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Artist rendering of the $13 billion international airport that was being built in Mexico City before President Andres Manuel Lopez Obrador scrapped it. (Photo: GACM)
Monday, June 27, 2022

Mexico: The Top Events Past Decade

Latinvex singles out the key events in Mexico business the past decade.


Mexico has seen two radically different governments this past decade. First a government that implemented historical reforms aimed at opening up the energy sector. Then a government that aimed at dismantling the very same reforms.

Mexico went from bullish optimism to record-low confidence among local and foreign investors. 

The result? An economy that is underperforming and lagging its Latin American peers.

During the government of President Andres Manuel Lopez Obrador, growth has averaged minus 1.6 percent, according to a Latinvex analysis of data and projections from the International Monetary Fund (IMF) for the 2019-22 period.

That compares with an average growth rate of 2.4 percent in the 2013-18 period, when Enrique Peña Nieto was president.

The economic decline the past few years would likely have been worse were it not for remittances from the United States.

The reason for the slowdown is a combination of factors, but key among them is the deterioration in investor confidence after AMLO (as the president is popularly known) shocked local and foreign investors by scrapping a partly built, $13 billion international airport, renegotiated state electricity form CFE’s contracts with private firms, reversed recent energy reforms by freezing oil auctions and announced plans to build a $12 billion refinery as well as a $11.6 billion, 1,525-kilometer railroad in the Yucatán Peninsula.

It hasn’t helped matters that AMLO has repeatedly downplayed the importance of economic growth. A “key element of our policy is to put aside, gradually get rid of the technocrat obsession with measuring everything by economic growth,” AMLO said in his first state of the union speech in September, according to Forbes.

“We consider that the most important is …the equitable distribution of income and wealth.” He also frequently says he prefers “soul wealth” to “material wealth.”

Meanwhile, Mexico’s president has systematically overhauled the country’s bureaucracy and regulatory agencies, replacing technocrats with unqualified loyalists, saying publicly he prefers someone with 90 percent honesty and only 10 percent experience, as if the two were contradictory. 

Lopez Obrador’s policies have focused on increasing the state role in the economy. But his administration has also become known for putting military and unqualified people in key posts, while constantly attacking and insulting anyone who criticizes his policies. He has also held two sham “plebiscites” by supporters to justify cancelling key projects such as a badly-needed new international airport and a new plant by US-based Constellation Brands.

Lopez Obrador, popularly known as AMLO, has called Mexican attorneys working for foreign firms “traitors” and has attacked judges that rule against his government.


The pessimism of today marks a stark contrast with the optimism just five years ago, when Mexico held several oil auctions granting private and foreign companies historic rights to explore oil. In June 2017, Mexico auctioned two-thirds of the shallow water oil and gas blocks up for grabs, Reuters and Bloomberg reported. Winners included Italy’s Eni, Spain’s Repsol, Colombia’s Ecopetrol, Russia’s Lukoil, Mexico’s state oil company Pemex and a tie-up between France’s Total and Royal Dutch Shell. Mexican energy minister at the time, Pedro Joaquín Coldwell, estimated the winning bids would generate $8.2 billion in investments, El Financiero reported.

Meanwhile, Mexican state oil company Pemex signed several major joint venture agreements with private oil companies such as Australia-based BHP Billiton and Chevron.

And Chevron, Texaco, BP and Royal Dutch Shell opened up the country’s first foreign brand gasoline stations in Mexico’s history. (Local companies Hidrosina and Femsa launched the first private gas stations in 2016).

Mexico also saw the $650 million IPO from private oil company Vista Oil & Gas — the first E&P-focused company to list in Mexico – in 2017.

And in July 2017, U.S. energy company Talos, Mexico’s Sierra Oil & Gas and the United Kingdom’s Premier Oil announced a “historic and significant” oil discovery in shallow waters of the Gulf of Mexico, which the consortium said was the largest find anywhere in the world in the last five years. 

Four years earlier – in 2013 — Latinvex ranked Mexico’s energy reform as one of best business developments in Latin America.

