The World

Warning Signs in Mexico

After three months, there are reasons for concern about President Andrés Manuel López Obrador.

Andrés Manuel Lopéz Obrador looks down.
Andrés Manuel Lopéz Obrador in Mexico City on Feb. 8. Alfredo Estrella/AFP/Getty Images

When more than 56 million Mexicans went to the polls to elect a new president and a new Congress on July 1, 2018, it was clear they were ready for a change. The outgoing president, Enrique Peña Nieto, was deeply unpopular, with an approval rating below 20 percent. His administration and his party, the PRI, were mired in corruption scandals and blamed for the disappearance of 43 students in the southern state of Guerrero. Cartel violence was astronomically high, which many blamed on the failed war on drugs started by the previous president, Felipe Calderón of the PAN party, in 2006. Mexicans were fed up with the cronyism and excesses of the country’s political and business elites and worn out by the shocking number of violent deaths in the country—more than 250,000 since 2006, according to government statistics.

The PAN and the PRI were perceived as part of the same rotten political establishment that ruled the country since the end of the Mexican revolution, and voters were tired of both of them. Fifty-three percent of the electorate voted for the left-wing candidate Andrés Manuel López Obrador, a former mayor of Mexico City and founder of the National Regeneration Movement party, or MORENA, who promised a historic transformation of Mexican institutions and society. López Obrador, often referred to by his initials, AMLO, won the presidency and MORENA’s coalition secured a majority in both houses of government.

AMLO ran on a populist platform that blamed most of Mexico’s problems on the upper class and the neoliberal economic policies that were implemented in Mexico from the 1980s onward. He presented himself as a man of the people and traveled to the most remote districts of the country to make his case. His messianic rhetoric and demagogic policy ideas drew comparisons to Hugo Chávez and the worst of the Latin American left, but for most Mexicans he fostered hope, not fear.

In his first three months in office, AMLO has made a series of decisions that outline a policy agenda and a vision for the future that should worry all Mexicans. Though the president diagnosed many of the country’s problems correctly—inequality, corruption, and violent crime, to name a few—the way he is tackling these issues suggests he sees the world through a lens of anachronistic nationalism, built on a flawed understanding of history and economics.

The first major decision AMLO made after winning the election, before even taking office, was to cancel the construction of a much-needed new airport in Mexico City, in an area called Texcoco. After a sham referendum organized by his own party, in which only 1 percent of the population voted, he pulled the plug on the $13 billion project and announced that an air force base called Santa Lucía, 28 miles from the existing airport, will be conditioned to function as a supplementary airport instead.

“What the government is saying is that this was a very expensive project and that with the other project they will save around 100 billion pesos [roughly $5 billion],” said Mario Ruiz, the former chief of staff of the Texcoco airport project. “Their argument was that we were building a very ostentatious airport for a poor country. What I would tell you is that that is a false premise; what they’re doing right now is going to have a much higher cost for the country.”

One-third of the Texcoco airport was already built, so the cancellation of the project resulted in an immediate loss of roughly $5 billion that had already been spent plus another $4 billion in debts to investors. Additionally, there is a consensus among aviation experts that the Santa Lucía project is unfeasible because the landing routes cross paths with the current airport’s. “The Santa Lucía project is a very short-term solution to the problem [of saturation at the current airport],” said Ruiz. “In 10 years, we’re going to be talking about where to build a new airport again.”

In January, Bank of America Merrill Lynch cut its forecast for Mexican economic growth in 2019 from 2 percent to 1 percent, citing a possible downturn in the U.S. economy and uncertainty around Mexico’s new economic policies and the cancellation of the airport in Texcoco, which scared investors.

There was undoubtedly a political component to the cancellation of the airport—it sent a strong message that AMLO is in charge, and it pandered to his base, which saw the Texcoco project as a symbol of corruption and upper-class extravagance. But it was clearly also motivated by AMLO’s inward-looking, anti-neoliberal ideology.

“If you read López Obrador’s book from before the campaign, La Salida (The Exit), the narrative is that this country was doing well until 1982, when president [Miguel] de La Madrid came to power, the neoliberal era began, and Mexico went downhill,” said Leo Zuckerman, the host of Es la Hora de Opinar, a Mexican political debate show. “It is, of course, a Manichean and simplistic vision that does not correspond with reality.”

