Won’t You Be My Neighbor?

Mexican President-elect Enrique Peña Nieto’s visit to Washington, D.C. on Tuesday — just four days before he takes office — will be the first major test of President Barack Obama’s post-election foreign policy. Yes, the reelected U.S. president helped defuse the crisis in Gaza and recently returned from Southeast Asia. But his Asia trip was largely symbolic — a reaffirmation of Washington’s announced "pivot" toward the Pacific region. Resetting U.S.-Mexican relations, meanwhile, could prove more consequential and produce a high payoff for the U.S. economy.

Why? The meeting between Obama and Peña Nieto comes at a particularly promising moment when the two nations have a chance to ease two longstanding sources of bilateral tension and mistrust: immigration and anti-drug policy. And more than at any time since the signing of the North American Free Trade Agreement (NAFTA) in 1993, both countries have the opportunity to substantially upgrade what is an already robust economic partnership.

President George W. Bush was right when, in 2001, he stated that "the United States has no more important relationship in the world than the one we have with Mexico" — and it has become far more important since then. With trade between the two countries totaling around $500 billion a year, Mexico is America’s second-largest commercial partner — about equal to China and trailing only Canada. Some projections now foresee Mexico emerging as America’s top trading partner in the next 10 years. The demographics are impressive as well; upwards of 32 million U.S. residents are of Mexican origin. They account for more than 10 percent of the U.S. population and more than six out of 10 Latinos. No country in the world sends more of its people to the United States than Mexico, and one out of 10 Mexican citizens now lives in the States — about half of them with no legal status.

The decisive impact of the Latino vote on the outcome of this year’s U.S. presidential election has dramatically increased the prospects for immigration reform in the next year or so. For the first time in decades, both Republicans and Democrats have powerful incentives to reconsider the country’s divisive immigration policies.

Neither party should have difficulty coming up with arguments for fixing the broken immigration system. Besides making U.S. immigration laws more humane, a new policy approach would be a boon to the struggling U.S. economy. In the past decade, immigrants have accounted for more than half the increase in America’s working-age population. They fill crucial jobs, fuel economic growth and productivity, and help sustain the Social Security system. By addressing critical labor demands and giving law-abiding migrants the opportunity for legal employment and additional training, sensible immigration reform would multiply these economic contributions. And no single policy change would do more to ease friction and build goodwill in U.S.-Mexican relations.

American citizens tend to view the country’s immigration problem in terms of the large number of undocumented immigrants residing in the United States and the ongoing flows of unauthorized migrants into the country. But Mexicans have a different set of concerns. They focus on how their compatriots are treated in the United States and how some six to seven million undocumented Mexicans in the country can gain the legal standing and rights they now lack. Like U.S. Latinos generally, Mexicans find the debates over immigration insulting (Mitt Romney’s suggestion that undocumented immigrants should "self-deport" was particularly offensive). Mexican leaders of all political stripes criticize U.S. immigration laws as unjust, disrespectful, and cruel, and regularly call for reforms. But they know how counterproductive it can be to intrude forcefully into U.S. disputes on immigration.

Beyond immigration, Peña Nieto and his advisors consider energy policy one of their highest priorities on a far-reaching agenda of economic reform. Their two main challenges are to 1) free Mexico’s national oil company, PEMEX, from the suffocating constitutional and regulatory constraints that keep production and revenue low, and 2) allow for the large-scale exploitation of the world’s fourth-largest deposits of shale gas. Oil production in Mexico has plummeted by nearly 25 percent from its peak in 2004 and reserves continue to shrink. Unless officials take action, Mexico could be a net oil importer by the end of the decade. If, however, the Mexican government succeeds, even modestly, in opening its hydrocarbon sector to private and foreign exploration and investment, it would be a game-changer for both Mexico and the United States. Mexico would gain access to the capital and technology — including deep-sea drilling — the country requires to remain a major oil exporter and take full advantage of its potential wealth in shale gas. Energy reform in Mexico could also set the stage for a genuine North American energy market, to the benefit of all three NAFTA partners. And greater energy production in Mexico should mean less U.S. dependence on oil from the Middle East and other distant and/or troubled parts of the world.

To be sure, the political obstacles to energy reform in Mexico are formidable. They include the country’s history of energy nationalism and the fact that a serious easing of current restrictions on hydrocarbon exploitation cannot proceed without multiple changes in Mexico’s constitution, which will require a difficult-to-obtain two-thirds majority in Congress. Still, there are reasons for optimism, including the growing acknowledgement by Mexican leaders across the political spectrum of the escalating costs of the status quo. The legislature’s two largest parties, the Institutional Revolutionary Party (PRI) and National Action Party (PAN), both support energy reform and together enjoy a majority in Congress. It is widely anticipated that they will remain allied for the coming year, and they may be able to draw sufficient votes from smaller parties to amend the Constitution. The determined leadership of Peña Nieto, who is viewed in Mexico as a talented, pragmatic politician, will be essential. For its part, the United States knows that its interests will be best served by staying out of Mexico’s debates about the country’s energy future.

Over the past six years, Mexico’s annual homicide rate has more than doubled to some 20 murders per 100,000 people. The extent and brutality of the violence, fueled by drug trafficking and largely carried out by organized criminal gangs, has proven to be a particularly harrowing test for the two neighbors. Yet while security collaboration between the two countries is closer than ever, drug-related violence remains a major source of contention in the bilateral relationship. Many Mexicans blame their public security problems on America’s voracious appetite for drugs, and see the U.S. commitment to finding a solution as half-hearted at best. They believe the United States is not doing nearly enough to reduce its demand for illicit drugs and curtail the flow of profits and arms to Mexican drug gangs. The United States has repeatedly acknowledged its shared responsibility for Mexico’s crime and drug problems, and is working closely with the country’s security forces to address them. But Washington has been slow to alter its basic prohibitionist and enforcement-focused approach to drug control.

The election-day referendums legalizing marijuana use in Colorado and Washington provide a new opportunity for the United States and Mexico to reduce current tensions and perhaps even resolve some of their differences over drug and security issues. When they meet, Obama and Peña Nieto should, at a minimum, set the stage for a significant and continuing bilateral discussion about alternative anti-drug policies. Mexico’s outgoing president, Felipe Calderón, has consistently endorsed the search for fresh approaches, including a hard look at some legalization measures. Peña Nieto appears ready to modify the country’s security approach by, among other things, focusing on violence reduction and deemphasizing drug interdiction.

For its part, the Obama administration has shown a willingness to indulge a discussion of new policies and has declared that the United States is no longer fighting a "war on drugs." But it has not yet seriously pursued other options. Indeed, it is unclear how tolerant the administration will be of marijuana use in Colorado and Washington. Still, it would make a good deal of sense for the U.S. and Mexican governments to begin a systematic exploration of alternative drug strategies, including a study of the likely security and health consequences of different approaches to marijuana legalization.

It has now become routine for Mexican presidents-elect, in advance of their inaugurations, to travel to Washington to meet with their U.S. counterpart — a powerful symbol of the close and important relationship between the two countries. This week’s conversation, however, should emphasize substance, not symbols. The key role that Latino voters played in the U.S. election has pushed immigration policy to the top of the U.S. political agenda, while Peña Nieto has consistently highlighted his commitment to energy reform since his electoral victory in July. And both presidents have expressed their dissatisfaction with the way the war on drugs has been conducted.

Success will not come easy on any of these issues; it has been decades since even modest headway was made on any of them. But the shifting political climate in both countries has now paved the way for change. If they take advantage of that opening this week, the U.S. and Mexican presidents will have four full years to work together and make it happen.