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Al-Ahram Weekly Online   21 - 27 June 2012
Issue No. 1103
Published in Cairo by AL-AHRAM established in 1875

Gamal Nkrumah

Tequila, tacos and Starbucks

Mexico tries to tempt a wider range of palates with its pleasures and treasures by hosting the G20 summit, but the Eurozone crisis leaves a bitter aftertaste, concludes Gamal Nkrumah

Donde hubo fuego, cenizas quedonÒê¦ There is a saying in Mexico that where there was fire, ashes remain. That is to say, when the zeal of love falters, something of the old love still remains. The United States, the world's largest economy, and Mexico have had a turbulent love-hate relationship that has lasted for several centuries.

Click to view caption
The leaders of the G20 lined up for a group photo for the cameras before they went off to the beaches for a dip in the Pacific Ocean

California and Texas, two of the largest and wealthiest states of the US, were once upon a time Mexican territories. Some Mexicans to this day claim California and Texas, New Mexico and other parts of the US southwest as Mexican lands, but at this stage such a step would risk further politicising the deep wounds of the past. The Rio Grande River has become the official border separating the two countries. And even though demographic changes have opened up old wounds and the Hispanics have emerged as the largest ethnic minority in the US in the past decade, surpassing in numbers the African Americans, the country's second largest ethnic minority.

Mexican President Felipe Calder³ön officially inaugurated the G20 summit meeting in the Los Cabos coastal resort on the southern tip of the Pacific Ocean Peninsula of Baja California.

A showpiece of Mexican tourism, and an attractive alternative to devilish diversion from Cancun and Acapulco, Los Cabos has Mexico's seventh busiest airport and attracts tourists from colder climes in Canada and New England and other parts of North America. The choice of Los Cabos as the 2012 venue for the G20 was to catch the eye of the less intrepid investors from thriving Asia, ailing Europe and the rest of the Americas. Mexico, after all, has attracted the interest of adventurers, explorers and Western fortune-seekers since Spanish conquistador Hernan Cortez first set eyes on this tropical paradise five centuries ago.

The Mexican presidency of the G20 comes at an inauspicious moment for Latin America. A closely watched index of business activity in the Western Hemisphere points to an economic boom. A global summit such as the G20 can bring a burst of optimism, even in as disorderly a place as South and Central America. The irony is that the Mexican economy, as is that of many of its neighbours further south, is in relatively good shape.

The region has risen in the world's estimation. In Mexico the figures and economic indicators have been decidedly perky. Exports and the tourism industry in Mexico have been performing well. Moreover, Mexican democracy is in tact. Barely a decade ago or so, the country was reeling from the war in the southernmost state of Chaiapas. There the Zapatista Army of National Liberation Front, the Zapatistas for short, struggled for full participation in the development and decision making process by the indigenous population of the impoverished region who were long disfranchised politically and economically and treated as social pariahs. Yet, Chiapas is the second largest agricultural producer in Mexico, producing 60 per cent of Mexico's total coffee output and the second largest cocoa producer in Mexico.

Starbucks is a byword for the fabled coffee of Chiapas. But, it was Los Cabos, the balmy seaside resort of Baja California that was to be the showpiece of Mexican tourism in 2012. This week when world leaders converged on the posh resort, their Mexican hosts had no intention of discussing liberation theology, the Zapatistas or the grimmer history of the country's backwaters. The worries of Eurozone sovereign debt were uppermost in most of the G20 leaders' minds.

At Los Cabos it was sunshine, azure skies and the turquoise waters of the Bay of California and the Pacific Ocean.

Tourism is Mexico's fourth largest source of foreign revenue and the country receives some 20 million tourists annually.

Mexico is a nation on the move, and yet there is always an uneasy feeling in the country of being eclipsed by its giant neighbour across the Rio Grande. There is also a nagging notion of being a neo-colony of sorts.

Mexico concluded the North American Free Trade Agreement (NAFTA) with the US and Canada, on 1 January 1994, ominously the day the Zapatista movement in Chiapas launched its uprising. Today 90.9 per cent of Mexico's exports go to its key trading partner the US. And, likewise, Mexico imports 53.4 per cent of its consumer and manufactured goods from the US. Mexico has the world's sixth largest electronics industry after China, the US, Japan, South Korea and Taiwan. Yet the fact that the US accounts for more than 90 per cent of its exports and 55 per cent of its imports gives the impression that it is still simply a US dependency.

What is a worry in the Western Hemisphere, American economic hegemony, is a small blessing in Europe. The Mexican economy is one of the world's fastest growing economies and with a gross domestic product (GDP) of $1 trillion is the 13th largest economy in the world -- the world's 11th largest by purchasing power parity.

So what is the price of prosperity? Or better still, what is the cost of sovereignty? The Mexicans, in conjunction with other major developing economies and emerging economies, such as Brazil and Argentina, for the first time in the history of the G20 summits, were determined to break the mould. The Latin American giants perennially fear that they lack influence on the Bretton Woods institutions namely the International Monetary Fund and the World Bank.

Mexico and Brazil understand that they need to demonstrate a potent cogency so far unseen in the Third World.

The merits of Mexico acting stronger now in the international arena are infinitely more convincing. Mexican President Calder³ön suggested putting the IMF in its place. "It's going to be the first time the fund is capitalised without the US, which reflects the importance of emerging markets," Calder³ön extrapolated. Brazil's Finance Minister Guido Mantega concurred with Mexico's Calder³ön. "We are going to make an additional contribution to the IMF," Mantega elucidated.

There are many reasons to be cheerful rather than fearful in Mexico. The Mexicans are minding their manners, though. Mexico's political establishment and economic elite's hope is that faith and trust in Mexico's economic future will build up gradually from the groundwork already laid by Mexican entrepreneurs and decision-makers. As Mexico and the EU hold their sixth Summit on the sidelines of the G20 Summit, the onus will not be on the euro or the peso per se, but rather on the potential of a more robust economic partnership. Mexico's former colonial master, Spain, is still an important trading partner but the two countries now see each other more as equals and Mexico is treated on an equal footing by its European economic partners.

Chinese President Hu Jintao likewise took his presence in Los Cabos to cement ties with his Mexican counterpart Calder³ön. Industrial production has held up surprisingly well, and China and Mexico are instrumental in rethinking global economic themes.

Brazil, too, is a rising Latin power that is not particularly interested in the European blame game. Brazil is buzzing. The arguments for Brazil's and Mexico's economic resurgence are finely poised. Brazil, with a labour force of 105 million, is the sixth largest economy by nominal GDP. Brazil's GDP is a staggering $2.517 trillion: one of the fastest growing economies on earth. Besides, Brazil and Mexico are in the forefront of the Latin American multinationals' phenomenon.

There is also the small matter of the Eurozone headache. We have seen this movie before in East Asia and in Latin America itself. So what if economic growth prospects in Europe are steadily downgraded? Latin America and Asia are on the rise.

The G20 summit by itself solves nothing, and the current course of unending depression in Europe is of little consequence to Asia and Latin America. Without a sense of improvement in Europe's economic fortunes, though, even more emerging economies may heed the siren calls of Europe's sickening horror movie and the Eurozone's nauseous soap opera. The upper echelons of the Brazilian and the Mexican social and economic cream of the crop ought to bring into focus the trials and tribulations of the less privileged of their compatriots.

But how could this altruistic spirit be measured? Perhaps, at forums like Los Cabos? And, the leftist policy-makers who appear to have the political upper hand in Latin America, and not the traditional comprador bourgeoisie, ought to pursue the interests of the Third World countries more vigorously and uphold the triumphant upsurge in the emerging economies' windfall.

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