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H.R. McMaster: [00:00:00] America and other free and open societies face crucial challenges and opportunities abroad that affect security and prosperity at home. This is a series of conversations with guests who bring deep understanding of today's battlegrounds and creative ideas about how to compete, overcome challenges, capitalize on opportunities and secure a better future.
I am H. R. McMaster. This is Battlegrounds.
Voice Over: On today's episode of Battlegrounds, our focus is on Mexico, a long time strategic partner of the United States. We welcome back Dr. Jorge Castañeda, who served as Foreign Minister of Mexico from 2000 to 2003. Dr. Castañeda, holds a Ph. D. in Economic History and is a renowned public intellectual, political [00:01:00] scientist, and prolific writer on Mexican and Latin American politics.
He is the Global Distinguished Professor of Political Science and Latin American and Caribbean Studies at NYU, and has authored over 15 books. Mesoamerica, the region that begins in the southern part of North America and extends to the Pacific coast of Central America, was home to advanced ancient civilizations.
In the 15th century, the Aztec Empire, a confederation of three city states, became the dominant power in Mesoamerica, ruling from Tenochtitlan, what is now Mexico City. In 1521, Hernán Cortés led Spanish conquistadors to defeat the Aztecs with the help of local tribes resentful of their domination.
Spanish colonial rule lasted until 1810, when dissatisfied local elites initiated the War of Independence, resulting in the signing of the Treaty of Cordoba and the subsequent Declaration of Independence in 1821. In [00:02:00] 1846, border disputes over Texas erupted into the Mexican American War, which ended in 1848, with Mexico ceding half its territory to the United States.
Early 20th century Mexico saw protests against the undemocratic policies of President Porfirio Diaz amidst widespread poverty. Initiating a decade long struggle known as the Mexican Revolution. Diaz fled into exile in 1911, and Mexico signed its constitution in 1917. In 1942, Mexico declared war against the Axis powers, following the sinking of Mexican commercial ships by U boats.
Mexico prospered in the decades after World War II and was a key U. S. ally throughout the Cold War. The two countries began significant security collaboration in the 1980s. The U. S. Mexico Economic Partnership solidified in 1992, when President Carlos Salinas de Gotari signed the North American Free Trade Agreement with the United States and Canada.[00:03:00]
In 2007, the two countries announced the Marida Initiative, a U. S. assistance package to combat criminal organizations And strengthen border controls. Mexicans elected Andres Manuel Lopez Obrador of the Morena party, better known as AMLO, president in 2018. His left leaning government led Mexico through the COVID 19 pandemic and a subsequent economic downturn.
Despite the growth of crime and political violence during his tenure, Lopez Obrador will leave office with high approval ratings after his six year term with no possibility of re election. In June 2024, Mexican voters will cast their presidential ballots in the largest election in Mexico's history, where the leading candidates, Claudia Sheinbaum and Xochitl Galvez, present two different visions of how to balance democratic governance with strong centralized authority.
The Morena candidate for president, Claudia Sheinbaum, who is serving as the mayor of Mexico City, is favored to win the presidency. If she does, she will be the [00:04:00] first woman and Jewish president in the nation's history. Five months later, the United States heads to the polls. New administrations in Washington and in Mexico City will grapple with issues of trade, international investment, border security, and narcotics trafficking.
We welcome Dr. Castañeda, to discuss the future of Mexico and Mexican U. S. relations.
H.R. McMaster: Jorge Castañeda, welcome back to Battlegrounds. Great to see you and great to have you on, this, series. It's such a critical time for Mexico and North America.
Jorge Castañeda: It's an honor, General. I'm great. I'm really happy to be back.
H.R. McMaster: of course, we're speaking on the eve of the Mexican elections. I think everybody thinks the election is going to go more like a coronation at this point than a than an election at the presidential level, at least.
and, of course, the candidate, Claudia Scheinbaum, the former mayor of Mexico City, is Maintained a double digit lead in [00:05:00] the polls and she promises to be a continuation of the populist leader President López Obrador's Policies, he's backed by his marina party. can you really, place this election maybe in broader context?
