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发帖数: 562 | 1 Political Risk Analysis: What's Ahead For Mexico?
Nathaniel Parish Flannery , Contributor
Opinions expressed by Forbes Contributors are their own.
Mexican presidential candidate for the MORENA party, Andres Manuel Lopez
Obrador (R) greets supporters.(Photo: ENRIQUE CASTRO/AFP/Getty Images)
As tense trade talks continue with the US and Canada, and the future of
cross-border trade within North America remains uncertain, Mexico is heading
towards a potentially transformational presidential election on July 1. A
veteran left-of-center politician named Andres Manuel Lopez Obrador (AMLO)
currently enjoys a seemingly insurmountable lead over rivals from the
Institutional Revolutionary Party (PRI) of current Mexican president Enrique
Peña Neito, and the National Action Party (PAN) of former Mexican
president Felipe Calderon (2006-2012). During the 2018 campaign AMLO has
worked to build as broad of a coalition as possible and create an expansive
policy platform that includes a panoply of interest groups. He still,
however, faces immense hostility from some pundits and business leaders.
Mexico's wealthiest man, billionaire Carlos Slim, a man who accumulated a
net worth of over $59 billion after buying Telmex, Mexico's government-run
telecom monopoly, has voiced his opposition to AMLO. Slim's America Movil
telecom company and Grupo Carso construction firm could be affected by an
AMLO victory. German Larrea Valasco, a Mexican billionaire Forbes estimates
to be worth $15.2 billion, Alberto Bailleres Gonzalez, a Mexican billionaire
worth over $9 billion, and other corporate leaders and business chambers
are reportedly trying to influence the way their employees vote. Within
Mexico AMLO is a uniquely polarizing figure. Some see him as progressive and
immune to corruption, a politician with the potential to transform a
country long dogged by intractable problems with poverty, inequality, and
corruption, but others see him as a hapless and antiquated firebrand who
will try to regress backwards towards the failed policies of the 1970s and
erase the tenuous gains that Mexico has achieved during the 21st century.
Likewise, Mexico experts and analysts in the US are similarly divided what
AMLO's (likely) presidency will actually look like and what impact he'll
have on investment and economic growth. In a recent podcast with the
Americas Society, a think-tank in New York, Denise Dresser, one of Mexico's
top political wonks, explained "as an analyst it's become quite difficult to
because at times he presents one version of himself and other other times
another version of himself." At a time of deep uncertainty about the North
American Free Trade Agreement (NAFTA), AMLO adds one more variable to
already complex dynamic of US-Mexico (and US-Mexico-Canada) relations. I
reached out to Jesse Wheeler, a Mexico analyst at BMI Research to discuss
Mexico's political future.
Nathaniel Parish Flannery: At this point how likely do you think that AMLO
will win the race? Do you see any signs that the private sector in Mexico is
starting to acknowledge the high probability that AMLO will win the
election?
Jesse Wheeler: With AMLO widening his lead to around 50% of voter intentions
in recent polling, we place his probability of winning the presidency at
over 90% at this point in the race. Mexico’s July 1 general election will
be framed by voters’ aversion with the status quo, where violence has
spiked and a perception of corruption and criminal impunity has brought a
distrust of established parties and politicians. This dissatisfaction has
driven support for AMLO, who benefits from more credible anti-corruption
credentials, his status as a relative outsider and an unorthodox economic
policy platform.
When we first made our call for AMLO to win the election on March 3, he was
drawing 38.1% of voter intentions, 8.6 points ahead of the PAN's Ricardo
Anaya in second place. He is now polling at 48.6%, placing him 22.2 points
clear of his closest rival. With this commanding lead and a few weeks left
until the vote, only a major shakeup of party alliances would give Anaya (or
Meade) a shot at catching AMLO. A PRI-PAN alliance has been floated in
recent weeks, but even if this unwieldy and improbable pairing were to occur
, AMLO may still come out on top. PRI voters may be unwilling to support
Anaya, and he would lose much of his own anti-corruption credibility, likely
causing some voters to remain on the sidelines.
The private sector is definitely wising up to the fact that an AMLO victory
is likely in the cards. A number of major firms, including mining giant
Grupo Mexico, which is owned by the billionaire Larrea family, luxury store
chain Palacio de Hierro, which is owned by the billionaire Bailleres family,
and supermarket chain Grupo Comercial Chedraui, which is owned by another
one of Mexico's wealthiest families, have reportedly required employees to
attend presentations or read materials designed to warn them of the
implications of an AMLO victory. In a letter sent to employees and
shareholders, Grupo Mexico chief German Larrea alluded to the economic
troubles of Argentina, Cuba and Venezuela. These actions are a clear
indicator that Mexico’s business elites view AMLO's potential victory as a
business risk.