“Mexico’s energy reform is clearly the best business news out of Latin America this year. The reform could double foreign direct investment in the country within the next few years and will place Mexico as one of the hot oil and gas markets in the world. It will also help make state oil giant Pemex more efficient.”

Latinvex also named Peña Nieto Leader of the Year for his role in passing investor-friendly energy, telecom and education reforms


Despite the investments in the energy sector, AMLO decided to roll back all reforms and instead bet heavily on Pemex and state electricity company CFE.

In March this year, US-based Talos Energy announced that Mexico’s Ministry of Energy has officially confirmed that state oil company Pemex will be the operator of the Zama oil field that Talos discovered in 2017. “We are disappointed that despite our consistent track record of success, safety and progress we were not provided the opportunity to retain our role as operator for the benefit of the project,” Talos CEO Timothy S. Duncan said in a statement.

In May, Talos temporarily suspended pursuit of an arbitration claim against Mexico amid high-level talks over one of the country’s flagship offshore projects. AMLO said in June that the Mexican government is close to reaching a deal with Talos.

The handling of Zama, a deposit holding some 900 million barrels and located offshore in the southern Gulf of Mexico, which provoked a battle over who would run the project, is being closely watched by U.S. investors as a test of Lopez Obrador’s commitment to respecting private contracts in the politically sensitive energy sector, Reuters reports.

Then there’s the Dos Bocas refinery – one of AMLO’s pet projects. Pemex announced in May that the cost of Dos Bocas could end up costing $12.4 billion, or 40 percent more than originally planned, Argus Media reported.

Ratings agencies such as Moody’s as well as the IMF had warned against the refinery plans before fixing Pemex’ finances.

That comes on top of paying for the continued high losses at Pemex, which has been the worst performer in Latin America for years. Last year, Pemex lost $10.4 billion. Pemex has for years led losses on the Latinvex 500 ranking of Latin America’s top 500 companies. In 2020 alone its losses wiped out all profits of the Latinvex 500.

AMLO’s changes to renewable energy regulations have also caused condemnation from the US, Canadian and European Union embassies and chambers. The American Petroleum Institute complains of systematic discrimination against US fuel companies in favor of state oil company Pemex. (See Mexico: US Energy Sector Complains of Discrimination).

Most recently, AMLO tried to get Congress to pass a power bill that was opposed by the US, Canada and local and foreign investors and which, if implemented, would put $22 billion in solar, wind and other renewable-energy contracts at risk, according to BloombergThe proposed reform had been worrying European firms and governments, as well as crimping investment, the European Union’s ambassador to Mexico announced. 

In the end, AMLO was unable to get the bill passed, but fears persist that he may try again. 

Right after the defeat in April, the lower house of Congress passed an amendment to mining legislation in order to nationalize the country’s lithium reserves, a day after the bill was sent to lawmakers by AMLO, Reuters reported. The Canadian-Mexican Chamber of Commerce says the potential new law would violate the US-Mexico-Canada Trade Agreement and World Trade Organization rules, El Economista reported.


Then there’s AMLO’s total disregard for existing contracts with major foreign investors. In 2020, AMLO cancelled Constellation Brand’s $1.4 billion plant (which was 70 percent finished) after a “referendum” was held.  Only about 4.6% of Mexicali’s electorate participated in the March vote, according to employers’ confederation Coparmex. The move was widely condemned by business groups, including the American Chamber of Commerce in Mexico.  CCE, Mexico’s largest business group, also condemned the referendum, El Financiero reported.

“A bullet in the brain would be less damaging than what they’re doing,” Juan Francisco Torres Landa, Managing Partner of the Mexico City office at Hogan Lovells, told the Financial Times after the Constellation “referendum”.

In December 2020, AMLO cut off natural gas supply to Brazilian-Mexican petrochemical company Braskem Idesa, Reuters reported. In a statement, Braskem Idesa said AMLO violated the rule of law and the company will take actions to defend its rights and assets, El Financiero reports.

AMLO has also repeatedly attacked Spanish energy giant Iberdrola, accusing it of corruption without specifying or presenting any evidence.