I mean you've been a close observer in and participant in mexican elections for decades
Jorge Castañeda: well, it's a very significant election in many ways because Although everybody always says both in mexico and the united states and just about everywhere This is the most important election in our lifetime, etc.
We've both heard that so many times This one is important for One basic reason, which is that from 1994 on, we have had elections and an electoral process and a representative democracy that is better and better each time, still imperfect, full of defects for a country that never had elections before, never meaning [00:06:00] never.
All of the elections before 1994. were a sham. They were not for real, either in the 20th century or in the 19th century. So for a country that had never had this, the fact that we have now gone from 94 and mainly 2000, 2006, 2012, 2018, that's a lot of progress. This election Could mean that we're moving back towards where we were in the eighties and seventies in the sense that it is an unfair election from the get go because the president that there's Manuel Lopez Obrador has made a point of interfering in the electoral process from the very beginning using government programs, government resources, government officials of all sorts to try and back his candidate and ensure her election.
The media have been terribly skewed in her favor. There have been the governors of [00:07:00] Mexico's 32 states, 23 of which are in Morena hands, have been heavily favoring her. So in many ways, this is no longer An improvement on the previous election in terms of being more democratic, freer and fairer, it is less free and less fair.
H.R. McMaster: So you're touching on, I think, some of the key legacies of the Lopez Obrador and Morena phenomenon. You've observed him closely, he's been on the scene for a long time. In the administration which you served under President Vicente Fox, he denied the validity of that election when he was a candidate.
And, and he, his motto became, to, first of all, Primero los Pobres. So he was trying to make this a populist movement, but he also said at the time to hell with your institutions. And, and I, wonder if you could explain more about the degree to [00:08:00] which. Lopez Obrador has impinged on Mexican democracy and institutions broadly.
Jorge Castañeda: he has done so on many fronts, some of which were more failed attempts, but some of which were successful. So he has tried to weaken or to do away with many of the autonomous. agencies or independent agencies that have been set up in Mexico over the past 30 years. The Statistical Institute, the Transparency Institute, the Electoral Authority, the Federal Competition Commission, etc.
All of these He has either weakened or done away with. He has respected the autonomy of the central bank, but barely, let's put it that way. he has gone after the Supreme Court and has promised to stack it if his candidate is elected. And by stacking, I mean he wants to remove the current Supreme Court [00:09:00] and have justices elected by universal suffrage, which is something outrageous.
The only other country in the world that does that with its Supreme Court is Bolivia, which is not exactly an example to follow. and he has pursued what many people see as the most worrisome aspect of his anti democratic leanings, general, the militarization of Mexico. He has commissioned the army to do a series of things it had never done before.
It's not just law enforcement, which it has always been a little bit involved in, and much more involved in, drug enforcement and law enforcement since 2007. But most importantly, he's got it to build and run airports. Build and run trains, hotels, banks, customs, the ports, everything under the sun. And this is very worrisome because the Mexican [00:10:00] army has remained aloof, away from politics since the 1920s.
And that was a big deal, compared particularly with the rest of Latin America. So that's another aspect of the way he has weakened Mexican democracy. And if Claudia Sheinbaum were to be elected, he has promised and she has promised to follow him that they will further concentrate power enormously.
That's what a lot of people are worried about. I think,
H.R. McMaster: what people are worried about I think in particular is if Marina wins a super majority in both in, in, in the legislature, and in both houses and would allow the party wouldn't it to pass. some of the constitutional legal so called reforms that Lopez Obrador was pushing but couldn't get all the way across the finish line during his presidency.
Could you explain what's at stake, and why, it makes a difference the degree [00:11:00] to which, Scheinbaum wins, in terms of the numbers of seats in, in the Congress?
Jorge Castañeda: if, her party obtains two, a two thirds majority, In both houses, and automatically, by the way, in all 32 local assemblies or state assemblies, then she can change the constitution.
