Mexico: Leftist Threatens Reforms

Thanks to Trump, Mexico may elect a leftist anti-American president.

BY JOACHIM BAMRUD

Andrés Manuel López Obrador – a critic of the United States, private business and NAFTA popularly known as AMLO -- has tried twice before to become Mexico’s president and failed both times. Now, however, he has a real shot at becoming president, thanks in large part to Donald Trump, the anti-Mexican president of the United States.

“AMLO’s chances increase with every tweet from President Trump that offends Mexico or Mexican immigrants in the United States,” says Cynthia Arnson, Director of the Latin American Program at the Woodrow Wilson International Center for Scholars. “AMLO has attacked free trade from the left, and represents the inward-looking Mexico of the pre-NAFTA years.  AMLO and Trump could feed off of one another in ways that could upend many of the assumptions that have governed US-Mexico economic relations since the early 1990s.”

Pamela Starr, an associate professor of international relations at the University of Southern California, sees AMLO as having a strong shot at the presidency.

“AMLO definitely has a real chance of winning the 2018 Mexican presidential election,” she says. “This is in part due to a political climate in Mexico – a weak economy, growing intolerance with corruption, and rising nationalist sentiments – which favors a left-leaning anti-corruption candidate such as Andrés Manuel López Obrador. “

At the same time, the voters’ utter disgust with the current government and evident disarray in the main opposition parties – the virtual collapse of the PRD and sharp divisions within the PAN which raise questions about the party’s ability to unite behind whoever it selects to be its presidential candidate – will help AMLO and his united, disciplined and highly loyal Morena party, Starr argues.

“There is still a long way to go and anything can happen, but if the elections were held today, AMLO would likely be Mexico’s president,” says Michael Shifter, President of the Inter-American Dialogue.   “Mexicans have tried with the PAN twice, with Fox, then Calderon, then voted back the PRI with Peña Nieto, yet all administrations have failed to jumpstart the economy, reduce poverty and tame violence.  Trump’s rhetoric and policy moves help feed AMLO’s nationalistic narrative. Barring some unexpected twists and turns, with AMLO in Los Pinos and Trump in the White House, US-Mexican relations are likely to hit a low point.”

MEXICO ELECTIONS

Mexico is scheduled to hold general elections in July 2018 to elect a president and congress for a six-year period. 

“We can expect that President Trump will feature somewhat prominently in Mexico's presidential campaigns, with the candidates and their teams seeking try to portray one another as too submissive to Trump, too similar to Trump, or too incapable of negotiating with Trump,” says Antonio Garza, who served as the US ambassador to Mexico between 2002 and 2009 during the administration of President George W. Bush. “Yet the U.S. administration will by no means be this electoral season's defining issue. Mexicans care deeply about domestic issues, especially corruption, growing insecurity, human rights, sluggish economic growth, and the slow implementation of Peña Nieto's economic reforms, and they aren't going to let the political discussions shift too far away from these central themes. These national conversations may also intensify over the coming months if the government moves forward on controversial legislation, such as a bill currently in Congress that would veer away from recent efforts to reform the judicial system.”

Enrique Peña Nieto and the PRI party won the previous election in 2012 and have won widespread investor praise for economic reforms that opened up the energy and telecom sectors to competition.

Especially the energy reform was historic since it ended the monopoly state oil giant Pemex had held since the oil sector was nationalized in 1938 by then-president Lazaro Cardenas from the same PRI party as Peña Nieto. It allowed foreign and private oil companies to sign production-sharing contracts and authority to book reserves.

Earlier this month, Australia-based mining giant BHP Billiton signed an agreement with Pemex to develop the $14 billion Trion block – the first exploration and production farm out project in association with a foreign company.

Meanwhile, last month, US-based Chevron and Japan’s INPEX Corporation signed an agreement with Pemex for the deep-water exploration and extraction of block 3 North of the Plegado Perdido Belt in the Gulf of Mexico -- the first time that Pemex participated in a bidding process with private international oil companies for a block in Mexico.

