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How a telegram to Mexico brought the US into World War I

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By the time it reached the hands of U.S. President Woodrow Wilson, the Zimmerman telegram was already destined to change the course of history.(Wikimedia Commons)

In January of 1917, Nigel de Grey, a member of the cryptanalysis section of the British Admiralty  — also known as Room 40, for the room in the Admiralty building which housed the team of top cryptanalysts – finished deciphering a coded communiqué from German Foreign Minister Arthur Zimmerman to Heinrich von Eckhardt, Germany’s ambassador to Mexico. De Grey immediately understood the significance of the secret plans he had just uncovered.

This message, which we now know as the Zimmerman Telegram, was destined for Mexican president Venustiano Carranza and contained two critical pieces of information. First, the Germans planned on resuming unrestricted submarine warfare, which had been curtailed through the 1916 Sussex pledge. Second, Germany was proposing that Mexico join the war as its ally. In return for this alliance, Germany would provide financial support and join Mexico in a military engagement with the U.S. to recover some of the territory lost in the Mexican-American War – namely Texas, New Mexico and Arizona.

An illustration of Admiralty Office, where British cryptanalyst Nigel de Grey deciphered the consequential communiqué from Germany, known as the Zimmerman telegram. (Wikimedia Commons)

Up to this point, the United States had remained neutral in what was being called the Great War. The British were desperate to bring the U.S. into the war and de Grey felt this telegram could accomplish that. For its part, Germany was desperate to keep the U.S. out of the conflict and hoped that with Mexico’s help they could keep U.S. troops busy protecting their southern border and at the same time deplete American resources. Mexico had also remained neutral. The country was still embroiled in civil war, and Carranza wanted to avoid agitating either their neighbor to the north or their European friends.

Germany had shown an interest in Mexico for years. During the Mexican Revolution, the German spy Felix Sommerfeld was sent to Mexico to ingratiate himself with revolutionary leaders. He succeeded in becoming a confidante to former president Francisco I. Madero (1911- 1913), Pancho Villa and Carranza himself.  

Sommerfeld and Madero were so close that when Madero became president, he put the German in charge of creating and running Mexico’s secret service – the perfect position for intelligence-gathering. Madero and Sommerfeld were rarely seen apart. At the same time, Sommerfeld was sending regular intelligence dispatches to Germany.  

By 1914, Mexico was a hotbed of political intrigue and German espionage. By 1917, Germany had reason to believe Mexico might be ready for an alliance.

The Zimmerman Telegram. (Wikimedia Commons)

Meanwhile, in March 1917, the British passed the Zimmerman Telegram along to U.S. President Woodrow Wilson, who had just been re-elected to a second term, largely thanks to the slogan “He kept us out of war.” Wilson was stunned by the audacity of the Germans,  reportedly muttering “Good Lord!” repeatedly as he read the message. For Wilson, the telegram changed the calculus on entering the war, and he decided to release the contents to the press.

The telegram’s release was met with public outrage and galvanized support for going to war.

According to the author of “Codebreakers,” David Kahn: “No other single cryptanalysis has had such enormous consequences.”

Some government officials suspected that the telegram was a British ruse to draw the United States into the war. Those suspicions were soon dispelled, however, when Zimmerman himself confirmed the message’s authenticity in a public speech only a few days later.

Francisco I. Madero at dinner with guests, including spy Felix Sommerfeld, c. 1911. (Facebook/El Paso History Alliance)

On April 2, Wilson convened a joint session of Congress and called for a declaration of war.

In Mexico, Carranza had received the telegram.  It is unknown whether he seriously considered the proposal. His relationship with the U.S. was a little shaky: Carranza’s rival Pancho Villa had attempted to provoke a crisis between the two countries by raiding Columbus, New Mexico in March 1916. In response, Wilson sent General John J. Pershing on a punitive expedition into Mexico to capture Villa; and though war between Mexico and the U.S. was narrowly avoided, anti-U.S. sentiment was inflamed across Mexico. .

Carranza turned the German proposal over to a military commission for an assessment.  The proposal was officially rejected once the commission decided there was no benefit to accepting it. The commission noted that the German government’s promises of “generous financial support” were unreliable, as it had refused financial help to Mexico in 1916. Moreover, still embroiled in civil war and militarily weak, there was no reason to believe that Mexico could actually beat the United States. War would also jeopardize Mexico’s international relations. Even if it did win, the lost territory of Texas, New Mexico and Arizona would be difficult to govern, as it was now populated by an armed, English-speaking population.

