U.S. Treasury Secretary Janet Yellen's three-day visit to Mexico City this week holds a strategic focus on bolstering cooperation between the United States and Mexico in the fight against illicit finance and the trafficking of fentanyl. The trip, spanning from December 5 to 7, involves high-level meetings with key Mexican officials, including President Andres Manuel Lopez Obrador, the central bank governor, and the finance minister. This diplomatic engagement comes on the heels of the U.S. Treasury's recent announcement of a dedicated "strike force" aimed at disrupting illicit drug trafficking, particularly the distribution of fentanyl.
The task force, operating under the Treasury, will bring together various departmental resources, including the Office of Terrorism and Financial Intelligence and the Internal Revenue Service's Criminal Investigation unit. It represents a significant step in combating the opioid crisis, with illicit fentanyl and synthetic opioids contributing to a staggering number of overdose deaths annually.
Recent cooperation between U.S. President Joe Biden and Chinese President Xi Jinping to stem the flow of fentanyl precursor chemicals from China has added an international dimension to the efforts. Often mixed by Mexican drug gangs, these chemicals play a crucial role in the production and distribution of the deadly drug in the United States.
While the Treasury has a history of imposing sanctions on Mexican cartels and associated money-laundering entities, the impact on the broader cross-border drug trade—estimated at $20 billion to $30 billion annually—has been limited. According to Earl Anthony Wayne, a former U.S. ambassador to Mexico, the challenge lies in tracing and disrupting the financial pathways that sustain these criminal enterprises.
Treasury Secretary Yellen is set to engage in discussions with Mexican counterparts and financial institution executives during her visit. The primary focus is on devising more effective strategies to combat illicit drug finance, with an emphasis on improving coordination of investigations. The objective is to unveil and dismantle drug supply chains that cleverly disguise themselves as legitimate commercial trade, disrupting their access to financing.
Yellen's visit is not only about countering illicit finance but also about promoting Mexico's pivotal role as a destination for "friend-shoring"—a concept that involves enhancing the resilience of U.S. supply chains. With Mexico surpassing China as the largest U.S. trading partner, discussions will cover a range of issues, including U.S. tax credits for electric vehicles produced in North America and new Treasury rules impacting Chinese investment in Mexico.
The multifaceted agenda of Yellen's visit reflects the interconnected nature of diplomatic, strategic, and economic collaboration between the United States and Mexico. The engagement underscores the urgency and complexity of addressing both the opioid crisis and broader economic and trade considerations in the region.
By fLEXI tEAM