AMLO started his administration in December 2018 amidst shock among investors after he had announced in October that he planned to scrap the new $13 billion international airport being built in Mexico City – the largest infrastructure project in the country – despite it being a third built, warnings from local and foreign investors about the signal that would send and warnings from local and foreign experts on the negative impact that would have on air traffic.

The news led to the peso plunging and stocks falling $22.5 billion in a few days, ironically almost enough to finance almost two new Mexico City airports, as Bloomberg’s Eric Martin pointed out.

Fitch Ratings downgraded its outlook for Mexico’s sovereign debt from stable to negative.


In a break with recent tradition, AMLO last year refused to extend the mandate of Central Bank Governor Alejandro Diaz de Leon. Since Mexico opposition candidates gained office in 2000, two of AMLO’s predecessors kept on Central Bank governors appointed by their respective predecessors. Vicente Fox kept on Guillermo Ortiz, who had been named by Ernesto Zedillo.  Enrique Pena Nieto kept on Agustin Carstens, who had been named by Felipe Calderon.

The decision to not extend Diaz de Leon’s mandate came after AMLO had repeatedly attacked him for doing his job, namely fighting to detain inflation. AMLO has insisted that the Central Bank also needs to have a “social dimension”.

AMLO instead nominated his finance minister, Arturo Herrera. But then — in a surprise move just before the change — he pulled his nominee without explanation. After days of uncertainty, AMLO nominated Victoria Rodriguez, a little-known economist with scant monetary policy experience. The news sent the peso tumbling and fueled concern about possible government interference in the bank’s independence as inflation hits a 20-year high, Bloomberg reported.

In 2020, AMLO tried to weaken the Central Bank autonomy by forcing it to buy cash that in theory was supposed to only come from migrants and hospitality sector workers paid in dollars, but in actuality could end up including drug money, according to warnings from Central Bank Governor Alejandro Diaz de Leon, the Mexican banking Association, US authorities and ratings agencies like Moody’s. Jonathan Heath, a Central Bank board member appointed by AMLO, says the bill is mainly intended to help controversial business mogul Ricardo Salinas, the only leading businessman who supports the president.

“One of the most important [arguments against the bill] is that one should not reform a law to favor one single company, especially with a negative track record with the SEC (Securities and Exchange Commission) in the United States,” Heath wrote on Twitter.

The Mexican senate passed the new bill on December 9 and the lower house was expected to follow suit on December 15, but decided to delay their vote until this year following a wave of criticism.

The new plans follow a proposal in November to force the Central Bank to use its international reserves to pay off debt by money-losing state oil company Pemex, according to El Universal. The idea originated with the Pemex board and was supported by Energy Minister Rocio Nahle. However, Central Bank deputy Governor Gerardo Esquivel (appointed by AMLO) shot down the plan, pointing to its regulations, El Universal reported.


AMLO also decided to ban labor outsourcing in an effort to combat tax evasion and ensure employers cover benefits. While the measure helped to boost formal hiring, it hit the string of service companies dedicated to labor outsourcing and was a key factor (apart from a COVID surge) that caused a 0.2 percent decline in third quarter GDP, according to  Bloomberg.

Meanwhile, the Mexican president has also been pressuring big foreign companies to pay more taxes despite the economic crisis and fallout from COVID-19. His targets included Walmex (the Mexican unit of US-based retailer Walmart), Coca-Cola bottler and convenience store operator Femsa, IBM and Canadian mining company First Majestic Silver.


And despite the weak economic recovery, AMLO continued full speed ahead with his pet projects. Apart from the Dos Bocas refinery they include the $15 billion Santa Lucia airport and the $11.4 billion Maya Train.

The Santa Lucia airport is $877 million more expensive than planned, while the cost of the Maya Train is now 47 percent more expensive  than originally announced and so far five months behind schedule, El Financiero reports.

In November AMLO declared the three pet projects vital for national security, which will likely lead to cost overruns, the construction chamber warns. Legal experts and transparency activists have said the decree casts a shroud over government actions, hindering oversight, cutting through legal protections and potentially endangering the environment and human rights, Bloomberg reports.


Despite the negative impact of Amlonomics, AMLO remains popular. By law he can’t run for re-election in 2024, but his Morena party is leading all polls and will likely be able to win the presidency again.

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