Ironically, the mysterious German spy Felix Sommerfeld – who was secretly in charge of the Mexican portion of Germany’s war strategy – became Carranza’s liaison with President Wilson, as he also had well-placed contacts in the United States.  There is no indication that Carranza knew Sommerfeld was a German spy.

President Venustiano Carranza (center), leader of the Mexican Revolution, decided after receiving the telegram that there would be no financial or political benefit to forming an alliance with Germany in WWI. (Wikimedia Commons)

In the end, Mexico did not enter World War I or start a conflict with the United States, whose entry into the war on the side of the Allies was instrumental in ending the conflict.  

Mexico benefited in another way by refusing Germany’s proposal. 

The United States had not, up to this point, recognized the political leadership in Mexico. To ensure Mexico’s neutrality in World War I, the United States officially recognized the Carranza government on August 3, 1917, leading to a better relationship between the two countries.

Sheryl Losser is a former public relations executive and professional researcher.  She spent 45 years in national politics in the United States. She moved to Mazatlán in 2021 and works part-time doing freelance research and writing.

Analysts predict 2.9% GDP growth in Mexico this year

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Monterrey, Nuevo León
Foreign direct investment in northern states as a result of nearshoring is contributing to an improved economic outlook for this year. (Shutterstock)

Mexico’s economy will grow 2.9% in 2023 while the Mexican peso will trade at just under 18 to the US dollar at the end of the year, according to consensus forecasts of analysts surveyed by Citibanamex.

The bank surveyed analysts from 32 banks, brokerages and other financial institutions and published the results on Tuesday.

Currency exchange
According to consensus from various analysts, the Mexican peso will end the year just below 18 to the US dollar. (ANDREA MURCIA /CUARTOSCURO.COM)

The consensus forecast for GDP growth this year is 0.2 percentage points higher than that published by Citibanamex two weeks ago. The predictions of the analysts surveyed ranged from 2.3% to 3.5%.

Even the most optimistic forecasts, which came from analysts at French bank BNP Paribas and Mexican brokerage Finamex, are below the 3.6% annual growth recorded in the first half of the year, according to preliminary data published by national statistics agency INEGI on July 31.

The private sector analysts’ consensus forecast for 2023 growth in Mexico is above the International Monetary Fund’s current prediction of a 2.6% expansion, but below the federal government’s prognosis of an advancement of at least 3%. The government believes that the relocation of foreign companies to Mexico as part of the growing nearshoring phenomenon will spur growth of 3% or more this year.

In 2024, the analysts surveyed by Citibanamex anticipated, on average, growth of 1.6%, up from a 1.5% consensus forecast found by the previous four surveys.

Apodaca industrial park
As manufacturers relocate to Mexico, foreign direct investment has accelerated, particularly in industrial sectors in the north of the country. (Nexxus)

As for the Mexican peso, the consensus forecast was that it will trade at 17.85 to the US dollar at the end of the year. That’s a slight improvement for the peso compared to the previous 17.88 prediction, but a significant weakening compared to Wednesday morning’s USD:MXN exchange rate of about 16.8.

Analysts believe that the peso will depreciate next year to end 2024 at 19 to the greenback.

With regard to Bank of Mexico (Banxico) monetary policy, Citibanamex found that the consensus view is that an initial 25-basis-point cut to the current record high interest rate of 11.25% will come in December. The central bank raised its key rate to that level in March and kept it there following monetary policy meetings in May, June and earlier this month.

Banxico said in a statement Aug. 10 that “the inflationary outlook is still very complex” and that “in order to achieve an orderly and sustained convergence of headline inflation to the 3% target, [the bank’s board] considers that it will be necessary to maintain the reference rate at its current level for an extended period.”

The analysts surveyed by Citibanamex predicted, on average, that annual headline inflation will be 4.67% at the end of the year. That consensus forecast is just 0.12 percentage points below the 4.79% rate recorded in July.

With reports from EFE

US requests USMCA panel over workers’ rights at San Martín mine

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San Martín Mine
The Zacatecas mine has been at the center of strikes and trade disputes for more than a decade. (Elizier Name/Cuartoscuro)

Another dispute between Mexico and the United States is set to be resolved by a panel of experts that will be established in accordance with the USMCA free trade pact.

The United States government has asked a panel to review the labor situation at a Zacatecas mine after its Mexican counterpart found that workers’ rights to freedom of association and collective bargaining had not been violated.

