Can AMLO Live Up to Mexico’s Expectations?

 Andres Manuel Lopez Obrador greets supporters as election results come in on 1 July. Photo: Getty Images.
Andres Manuel Lopez Obrador greets supporters as election results come in on 1 July. Photo: Getty Images.

The landslide election victory this month of veteran left-winger Andrés Manuel López Obrador signals an important turning point for Mexico. López Obrador – or AMLO, as he is commonly known – is a very different kind of politician to the technocratic and market-friendly centrists who have governed the country since the 1980s, and who sealed the North American Free Trade Agreement (NAFTA) with the US and Canada a quarter of a century ago.

An austere, grassroots campaigner for social reform from the poor southeastern state of Tabasco, AMLO was elected mayor of Mexico City in 2000 and previously stood for the presidency in 2006 and 2012, leading mass street protests against alleged but unproven fraud after his first defeat.

AMLO has long enjoyed solid support among poorer Mexicans and the backing of trade unions and the far left. But this time around his election campaign succeeded in tapping into wider popular frustration at rising levels of violent crime, lacklustre economic performance and – above all – far-reaching corruption. In his victory speech, the president-elect notably pledged to eradicate corruption and end impunity.

Having won by a wider margin than opinion polls had predicted, AMLO now has significant political capital. For the first time since 2000, when the Institutional Revolutionary Party (PRI) lost its 70-year grip on central government to the right-wing National Action Party (PAN), a Mexican president will have the backing of a substantial congressional majority.

The outcome of the concurrent legislative elections is that AMLO’s National Regeneration Movement, together with its far-left and other allies, will control both the upper and lower houses of Mexico’s Congress. The PRI – back in power since 2012 – and the PAN lost seats in large numbers, as did the moderate left-wing Democratic Revolutionary Party.

What can be expected of the new government when it takes office in December? And what kind of left-wing president will AMLO prove to be? At the moment, the evidence suggests that he will tend towards pragmatism – more in the leadership style of Luiz Inácio Lula da Silva, the (now-imprisoned) former president of Brazil, than of the late Hugo Chávez, architect of Venezuela’s disastrous experiment with 21st-century socialism. Certainly, in his first public statements since his election, AMLO – like Lula in 2002 – has been placatory towards the private sector, and his moderate tone has helped stabilize currency markets in the last few days. Commitments to respecting central bank autonomy and maintaining fiscal stability have gone down well.

AMLO’s economic advisers are drawn from the mainstream, in sharp contrast to the left-wing dependency theorists and Marxists who have guided Venezuela’s strategy. Finance minister-designate Carlos Urzúa is a US-trained economist who enjoys good relations with the private sector; as does Alfonso Romo, a key economic adviser, who owns a big fund-management company and has a long and successful track record in business.

There are some sources of concern, however.

Pledges to increase old-age pensions, subsidize petrol and other prices and introduce a big job creation scheme – the centrepiece of AMLO’s commitment to ‘put the poor first’ – will cost the equivalent of 2.5 per cent of GDP. The president-elect’s case that the money can be found by reallocating existing funds and clamping down on malpractice seems hugely optimistic. Longer-term plans to increase public investment to as much as 5 per cent of GDP could also be difficult to realize.

AMLO has vowed to review more than 100 oil contracts offered to international companies under a radical liberalization of the energy sector introduced five years ago. But it remains unclear whether he will seek to reverse the reform completely and restore the monopoly previously enjoyed by the state-owned Pemex. Indeed, to do so would require a constitutional amendment, dependent on a two-thirds’ majority in Congress and the agreement of a majority of Mexican states.

Relations with the US – by far Mexico’s biggest trading partner – are another potential stumbling block. AMLO has in the past been critical both of President Donald Trump and of NAFTA, although in the days following his victory he has sought to downplay any possible tensions. The existing Mexican team involved in the NAFTA renegotiation will remain in place until the new administration takes office late this year. Yet uncertainty on all these fronts – macroeconomic policy, energy and trade – could dampen inward investment and depress output.

Moreover, it is hard not to be at least a little sceptical about AMLO’s undertakings to reduce crime and corruption. Successive governments have been overwhelmed by the extent of organized crime in Mexico, rooted in trafficking cocaine and other illegal drugs. Murder rates have more than tripled since 2000. AMLO has thus far avoided spelling out how he will deal with this problem, instead issuing vague statements in favour of peace talks, the possible involvement of the Vatican, and the necessity of regular early-morning meetings with security chiefs.

Tackling corruption, too, is set to be a massive challenge. AMLO’s emphasis on likely headline-grabbing actions targeting individuals – by reducing salary levels and perks, or by pursuing miscreants more effectively – mirrors the approaches of previous heads of state. In their early days in office, Carlos Salinas de Gortari (1988–94) and outgoing president Enrique Peña Nieto (2012–18) both, with much fanfare, orchestrated the arrests of corrupt trade union leaders, for instance. There has been little mention of the longer-term, more painstaking work needed to make Mexico’s institutions more accountable and to ensure that the judiciary is free from political influence. AMLO’s ‘personalist’ approach to politics and his past lack of interest in administrative procedures do not augur well in this respect.

On all these fronts, popular expectations for change are running high. The ability of the new president and his administration to deliver on – or at least manage – these expectations will be crucial. AMLO retained strong popularity ratings during the time he ran Mexico City, but whether he can replicate this same level of success on the very much wider national stage remains open to question.

Richard Lapper, Associate Fellow, Global Economy and Finance Department and US and Americas Programme.

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