Which means she can change the composition and the way the Supreme Court is picked, the composition and the way the electoral court is picked, and the constitution, the formation and the, way the electoral authority, let's say the Federal Electoral Commission, is picked in Mexico. And that in itself would be an enormous difference, because it would mean that you can, the only bulwark against.
Lopez Obrador's reform so far has been the Supreme Court on energy. On, human rights, particularly [00:12:00] on, locking people up while they are being tried, prolonged detention, and a series of other changes that Lopez Obrador attempted to achieve and was unable to do so because the Supreme Court shot them down.
But if they are able to change the composition of the court, or change the court completely, then there will no longer be that bulwark. And the way they can change the court is by changing the constitution, and for that they need the two thirds majority. Right now it doesn't seem likely. But first of all, the electoral results will not necessarily tell us all we want to know about those super majorities because Lopez Obrador and Scheinbaum are very skillful at rounding up other people's votes.
They've done it before, and there will be enough senators and congress people out [00:13:00] there after the election. Who would be willing to sell themselves, for interesting retro, compensation.
H.R. McMaster: And some, observers have said, what is at stake is the de democratization of Mexico. Do you think that's an overstatement or are you, concerned?
No,
Jorge Castañeda: I agree with that statement. I think it's already been happening, but has not gone as far as Lopez Obrador would have wanted, but a landslide victory and a two thirds majority in both houses and retaining the mayor, mayoralty of Mexico City, which is the country's second most important job. because of the importance of the city and the economy and everything else, if they were to get that, I think we, Mexican democracy would be in very severe danger, which is, by the way, General, something that I would have imagined people in Washington would be somewhat concerned about, [00:14:00] but I see more indifference than anything else.
H.R. McMaster: I think there's just a strange affinity for some of the left leaning governments in the hemisphere in the current administration, I think, but not to delve too deeply into that, but this, this, tendency to, to have this kind of, Affinity for left leaning governments. We saw that with the opening to Cuba under the Obama administration, doing the wave with Raul Castro in a baseball game.
I think there is this, I think strange affinity by certain members of maybe the State Department and, and the administration toward these, left leaning, governments. I, it's hard, I think for some of our, viewers to understand. Jorge, like what, is the source of Marina's support, right?
the security situation in Mexico is pretty bad now, right? The cartels are, getting stronger and stronger. there's been electoral violence, at the local level. perpetrated mainly by, narcos [00:15:00] eliminating, eliminating, competition or as well as any candidates who didn't pledge to, their intentions before the election.
and so there's this toxic situation of cartels and gangs that are battling for turf. I think. I think the number's over 20 of people who have been assassinated, who are seeking political office, this year. and the hugs not bullets approach, of Lopez Obrador didn't work. So where is his popularity coming from or Moreno's, popularity coming from?
Jorge Castañeda: I think it comes, it stems from several sources. firstly, there are the, there is the discredit that the last three or four administrations fell into, including the one I, which I worked with, sometimes fairly, sometimes unfairly, but a lot of mistakes were made. A lot of opportunities were missed.
A lot of Challenges were unable to be met. [00:16:00] And so when Lopez Obrador runs for office in 2018 for the third time, he really can point to a record of, let's say, the absence of success of the democratic administrations that preceded him. So that's one. A second one is that. He has been able to, distribute handouts to an enormous amount of people, the elderly, the handicapped, indigenous people, high school students, slightly older youngsters who have neither a job nor are in school, some women, et cetera, which given the incredibly low level of Mexican incomes over the past 30 years, which given the incredibly low level of Mexican incomes over the past 30 years, A tiny little bit of money in macroeconomic terms becomes a whole lot of money in someone's pocket or in a family's pocket.
And this has shown up in the polls. [00:17:00] Among the polls that have been taken recently, Claudia Sheinbaum comes out way ahead among those who receive the government handouts. But Xochitl Galvez significantly ahead among those who do not receive government handouts. It's really crystal clear. And that is a second very important explanation.