Parish Flannery: AMLO's discourse has varied over the course of the campaign
. On the one hand he seems to be trying to build an inclusive policy
framework that addresses a wide range of constituents' interests, but he's
also made some pretty extreme statements at times. How much do you think he'
ll really try to shift Mexico's economic development strategy?
Wheeler: On economic issues, AMLO stands in stark contrast to other
candidates, promoting a nationalistic economic policy agenda. He blames poor
trade policies for the decimation of Mexico's agricultural industry, and
has railed against current President Peña Nieto’s liberalization of
the energy sector. However, we believe fears that he will reverse key
economic policies, including energy sector reforms, are likely overblown.
Most likely, AMLO’s rhetoric surrounding energy and trade policy is a
campaign strategy unlikely to be maintained in such an extreme form should
he enter office.
AMLO likely understands that abandoning trade agreements and re-inserting
the federal government into the energy sector would severely impede economic
activity. His designated cabinet appointees have suggested as much, given
their favorable comments about oil tender awards to private firms and trade
agreements in recent weeks. AMLO will likely rein in the pace of energy
sector liberalization rather than reverse course on what has already been
done. Ironically, he is poised to benefit from the economic growth catalyzed
by investments already made into the sector.
To this point we have assumed that AMLO’s ability to pass major legislation
would be limited over the course of his term by a lack of legislative
majority in Congress. However, a Morena (and allies)-controlled Congress is
becoming a real possibility, with some recent polls suggesting they could
pick up enough seats for majority in both houses. Should AMLO’s government
be unfettered by legislative opposition, we would re-evaluate our forecasts,
likely adjusting to reflect higher fiscal spending. Congressional control
would likely also see the passage of more investment-unfriendly policies,
potentially around energy, labour, and agriculture, which would weigh on
long-term economic growth.
Parish Flannery: In the U.S., NAFTA talks are still at the center of the
policy agenda. How might AMLO's election affect the ongoing negotiations?
Could his promise that he'll help Mexico achieve food self-sufficiency and
produce what it consumes run counter to the parameters of the existing NAFTA
framework?
Wheeler: The introduction of an AMLO trade team to NAFTA renegotiations
would complicate already very complicated talks. AMLO has long blamed NAFTA
and other trade deals for the deterioration of Mexico's agricultural
industry particularly in the rural southern states, which represent his
strongest base of political support. Although AMLO would not take office
until December 1, he has insisted on having members of his team participate
in ongoing talks should he win the presidency. Peña Nieto’s
administration has reportedly been receptive to this position. President
AMLO would likely take a harder stance on the politically sensitive
agricultural sector than the current administration, potentially throwing a
wrench into talks in which the US has appeared fairly intransigent in recent
months. On other key issues like trilateral vs. bilateral talks and auto
sector content requirement we do not expect a shift from the current Mexican
stance.
That said, AMLO, along with his surrogates, has repeatedly voiced his
support for NAFTA, as well as the recently concluded CPTPP trade pact. In
March, AMLO named his presumptive trade representative, Oxford-trained and
ex-WTO economist Jesus Seade. Seade would potentially replace current
Economic Minister Ildefonso Guajardo as Mexico’s top trade representative,
but not until after AMLO’s inauguration in December. In public comments,
Seade has stressed the need for modernizing NAFTA and the importance of
Mexico’s economic ties with the US.
As such, AMLO is unlikely to pursue tariffs or other import restrictions.
His team appears to understand the serious risks of retaliation from trading
partners, especially the US as NAFTA hangs in the balance. AMLO’s goal of
achieving food self-sufficiency will more likely be pursued via domestic
programs aimed at boosting procuring, including subsides, financing for
inputs and capital goods, and potentially some form of crop price insurance,
which would provide a minimum return Mexican farmers. Although these
tactics are used in many countries, they would come in violation of WTO
rules and thus likely be challenged by trade partners via the organization’
s dispute settlement body. AMLO may be willing to take this risk, as this
would only play out over a multi-year period and would be less likely to
prompt immediate retaliatory trade barriers than the implementation of
tariffs. |
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