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Protests, Trump threats: A rocky New Year for Mexico

-

Mexico is already having a year to forget.

Mexicans woke up from their New Year celebrations on January 1 with the highest increase in gasoline prices in years that sparked daily protests and looting that left at least three people dead.

On top of that, Ford scrapped a new car factory, the peso fell to new lows and, to cap the terrible week on Friday, US President-elect Donald Trump renewed his vow to make Mexico pay for a border wall.

"Everything has come together like a perfect storm," said the president of the binational American Chamber of Commerce of Mexico, Jose Maria Zas.

Trump's wall threat prompted former president Vicente Fox to respond with an F-bomb for the second time since last year, while the economy ministry rejected any threats against investors.

President Enrique Pena Nieto, whose approval rating was already below 25 percent, used his nationally televised New Year's address late Thursday to defend the gasoline price increase and promise to seek "positive relations" with the Trump administration.

Pena Nieto said the 20.1 percent hike in gasoline prices was linked to an increase in international oil prices.

The government is ending fuel subsidies and hopes that prices will go down when the market begins to dictate how much drivers will pay in March.

Maintaining "artificial" prices, Pena Nieto said, would have forced the government to cut welfare and healthcare programs.

Pena Nieto asked his nation: "What would you have done?"

- Who's behind looting? -

For now, Mexicans have held protests, blocked highways and service stations, clashed with police, and looted hundreds of stores.

The looting intensified on Wednesday and Thursday ahead of the January 6 Three Kings' Day, as people stole televisions, clothes and toys from department stores. Hundreds of people have been arrested.

Fewer incidents were reported on Friday.

Luis Carlos Ugalde, director general of the political consultancy Integralia Consultores, said it was unclear whether the violence was organized by political or criminal groups, or a spontaneous display of public anger.

People pick up toys as they loot a store during a protest in the port of Veracruz  Mexico  on Januar...
People pick up toys as they loot a store during a protest in the port of Veracruz, Mexico, on January 4, 2017, related to a 20 percent gasoline price increase
Ilse Huesca, AFP/File

"What's clear is that there are many groups in many regions of the country who are willing to use any event, any situation, to spread problems of violence," Ugalde said.

The looting has cost businesses millions of dollars but Raul Feliz, analyst at the Economic Research and Teaching Center in Mexico City, said investors are more concerned about something else.

"Investors are more worried about what Trump is doing than the protests, though it will be another negative factor if they get out of control and spark general chaos," Feliz said.

- Negotiate to 'reduce fears' -

While he has yet to take office, Trump -- who becomes president on January 20 -- has already caused the peso to fall with his pledge to renegotiate the North American Free Trade Agreement (NAFTA) and his threats to slap tariffs on companies that ship jobs to Mexico.

The peso tumbled by 3.02 percent this week, trading at 21.55 pesos per dollar.

"The uncertainty surrounding the trade policy that Mexico faces with Trump clouds the outlook and makes any calculation difficult," Feliz said.

"The most important thing is to see how he will change the rules, because if he opts for tariffs on imported goods he could bring the Mexican economy into recession," Feliz said.

This week, the Republican billionaire threatened US automaker General Motors and Japanese rival Toyota, both of which make cars in Mexico, with stiff import taxes.

In a veiled reference to Trump's tweets, the Mexican economy ministry said Friday it "categorically rejects any attempt to influence the investment decisions of companies on the basis of fear or threats."

But Mexico appears to want cordial relations with Trump's administration.

Earlier this week, Pena Nieto brought back his former finance minister, Luis Videgaray, naming him foreign minister to lead negotiations with the incoming US administration.

Videgaray had resigned in September after it was revealed that he had organized Trump's widely-criticized pre-election meeting with Pena Nieto in Mexico City a week earlier.

Analysts say Videgaray's previous contacts with the incoming administration could be an asset in future talks.

"After negotiations between the Mexican government with Luis Videgaray as the main negotiator and the Trump team," Ugalde said, "we will probably be able to see an agreement, an arrangement, a common policy that reduces fears."

Fox was less diplomatic after Trump renewed his vow to make Mexico pay for a massive wall along the US-Mexico border.

"TRUMP, when will you understand that I am not paying for that fucken wall," the Mexican former president wrote on Twitter.

"Be clear with US tax payers. They will pay for it."

Mexico is already having a year to forget.