And perhaps the third one is He does have a kind of common touch. He is certainly not a man of the people in many ways. His grandfather was Spanish. he has a university degree in a country where very few people do. et cetera, et cetera. But he has the common touch. He has a way of connecting to the people of Mexico that not too many of his predecessor had.
he makes people feel that he cares about them. And that's a big deal in a country where [00:18:00] a lot of people have felt neglected, dismissed, underrepresented for many years.
H.R. McMaster: I wonder if we could talk maybe about the new administration anticipation of a rain of victory, even though we don't know the extent of that victory.
What do you think that the new administration will do on some of the big issues that concern people in the United States these days, especially border security and immigration and of course, illegal immigration in particular, but I know you've been dealing with these issues back to the George W.
Bush administration when you serve President Vincente Fox and. You are a strong advocate for a much more sensible legal immigration policy as connected right to dealing with illegal immigration and border security. But can you maybe share your assessment of those issues, but also what you think is a likely trajectory?
for Sean Baum, administration.
Jorge Castañeda: Sure. I think on immigration, she [00:19:00] will pretty much do what Lopez Obrador has done, which is when presidents Trump and Biden asked him to do what I consider, I know it's not a nice term, but what I consider sometimes the United States dirty work in Mexico, they, he did. when, this is the
H.R. McMaster: remain in Mexico policy, the remain in Mexico policy.
Jorge Castañeda: De facto safe third country policy. The fact of having Mexico accept, people being deported from the United States who are not Mexican, Cuban, Nicaraguan, Venezuelan, Haitian, etc. They may have come from Mexico, many of them, probably the majority of them, but they are not Mexican citizens. in a strictly legal sense, Mexico does not have the obligation to receive them.
We have to receive all Mexican deportees, for whatever reason the United States deports them, and that's a domestic U. S. issue. But, when you [00:20:00] deport, an Ecuadorian to Mexico, normally what a country would say is, Deport him to Ecuador if you want to deport him, but don't send him back to us because he's not ours.
I think Scheinbaum will continue with much of this policy. Hopefully she will revamp the Mexican National Immigration Institute. Which is let's say the equivalent of your CVP, which is disastrous. It's corrupt. It's savage. It violates human rights for breakfast every day. It is as bad as it gets. It's really terrible.
And that would be something that would be much more important to do. And the second thing she might consider doing. And I think she should look into this, General, which is to try and reach an understanding with U. S., similar to the understandings that the European Union has reached with Turkey, with Egypt, with Tunisia, with Morocco, and even Britain wants to do it [00:21:00] with Rwanda.
Not a great idea in my opinion, but okay. Which is basically, all right, you keep them. But we'll pay for them because it costs an enormous amount of money to be able to have people stay in Mexico under acceptable conditions, in terms of security, in terms of accommodation, lodging, in terms of food, in terms of hygiene, just about everything is cost an enormous amount of money because we're talking about hundreds of thousands of people.
So perhaps she will move in that direction, which I consider I think would be a sensible one. On security and on drugs. Again, I think she will be very similar. Her policies will be very similar to López Obrador's. Perhaps not hugs instead of bullets, because that has been such a miserable failure that it's going to be difficult to keep doing it.
But I think there will be a little bit of the same [00:22:00] let and live and let live. Attitudes that Lopez Obrador had with the drug cartels, unless some kind of understanding can be reached with the United States, where there is much further, much greater cooperation between the two countries in fighting the cartels, but in ways that are also beneficial and acceptable to Mexico, not just what the U.
S. would like, which is understandable. Countries defend their own interests, but they're not always entirely the same.
H.R. McMaster: Of course, U. S. Mexican relations will depend in large measure on this election in Mexico, but also the election in the United States this year. And what is your prediction on how a Scheinbaum administration might interact with a Trump 2.
0 administration, especially at a time when The most prominent issue is border security, it may be a second to that you've already mentioned is the drug [00:23:00] issue and you've had some Republicans talking about using the US military to chase narcos and in Mexico, are you concerned about, the interaction between these two administrations.
