Dan Johnson hadn't crossed the U.S.-Mexico border in years despite the fact the San Diego native lives 20 minutes away and spent most of his life making weekend runs for Baja California's surf and fish tacos.
"Everybody was scared," Johnson said of San Diegans' impression of their Mexican neighbor after violence spiked about eight years ago. But now Johnson, like an increasing number of Americans, is being lured back by a region that has transformed itself while fighting the drug war.
Once centered on timeshares and rowdy bars largely frequented by Americans and Canadians, northern Baja California's tourism industry is rebounding with the exploding fame of local chefs, the expansion of boutique hotels and a burgeoning art scene creating a buzz in travel magazines.
By Richard Fausset
Los Angeles Times
To President Enrique Peña Nieto's supporters, his first year in office has been a time of bold promises kept as he pursues an ambitious agenda of reforms designed, in the long term, to bring peace and economic growth to Mexico.
But in the short term, by many measures, his country remains a mess.
Though he promised to focus on Mexico's economic potential, Peña Nieto has presided over an economy that has hardly grown at all. Though he vowed to reduce the kind of violence that affects innocent citizens, his record has been mixed, with kidnappings and extortion rising nationwide even as the number of homicides drops.
And the drug war rages on. In recent months, the key agricultural state of Michoacan has devolved into something close to a failed state, as armed peasants have formed ad hoc militias to protect themselves from the surging cartel menace. On Wednesday, the president's finance minister, Luis Videgaray, declared that the ongoing chaos there was a threat to Mexico.
As Peña Nieto marks his first year in office, he has successfully pushed major banking, education, tax and telecommunication reform bills through Congress, and is pursuing changes in the crucial oil industry. Yet the young, confident and telegenic president, who as a candidate promised a "government that delivers," is facing doubts about his ability to do just that.
A poll from El Universal newspaper last month put Peña Nieto's approval at 50 percent and his disapproval at 37 percent — his worst numbers so far as president. In the newspaper Excelsior, columnist Leo Zuckermann last week noted that the president had failed to transform the positive story he tells about Mexico into actual good news.
"It was one thing to 'sell' great expectations, which the Peña government did very well," Zuckermann wrote, "and another very different thing to deliver good results."
By Ana Isabel Martinez and Dave Graham
Mexico's main leftist party said on Thursday it had pulled out of a cross-party pact on economic reform, raising hopes that the government will agree to a more far-reaching plan to attract private investment for the oil industry.
The ruling Institutional Revolutionary Party, or PRI, is hoping its energy reform will spur faster economic growth, and the departure of the Party of the Democratic Revolution (PRD) from the accord is likely to push the debate closer to a more business-friendly proposal backed by the center-right.
Unveiling his plan to shake up the state-controlled oil and gas industry in August, President Enrique Pena Nieto proposed offering investors profit-sharing contracts to try and reverse a slump in crude output, which is down by a quarter since 2004.
But the PRI has no majority in Congress and its natural ally on energy reform, the conservative National Action Party (PAN), has proposed a more radical opening of the oil sector, including concessions and production-sharing contracts.
The PRD has rejected the PRI and the PAN proposals for reform, arguing that Mexico needs to give greater autonomy to state oil giant Pemex.
PRD Chairman Jesus Zambrano said his party had been left out of the negotiating process on energy and would leave the pact definitively unless the situation changed.
"We are out," Zambrano said after his party had already balked at the negotiations under way over an electoral reform that the PAN has made a prerequisite for its support on the energy bill. "If they don't correct this, there is no point."
By Brendan Case / Bloomberg
As global automakers pour billions of dollars into their Mexican factories, Marcos Perez is trying to make sure the nation’s future goes beyond assembly lines.
The head of product development at Ford Motor’s Mexico unit, Perez has helped the company almost triple its local engineering staff, to nearly 1,000, since 2010.
“We used to be a simple-assembly kind of country, and we moved to a truly core manufacturing country, where most of our assembly plants are hitting record numbers on productivity, on quality, on cost. Now we are transitioning from Made in Mexico to Designed in Mexico,” Perez said.
Mexico had 579,814 students enrolled in engineering programs in 2011, double the number five years earlier and more than Brazil or Germany, according to data from the United Nations Educational, Scientific, and Cultural Organization (Unesco). The country has almost 4.9 engineering students per 1,000 people, compared with 3.6 in the U.S.
By Eric Martin
Mexico is unlikely to cut its benchmark interest rate because the nation’s economy is strengthening, said Javier Guzman, a deputy central bank governor and one of five board members who set borrowing costs.
Growth is picking up as the record-low 3.5 percent rate and government spending spur the economy, Guzman said in an interview in Mexico City.
Gross domestic product increased 0.8 percent in the third quarter from the previous three months, the national statistics agency reported last week, rebounding from a revised 0.5 percent contraction from April through June.
“The main scenario is for the pickup to continue,” Guzman said in the interview yesterday. “We don’t think that in the foreseeable future there will be additional interest-rate cuts, precisely because of this main scenario. There’s sufficient stimulus in the economy.”
Congress this month approved a 2014 budget deficit of 1.5 percent of GDP, the widest gap in four years, allowing the government to increase spending in a bid to stimulate an economy it estimates will grow 1.3 percent this year, the least since 2009. The central bank has cut interest rates three times in 2013 and signaled that further reductions wouldn’t be advisable.
Mexico’s negative output gap will probably narrow next year, and while the inflation rate will probably remain within a “reasonable” range for the rest of this year, policy makers will respond if price gains need to be curbed, Guzman said.