Mexicans woke up from their New Year celebrations on January 1 with the highest increase in gasoline prices in years that sparked daily protests and looting that left at least three people dead.

On top of that, Ford scrapped a new car factory, the peso fell to new lows and, to cap the terrible week on Friday, US President-elect Donald Trump renewed his vow to make Mexico pay for a border wall.

“Everything has come together like a perfect storm,” said the president of the binational American Chamber of Commerce of Mexico, Jose Maria Zas.

Trump’s wall threat prompted former president Vicente Fox to respond with an F-bomb for the second time since last year, while the economy ministry rejected any threats against investors.

President Enrique Pena Nieto, whose approval rating was already below 25 percent, used his nationally televised New Year’s address late Thursday to defend the gasoline price increase and promise to seek “positive relations” with the Trump administration.

Pena Nieto said the 20.1 percent hike in gasoline prices was linked to an increase in international oil prices.

The government is ending fuel subsidies and hopes that prices will go down when the market begins to dictate how much drivers will pay in March.

Maintaining “artificial” prices, Pena Nieto said, would have forced the government to cut welfare and healthcare programs.

Pena Nieto asked his nation: “What would you have done?”

– Who’s behind looting? –

For now, Mexicans have held protests, blocked highways and service stations, clashed with police, and looted hundreds of stores.

The looting intensified on Wednesday and Thursday ahead of the January 6 Three Kings’ Day, as people stole televisions, clothes and toys from department stores. Hundreds of people have been arrested.

Fewer incidents were reported on Friday.

Luis Carlos Ugalde, director general of the political consultancy Integralia Consultores, said it was unclear whether the violence was organized by political or criminal groups, or a spontaneous display of public anger.

People pick up toys as they loot a store during a protest in the port of Veracruz  Mexico  on Januar...

People pick up toys as they loot a store during a protest in the port of Veracruz, Mexico, on January 4, 2017, related to a 20 percent gasoline price increase
Ilse Huesca, AFP/File

“What’s clear is that there are many groups in many regions of the country who are willing to use any event, any situation, to spread problems of violence,” Ugalde said.

The looting has cost businesses millions of dollars but Raul Feliz, analyst at the Economic Research and Teaching Center in Mexico City, said investors are more concerned about something else.

“Investors are more worried about what Trump is doing than the protests, though it will be another negative factor if they get out of control and spark general chaos,” Feliz said.

– Negotiate to ‘reduce fears’ –

While he has yet to take office, Trump — who becomes president on January 20 — has already caused the peso to fall with his pledge to renegotiate the North American Free Trade Agreement (NAFTA) and his threats to slap tariffs on companies that ship jobs to Mexico.

The peso tumbled by 3.02 percent this week, trading at 21.55 pesos per dollar.

“The uncertainty surrounding the trade policy that Mexico faces with Trump clouds the outlook and makes any calculation difficult,” Feliz said.

“The most important thing is to see how he will change the rules, because if he opts for tariffs on imported goods he could bring the Mexican economy into recession,” Feliz said.

This week, the Republican billionaire threatened US automaker General Motors and Japanese rival Toyota, both of which make cars in Mexico, with stiff import taxes.

In a veiled reference to Trump’s tweets, the Mexican economy ministry said Friday it “categorically rejects any attempt to influence the investment decisions of companies on the basis of fear or threats.”

But Mexico appears to want cordial relations with Trump’s administration.

Earlier this week, Pena Nieto brought back his former finance minister, Luis Videgaray, naming him foreign minister to lead negotiations with the incoming US administration.

Videgaray had resigned in September after it was revealed that he had organized Trump’s widely-criticized pre-election meeting with Pena Nieto in Mexico City a week earlier.

Analysts say Videgaray’s previous contacts with the incoming administration could be an asset in future talks.

“After negotiations between the Mexican government with Luis Videgaray as the main negotiator and the Trump team,” Ugalde said, “we will probably be able to see an agreement, an arrangement, a common policy that reduces fears.”

Fox was less diplomatic after Trump renewed his vow to make Mexico pay for a massive wall along the US-Mexico border.

“TRUMP, when will you understand that I am not paying for that fucken wall,” the Mexican former president wrote on Twitter.

“Be clear with US tax payers. They will pay for it.”

AFP
Written By

With 2,400 staff representing 100 different nationalities, AFP covers the world as a leading global news agency. AFP provides fast, comprehensive and verified coverage of the issues affecting our daily lives.

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