Economic planet | The strange approach to Mexico

Since the renewal of the North American Free Trade Agreement in 2020, relations between the three amigos who signed the treaty have not made much noise. There was the American election and the pandemic, which damaged rapprochements at the top. But now the Russian invasion of Ukraine is throwing a wedge between Mexico and its Canadian and American partners.

Helene Baril
The Press

Mexico is one of the few countries to refuse to impose sanctions on Moscow. Deputies from President Andrés Manuel López Obrador’s party, in power since 2018, have even just created a Mexico-Russia friendship group, which is infuriating Americans, the newspaper reported last week. The world.

Accused of hosting Russian spies, the Mexican president denied and replied that “Mexico is a free, independent, sovereign country. We are not a colony of either Russia or China or the United States.”

AMLO, as the president is called, is a special head of state in several respects. He has turned his back on the reforms undertaken by his neoliberal predecessors to, he promised, return power to the people.

He set an example with a radical change in presidential habits. He has a frugal lifestyle and never travels abroad. The presidential plane, a Boeing 787 Dreamliner, went on sale as soon as he took office. As it did not find a buyer, it was made available to Mexicans who would like to organize weddings and parties there.

At the same time, the president has launched pharaonic investment projects that are bleeding the public treasury. A train connecting the archaeological sites of Yucatán is under construction, a 1500 kilometer project whose cost is estimated at at least 1.4 billion. The project arouses a lot of opposition because it does not seem to have any other objective than to transport tourists interested in the civilization of the Mayas.

As soon as he came to power, AMLO stopped the construction of the new airport in Mexico City, a third of which was completed, to have the army build another on another site. The new terminal was inaugurated a few weeks ago, and the State absorbed the losses of this change of plan.

But it is the reform of the energy sector undertaken by AMLO that most frowns on Mexico’s trading partners, including Canada and the United States. The Mexican government set out to regain control of oil and electricity production which had begun to open up to foreign investment.

Private companies that had designs on the Mexican energy sector no longer feel welcome. Remedies are being considered by some of them who have ongoing projects.

Examples of this change of direction: the Mexican president wants to increase the production of Pemex, the national oil company, but he does not want to export it. He wants to keep the oil in the country, where its price is subsidized.

The president does not trust private companies that had shown a willingness to invest in renewable energy. But Hydro-Quebec, a Crown corporation, had found favor in his eyes. In a video posted on YouTube in 2019, he had embarrassingly praised the Quebec company which wanted to participate in the modernization of the Mexican electricity network. The partnership was announced, but there were no follow-ups.

Slow recovery

The Mexican economy, meanwhile, lost its feathers. The country is one of the few to have provided no financial support to companies and workers affected by the pandemic. The losses, in bankruptcies and jobs, are significant. No restrictions have been imposed on travelers either, and the country has one of the highest death tolls in the world for the number of deaths from COVID-19 per million inhabitants.

While the economy has rebounded nicely in Canada and the United States, the recovery is slower in Mexico, and growth forecasts for 2022 have just been revised downwards by the Ministry of Finance. Government figures also indicate that the level of investment is 15% lower than in 2018.

Despite everything, the Mexican people are still behind AMLO. The disastrous management of the pandemic, the growing violence and the stagnant economy, nothing helps, the president is still popular, according to the result of the referendum held on April 10.

Without being obliged to, two years from the end of his mandate, this strange president officially asked the voters if he should stay or leave. Turnout was low, but 90% of those who voted told AMLO to stay.

“Let no one forget that it is the people who command”, he had launched on the day of the vote. To be checked in two years, to know what the people will order in the election.