The Mexican economy prior to the 1980s was characterized by the government’s protectionist policies and the nationalization of several major industries, like oil, electricity, and telecommunications. “If you look at Mexico in the ’70s and at Mexico last year, there is not a single measure by which Mexico was doing better before,” said Jorge Suárez-Vélez, a prominent columnist for the Mexican daily Reforma. “As a result of opening up the economy, Mexico has created a large middle class over the last 30 years.”

Neoliberal policies made Mexico richer, but it’s true that, like everywhere else in the world, they also increased inequality. AMLO vowed not to raise taxes and to end the year with a fiscal surplus while delivering on his campaign promise to redistribute wealth through social programs—he doubled pensions for everyone over 68, is offering yearlong job-training scholarships to everyone between 18 and 29 that does not work or go to school, and started a pension program for people with disabilities.

“To finance all of that, it is necessary for the economy to keep growing and for the state to be able to collect more taxes,” said Zuckerman. “If the economy isn’t doing well, they’re not going to have the resources to distribute to their constituents, and that’s going to create a problem, unless they start getting into a lot of debt, but that would make the economic problem even worse.”

AMLO’s economic policies are often reminiscent of another era. They include price controls on basic goods and rescuing Pemex, Mexico’s state-owned oil company (whose $106 billion debt was recently downgraded by Fitch), with tax cuts and bailouts. “The airport, the price controls, all the measures around Pemex and public expenditure—the criteria for making these economic decisions is clearly of an ideological nature,” said Jorge Castañeda, Mexico’s foreign minister from 2000 to 2003 and a professor of Latin American studies at New York University.

AMLO campaigned on rescuing Pemex, the most indebted oil company in the world, in order to increase gasoline production in Mexico and end Mexico’s dependence on gasoline imports from the U.S. In January, AMLO announced the shutdown of key oil pipelines to combat rampant oil theft, a practice known as huachicoleo, which is controlled by organized crime and generates losses for Pemex of more than $3 billion a year. The shutdown of the pipeline led to widespread fuel shortages across central Mexico, one of the most productive regions of the country. To this day, no arrests in the fight against huachicoleo have been announced, and it is not clear how shutting down the pipelines will provide a long-term solution to the problem.

Pemex is a behemoth whose production has been plummeting for years. Its proven reserves are drying up, and it can’t produce enough light oil for its own refineries. Pemex doesn’t have the capital nor the technology to explore and drill new reserves, and with alternative energy sources becoming increasingly inexpensive, it is hard to understand how pinning the future of Mexico’s energy sector on self-sufficient oil production is a good idea. “What we’re seeing is total incompetence,” said Suárez-Vélez. “They’re managing the biggest company in the country with ideological criteria.”

According to the Wall Street Journal, AMLO reduced gasoline imports from the U.S. in December and has completely stopped importing U.S. light crude oil, which Mexican refineries use to make gasoline. This likely aggravated the gasoline shortages and has led some to believe that the clumsy battle against huachicoleo was an excuse to cover up shortages caused in part by the decision to reduce U.S. imports. “If what you had wanted to do was fight huachicoleo, then you would have made sure your gasoline reserves were full, that you had enough trucks [to transport the gasoline to gas stations], and that you had a strategy,” said Suárez-Vélez. “You don’t just shut down the pipeline and then realize you don’t have gasoline and you don’t have trucks.”

Another cause for concern is that AMLO is leaning heavily on the military to advance his agenda. He has deployed the military in the fight against huachicoleo—soldiers are guarding pipelines and driving the recently purchased trucks for gasoline transport—and the military will be in charge of the construction of the Santa Lucía airport. The military will also develop luxury real estate for private purchase in order to finance a new national police force, called the Guardia Nacional. The Guardia Nacional will be under civilian command, but it will initially be comprised mostly of military and naval police officers. Under the constitutional amendment that allows for the creation of the Guardia Nacional, AMLO will have the authority to use the military for matters of public safety for the next five years.

“I look at militarization in this country with great concern,” said Zuckerman. “Historically, when you increase the role of the armed forces in society, it gets harder and harder to take them out—they don’t like to lose power. … In the specific case of Mexico, especially after the revolution, it took a lot of work to take the military out of political life, and now López Obrador is bringing it back.”

Despite these concerns, AMLO’s popularity remains amazingly high, at around 80 percent. “He connects very well with the most basic emotions in people,” said Castañeda. “Until we start to see the grave consequences [of his actions], he won’t experience much rejection.”