform should have the right kinds of safeguards that will ensure the judicial branch will be strengthened and not subject to the corruption of politics.

I also think that the debate over the direct election of judges in these times, as well as the fierce politics if the elections for judges in 2025 and 2027 were to be approved, will threaten the historic trade relationship we have built, which relies on investors’ confidence in Mexico’s legal framework. Direct elections would also make it easier for cartels and other bad actors to take advantage of politically motivated and inexperienced judges…

We understand the importance of Mexico’s fight against judicial corruption.  But direct political election of judges, in my view, would not address judicial corruption nor would it strengthen the judicial branch of government. It would also weaken the efforts to make North American economic integration a reality and would create turbulence as the debate over direct election will continue over the next several years.

Canada Joins the Scrum

It didn’t take long for the Canadian Ambassador, Graham C Clark, to join the scrum, warning that Canadian investors — primarily, of course, the mining companies that dominate Mexico’s mining sector and which now face tougher regulations following Mexico’s mining reforms last year — had also expressed concerns about Mexico’s judicial reform.

“I heard these concerns this morning. So, the only thing I’m doing is listening to what our investors are saying about it and there’s concern,” Clark said, adding that the proposed judicial reforms may affect the “bond of trust” between investors and the Government of Mexico. From Forbes Mexico:

“An investment is a sign of confidence. I’m going to invest in your country, I’m going to, I don’t know, build a factory or invest in a Mexican company,” the diplomat added.

However, the ambassador clarified that his “interest is to convey the concerns of the Canadian private sector” without intervening in Mexico’s affairs.

“As a diplomat, I am very sensitive to any comment that could be seen as interference in Mexico’s affairs and it is certainly not my goal,” Clark said.

Yet interfering in Mexico’s affairs is exactly what Clark and Salazar are doing. And AMLO is acutely aware of this, as, it seems, are many Mexicans. After all, this is not the first time Salazar has meddled directly in Mexico’s domestic affairs. In 2022, Salazar — a long-serving oil and gas lobbyist with close ties to the Clintons — lectured Mexico on renewable energy as the AMLO government sought to pass an energy reform package aimed at restoring a strong role for the state in Mexico’s energy and electricity sectors.

AMLO’s “Plan C”

The AMLO government’s “Plan-C” judicial reform proposals seek to radically reconfigure the way Mexico’s justice system works. Most controversially, judges and magistrates at all levels of the system will no longer be appointed but instead be elected by local citizens. Those elections will be taking place in 2025 and 2027, and sitting judges will have to win the people’s vote if they want to continue working. New institutions will be created to regulate procedures as well as combat the widespread corruption that has plagued Mexican justice for many decades.

This, insists the AMLO government, is all necessary because two of the main structural causes of corruption, impunity and lack of justice in Mexico are: a) the absence of true judicial independence of the institutions charged with delivering justice; and b) the ever widening gap between Mexican society and the judicial authorities that oversee the legal processes at all levels of the system, from the local and district courts to Mexico’s Supreme Court.

There is some truth to this. And making judges electorally accountable may go some way to remedying these problems, but it also poses a threat to judicial independence and impartiality, of which there is already scant supply. As some critics have argued, with AMLO’s Morena party already dominating both the executive and the legislative, there is a danger that it will end up taking control of all three branches of government — just like the Institutional Revolutionary Party, or PRI, that held uninterrupted power in the country for 71 years (1929-2000).

While these risks may exist, it is also true that the AMLO government has every right to pursue these reforms, has the support of roughly two-thirds of the Mexican public in doing so, and is following established legal procedures. Put simply, it is doing nothing outside of the law. It is also true that, whatever the Washington Post may claim, Mexico’s judicial reforms are a strictly domestic issue and should be of no business to the US or Canadian governments.

Imperial mindsets never rest. Per the @WashingtonPost, Mexico's judicial reform is not an internal affair but one the US has every right to comment on.

Thus, Mexican ambassador Esteban Moctezuma has the same right to comment on Biden's judicial reform. How would that go over? pic.twitter.com/GzZTJlIOGg

— Kurt Hackbarth 🌹 (@KurtHackbarth) August 26, 2024

In response to Salazar’s latest provocation, the AMLO government sent a strongly worded note to the White House [and is preparing to send a similar one to Ottawa]. In his Friday morning press conference, AMLO read out excerpts from the note to Washington:

The Mexican government is committed to a Judicial Branch that enjoys true independence, autonomy, and legitimacy, thus strengthening the rule of law and improving access to justice for all.