Katherine Tai in front of a Mexican flag
Katherine Tai, the United States Trade Representative said that the U.S. had activated a rapid response panel over concerns surrounding workers rights at the San Martín mine. (Office of the United States Trade Representative)

United States Trade Representative Katherine Tai announced Tuesday that the U.S., for the first time ever, had requested a rapid response labor mechanism (RRM) panel under the United States-Mexico-Canada Agreement, or USMCA, the free trade pact that superseded NAFTA in 2020.

“The panel pertains to a labor dispute at the San Martín mine in the Mexican state of Zacatecas.  The San Martín mine is a lead, zinc, and copper mine, owned and operated by the Grupo México conglomerate,” Tai’s office, the USTR, said in a statement.

The USTR said that the U.S. and Mexico “have worked cooperatively to address labor rights violations at numerous Mexican facilities under other RRM matters, but have been unable to reach agreement in this matter.”

Consequently, the U.S. has “determined that it is appropriate to request a panel to verify the facility’s compliance with Mexican labor laws and determine whether a denial of rights has occurred,” it said.

A miner in San Martín mine
The Mexican National Union of Mine and Metal Workers, and the United States AFL-CIO union jointly petitioned the United States on behalf of miners at San Martín. (Elizier Name/Cuartoscuro)

The USTR noted that U.S. authorities received in May an RRM petition from two U.S. labor organizations — the AFL-CIO and the United Steelworkers – and Mexico’s National Union of Mine and Metal Workers (Los Mineros).

“The petition alleged that Grupo México has resumed operations at the San Martín mine despite an ongoing strike and engaged in collective bargaining with a coalition of workers despite the fact that Los Mineros holds the right to represent workers for purposes of collective bargaining,” the USTR said.

In response to the petition, the United States’ Interagency Labor Committee for Monitoring and Enforcement “determined that there was sufficient, credible evidence of a denial of rights enabling the good faith invocation of enforcement mechanisms,” the USTR said.

“As a result, the United States Trade Representative submitted a request to Mexico that Mexico review whether workers at the San Martín mine facility were being denied the right to freedom of association and collective bargaining. … At the conclusion of its 45-day review period, Mexico disagreed with the United States and found no denial of rights to exist. The United States disagrees with this determination and is therefore requesting establishment of an RRM panel to review the situation,” Tai’s office said.

Mexico’s Economy Ministry considers the San Martín mine case “outside the scope” of the USMCA rapid response mechanism. (Elizier Name/Cuartoscuro)

Mexico’s Economy Ministry (SE) acknowledged the United States’ RRM panel request in a statement, but noted that the Mexican government has already determined that the San Martín mine case is “outside the scope of application of the rapid response labor mechanism.”

The SE and the Labor Ministry said Aug. 1 that the dispute predates the USMCA and that it would therefore be resolved in Mexican courts.

The Economy Ministry said Tuesday that “this labor dispute has been analyzed by the appropriate national authorities” and that “interference from a parallel procedure under the USMCA would not be acceptable.”

“It’s the first time that a rapid response labor mechanism [case] ends in a panel so guaranteeing that the principles of impartiality and certainty prevail in each stage will be essential,” the SE added.

“The Economy Ministry is in charge of representing the Mexican state before this panel. … Mexico will assert its position before the panel,” it said.

The Associated Press reported that the panel will have about six months to determine which side is right. “The dispute represents the first major challenge to the … RRM, which was established under the USMCA and stands as one of the biggest success stories of international labor rights cooperation,” the news agency said.

There have been ongoing labor disputes at the Zacatecas mine for 16 years. (Archive)

Grupo México, owned by billionaire businessman Germán Larrea, asserted in a statement that the panel will demonstrate that the law hasn’t been violated at its mine in the Zacatecas municipality of Sombrerete. The company said it has never stopped workers from exercising their “constitutional rights to have decent work” or from joining the labor union “of their preference.”

Napoleón Gómez Urrutia, a senator with the ruling Morena party and long-serving head of the National Union of Mine and Metal Workers, “filed the complaint that gave rise to this [RRM] process with two objectives,” Grupo México claimed.

His aims, the company said, were to “have a new excuse to ignore the definitive decision that orders him to pay US $55 million … accumulated since 2005 from former mining workers and create conflicts in order to press for a new political position that gives him immunity from prosecution.”

Grupo México said that its priority was its workers and their families.

