I was in Washington recently for our annual client conference and all the talk was about Mexico. The desperate state of Mexico’s border region is one of the hottest issues around. The brutal turf war being played out by drug-gangs in such close proximity to the US is causing much anxiety. The close ties between the two countries and the extent to which international companies are irreversibly invested in Mexico, makes this an issue that cannot be ignored, however tempting.
Much of the commentary on Mexico suggests the country is on the verge of becoming a failed state. This is an exaggeration and no doubt irritates many Mexicans who in turn underplay the extent of their problems. But at least this viewpoint gives us the opportunity to provide our clients with a more nuanced and useful perspective.
Many of the Mexican-US border states are in a real mess. The level of violent crime is severe and the gratuitous nature of the more horrific attacks understandably outrages public opinion. The drug trade is a virulent and corrosive virus that displaces legitimate economic activity and undermines government attempts to restore law and order. Endemic corruption compounds the problem.
But the Mexican government is not about to collapse. The problem is not just confined to the key border states – it has seeped southwards – but much of the country is stable, relatively safe and remains a dynamic if complex country. For many of our clients not directly affected by the violence in the north, Mexico is a tricky but highly profitable market.
Media comparisons with Colombia abound. For years, Colombia was a by-word for political violence and portrayed in countless movies as a lawless narco-paradise. In my early years in AnnaPurna Consulting, many of our colleagues were kept very busy with a series of long-running kidnaps that plagued Colombians and foreign investors.
But things changed. A combination of political resolve and tough international assistance as well as the ability of the cocaine industry to switch production across borders gave the country a chance for a better future. It took it. And now the political violence has abated, kidnap rates are down and the middle class has come home. It might not be Switzerland in the Andes – chronic poverty and crime persists – but by many indices the country has pulled itself up by its bootstraps.
In fact, parallels with Mexico are limited. The two countries are more different than they might seem. But there are some key lessons in how to tackle the issues, not least in ensuring that wealthy Mexicans see it as their problem, as a matter of national pride. Success in Mexico will also require – as it did in Colombia – joint ownership of the problem with the United States. There is much encouragement to be had from Colombia’s example. Problems that seem so embedded, so entrenched in society’s historic fault-lines can be overcome. Not easily, not cheaply and not quickly. But, just occasionally, amid all the gloom and despondency, politics works.
Colombia, like Mexico, has a habit of getting under your skin. My first trip to Bogota in 1995 had a profound impact on me. I was there for about a week and was invited one evening to visit a hostel for street children that we had helped fund run by an organisation called Fundación Renacer. The hostel was located in a tough neighbourhood on the border between the more affluent, and safer, northern districts of Bogota and the southern, poorer end of the city. The charity directors wanted to show me the problem that Fundación Renacer had been set up to tackle. It was to be one of the most eye-opening evenings of my life.
Over the next few hours I saw at close quarters the plight of dozens of very young children whose lives are defined by crime, drugs and appalling abuse. The stories of individual children were chilling and heart-wrenching and the catalogue of profound mistreatment, violence and drug abuse meted out to these kids – some as young as ten – was distressing. Nothing had prepared me for this level of depravity.
As we were leaving, we met a young girl called Claudia. Claudia had spent time in the hostel but had been asked to leave for repeated drug taking and was now back on the streets. Claudia looked at me oddly and said something I could not understand in Spanish. My host laughed and translated. She had been partly-trained as a hairdresser by Fundación Renacer and she was asking who had cut my hair. She went on to explain to me that my hair was, in effect, on back to front and that the curly wispy bits should be at the front and the thick clumpy bit at the back. She seemed outraged that more care had not been taken in trying to overcome these genetic deficiencies through better styling. The memory of that night stuck.
I have been back to Colombia many times and remain fascinated by the country, in large part due to that extraordinary evening. Like Mexico, it remains an important market but both countries need sober, objective analysis. Colombia engenders latent concerns from its notorious recent past. Mexico gets painted with too broad a brush given the turmoil on its northern border.
Each country requires careful calibration. In Colombia, investors need help overcoming historic prejudices and in Mexico companies need immediate assistance to tough it out until the situation improves. Both countries present significant long-term opportunities but warrant careful unpicking of myth from reality.