Standing beside a sugar cane farmer who uses a wooden, horse-drawn press to squeeze juice
into a plastic bucket, Mexican President Andrés Manuel López Obrador gave a demonstration of his economic world view.
On a visit to La Huasteca last week, near the Bajío region that is Mexico’s high-tech manufacturing powerhouse, the leftwing nationalist president — who prideshimself on not having a checking account or credit card — extolled the virtues of artisanal microbusinesses that he said were “as or more important” in terms of job creation and development than big business.
“This is the economy we are boosting,” he said, sipping his cane juice. The day after his trip, he abruptly fired the head of the agency charged with measuring poverty and evaluating the social
programmes that are a pillar of his eight-month-old government.
Gonzalo Hernández Licona’s dismissal from Coneval, four days after he wrote an editorial saying budget cuts were crippling the agency’s ability to function, was the latest in a purge of technocrats and institutions the president says are corrupt, profligate or standing in the way of his transformation of Mexico after 36 years of failed market-focused “neoliberal” policies.
But some investors and analysts fear that in pursuing the mirage of a return to the golden era of growth of half a century ago, with the state firmly in the driving seat, the silver-haired shopkeepers’ son is flirting with the sort of demagoguery that could take Mexico down a dangerous populist path.
“There is a sense that history begins with him, that nothing of the past works and that he has to start a new era,” says Enrique Krauze, a prominent historian who has himself clashed with a president he once dubbed a “tropical messiah”. “He is not only taking decisions — good or bad
— on economic policy but also institutions, which took so much effort to build. I’m truly worried.”
Mexico will publish second quarter GDP data on Wednesday that are expected to show the economy close to recession, after a shock contraction at the start of the year, a fall in job creation and the lowest construction activity in 13 years.
Citibanamex, a leading bank, has slashed its 2019 growth forecast to just 0.2 per cent in stark contrast to the president’s promise of 2 per cent.
Yet with approval ratings as high as 70 per cent and his main economic barometer, the peso, holding steady against the dollar, Mr López Obrador feels vindicated in his rush to jettison past
policies and overhaul institutions in line with his beliefs, no matter who he upsets.
“I think that if your project is to change the status quo, political tensions are normal,” says Ignacio Marván, a professor at CIDE university and former adviser to Mr López Obrador when he was mayor of Mexico City. “He’s not risk averse. He’s not afraid of taking tough decisions, then he backtracks.
“[But] he may be thinking that. . . giving concessions now would weaken his support.” The 65-year-old politician swept into office in December after a landslide victory that gave him a huge popular mandate and control of both houses of Congress. He has moved speedily to centralise decision-making in his hands and to consolidate an unprecedented level of power now that he has finally made it to the presidency at the third attempt.
In tandem with his own ethic of frugality, Mr López Obrador has pushed to shake-up the way
many government departments and agencies spend money — with large reductions in operating
expenses to allow more social spending to go directly to people.
But hopes that he would prove a pragmatic steward of the economy — as he was during his period as mayor of Mexico City — are fading fast. Mr López Obrador has already alarmed investors by scrapping a partially-built $13bn airport project and pushing ahead with a planned $8bn refinery that few in the oil industry believe makes sense or can be built on time and to budget.
While his goals of eradicating corruption and fairer wealth distribution are widely lauded, many fear his methods spell a return to the failed nationalist policies of the 1970s.
As he hurtles ahead in a quest he hopes “with all my heart and soul” that future governments will never be able to undo, Mr López Obrador’s confrontational style has put him on collision course
with energy regulators, whom he has dismissed as “real shysters”, the federal police which he said was “not up to scratch” and the “shameful” national human rights agency.
Carlos Urzúa, a longtime ally, resigned as finance minister in July after a dramatic falling-out
with the president, claiming that policy decisions were not being “based on evidence”.
He joins a growing list of casualties: Germán Martínez quit as head of the state social security
agency IMSS, Guillermo García Alcocer as head of energy regulator CRE and Tonatiuh Guillén as head of the National Migration Institute amid budget cuts, interdepartmental meddling and
policy differences.
The message that many in Mexico have drawn is not just that awkward critics — those deemed
not to be on board with the president’s radical crusade to sweep away corruption and all vestiges of the “neoliberal period” — are either enemies or expendable.
But that the institutions they serve may be sacrificed, too, as the president imposes his uncompromising agenda on Latin America’s second-biggest economy. “The problem is that his idea is
not to build more technical institutions,” says Jacqueline Peschard, a former head of the agency in charge of access to information. “He subordinates everything to his narrative, which is more moralising than technical.
