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Let’s Meet the 80%

As the first Latin American and second emerging economy to take over the G20’s presidency, Mexico is confirming its role as a responsible and influential actor, both regionally and globally.

Now recognized as one of the globe’s foremost emerging economies, Mexico’s leaders have injected its foreign policy with a shot of dynamism, becoming more active in multilateral affairs and regional matters. Its year-long presidency of the G20 beginning in December 2011 is certainly a coup for the country and Latin America alike, as the world’s biggest economies take their place on center court. The G20 gathers together finance ministers and central bank governors representing more than 80% of global GDP and over two-thirds of the world’s population.

Mexico is playing a heightened role in international affairs, and it has engaged in numerous international agreements, organizations, and regional mechanisms, including the Organization of American States (OAS), the Rio Group, and the Agency for the Prohibition of Nuclear Weapons in Latin America and the Caribbean. Since it assumed its year-long G20 presidency, Mexico has promoted an active and engaged participation in international organizations, think tanks, and the private sector, and is particularly focused on promoting dialogue with countries outside of the G20. All of this is aimed at building communication bridges between developed and emerging economies and expanding inter-G20 dialogue. According to the Mexican Under Secretary for Foreign Affairs Lourdes Aranda, who is also the Mexican “Sherpa” for the G20, participation and coordination are crucial for the success of the summit.

In an interview with The Americas Society and the Council of the Americas (AS/COA), Aranda stated that Mexico has the moral authority to lead G20 and is in the best place to work in the international arena, forging consensus. “That has been one of the characteristics of Mexican foreign policy,” she underlined. Its initiative in the Conference of the Parties of the United Nations Framework Convention on Climate Change (COP16)—held in Cancún—led to agreements on important environmental and climate change issues, showing “that Mexico knows how to deal with difficult issues,” she stated. For Aranda, the G20 Mexican presidency derives from the international recognition of Latin American economies.

As G20 president, Mexico is hoping to leave a green footprint. Its ambition to link green growth to strong, sustainable, and balanced economic expansion means there is a special emphasis on promoting sustainable development and fighting against climate change. Since the start of the current administration, President Calderón stated that the issue of climate change was one of his priorities, due to the challenges faced by the country in the face of floods and droughts. Aranda explained the importance of coordinating environment and natural-resource protection with growth. “We don’t think it’s a dilemma between growing or investing money and resources in fighting climate change and protecting in general terms our environmental resources,” she said. Green growth will not only be dealt with from the point of view of environmentalists, but also by taking into account financial, economic, and development aspects. Infrastructure development will be a crucial topic of discussion. Aranda emphasized the importance of investing resources in infrastructure as a way of promoting economic growth. “Let’s channel the resources in those kind of projects which in the long term are sustainable and which can create jobs which are geared towards the green industry,” whether it is in new renewable sources of energy or in industries that produce goods that protect the environment, she said.

The issues of food security and commodity price volatility will be high on the agenda. The stabilization of markets, control of stocks and of production, as well as increasing productivity and addressing distribution will be central in solving the food-security issue.

Another key aspect in the agenda is economic stabilization and structural reforms as foundations for growth and employment. In this context, the focus on promoting employment in each country will be dealt with by sharing best practices at a global level. Protectionism will also be addressed, and Mexico will insist on free trade as an engine of growth, allowing competition in the open markets and access to cheaper products. According to Aranda, “Protectionism is something that harms everybody; it doesn’t necessarily help towards growth.”

Mexico will also push for strengthening the Financial Stability Board and continue to follow its recommendations to seek a balance between financial stability and growth. A major goal is to broaden the role and the resources of the IMF, as well as to strengthen financial inclusion for growth.

In addition, consultation with the academic community has been given special importance through the meeting entitled “Think20.” Other outreach activities to various sectors of society such as the business community, young people, trade unions, and non-governmental organizations are all aimed at enriching the leaders’ summit at Los Cabos, which will be the most important event during Mexico’s G20 presidency.

But the summit will also face challenges. Mexico took over the G20 presidency in the midst of a complex global economic crisis, which is far from being resolved. If it were to spin out of control and harm growth worldwide, the credibility and success of the G20 could be hit hard. In addition to the weight of the crisis, in June 2012, Mexico will be a mere month away from presidential elections, which may lead to a period of political uncertainty as the various parties and candidates jostle for votes.

However, Mexico has credibility following its experience after the Tequila Crisis in 1994, and its presidency comes at a time when its fundamental macroeconomic numbers are positive. In an interview with TBY, the Spanish Minister of Economy and Competitiveness Luis de Guindos reinforced the idea that Mexico holds all the prerequisites and conditions for its presidency to be a success. He said Mexico’s consistency of macroeconomic management and experience in crisis management provide it with an extraordinary credibility. “I’m sure it will demonstrate its leadership and its capacity to build tangible and beneficial consensus with the international community,” he added.