Publish in Latin America Outlook - Wednesday, January 17, 2018
Leftist Andres Manuel Lopez Obrador continues to lead all polls ahead of the July presidential elections in Mexico. (Photo: Morena)
Investor favorite Jose Antonio Meade just started his campaign and is trailing in polls. (Photo: Meade's Twitter account)
Can investor favorite Meade beat leftist firebrand AMLO?
BY JOACHIM BAMRUD
As if Hurricane Trump wasn’t enough, local and foreign investors in Mexico these days also have to contend with the fact that all polls show a leftist firebrand as the favorite to win the July presidential elections.
According to a poll published in El Economista today, Andres Manuel Lopez Obrador – a leftist, former mayor of Mexico City popularly known as AMLO – would get 23.6 percent of the votes, followed by Ricardo Anaya from the left-right PRD-PAN alliance (20.4 percent) and Jose Antonio Meade from the ruling PRI party at 18.2 percent.
“Should AMLO win, capital flight and an associated fall in the peso/dollar exchange rate in the days and weeks leading up to election day, and in the days and weeks immediately after, is quite likely,” says Pamela Starr, an associate professor of international relations at the University of Southern California.
AMLO will move quickly to attempt to quiet the concerns of the private sector which should stem the capital outflow, but it is unlikely that these funds will quickly flow back into Mexico, she adds.
“This will only happen once investors have a better sense of what an AMLO presidency will look like in terms of policy,” Starr says.
Last month, AMLO proposed Carlos Manuel Urzua, a moderate U.S.-trained economist, for finance minister, but he also announced that he would name Rocio Nahle to the post of energy minister. She is an outspoken critic of Mexico’s recent energy liberalization implemented by outgoing president Enrique Peña Nieto.
Starr does not believe AMLO would be as bad as many fear.
“Based on his performance as Mexico City mayor, his governing platform, and the economic advisers at his side, I suspect an AMLO government will not be bad for business,” she says. “He has promised to increase the role of the state in regulating business to direct its activities to benefit national interests, and specifically his promised effort to fight poverty and inequality. This is far from the arm’s length approach to private sector operations that firms typically prefer. But AMLO has made it very plain that he supports the development of a strong private sector in Mexico, just one that the state can nudge into operating in a way that advances his vision of the national interest alongside company interests.”
That being said, AMLO’s past behavior has clearly demonstrated a lack of respect for institutions when they obstruct his policy preferences, Starr warns.
“He is thus unlikely to feel as constrained as his predecessors by opposition in the legislature, in the courts, or in autonomous institutions, she says. “This means the private sector should expect surprises.”
AMLO would also likely will act quickly to make deals with key political power brokers who feel personally threatened by his anti-corruption crusade.
“Those who are willing to work with him are apt to be spared, and those who are unwilling to work with AMLO are libel to go down,” Starr says. “While I am skeptical that this strategy will be sufficient to build a working majority in the national legislature, it should be sufficient to allow him to build the foundation for a peaceful transition of power.”
THE TRUMP & NAFTA FACTOR
The negotiations over the future of the North American Free Trade Agreement (NAFTA) will play a role in voter sentiment, argues Riordan Roett, Director of the Latin American Studies Program at Johns Hopkins University.
“Peña Nieto is highly unpopular, and Meade will not be able to rely on the President’s leadership in the campaign,” he says. “If Mexicans believe that a breakdown of the negotiations will result in higher unemployment and less growth, AMLO will be in a strong position to argue that he is the candidate of “change.”
Cynthia Arnson, Director of the Latin American Program at the Woodrow Wilson International Center for Scholars, also sees AMLO benefiting from the worsening US-Mexican relations under President Donald Trump.
“Donald Trump’s policies on migration, the border wall, and the increasingly difficult renegotiation of NAFTA have cast a long shadow over Mexico’s domestic politics,” she says. “A host of polls by the Pew Research Center, CIDE, and others show that distrust of and contempt for the United States are at record levels, with only 5 percent of Mexicans holding a favorable view of the U.S. president. While many across the political spectrum in Mexico share these negative sentiments, the candidate who thus far has most successfully tapped into the dramatic deterioration of U.S.-Mexican relations is Andrés Manuel López Obrador.”
An AMLO presidency would be accompanied by a high degree of uncertainty, warns Michael Shifter, President of the Inter-American Dialogue.
“He would probably pursue a more nationalist, populist agenda than recent Mexican presidents, of both the PRI and PAN, as well as his rival candidates,” he says.
Although he was mayor of Mexico City and has shown a pragmatic streak, AMLO's positions on key issues such as violence and corruption are not altogether clear, Shifter argues.
“AMLO is prone to make mistakes and has proved to be his own worst enemy,” he says. “His proposed amnesty for narcos illustrates the problem. It makes little sense in either political or policy terms.”
CAN MEADE WIN?
Meade, who served as Mexico’s finance minister until November, has a long track record in public service and also served in various governments from the opposition PAN party. In addition to serving twice as finance minister he served as energy, foreign and social development minister.
“Meade has his work cut out for him,” Starr says. “He is starting his campaign from third place, a position from which a Mexican presidential candidate has never reached the presidency, he is the personal selection of a highly unpopular president, and he will be the candidate of a highly unpopular political party. He also must be sufficiently loyal to the PRI to ensure party unity behind his candidacy (he cannot win without a unified PRI behind him), but at the same time be sufficiently independent to attract the majority of Mexican voters that describe themselves as independents. And he is not a naturally charismatic personality and is a completely unproven campaigner.”
At the same time, Meade will benefit from a sharply divided anti-PRI vote – there will be two other major candidates, AMLO and the candidate of the PRD-PAN alliance, as well as an independent or two and a handful of candidates from Mexico’s small parties.
“He will benefit from a large proportion of the electorate that says it will never vote for AMLO and a PRD-PAN alliance that does not seem able to agree on a candidate, let alone one that will be attractive to voters that are tired of the same old political faces,” Starr says. “And he will benefit from the missteps of AMLO, most recently his proposal to offer a negotiated amnesty for criminals as a way to bring justice to their victims.”
All in all, Starr expects the election will boil down to a race between Meade and AMLO, with PAN and PRD voters mostly selecting the least bad of these two options so as to not waste their vote as the alliance candidate falls into a distant third place.
“Should this scenario develop, it is a toss-up at this point as to who will win,” she says.
A likely alternate, albeit less likely, scenario would be a surprisingly competitive choice as the PAN-PRD alliance candidate who would take Meade’s place as the principal competition for AMLO. This would force Meade’s voters to make a strategic decision between the alliance candidate and AMLO, again creating a race between the two top contenders, Starr says.
Shifter also believes that Meade will end up being AMLO's chief rival, although he is not well-known in much of Mexico.
“He is viewed as a very able technocrat but lacking popular appeal,” he says.
Roett says Meade does benefit from one advantage, the fact that despite Peña Nieto’s unpopularity, the PRI party still boasts an impressive organization throughout Mexico.
“Never count the PRI out,” he says. “They have a “base” across the country that is historically solid and predictable.”
While AMLO and his Morena party should do well in Mexico City, it is not clear if he can appeal to the more conservative and PRI-oriented Mexicans in the hinterland, Roett points out.
Polls indicate that Mexicans are ready for change and Meade would have to convince them that he is the person to restart the economy and address the issue of growing insecurity and crime, he says.
“All signs suggest this is a "Change" election in Mexico, which gives AMLO the edge,” Shifter concludes.
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LATIN AMERICA: 2018 OUTLOOK