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By ANTONIO GARZA, former U.S. ambassador to Mexico

The official start of summer is not until June 21, but the season of swelter is already making an early appearance in both the United States and Mexico, with temperatures soaring to record highs on both sides of the border.

And it is not just the meteorological thermostat that is scorching.

Political temperatures are also rising, and potential conflicts and near-miss economic catastrophes are coming to a head in the Western Hemisphere and around the globe.

With Memorial Day now behind us and summer just around the corner, the long holiday weekend last week left the U.S. Congress with just a few days to take action on the debt limit in order to avoid a catastrophic U.S. government default. Late last week, U.S. President Joe Biden and Republican leadership finally reached a deal to suspend the debt ceiling, which contains compromises for both political parties. The House of Representatives passed the bill late Wednesday, May 31, and the U.S. Senate followed suit late Thursday, June 1. The bill then headed to Biden’s desk for signature on Saturday, June 3, with just two days to spare before an unprecedented default. 

With the stated purpose of restoring peace in Ukraine and upholding the free and open international order based on rule of law, this year’s Group of Seven (G7) summit convened last month in Japan. Top of mind for G7 leaders were the ongoing Russian invasion of Ukraine, China’s aggressive economic tactics and the aftermath of the covid-19 pandemic.

Of note at the summit, G7 leaders stressed the need to “de-risk” from China –– instead of more extreme “decoupling” measures — in order to decrease supply-chain dependency and boost economic resiliency. Leaders also agreed to step up sanctions against Russia and provide more military aid for Ukraine. Last week, the Brazil, Russia, India and China (BRIC) group of emerging markets also met, with a focus on expanding their members’ influence and challenging the United States.

Of note at the summit, G7 leaders stressed the need to “de-risk” from China –– instead of more extreme “decoupling” measures — in order to decrease supply-chain dependency and boost economic resiliency.

In our own hemisphere, Mexican President Andrés Manuel López Obrador (AMLO) continues to unsettle investors by taking steps to concentrate power in the executive and undermine rule of law. Further south, Brazilian President Luiz Inácio Lula da Silva’s embrace of Venezuela’s autocratic leader Nicolas Maduro at a recent South American summit raised concern that there is no longer a region-wide consensus on what constitutes a democracy.

On Friday, May 19, López Obrador deployed the Navy to seize 75 miles of railway in southern Mexico. The railway –– operated by Grupo México via governmental concession -– is seen as critical to López Obrador’s Inter-Oceanic Corridor project that aims to connect Mexico’s Pacific and Gulf coasts. The Mexican president defended the action as motivated by “national security and public interest” and as temporary. Late last week, it appears that the government and Grupo México reached an agreement over the use of the railroad tracks. 

In March, López Obrador sent a series of bills to Congress to reform administrative, mining and environmental laws. This legislation gives broad, and at times seemingly arbitrary, authority to the executive, narrowing private investor rights in key sectors. The mining overhaul — which became law in early May — establishes a public bidding mechanism for mining concessions, reduces their maximum term and imposes new environmental safeguards. And Mexico’s legislative bodies will debate the president’s administrative reforms in its fall session. 

López Obrador’s latest moves have been broadly criticized as an overstep of executive power and damaging to market confidence. Investors have been increasingly concerned by these aggressive measures in the lead up to Mexico’s gubernatorial elections, which took place on Sunday, June 4, and 2024 presidential elections.  

López Obrador’s latest moves have been broadly criticized as an overstep of executive power and damaging to market confidence. Investors have been increasingly concerned by these aggressive measures in the lead up to Mexico’s gubernatorial elections, which took place on Sunday, June 4, and 2024 presidential elections.

Mexico’s judiciary has taken action to keep the executive branch in conformity with the country’s constitution. Last month, the Mexican Supreme Court (SCJN) struck down a presidential decree, which declared that the controversial Tren Maya tourist train and Inter-Oceanic Corridor transportation projects were a matter of national security. This designation would have allowed the Mexican government to keep aspects of the projects secret and prevent legal challenges from critics such as environmental groups. Earlier in the spring, the court also ruled that López Obrador’s measures to reform the country’s electoral system were unconstitutional.

On Sunday, May 28, protestors took to the streets across the country in defense of Mexico’s Supreme Court. In a press briefing last week, López Obrador claimed that the judicial branch was launching a “technical coup d’état” against his administration’s agenda. As might be imagined, commentators across the country expressed alarm at the president’s “authoritarian populism” and potential democratic backsliding.  

On the immigration front, May 11 brought an end to the controversial Title 42 policy in the United States, a public health measure in place since March 2020 that allowed U.S. border authorities to rapidly expel migrants in over 2 million cases. Despite predictions of chaos and a drastic increase in crossings, border apprehensions have been down 70 percent since May 11. In Title 42’s place, the Biden administration implemented a new regulation that restricts asylum eligibility for migrants, and in recent weeks, Mexican authorities stepped up enforcement to stop undocumented U.S.-bound migrants.  

Combatting fentanyl remains a top priority on the Biden administration’s bilateral agenda. Last week, the U.S. Treasury Department imposed sanctions on individuals and entities based in China and Mexico for facilitating fentanyl trafficking. This move came after the administration’s announcement in April of a strengthened approach to combat the drug’s supply chains. 

Geopolitical considerations –– including Mexico’s cooperation –– continue to present obstacles in U.S. efforts to halt the fentanyl epidemic. The United States recently charged 28 members of the Sinaloa Cartel, which has built a global fentanyl smuggling network. López Obrador criticized the U.S. investigation of the cartel for “abusive, arrogant interference,” and in the face of continued violence, the Mexican president recently said he would support a peace agreement with the cartels to stop the bloodshed.

Geopolitical considerations –– including Mexico’s cooperation –– continue to present obstacles in U.S. efforts to halt the fentanyl epidemic.

On the trade front, it appears that the United States-Mexico-Canada agreement (USMCA) consultations over Mexico’s energy policy may be on hold for the moment. Following a trilateral meeting in Washington D.C., Canadian Trade Minister Mary Ng said that Mexico was making progress in addressing concerns and a dispute panel wasn’t necessary for now; the Office of the U.S. Trade Representative appears to be taking a similar position. 

Mexican voters headed to the polls on Sunday, June 4, to elect the governors of Coahuila and the State of Mexico (EdoMéx). One year ahead of Mexico’s 2024 presidential elections, López Obrador’s National Regeneration Movement (Morena) party managed to increase its reach across Mexico’s 32 states, where it already held 22 governorships. Early polling results indicated that Morena won in the county’s most populous State of Mexico –– where for the first time both candidates were women –– and the opposition Institutional Revolutionary Party (PRI) retained power in the border state of Coahuila. 

Morena is already well positioned going into the 2024 presidential elections. Since taking office in 2018, López Obrador’s personal approval rating has hovered at 60 percent. The lead Morena contenders include close allies of the president: Mexico City Governor Claudia Sheinbaum, Foreign Relations (SRE) Secretary Marcelo Ebrard and Interior Secretary Adán Augusto López Hernández, widely seen as the election’s dark horse.