“An entire community in Zacatecas depends of the work carried out in the mine. The opening of this dispute resolution panel will finally provide certainty and peace to all the residents of Sombrerete, Zacatecas,” it said.

Tai said that the decision to request a panel upholds the United States government’s “commitment to creating a more level playing field for workers to feel empowered and using every enforcement tool at our disposal to safeguard workers’ rights.”

German Larrea
Germán Larrea, the billionaire owner of Grupo México, which owns the San Martín mine. (Moisés Pablo/Cuartoscuro)

“The RRM has proved to be a critical instrument for defending the free exercise of freedom of association and collective bargaining rights. While we are always open to collaborating with Mexico to find a resolution, our priority is delivering meaningful outcomes for workers,” she said.

The request for the panel came less than a week after Tai announced that the U.S. was requesting the establishment of a dispute settlement panel to resolve its differences with Mexico over soon-to-be enforced rules on genetically modified corn imports.

Economy Minister Raquel Buenrostro told the Reuters news agency on Monday that Mexico won’t make any changes to its GM corn decree – which will ban imports of such maize for use in tortillas – before the establishment of the panel.

The United States has also challenged Mexico’s nationalistic energy policies under USMCA. Buenrostro told Reuters that Mexico, the U.S. and Canada – which also challenged Mexico’s policies – are working on an agreement to resolve their differences without resorting to a panel.

Mexico News Daily 

Taylor Swift’s CDMX concerts expected to generate over 1B pesos in revenue

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Taylor Swift's Eras tour, on track to become one of the highest-grossing of all time, is arriving in Mexico City for 4 nights. (Taylor Swift/X)

Taylor Swift’s hotly-anticipated Eras Tour arrives in Mexico City this Thursday, and with it, millions of dollars. 

According to Mexico City’s Chamber of Commerce, Services and Tourism (Canaco), Swift’s four shows in the city this week (Aug. 24-27) – her first ever in Mexico – are expected to generate more than 1 billion pesos (US $59.1 million) in revenue and an attendance of over 180,000 people.

Taylor Swift Eras tour
Taylor Swift’s Latin America tour dates. She has since added one more performance in Mexico City, on Aug. 27. (Taylor Swift/Twitter)

Canaco calculated that the Foro Sol, where the concert will be held, will receive an estimated 981 million pesos (US $16.6 million). Businesses in the city anticipate 12.6 million pesos (US $744,000) in revenue, followed by the tourism industry, at 8 million pesos (US $472,000). Hotels and lodging services expect a revenue of 5.5 million pesos (US $325,000) and the food and beverage industry 4.7 million pesos (US $278,000).

As one of only three countries in Latin America to host a leg of the Eras Tour, Mexico also expects an influx of fans from other countries in the region. The Mexico City Hotel Association said hotels near the Foro Sol anticipate an occupancy rate of 66% to 70%, boosting what has otherwise been a slow month. 

“These concerts are going to help us a lot because August was going to drop a bit in terms of occupancy rate in the summer,” head of the Mexico City Hotel Association Alberto Albarrán Leyva told newspaper Milenio.

Even businesses outside of the tourism industry have benefited from Swift’s upcoming concerts. 

Taylor Swift friendship bracelets
Friendship bracelets are an integral part of the Taylor Swift fandom. Some Mexican craft outlets have organized special bracelet-making events. (Katrina Burton/X)

Fantasías Miguel (a Mexican craft store chain) has created dedicated areas in-store for fans to buy beads to make friendship bracelets, to be exchanged with other attendees at the concert – a global trend among “Swifties”, as the singer’s loyal fans are known. 

Swift’s U.S. part of the tour was estimated to generate a jaw-dropping US $4.6 billion in consumer spending by research company QuestionPro. The global Eras Tour, which began in March and concludes in November 2024, may become the highest-grossing tour ever, bringing in over US $2 billion in ticket sales.

With reports from Milenio, Forbes and CNN

At least 16 dead in Oaxaca highway collision

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Oaxaca bus crash
The bus, which was transporting migrants and locals, is believed to have suffered a mechanical failure. (Nemesio Méndez/Cuartoscuro)

The Oaxaca Attorney General’s Office (FGEO) has reported a preliminary toll of 16 people killed and 36 injured after a head-on collision between a bus and a truck near the Oaxaca-Puebla border early Tuesday.