Therefore, the statement by the Ambassador of the United States of America expressing a position on this strictly domestic matter of the Mexican State represents unacceptable interference, contravenes the sovereignty of the United Mexican States, and does not reflect the degree of mutual respect that characterizes the relations between our governments.

AMLO also divulged another way in which the US government has been meddling in Mexico’s internal affairs over the past six years — namely by giving money to organizations that claim to defend human rights but in reality are dedicated to undermining Mexico’s democratically elected government.

Mexico’s Financial Intelligence Unit (UIF) recently revealed that the NGO Mexicans Against Corruption and Impunity (MCCI) had received 96.7 million pesos ($4.95 million) from the US Embassy. CIA cut-outs the US Agency for International Development (USAID) and the National Endowment for Democracy (NED) have also been giving generously to MCCI, as we reported in 2021.

Founded in late 2015 by Claudio X. González Jr, the son of the long-serving president of Kimberley Clark Mexico, with the ostensible purpose of investigating the causes and effects of corruption and impunity, MCCI has become a major political actor. In recent years, it has helped build a coalition of opposition parties against the AMLO government. Tellingly, it didn’t start receiving donations from the US government until 2018, the year AMLO won the presidency and his party, Morena, secured a majority in Mexico’s legislative chambers.

In 2021, AMLO described the US government’s funding of MCCI as a form of golpismo, or coup promotion, and likened it to the participation of US ambassador Henry Wilson in the overthrow of President Francisco Madero during the Mexican Revolution. “It’s an act of interventionism that violates our sovereignty … Our Constitution forbids it. You can’t receive money from another country for political ends.”

Historical Background

In his speech on Friday, AMLO also provided some historical background to US meddling in Mexican and Latin American affairs. Like Vladimir Putin, AMLO has a penchant for delving deep into the past to explain current realities:

For many years… the United States has applied an interventionist policy throughout America, ever since it established the Monroe Doctrine…

For a long time Washington set the political agenda of countries on this continent. They imposed and removed presidents at their whim, they invaded countries, created new countries and new protectorates… We were invaded twice… The first time was the War of Intervention of 1847-8, which robbed us of half of our territory. Nine states of the American Union belonged to Mexico.

It was very sad. Imagine: on September 15, the [US troops] took Mexico City and hung the stars and stripes from here, the National Palace. Then, in 1914, they invaded us again, this time in Veracruz. For seven months they occupied our territory.

[T]hen they created a different strategy that was more subtle but highly effective. They began opening up US universities to young, ambitious Mexicans to educate them there… We have evidence of this: [T]hen-President Wilson was told by his secretary of state [Robert Lansing] that it was no longer necessary to invade Mexico or shoot a single bullet; it was just a question of indoctrinating young ambitious Mexicans at US universities.

And the strategy worked… for a long time. At least three (Mexican) presidents during the neoliberal period were educated in the US… [T]he [US] not only dominated politics here but also imposed the economic agenda. They were the ones who defined the so-called structural reforms, they touted the privatisations that transferred the nation’s assets from the hands of the Mexican people into the hands of private individuals and foreign companies.

So, this neoliberal, anti-people, interventionist policy led us into a terrible crisis, a prolonged economic decline — and the people of Mexico, who are fiercely protective of their traditions and are prepared to fight for justice, for freedom, for independence, and sovereignty, said “basta” [enough] and this new transformation began.

Flagrant US Hypocrisy 

The US government’s flagrant hypocrisy is once again on full display in this latest diplomatic spat. As Mexico’s former Foreign Minister (and incoming Economy Minister) Marcelo Ebrard pointed out a few days ago, in 42 out of the US’ 50 states at least some, if not all, of the judges are elected:

Dear Ken: what are you talking about? [said in English]. Of all our partners, the US is the country that elects the most judges. In the US, judges are elected in 42 states of the American Union, and this has been going on for more than a century and a half. Mexico never said: ‘oops, democracy is in danger in the United States.’ No one said that, on the contrary, [the election of judges] strengthened it.

What Ebrard doesn’t mention is that all federal judges in the US, including the supreme court judges, are appointed. By contrast, Mexico is proposing to make all judge and magistrate positions subject to vote. In the case of the Supreme Court, which is the highest judicial authority of the land as well as the ultimate interpreter of the constitution, the concerns are understandable.

There are, of course, other elements of US hypocrisy on display here — for example, the fact that over the past year-and-a-half the outgoing Biden administration has tried just about every lawfare trick in the book to get Trump behind bars, or at least disqualified from the ballot, to no avail.

The Biden Administration is now trying to fast track its own reforms of the US Supreme Court, including the imposition of term limits for SC judges as well as a constitutional amendment to “make clear there is no immunity for crimes a former president committed while in office.” As the Supreme Court blog notes, the fact that constitutional amendments in the US require a two-thirds vote of both houses, followed by ratification by three-quarters of the states renders “passage of such an amendment extremely unlikely, if not all but impossible, at this time.”

