Will Mexico Feel Slighted by Choice of New US Ambassador?

| Jun. 10, 2011 |

Published by Minyanville

Earl Anthony Wayne has been nominated by President Barack Obama as the United States’ next ambassador to Mexico following the departure of Carlos Pascual in March. Pascual was forced to resign after WikiLeaks cables showed his harsh criticism of the Mexican authorities, specifically president Felipe Calderón. Foreign Policy points out that it probably didn’t help that Pascual was dating the daughter of a senior opposition party member.

Wayne has spent his career in the foreign service and will, if confirmed, move over from his current position as deputy ambassador to Afghanistan. He knows the region, having served as US ambassador to Argentina from 2006 to 2009.

The new posting should be a breath of fresh air for the somewhat delicate relationship between the neighbors. However, things may not be so simple. "Knowing the Mexicans, they probably won't like the fact that the US is sending them their man in Afghanistan," Kevin Casas-Zamora, a senior fellow at the Brookings Institution and a former vice president of Costa Rica, told the Foreign Policy magazine. “If they didn't like [Pascual's expertise in failed states], I can't see them liking the fact that Wayne comes straight from Kabul.”

Bank Chief Keeps Pushing for IMF Presidency
Mexico’s central bank chief is still campaigning hard to win leadership of the IMF. Over the last week Agustin Carstens has visited Canada, Brazil, Argentina and India. He, and many other emerging economies, are pushing for the long-held tradition of appointing a European head of the organization to end. "It is clear that for the moment, [European nations] have not managed to get to a situation where they have full credibility," Carstens told AFP. "So they need to make more efforts."

However, the emerging economies have failed to solidly back Carstens. India has declined support for either Carstens or his competitor France’s Christine Lagarde, touted by many to win the position, simply saying that the leader should be chosen for their suitability for the role rather than nationality. China made a similar comment, adding that the IMF should better represent emerging markets and changes to the global economy.

Carstens lack of strong support from emerging nations could be dues to the certainty of Lagarde’s win. Emerging nations, while wanting one of their own at the helm, are aware that it's not likely to happen and will not want to antagonize the French finance minister. "I am very satisfied with the meetings I've had in China," Lagarde said from Beijing. "I have a very positive feeling following these talks, but it's up to them to convey their decision. It's not up to me."

Inflation Cools, Stocks Fall
Domestically Carstens can shout about some success in cooling Mexico’s inflation figures last month. May’s annual figure fell to 3.25%, below the 3.36% expected by analysts. The central bank is aiming for 3% for the year. The current interest rate is sitting at 4.5% though is likely to rise in January 2012, according to investors. This is much slower than Latin America’s other emerging powerhouses.

Brazil this week raised its rate to 12.25%, the highest of the world’s large economies. It and many other emerging markets are making similar moves to quash the high inflation associated with brisk growth. Mexico, however, is flagging. While Chile and Peru also raise interest rates, Mexico’s are relatively low and its inflation figures reflect this.

With 80% of the country’s exports heading north into the United States, Mexico’s economy suffered further this week as fears rose on slowing US growth. This drove the Mexican peso down to a two-month low of 11.8395 to the US dollar. Stocks were also down with news of leftist Ollanta Humala’s win in Peru’s presidential elections on Sunday.

Copper miner Grupo Mexico (GMBXF) took the worst hit with the news, thanks to its considerable operations in the country through its Southern Copper Corporation unit. Its shares slid 7.5% on Monday.

The IPC index as a whole fell to a 2011 low, falling 1.3% on Monday to 34,673 points on a volume of 151.2 million shares worth $408 million. The market began the year at 38,696 points.

Carlos Slim’s America Movil (AMX) fell 1.3%, although speculation that the company is to win an appeal to overturn a decision that denies it a broadcast TV license has sparked a rally in bonds.