The FGEO said in a statement that eight men, seven women and a girl were killed in the accident, which occurred on the Oaxaca-Cuacnopalan highway (Federal Highway 135D) at about 1:30 a.m. It said that the 36 people injured were taken to hospitals in the state of Puebla including the General Hospital of Tehuacán.

Oaxaca bus crash
Images posted on social media showed the scene of the crash, where a bus and truck collided head-on. (ANGESC7/X)

The bus left Oaxaca on Monday night and was transporting residents of that state as well as foreign migrants, the FGEO said.

It said that bus passengers reported “mechanical failures” and that they were “probably” the cause of the crash.

According to the Oaxaca government, at least 24 of those injured in the accident are Venezuelans, three of whom are children. As of 1 p.m. Mexico City time, authorities hadn’t released the names and nationalities of any of the people who died. It was unclear whether the drivers of the bus and truck were among the dead.

The accident came almost seven weeks after a bus crash in the Mixteca region of Oaxaca left a death toll of  29 people. Earlier this month, 18 people were killed when a bus veered off a highway in Nayarit and plunged into a ravine.

With reports from El Universal and El Financiero 

Bodies found in Lagos de Moreno not missing men, say authorities

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Lagos de Moreno property
Investigators said they found human skeletal remains at another property on Monday. (Fiscalía Jalisco/X)

Human remains found last week in Lagos de Moreno, Jalisco, don’t correspond to a group of young men who were abducted and presumably murdered in the same municipality earlier this month, Governor Enrique Alfaro said Tuesday.

Municipal police found burned skeletal remains, including four skulls at a property in Lagos de Moreno last Wednesday. That discovery came just days after five friends were kidnapped in the northeast Jalisco municipality.

Lagos de Moreno victims
The five young men went missing after going to the local fair in Lagos de Moreno. (Social media)

A horrifying video that appeared to confirm the murders of at least three of the men subsequently surfaced on social media.

Alfaro told reporters on Tuesday that the parents of the men had been notified that DNA testing determined that the bones found last week don’t belong to their sons. He didn’t say who the skulls and other bones did belong to.

Testing of other human remains found Monday at another Lagos de Morena property is ongoing, the Jalisco governor said.

Alfaro noted that the Federal Attorney General’s Office hasn’t taken over the investigation into the young men’s disappearance and presumed murder even though Jalisco authorities asked it to do so.

“Behind this there is an issue of organized crime and we believe the Federal Attorney General’s Office should take over the case,” he said.

With reports from Reforma and Milenio

Government decrees 13 new natural protected areas across Mexico

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Huatulco
Huatulco has now gained a second national park as part of the new decrees. (zonaturistica.com)

Although Mexico has more than 70 national parks, the federal government hadn’t bestowed the title “national park” on any new entities in nearly six years — until last week, when the Ministry of Environment and Natural Resources (Semarnat) announced the establishment of 13 new Protected Natural Areas (ANP). 

Six of the 13 have been designated as national parks, including three on the Baja California peninsula. The other seven are classified as Flora and Fauna Protection Areas. Altogether, the new areas cover 17,918 hectares (44,276 acres), according to a press release from Semarnat. 

Sumidero Canyon, CHI
Mexico’s national parks, such as the Sumidero Canyon, in Chiapas, protect much of Mexico’s diverse flora and fauna. (Jan Harenberg/Wikimedia)

The country now has 200 ANPs areas under federal protection.

Of those, 73 are national parks, although the last one created with that designation had been back on Nov. 27, 2017: Revillagigedo National Park, a group of four islands 400 kilometers south of the southern tip of the Baja California peninsula. The area is North America’s largest fully protected underwater park, offering the continent’s greatest concentration of  large marine life, and a trip there was chosen as one of National Geographic’s “5 adrenaline-pumping adventures in 2023.” 

These are the new parques nacionales in Mexico:

Baja California: San Quintín (85 hectares)

Baja California Sur: Nopoló (2,076 hectares), Loreto II (6,217 hectares)

Guerrero: Vicente Guerrero (723 hectares)

Oaxaca: Huatulco II (2,237 hectares), Ricardo Flores Magón (1,812 hectares)

Baja Califonia San Quintin
San Quintín, Baja California’s newest national park. (Sanquintin.travel)

These are the new Flora and Fauna Protection Areas:

Sinaloa: Juan M. Banderas (2,489 hectares)

Guerrero: Hermenegildo Galeana (282 hectares)

Oaxaca: Bajos de Coyula (1,923 hectares)