I was, in the Trump administration, President Trump had this kind of strange soft spot, right? For Lopez Obrador, he thought of him as a populist leader, like he was, a populist leader. But I wonder if that's worn off in terms of Morena's policies and, and if there is going to be a really difficult phase in the relationship, potentially, in this next year and beyond.
Jorge Castañeda: Well, General, without being disrespectful to former President Trump, but my impression is that he didn't always get along famously. With female counterparts. I recall several instances of his meetings with Chancellor Merkel from Germany, [00:24:00] which didn't always go out, go down very well. and I think it would not be easy, although President Trump is a very skillful politician and a very, sophisticated individual, behaviorist, let's say.
He would probably be very respectful of Claudia Sheinbaum because she's the president of Mexico full stop. But I don't know how good the vibes would be. So that's one thing to take into account. And another one is that, Claudia Sheinbaum is probably less transactional than López Obrador was.
López Obrador understood perfectly well, When President Trump threatened to slap a 25 percent tariff on all exports from Mexico or imports to the United States from Mexico, if Mexico did not accept the remain in Mexico policy and, Lopez Obrador [00:25:00] accepted it because he understood the transactional nature of this thing.
you give me something, I give you something, and we're okay, we're fine. She is probably a bit more ideological, a bit less transactional than that, and they may have some rough encounters at the beginning. All of this, of course, on the understanding that former President Trump is elected, with Biden, it would be easier, I imagine, because although she hasn't met him, she certainly will go to Washington to speak with him before the November elections, this has always occurred, and there's been enough contact between the López Obrador administration and the Biden administration that many of the people who have worked with them, will be surrounding her.
H.R. McMaster: how about in terms of other policies where he can we talk a little bit about how you think she might be different or maybe the same as [00:26:00] Lopez Obrador and in the area of private sector investment, for example, I'm thinking of Lopez Obrador's treatment of Pemex and Pemex debt and so forth and his soft spot for state owned enterprises, but it generally, a hostile attitude right toward private investment.
Could you. Talk about the trajectory that you see from a economic and financial perspective, in a new administration.
Jorge Castañeda: I think it's important to point out that the contrast in the Lopez Obrador administration, he, I agree with you entirely. He is not particularly, he's not a great fan of private investment or foreign investment.
But the Mexican business community, the big business community, has done spectacularly well under López Obrador. They have made money like it was going out of style. And so there's a little bit both attitudes on his part. I think she will be similar in many ways. [00:27:00] Now she has probably an even more statist attitude towards, private investment and towards economic development than López Obrador does.
She believes in a strong PEMEX. People, for example, have been saying for some time now that she would be more amenable to renewable, energies or, air, wind and, sun, for example. But she wants To have them carried out by Pemex. She wants to put wind and solar energy into Pemex. It's not that she wants the private sector to invest in that.
She wants Pemex to invest in that. God knows how, because as it is, it always, 105 billion. It's the most indebted oil company in the world. So I'm not sure where the money for Pemex to get involved in those in renewables is where the money is going to come from. But I think she's going to be perhaps a bit less pragmatic than many people in the U.
S. Media [00:28:00] are making her out to be on at least on these matters.
H.R. McMaster: And there's so many, I think, potential opportunities aren't there in terms of, in terms of the nearshoring trend, the concern about supply chains and to become overly, reliant on single points of failure, especially in China, for example, I'm thinking of.
the vast reserves of natural gas in the United States and the opportunity to export liquefied natural gas from Mexican ports and the transit fees associated with those kinds of opportunities and the investments in infrastructure. And so I just think there's so many opportunities for the US and Mexican economies.
Do you think we're able to take full advantage of that under a Moreno government?
Jorge Castañeda: I think we would probably be able to take better advantage of all of this, General, if we didn't have a Morena government. If Xochitl Galvez were to win. But that seems unlikely. And [00:29:00] the Key question is whether a Scheinbaum administration will want to do all of the things that López Obrador has not done, in order to take advantage of this new, these new opportunities.
