Mexico’s President-elect Andrés Manuel López Obrador likes to frame his coming presidency as the start of a new era in Mexican politics. He also wants to re-establish the role of the presidency as the centerpiece of power. That was part of his justification for holding a $13 billion airport project already underway outside Mexico City up to a public vote in October.
But the informal and legally dubious way that vote was conducted – and López Obrador’s subsequent decision to cancel the project anyway – shows what his goals are and how much of an old-establishment politician he really is. The question now is whether outcry over his decision will be enough for AMLO (as he is widely known) to adjust his approach.
López Obrador has a clear vision of what he wants to accomplish, but no concrete plan for how to get there. Like politicians from the autocratic Institutional Revolutionary Party (PRI) in the 1960s, he wants to recentralize power to recreate the old, strong presidency, and have the government establish priorities while the private sector follows along. He appears convinced the country lost its way when the old political system was abandoned, and reforms in the 1980s and beyond began to liberalize the economy and create autonomous agencies to provide certainty to investors and the public at large.
It is in this context that López Obrador’s decision to cancel the airport project must be understood. For him, everything is about politics: economic considerations had nothing to do with it. López Obrador’s decision was instead meant to establish new rules of the game, where he, rather than business or what he derisively refers to as “the markets,” will be in charge. But that shift may come with a cost.
Soon after he announced his decision, López Obrador said that negotiations would ensue to settle whatever claims contractors involved in the canceled project might have. It was a revealing statement. As in the 1960s, AMLO assumes that decisions of this magnitude are all about wheeling and dealing with a few influential powerbrokers. While he has already settled with most of the domestic contractors, Mexican style, he neglects the fact that Mexico’s economy has become totally integrated into the world economy and financial system. In other words, AMLO does not wield as much power as he believes.
López Obrador won’t take office until Dec. 1. But his airport decision clearly establishes the nature of things to come.
First, decisions will be political and López Obrador will seek to legitimize them through referenda (he’s already announced plans for a consultation on a rail project in Mexico’s southeast in coming months). If AMLO gets his way, he would also be on the ballot in midterm elections in 2021, giving citizens a chance to revoke his mandate.
Second, AMLO has shown willingness to eliminate, or undermine, independent or autonomous regulatory agencies (competition, telecommunications, energy, hydrocarbons, and so on), so as to further concentrate power in the presidency.
Finally, everything in Mexico in the foreseeable future will be about him. On this point, he’s not very different from the current U.S. president.
What López Obrador seems not realize, at least not yet, is that as Mexico’s next president his decisions carry far more weight than they did when he was an opposition figure. The airport cancellation, which roiled financial markets and the peso, is a perfect example. AMLO’s actions now directly affect Mexico’s ability to service its debt, and decisions made by investors both in Mexico and abroad. To that end, the airport decision – particularly the capricious way in which it was made – creates enormous uncertainty for investors and citizens alike.
The current economic environment further complicates matters. López Obrador’s inauguration comes on the heels of the signing of a replacement for the North American Free Trade Agreement. The new agreement severely reduces legal protection for companies investing in Mexico. The danger today is that this combination – AMLO’s way of deciding and the trade agreement’s weakness – will combine to stall Mexico’s progress. It is worth remembering that NAFTA was originally conceived as a means to provide investors with certainty that the Mexican government would not change the rules of the game arbitrarily, and that this was seen to be in the U.S.’ national interest.
I expect AMLO will soon realize the enormous consequences of his decisions. The question is how he will respond. One possibility would be to search for scapegoats everywhere: from businessmen to Donald Trump to the media. However, the fact that this is coming so early in his administration, even before he’s been inaugurated, could well force him to rethink his ways.
AMLO won the presidency in large part because voters were convinced that “more of the same” wouldn’t fix Mexico’s problems. AMLO has a complex challenge ahead; if he truly wants to be a revolutionary, he should focus his efforts on strengthening institutions, rather than tearing them down.