By Vladimir Hernandez / BBC
Does God exist? Does the Devil exist? The Catholic church believes they both do - and some priests say they are currently having an immense battle in Mexico.
To some it may seem extraordinary, but priests say the country is under attack by Satan, and that more exorcists are needed to fight him.
"We believe that behind all these big and structural evils there is a dark agent and his name is The Demon. That is why the Lord wants to have here a ministry of exorcism and liberation, for the fight against the Devil," says Father Carlos Triana, a priest, and an exorcist, in Mexico City.
"As much as we believe that the Devil was behind Adolf Hitler, possessing and directing him, we also believe that he (the Devil) is here behind the drug cartels."
Mexico's exorcists say there is unprecedented demand for their services.
Mexico's recent tax overhaul does not do enough to curb the government's dependence on oil revenue while other major reforms might not boost economic growth as much as authorities forecast, the International Monetary Fund said on Tuesday.
Mexico, Latin America's second biggest economy, has made "impressive" strides" in passing a series of major economic reforms that will help boost growth, the IMF said in a report after its annual health check of Mexico's economy.
However, the Washington-based IMF said "further efforts are likely to be needed" to improve non-oil income after lawmakers approved a tax bill at the end of October that was less broad in scope than the market had expected.
"With the prospect of declining oil production over the next decade, the federal government needs to beef up its collection on non-oil revenues," the IMF said in a report on the fiscal reform that accompanied its so-called Article IV consultation with Mexican authorities.
Those remarks come as another government reform is moving through Congress that aims to open up the state-controlled oil industry to private investors and boost crude output, which has fallen by a quarter since 2004.
Excluding revenue from state oil firm Pemex, Mexico's government only collects taxes worth about 10 percent of its gross domestic product, far less than its main peers in Latin America or in more developed economies.
By Tim Johnson / McClatchy News Service
The sons and daughters of Mexico’s most renowned outlaws just can’t refrain from posting photos of their lavish lifestyles online: Fat bundles of cash. Gold-plated assault rifles. Pet lions and tigers. Tricked-out dune buggies.
All is on display on Twitter, Facebook and Instagram. It’s like peering at a gossip magazine for the underground rich and famous as they hide from the law.
The arrest last week in Arizona of the son of the alleged No. 2 leader of the Sinaloa Cartel, Mexico’s most powerful criminal syndicate, brought attention to his social media accounts and those of his closest friends, including the son of the nation’s most wanted man, Joaquin “El Chapo” Guzman.
Serafin Zambada Ortiz, 23, was detained Wednesday as he crossed on foot from Mexico to Nogales, Ariz. Zambada, the U.S.-born son of wanted Sinaloa leader Ismael Zambada, made the crossing despite his indictment in U.S. federal court on charges of trafficking methamphetamine and cocaine.
Going by his Twitter (@zambadaserafin) and Facebook posts, Zambada seemed eager to share with the world his decadent lifestyle, apparently feeling invulnerable.
By Gabriel Casillas
Since President Enrique Pena Nieto took office last December, Mexico has embarked on a flurry of structural reforms in areas as varied as telecommunications, education, taxes and the country’s national oil industry.
Yet the one reform likely to have the most immediate positive economic effect has gone relatively unheralded: bank lending reform, which the Mexican Senate is about to approve.
Although moves to open the oil industry represent a revolutionary shift, their impact on increased production might not be felt for years. Likewise, higher taxes on firms and individuals resulting from Mexico’s much-needed fiscal overhaul might well slow the Mexican economy in the short run.
But by making it easier to extend credit to small and medium enterprises and low-income families, Pena Nieto’s lending reforms could boost the economy as early as next year.
Mexico’s commercial bank credit to the nonfinancial private sector is about 15 percent of gross domestic product. This is way below not only developed economies’ standards (in the U.S., for example, the ratio is more than 150 percent), but also emerging markets’ credit ratios.
Part of the reason for Mexico’s relative backwardness could be historical: The nationalization of the banking system in 1982 and Mexico’s banking crisis in 1994 could be factors. Yet a better explanation lies in two characteristics of the Mexican economy.
First, a large number of workers and firms work under the regulatory table in the informal sector; second, under existing laws and regulations, banks face big hurdles in trying to recover collateral, and thus have had less incentive to make loans.
By Dave Graham
Legislation to implement a major overhaul of Mexico's telecommunications industry will not be approved until early next year, pushing back a deadline set for December, two senior lawmakers said.
The secondary laws set out the fine print for a telecoms reform promulgated in June by President Enrique Pena Nieto which gives regulators sweeping powers to rein in billionaire Carlos Slim's telecoms giant America Movil and dominant broadcaster Televisa.
The bill raised hopes Pena Nieto was serious about breaking the hold a select few have on much of the economy, but a pile-up of pending bills in Congress has made the Dec. 9 deadline for the secondary telecoms legislation increasingly unlikely.
Federico Gonzalez Luna, a congressman who heads the radio and television committee in the lower house, told Reuters that to ensure the secondary laws were properly drawn up, they would now have to wait until 2014.
"There's no way of doing them earlier," said Gonzalez Luna, a member of the Green Party, allies of Pena Nieto's Institutional Revolutionary Party (PRI). "The plan is to get them done as quickly as possible, but to do them well."
Efforts would focus on getting the laws passed in the next period of Congress beginning in February, he added.
A delay in the secondary laws could give America Movil and Televisa more time to prepare their defense against steps by the new regulator to reduce their dominant positions in Mexico.