Quintana Roo: Playa Delfines (4 hectares), Jacinto Pat (16 hectares), San Buenaventura (37 hectares), Cenote Aerolito (10 hectares)

Noteworthy selections include ​​the four Flora and Fauna Protection Areas in Quintana Roo: the iconic Playa Delfines, which has been extended by 4 hectares in Cancún’s hotel zone; Jacinto Pat, a swath of jungle with 42 endangered species named after Jacinto Pat, a Mayan leader and initiator of the so-called Caste War that lasted from 1848 to 1901; San Buenaventura, which includes a mangrove swamp and hosts more than 100 species of birds; and Cenote Aerolito, one of 18 cenotes in Cozumel.

Among the ecosystems that make up Mexico’s 200 ANPs are beaches, mangroves, coastal vegetation areas, nesting areas for sea turtles, biological corridors for jaguars, and migratory routes for birds and pollinating species (such as hummingbirds, bats, bees and moths).

Nopoló
Nopoló is another Baja California site that has won a national park designation. (playasmexico.com)

The aim of Mexico’s Protected Natural Areas is to create conditions that allow for the adaptation of flora and fauna typical of the region, and to provide areas for scientific research. In part, this is accomplished by not allowing any outside interference or construction.

The protection of the 13 new ANPs will be administered by the National Commission of Protected Natural Areas (Conanp), according to Semarnat. The president has highlighted that the agreement between Fonatur and Semarnat converts properties with high environmental value into ANPs “for the benefit of all Mexicans.”

With reports from El Economista and Expansión Política

Pre-Columbian incense burner returned to Mexican government

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Incense burner
The incense burner is similar to others found at the Maya site of Palenque in Chiapas. (INAH)

A cylindrical incense burner – believed to be around 1,300 years old – has been returned to the Mexican government by a U.S. citizen, the Foreign Affairs Ministry (SRE) reported on Monday.

An initial inspection of the object, found in central Texas, has revealed it is made of clay and is akin to others found in the ancient Maya city of Palenque, Chiapas, in southeastern Mexico. According to experts from the National Institute of Anthropology and History (INAH), it may date from A.D. 500-700. 

Crystal Orlando
Crystal Orlando (second from right) returned the artifact to the Mexican consulate in Austin, Texas. (INAH)

The artifact was found by Texan artist Crystal Orlando, who officially handed it over to the Mexican Consulate in Austin during a repatriation ceremony on Sunday.

According to the SRE, once the artifact arrives in Mexico, it will be handed over to the INAH for safeguarding, study, analysis and conservation. 

President Andrés Manuel López Obrador’s administration has prioritized the recovery of national cultural heritage from abroad. Since he took office in 2018, more than 11,500 archaeological pieces have been recovered, the SRE said.  

Some of these efforts include the international campaign called #MiPatrimonioNoSeVende (#My Heritage Is Not For Sale), and a strategy that involves filing lawsuits against the auction of Mexican pieces abroad. 

Mexican ambassador to Belgium Granguillhome and Louise Du Moulin
The Mexican government has dedicated resources these past five years into recovering stolen and misappropriated artifacts. A recent collection of 20 pieces was returned voluntarily in Belgium, as seen above. (INAH)

The Mexican government has fought auctions in cities such as New York, Paris and Rome, where pieces of Mexico’s heritage are sold for hundreds of thousands of dollars. Once these objects are sold to private collectors, it is more difficult to recover them. 

Mexico has successfully repatriated archaeological pieces from the Netherlands, Italy, Germany and France and other countries around the world.

With reports from La Jornada

Air travel options to expand between China and Mexico

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China-Mexico treaty signing
It is hoped that the new memorandum of understanding will establish a number of new passenger and cargo routes. (Gobierno de Mexico)

The national aviation agencies of Mexico and China have signed two new memoranda of understanding aimed at expanding air travel between the two countries, after a three-year suspension of direct flights during the COVID-19 pandemic.

Delegates from Mexico’s Federal Civil Aviation Agency (AFAC) and the Civil Aviation Administration of China (CAAC) met on Thursday to discuss the agreements. The first aims to increase bilateral cooperation in areas such as environmental protection, safety, capacity building and infrastructure development, while the second lays out a new air transport agreement covering passenger and cargo flights.