For example, practice, there has been practically no increase in Mexico's power and generation over the last six years. the administration began at around 51, 52, 000 megawatts. capacity, and we're at about 53, 54, meaning there's been no increase, probably practically whatsoever, even though the economy has grown a little bit, not a whole lot either, by the way.
I don't even want to imagine what would have happened if the Mexican economy had grown, but the generation of power had not. for example, how do you invite new companies. For example, how do you convince Tesla to actually build its plant in Monterrey? Not just [00:30:00] talk about it, but build it. If it can't get the power, and in the case of Monterrey, the water that it needs there.
Mexican infrastructure is incredibly defective in terms of receiving all of these Plants all of these enterprises from China or from elsewhere in the world to come to produce here within the North American market within U. S. M. C. A. that means investing a lot in all of these things. Will she do that?
I have my doubts.
H.R. McMaster: You mentioned U. S. M. C. A. Of course, U. S. Trade Representative Bob Lighthizer wrote into that agreement that it has to be renegotiated. In 2026. So I think they're going to be a series of challenges like in a relationship associated with border security and immigration and narcotics trafficking.
I think the investment environment, but USMCA is going to come up again in 2026. And I think there's a big concern about China offshoring [00:31:00] production in Mexico and thereby circumventing US trade enforcement mechanisms, tariffs and so forth. Are you concerned about, USMCA and its viability? Say if it is a, Scheinbaum, Trump, interaction?
Jorge Castañeda: I am concerned because for reasons that I don't necessarily agree with, the Biden administration has looked the other way on many of Mexico's violations. It has not necessarily Gone, asked for requested panels when it had the right to do It has not pushed a resolution of many of the controversies that have emerged.
It has been, let's say, soft on. Mexico and AMLO for reasons having to do with immigration. I'm not sure the Trump administration will do that. By the way, I'm not sure the Biden administration will do that in its second term, [00:32:00] if president Biden were to be reelected, because he would no longer have the election reelection challenge.
ahead of him. And there are a lot of things that Mexico has not complied with. There are some that the U. S. hasn't complied with, by the way, like this norms of origin, rules of origin for the automobile industry, in which a panel ruled against the U. S. and in favor of Mexico and Canada. and the U. S. has not complied.
We're not the only ones who are, let's say, guilty in this, area. But of course the big issue is what you just mentioned, General, which is the revision in 2026. And I can see how a lot of people in the United States Especially under a Republican administration with an increasingly protectionist Republican Party.
It's no longer the Republican Party of, Presidents Bush, 41 and 43, will respond to the demands of many sectors in the U. S. who [00:33:00] feel that, Mexico once again, Has not really complied with many of the provisions of the agreement in a similar fashion to what happened with NAFTA between 1994 and 2000, 20, 2020.
Exactly. Yes. So we'll have to see. I think it's going to be a big. headache for everybody. I agree with lightizers reasons for including the sunset clause or equivalent of a sunset clause. But that doesn't mean it's not going to give everybody a real pain.
H.R. McMaster: Yeah, it wasn't easy 2018 2019 either.
So I think, a lot of it will depend, A lot of the relationship will depend on, people on both sides, Who becomes foreign ministers and secretary of states and so forth. Can you talk a little bit more about the personalities in Marina and who do you think is going to go into some of the critical positions in government, those, especially with [00:34:00] oversight over foreign policy.
internal security and, and, and commerce and trade.
Jorge Castañeda: on, the trade side, a lot of people are saying, this is still, we're still far away from this, two or three months away, but many people are saying that former foreign minister, Ebrard, Would be named a secretary of the economy or the equivalent, the people who negotiate the trade stuff.
It's not exactly USTR. It's not exactly us department of commerce. It's a little bit of both. that's what the rumor mill has it in terms of that type of a job for the foreign ministry. There are. two main candidates, the current foreign minister, who was only appointed a year ago. She has a very professional background from the UN, and, she might be able to convince, Scheinbaum, if Scheinbaum wins, to stay on for a [00:35:00] year or a year and a half because Given her UN background, she might be interested in running for Secretary General of the UN in 2026.
