Economy

If Trump Kills NAFTA, 'Modern Mexico' May End Up Dead Too

For the ordinary Mexican, the free-trade agreement has been a chance to build a modern country based on the rule of law, and, above all, a ticket to economic development. Without it, Mexico could quickly slide backward.

Andrés Manuel López Obrador at the presentation of his book ''Oye, Trump''
Mexico City green and red
Luis Rubio

-OpEd-

MEXICO CITY — The shakiest tremor U.S. President Donald J. Trump may have triggered in Mexico is not his insults or attacks. Instead, it's a renewed debate about Mexico's development. For the second time in four decades, the way Mexico's economy, indeed the country, is run has become a subject of debate. This time, however, the criticism has not come from within: it's come from the United States.

The NAFTA free-trade agreement was the culmination of changes that began with a debate in our government in the second half of the 1960s. The country had to decide whether to open the economy or keep it protected, move closer to the U.S. or keep its distance, give precedence to consumers over producers, whether to have more or less government intervention in personal and business decisions. It was, broadly, a debate on what Mexicans should do to advance the country's development. In the 1970s, Mexico expanded government, increased spending and protected the economy, decisions that produced financial crises in 1976 and 1982. We stretched the chord as much as we could, until reality snapped it.

In a setting of hyperinflation in the mid-1980s, authorities stabilized the economy and started a sinuous process of economic liberalization. Hundreds of firms were privatized, public spending was rationalized, foreign debt was renegotiated and the country opened up to imports. The hope was that a change of strategy would generate enough investment to boost growth, and increase jobs and revenue. Although the changes were radical, they failed to bring about enough of the promised investment.

NAFTA has become our doorway to the modern world

It was NAFTA that boosted the economy. It sparked a revolution in industry and exports. In spite of the many, and in some cases absolutely legitimate, criticisms of the free-trade deal, the country became an exporting powerhouse that no longer faced a balance of payment problem that had prompted crises in earlier decades. But NAFTA was much more than a trade and investment agreement — it was a window of hope and opportunity.

For the ordinary Mexican, it meant the possibility of building a modern country, a society based on the rule of law, and, above all, a ticket to development. This may explain the mix of attitudes in Mexico toward Trump today: personal contempt for him on the one hand without vulgar anti-American feelings spreading through the population; and on the other, terrible anxiety at this dream of development being shot down. The Mexican economy, which could not attain high growth rates or a significant rise in per capita GDP in all these years, exacerbated these feelings.

Keep in mind that NAFTA has more than amply attained the goals we set out for it. It has facilitated productive investment, generated a new industrial sector, boosted exports and given investors a degree of assurance on the "rules of the game." Indirectly, it has also created a feeling of clarity about the future, including for those not directly involved in NAFTA-related enterprises. In short, NAFTA has become our doorway to the modern world, and Trump's challenge is not just threatening investment but also a vision of the future most Mexicans share.

Looking down in the capital — Photo: Alejandro

NAFTA was a way to limit our rulers' powers of abuse by restricting changes to the governing laws and giving our development model credibility. It paved the way for political liberalization, which although half-hearted and uneven, has reduced the concentration of power and changed the relationship between ordinary Mexicans and their rulers. Paradoxically, NAFTA (and job opportunities in the U.S.) also allowed politicians to keep living in their little world of privilege without bothering to perform basic tasks such as creating a modern educational system and ensuring the safety of citizens.

For now, we don't know for sure what will happen to NAFTA. It has already taken a hard knock. Trump has not only exposed our characteristic political weaknesses but also destroyed the certainty that came with our "ticket to modernity."

Perceptions and hopes have now changed. Don't be surprised to hear people start speaking of closing ourselves off, retaliating against Americans, and restoring an "efficient" state, for want of a better word. The people saying this do not understand that NAFTA was much more than an economic instrument — it was our chance for a brighter future.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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