Hainan Airlines Boeing 787-8
Hainan Airlines operated a direct flight between Beijing and Tijuana, which was paused in 2020, but the route is yet to restart. (byeangel/Wikimedia)

This agreement will allow more airlines to operate the China-Mexico route and expand destinations to five for passengers and four for cargo, from a previous maximum of two. It also lays out protocols for code-sharing, allowing both Mexican and Chinese airlines to increase joint operations.

During the meeting, two Chinese airlines expressed interest in resuming passenger flights to Mexico, while another agreed to increase cargo operations at Mexico’s Felipe Angeles International Airport (AIFA).

Direct flights between Mexico and China were suspended in January 2020, when China’s Hainan Airlines suspended flights to Tijuana due to maintenance at the destination. The flights were never reactivated after the COVID-19 pandemic struck later that year.

In May, the Pacific Airport Group (GAP), which operates 12 of Mexico’s regional airports, including popular destinations such as Puerto Vallarta and Guadalajara, pledged to reactivate Hainan Airline’s flights from Beijing to Tijuana and Mexico City before the end of summer of 2023. 

Aviation summit
The meeting took place between representatives of Mexico’s AFAC and China’s CAAC civil aviation authorities. (Gobierno de Mexico)

Alejandra Soto, GAP’s director of institutional relations, also announced that negotiations were underway with Korean Airlines to operate a direct flight to Tijuana from Seoul, South Korea. Soto also said that with the establishment of a new Tijuana-Panama route, GAP hoped the Baja California airport would act as a travel hub between Asia and Central America.

Analysts who spoke to Reforma newspaper expressed optimism that the new agreements will boost trade between Mexico and China. 

Aviation expert Carlos Torres said that increased cargo flights would allow Mexico to benefit more from the nearshoring phenomenon. A significant number of Chinese manufacturers have invested in Mexico in recent years, particularly in northern Mexican states close to the U.S. border.

Economist Fernando Gómez added that direct flights would also encourage more Chinese businesses to explore nearshoring opportunities in Mexico. Both analysts noted that Mexico is becoming a strategic trade hub in the context of the trade war between the two superpowers.

Chinese imports to Mexico have grown over recent years, reaching US $32 billion in the first four months of 2023, according to the Economy Ministry. Meanwhile, Chinese travelers to Mexico more than doubled to reach 68,206 in the first half of 2023, compared to 31,179 in the same period the year before, according to the Tourism Ministry.

With reports from Reforma and Milenio

Peso strengthens back to just below 17 to the US dollar

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Man holding Mexican pesos
The Mexican peso appreciated slightly at the beginning of the week, opening on Tuesday at 16.9 to the US dollar. (CRISANTA ESPINOSA AGUILAR /CUARTOSCURO.COM)

The US dollar-Mexican peso exchange rate dipped below 17 on Tuesday morning after the latter currency appreciated by more than 10 centavos from its closing position on Monday.

Data from Bloomberg shows that the value of one US dollar declined to a low of just under 16.9 pesos this morning after the greenback closed just above 17 on Monday.

Mexican peso and US dollar
Some reasons for the peso’s strength include high interest rates, large volumes of remittances and falling inflation. (Rmcarvalho/Istock)

At 11:30 a.m. Mexico City time, the peso was slightly weaker at 16.93 to the greenback.

The newspaper El Economista reported that the peso had benefited from a global weakening of the dollar.

It also said there was greater appetite for risk ahead of highly anticipated remarks set to be made by United States Federal Reserve Chair Jerome Powell at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming, this Friday.

“Any clues about how the [U.S.] central bank might be thinking about a plan for rate cuts in 2024 will … garner a lot of attention,” Bloomberg reported.

Mexico's central bank building
The Bank of Mexico has maintained interest rates at a record high this year. (Wikimedia Commons)

Analysts cite the Bank of Mexico’s high benchmark interest rate – currently set at a record high 11.25% – and the significant difference between that rate and that of the Fed (currently 5.25%-5.5%) as one factor that has benefited the peso this year. Strong incoming flows of foreign capital and remittances are among the other factors cited.

Mexico’s annual headline inflation rate has declined steadily this year to reach 4.79% in July, but the central bank opted against cutting its key interest rate at a monetary policy meeting earlier this month and has indicated that it intends to maintain the 11.25% level “for an extended period.”

President López Obrador has celebrated the strength of the peso, which reached an almost eight-year high of 16.62 to the US dollar in late July.

“We have a percentage of public debt contracted in dollars. So, when the peso strengthens, our debt goes down,” he said last month.

With reports from El Economista