And it's much easier to have a candidacy of that sort from the foreign ministry than, for example, from New York. from the permanent mission in New York. Conversely, the other leading candidate is our recently, who was until recently our permanent representative in New York at the U. N., Juan Ramon de la Fuente, who is very close to, candidate Scheinbaum.
And who has the experience of having been UN ambassador for five years, and particularly two years on the Security Council, which as is probably the best school there is, to learn, about international relations.
H.R. McMaster: And can you, maybe foreshadow some of what you think the policies might be in the commercial sector?
For example, Pemex [00:36:00] has a huge debt. Do you think that's going to be absorbed into the sovereign into sovereign debt? there are questions I think some people have about the degree to which joint ventures might be possible in the energy sector with Pemex. Can you think of any kind of specific policies that might in, create opportunities, for investment or, partnerships or joint ventures, with, with Mexican companies, but maybe even Pemex in particular.
Jorge Castañeda: Pendo, the, farmhouses with Pex. the 2013 law is still in place. Lopez Obrador tried to change it. the Supreme Court ruled that the changes were unconstitutional, so the law pretty much stands as it is right now, as it was and as it is. That has not stopped López Obrador from, in fact, disallowing foreign investment, either in partnerships with Pemex or with new auctions, etc.
[00:37:00] They just haven't happened. Now, if she gets a supermajority and she's able to change the Constitution, and change the court, then probably she would want to do what Lopez Obrador sought to do, but was unable to, and make it even more difficult for foreign investment with Pemex, etc. On the other hand, more and more people say in Mexico, without my knowing if this is the case, that the temptation To a swap, but that makes that for United Mexican States that is overwhelming.
Now the spread is somewhere around. I don't know, 500, 600, some people would even say 700 basis points. That's we would be saving seven, eight, maybe even 9 billion a year in debt service by carrying out this swap. Some people don't like the idea because they say it will [00:38:00] contaminate or pollute UMS, which has a, it was a, has a very strong debt rating.
And Pemex does not. but that probably will occur and that will make Pemex a little healthier and have more cash flow available to it. But a lot of new initiatives on oil and gas with foreign companies, I really just don't see it happening in general.
H.R. McMaster: I'd like to ask you just a general question here, where do you think the opportunities are in the US Mexico relationship in the next several years, what do you think the priorities ought to be in terms of how we can work together to build a better future for both of our countries and to promote your prosperity security.
in North America broadly,
Jorge Castañeda: there, there are several ideas out there, which I am not sure. I, know the details of all of them, but I think they give us somewhat of a road [00:39:00] map. For example, there's an idea of some kind of North American security arrangement, something that would be the security equivalent of, USMCA and NAFTA before it, with joint actions, probably without the Canadians, because they don't like this stuff.
They never like any trilateral stuff. You, we all love the Canadians and they love us, but they like to keep their own relationship with the US. on its own, but between Mexico and the United States, much more security cooperation, perhaps with a greater American presence, but a negotiated presence, something that is done on basis of agreement by the two parties, not something that is done unilaterally.
By the United States. I think that's an area of opportunity, which can be very important. It's obvious that Mexico by itself has been unable to weaken or destroy the cartels [00:40:00] over the past, I don't know, 16 17 years since all of this started back in 2000 and seven. So that's one area. I think infrastructure is another one.
If President Biden And I think, by the way, former President Trump's attitude towards China, North America, et cetera, they're very similar. If that, if they really want to think of enhancing North American competitiveness and the North American response to China, then that means using Mexican infrastructure to a much greater degree, and that means far greater U.
S. investment in Mexican infrastructure. Trains, highways, ports, airports, the works. Including the border, of course, but not just the border. The border is filling up, General, there, there's not a hell of a lot of room left to put [00:41:00] factories on the border, because either it's mountains or desert, or the cities are already overwhelmed.
And it's much better for Mexico, for all of this nearshoring, or whatever it's gonna be called, to move away from the border, further south. Not to the southeast, but a couple of hundred miles, three, four, five hundred miles south of the border. But that means infrastructure. And that means money. And that means, at the end of the day, American money, because Mexico simply doesn't have it.