Also, it goes without saying the US government is in no place to pass judgment on other countries’ political or judicial systems, given it is essentially facilitating and financing the worst war crime of the 21st century: Israel’s ongoing genocide in Gaza. As AMLO himself said, imagine our ambassador in the United States “writing a document questioning why the US sells or donates weapons for wars being fought in Ukraine or Gaza that are causing the deaths of many innocent people. Why do they have to meddle in our affairs?”

This was a point even Salazar himself was willing to concede — until recently. On June 13, the US ambassador cautioned against interfering in the Mexican government’s reform agenda (translated from Spanish):

The way this is done… is up to the Mexicans. We cannot impose our opinions.

Yet that is exactly what the US is now trying to do.

Why the Change of Tune?

On August 16, just six days before the big U-turn, Salazar even praised the idea of electing judges, pointing out that “there are different models [for judicial systems]: I, in my time as a lawyer, a member of the Supreme Court of the United States, was an advisor to the governor and was in charge of the election of judges in Colorado.” Experts, he said, gave three proposals to the governor and the governor chose among those three. By contrast, Salazar pointed out, there are states like Texas, where “judges do go out to campaign, seek the vote.”

It’s impossible to know with any certainty why this sudden change of tune, but there is a coincidence worth mentioning: on Aug 22, the same day Salazar issued his communique, the highly influential Council of Global Enterprises issued a statement expressing their “grave” concerns about the dampening effect the reforms could have on investment. The lobbying group’s members include Walmart, AT&T, Cargill, General Motors, Pepsico, VISA, Exxon Mobil, Bayer and Fedex.

“The current reform project contains some critical aspects that must be adjusted to ensure legal certainty and avoid discouraging investments,” the statement said. According to Forbes Mexico, the Council of Global Enterprises believe key aspects of the judicial reforms must be adjusted to preserve legal certainty and avoid discouraging investments, especially as the nearshoring trend continues to accelerate. In other words, US, Canadian and other global corporations, mainly from Europe, are determined to ensure that nothing is done to upset their apple cart.

As AMLO explained in his speech, the proposed judicial reforms are necessary because the current judicial system is “plagued by corruption and serves a rapacious minority. It protects white-collar criminals, both domestic and foreign, and is controlled by heads of criminal organizations.”

The corporations, both domestic and foreign, seem to want to keep it that way. And they can count on the support not only of the US government but also large US banks and ratings agencies, which are warning about the possible risks of Mexico’s judicial reforms. In their report, ominously titled “The Next 90 Days Could Shape the Next Decade for Mexico: Staying on the Defensive”, Bank of America analysts warn that President López Obrador’s goal is to disappear more than 7,000 active judges, as well as the 11 Supreme Court judges.

With pressure coming from both Wall Street and Washington, the peso is likely to continue its current slide, which began just before President elect Claudia Sheinbaum and Morena won by a landslide on June 2. But both AMLO and Sheinbaum are refusing to change course. After 12 hours of debates, the Commission on Constitutional Points of the Chamber of Deputies passed the reform, which now heads to the Plenary of the Chamber of Deputies, where it will be debated and voted on in the first days of September.

Yesterday (Aug 26), Ken Salazar said he was willing to engage in dialogue with AMLO about the election of judges and other aspects of the judicial reforms — an invitation that AMLO politely rejected, before announcing today that relations with the US and Canadian ambassadors are on hold until further notice:

“There must always be dialogue. The problem is that issues concerning Mexico are our exclusive ambit. No foreigners or foreign government can have a say on matters that pertain only to Mexicans. It is a basic principle of independence, of sovereignty.”

But how independent or sovereign can Mexico be if it shares the most-traversed land border on the planet with the world’s fading “empire of lies”, with which it has signed not one, but two trade deals in the past 30 years — deals whose ultimate goal, as Salazar candidly admits, is the economic integration of North America. But according to AMLO, having a trade agreement with the US does not mean Washington gets to interfere in its internal affairs:

The treaty is not for us to cede our sovereignty, the treaty is about trade, about forging good economic and commercial ties that suit both nations. But that doesn’t mean Mexico must become an appendix, a colony, or a protectorate [of the US].

AMLO does not appear to have heard of Dani Rodrik’s policy trilemma, which we have periodically discussed here on Naked Capitalism. The trilemma holds that “democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full.” In this case, of course, it is regional, not global, economic integration that is on the table. The question is: which of the three will Mexico decide to give up?