By Tony Garza
Texas Insider Report: AUSTIN Texas With a faltering economic recovery and persistently high unemployment President Obama faces a tough re-election environment. His approval ratings have declined steadily and
enthusiasm among Democrats is down sharply compared to both the past presidential election and in relation to enthusiasm among Republican voters (
see the latest Gallup data here).The President must run against a Republican party that is unified in opposition to his policies particularly health care reform and that is appealing strongly to many Americans profound mistrust of government.
Yet Mitt Romney is not a problem-free candidate for the Republicans.
(See the latest Gallup data here).
The drawn-out primary fight exposed weaknesses in his record (both as governor of Massachusetts and in the private sector) and in his ability to connect with voters. And the candidates recent international trip included some missteps that detracted from the statesman-like image he had hoped to convey.
Whether his performance on the international stage will change the calculus for his choice of a running mate remains to be seen. Its clear though that he and the party have a lot riding on his
choice which he will announce first to those who download an app from the candidates website.
Theres no question we are in the midst of historic change in the world. The international policy agenda has never been more diverse and theres a lot of uncertainty punctuated by anxiety about the direction of change.
The November winner will have to deal with what appears to be the new Congressional normal: polarization and political gridlock. The limits of this governing shift away from bipartisanship were all too evident last year especially during the debt-ceiling crisis.
The so-called fiscal cliff the tax increases and automatic spending cuts due to take effect at the end of the year and in early 2013 calls for an effort at prudent compromise. That possibility seems remote however and the domestic and global repercussions of eroding confidence and restricted US growth prospects will be significant as
this backgrounder from the Council on Foreign Relations makes clear.
Europes Woes Continue
The crisis in the 17-member eurozone remains grave. With measures intended to stabilize the Spanish economy bringing no more than temporary relief the country is likely to require a full bailout. If so it will follow Greece Ireland and Portugal down a too well worn path.
Spains size and the particulars of its problems pose a worrying threat to policymakers in Europe and the US. When troubles in the eurozone first arose many observers argued that the problems would not spread beyond the region.
It is now clear that was wishful thinking.
Europe is currently seen as the main drag on the US economy which explains Treasury Secretary Geithners trip to Germany in the closing days of July and the US pledge for coordinated action. Emerging markets in Europe and Asia are also at risk as
noted recently in The Economist. For an insightful look at whats at stake in this ongoing crisis read
What If Europe Fails?" a report by
published this summer in The Washington Quarterly that is available on the Brookings Institution website.
Mexico: A Bright Spot on the World Stage
That statement might surprise some who do not often look beyond the headlines when it comes to Mexico. Though the country is closely linked to the US economy its fundamentals are strong and it has weathered the economic crisis relatively well.
Prudent policies have helped reduce vulnerabilities and position the economy for growth. Nomura Equity Research recognized Mexicos economic and demographic strengths and potential when it
recently stated that the country will likely overtake Brazil as Latin Americas biggest economy within the next decade.
Other analysts have reached similar conclusions.
The numbers on Mexicos economy tell a positive story of growth (4.6 and 4 growth in the first and second quarters of the year) and expanding opportunity (through newly created jobs rising levels of foreign investment and a growing middle class). And though the transition is just beginning to take shape there is cautious optimism surrounding Mexicos new president-elect.
Enrique Pea Nieto supports structural pro-market reforms and he has pledged to bring more vibrant growth to the country. It will take a lot more than resolve to bring about the structural reforms that have long been blocked by entrenched interests.
But even if the prospects for some of the large-scale reforms (such as opening Pemex to competition and broadening the tax base) are still unknown even lower profile ones (such as changing regulatory practices) that are more easily achieved could bring strong gains.
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Antonio Garza former U.S. Ambassador to Mexico (Ret.) assists corporations in navigating complex legal business cultural and political landscapes in Mexico.