And it's the best investment by the way, I think the U. S. could make.
H.R. McMaster: I, think the potential is tremendous. It's just, I do worry about the business climate, in, in, Mexico, under Moreno, as we've discussed already. And, can I ask you just as we, wrap up here, Jorge, an unfair question, because the dynamics in the region, are so complicated broadly, but of course, every country there, there are different dynamics at work, but we've seen this, sort of pink wave in the region of movement to the far [00:42:00] left in some countries, like in Ecuador, for example, there's been a shift back to the right, but, in, in a country that was, staunch American ally in Columbia, for example, you have Gustavo Petro, who seems to have, almost a, an anti American anti West, a post modernist, post colonial view of the world in an extreme way.
how do you see the dynamics in the region and how do they, how do those dynamics bode for, for security, but also, economic discourse and commerce?
Jorge Castañeda: López Obrador talks, As the Texans would say, he's all hat and no cattle. and as far as this is concerned, he has been friends with the Cubans.
He's given them oil for free. He's brought Cuban doctors to Mexico. He's been friendly, a bit less but friendly with Maduro in Venezuela. He's had these fights over other issues [00:43:00] like Evo Morales in Bolivia and what happened recently with Ecuador. But by and large. Lopez Obrador in, let's say, the new U.
S. China rivalry, or Cold War, or whatever you want to call it. He has been pretty firmly in the U. S. camp. As I say, he talks a lot. But at the end of the day, he comes down pretty clearly on where Mexico's interests lie. And Mexico's interests lie clearly on the U. S. side in that war. Rivalry with China.
Now that doesn't mean he doesn't like to poke his finger in uncle Sam's eyes every now and then HR. And you're familiar with this, you've lived through it, you know what it is. and, Ms. Scheinbaum will probably do the same sort of thing. although she, lived in the States for some time. she has a sister [00:44:00] who lives in Los Angeles.
She, her parents are from a very cosmopolitan background, so she's not exactly as provincial, let's say, as López Obrador has been, so I would think that probably the best idea for the U. S. would be to do what both Trump and Biden did, which is, if she wants to You know, be nasty every now and then and be mischievous every now and then and be buddy with the Cubans and people like that and even not be very cooperative on major issues like Ukraine or the Middle East.
At the end of the day, if Mexico remains on the U. S. side in the most important rivalry which exists today, which is U. S. China. That really matters more than anything else does
H.R. McMaster: we're gonna just like to offer you the last word on anything you'd like to say [00:45:00] about the election the implications for the elections the u.
s Upcoming election implications What's your message for Our last message for our viewers.
Jorge Castañeda: this is a very important election for Mexico. we've only had five or six real, elections in our, history. So by definition, every one of them is very, important. And there is a real danger.
Of backsliding in Mexican democracy, and in the same way that the US, particularly after during the Clinton administration and the Bush 43 administration played an important role in Mexico's democratization. I think it's important that Washington continue to play a role in defending, promoting, protecting Mexico's democracy.
Not getting involved, at the end of the day these are Mexican affairs and have to be, but being perhaps a bit more [00:46:00] forceful, a bit more explicit, a bit more public, particularly now that the elections are coming, and that we don't know how things are going to turn out. They may turn out very well in terms of a proper process, and the winner winning by a proper margin and the loser conceding her defeat, whoever it may be, and everything could come out just fine, or maybe not.
I hope that people in Washington are watching closely.
H.R. McMaster: Minister Castagnetti, I can't think of anybody better to help us understand this election, the importance of this election and its implications. Thank you for joining us on Battlegrounds.
Jorge Castañeda: Thanks a lot. I really appreciate the invitation.
H.R. McMaster: It was great to be with you again.
Voice Over: Battlegrounds is a production of the Hoover Institution where we generate and promote ideas advancing freedom. For more information about our work, to hear more of our podcasts or view our video content, please visit [00:47:00] hoover.org.
