What can go wrong between Mexico and the US? Energy, for example

What can go wrong in the economic relationship between Mexico and the United States in 2022? Joe Biden’s first year was full of sticky situations that didn’t blow up or get resolved like a script by the Rose of Guadalupe. The migration crisis and the closure of borders by covid; the entry into force of the T-MEC and the first skirmishes related to it: demands for union democracy in Mexico, the US maneuvers in the automotive industry and the plans of the Mexican government in the energy sector and the environment.

Will Joe Biden continue with his same tactics towards Mexico and AMLO? This is one of the key questions. The American president has seen his popularity plummet. He faces pressure from some economic sectors and from Democratic legislators to adopt a tougher position towards Mexico.

There are 22 public letters from US leaders complaining about Mexico’s energy policy, according to Carlos Ramírez Fuentes, from the consulting firm Integralia. Of these, 13 are from legislators or governors and nine from business associations. This week there were two. One of these letters, signed by Bob Menendez, chairman of the Senate foreign relations committee. The legislator asks the Biden administration to act forcefully against the Mexican government’s plans for the electricity sector. In addition to a change in forms, Menendez asks the Biden administration to define a position against Mexico’s plans to prohibit lithium and copper concessions. He refers to them as a matter of “national security” for the United States.

There is another missive that can be understood as part of this same puzzle, a sign that the winds are blowing strongly in that direction. It is from Democratic Senator Ron Wyden, Chairman of the Finance Committee, and addressed to Trade Representative Katherine Chi Tai. It says, “The Mexican government is actively pursuing policies that benefit its oil and power companies, at the expense of private competitors who often offer cleaner energy options.”

Senator Wyden’s argument is not new, but it includes other complicated issues in addition to energy, such as e-commerce, telecommunications and the environment. His message also has a suggestion that is threatening and should turn on the lights on the alert board: “If Mexico and Canada do not comply with the commitments made in the T-MEC, the United States should deny them all the benefits promised in the treaty”.

What effect will those missives have on the attitude of the Biden administration? The visit of the Secretary of Energy, Jennifer Granholm, to Mexico will provide some clues. His agenda includes meetings with Marcelo Ebrard and Rocío Nahle. A round table in which Claudia Sheinbaum will participate and a meeting with Ricardo Monreal. Three presidential and its counterpart. In the next few days, hopefully, we will learn what he told his Mexican interlocutors.

Will AMLO maintain his position on energy matters? This is very profitable politically, as is clear from the popularity polls. It is expensive, if we consider the financial cost involved in rescuing Pemex and the superpowers it gives the CFE. It is risky, if we see it in the perspective of the bilateral relationship with the United States. The T-MEC is the only engine that is working for the Mexican economy. It is obvious that there is annoyance at the house of our neighbor to the north and it is also evident that Joe Biden will have to do something about that annoyance, what will the septuagenarian president do… once he wakes up?

lmgonzalez@eleconomista.com.mx