Now AMLO threatens those reforms. Earlier this month, he said that he wanted to revise laws that opened the country's energy markets to foreign investment, vowing to hold a referendum on the issue and make changes based on the result, Bloomberg reports.

“AMLO does not appear to have any sympathy for the private sector,” says Riordan Roett, Professor and Director of Latin American Studies Program, Western Hemisphere Studies at  SAIS-Johns Hopkins University. 

AMLO’s anti-status quo rhetoric injects uncertainty into the already shaky bilateral populations and markets, Garza points out.

However, experts warn that a President AMLO could be more pragmatic than Candidate AMLO.

“While an AMLO victory will definitely impact US-Mexico relations and the business climate in Mexico, it is easy to overstate the extent to which it would be a disrupting influence,” Starr says. “While he has promised a referendum on the energy reform and to abide by its results, AMLO has also stated he will respect the vote of the Congress, the only institution with the power to reverse the constitutional changes that are the heart and soul of the energy reform.  And the odds that López Obrador will be able to build an anti-reform congressional majority capable of reversing energy reform are long.”

Shifter concurs. “AMLO will have to face many constraints, and he has a pragmatic streak as well, so his policies may be more moderate than his rhetoric,” he says.  

While AMLO has promised to be more confrontational with the United States than the current government, so has virtually every opposition politician in Mexico, Starr points out. 

“We should expect of an AMLO presidency what he delivered as Mayor of Mexico City,” she says, pointing to the 2000-05 period the leftist politician ran Mexico’s largest city.  “He is apt to be a pragmatist, on economic matters, in his interaction with the private sector, and in Mexican relations with the United States.  But we should also expect the unexpected from a politician who is unlikely to follow the traditional script for Mexican presidents.”

Meanwhile, AMLO’s ability to unwind many of Mexico's economic reforms will be limited or at least slowed by the original constitutional reforms, political roadblocks, the momentum of ongoing implementation, and, for the energy reform, his stated preference for a referendum over an executive order, Garza argues.

“Regardless of who moves into Los Pinos next year, it seems highly plausible if not inevitable that he or she will adopt a less accommodating stance toward the Trump administration,” he says. “If this plays out, we can expect not just frozen U.S.-Mexico relations but perhaps the start of real and significant decreases in bilateral cooperation across a range of issues.”

TRUMP AND LATIN AMERICA

Meanwhile, Trump is also impacting the rest of Latin America.

“Trump will look to review every free trade agreement that the United States has with Latin American countries, causing unnecessary strain and anxiety among U.S. friends and allies,” Arnson says. 

The Trump Administration announced last week that it was preparing new executive orders to re-examine all 14 U.S. free trade agreements and review government procurement policies to aid American companies, Reuters reports. NAFTA tops the list, which also includes US FTAs with Chile, Colombia and Peru and Central America and Caribbean through CAFTA.

“Unfortunately Latin Americans have reason to worry about Trump’s evolving approach towards the region,” Shifter says.  “His trade policies could negatively affect a number of countries, especially if a Border Adjustment Tax (BAT) is adopted in the US, as some in the administration have urged. “

On security, Trump’s focus on fighting drugs and crime will likely be seen as too single-minded and will arouse suspicions and build resentment, he adds. 

“The new administration’s proposed wall on the US-Mexico border and hardline immigraton policies are an affront to the entire region and have already soured attitudes towards the US,” Shifter says.  “In a brief period, Trump has increased anti-American sentiment across Latin America, squandering the goodwill created in recent years.  

As a result, Latin America is increasingly looking at alternatives to the United States. They include Asia – led by China – as well as the European Union and even locally.

Mexico is working on a free trade agreement with Argentina and Brazil, while the latter two countries, in turn, are hoping to reach a long-delayed free trade agreement with the European Union through the South American Common Market known as Mercosur.

But the biggest winner may be China, which is advocating freer and closer trade with Latin America as the United States becomes protectionist.

“In the long term, the most lasting legacy of the Trump administration may be the impetus to deeper integration in the region itself, and to its expanded ties with China and other Asian countries,” Arnson says.   

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