Reflections on the Mexican Election. AMLO: Between a Rock and a (Very) Hard Place

AMLO closes 2018 presidential election campaign

Andrés Manuel López Obrador (AMLO) won the Mexican presidential election with a resounding majority of around 53 percent of votes cast—the highest since 1982 when the Institutional Revolutionary Party (PRI) was still able to manipulate electoral outcomes. Mexican public expectations are high and the problems that the country’s new president must deal with are enormous. Making his task more difficult is that fact that AMLO has a heterogeneous support base with the various groups having different interests and priorities.

Mexico’s Main Challenges are Domestic Ones

Media attention on the Mexican election has focussed on what the election of AMLO means for NAFTA negotiations. American and Canadian business interests heaved a collective sigh of relief when most talking heads sensibly argued that Lopez Obrador was not another Hugo Chavez, a point reinforced when AMLO himself said that he would respect the Mexican constitution and property rights. He also quickly announced that he supports reaching a deal in the NAFTA re-negotiations—a safe promise to make since the NAFTA process may well implode before AMLO’s new team takes control of the process. The source of the implosion will be Donald Trump not AMLO.

Mexico has three interrelated domestic challenges: large-scale corruption, the very high rate of criminal violence (last year was a record for the country’s murder rate), and the persisting high level of poverty and inequality. Persisting poverty and inequality are related to low economic growth rates and the failure of the economy to generate sufficient employment. Contrary to popular belief, NAFTA has not been a “win” for Mexico; in fact, a recent World Bank report documents a decline in employment in manufacturing since 2004. NAFTA has further exacerbated deep regional divisions. While the north has benefitted from NAFTA, south/central Mexico has remained mired in poverty. However, having restructured its economy and integrated it so deeply with the U.S. economy, the demise of NAFTA would be disastrous for Mexico given its weak economic situation and deep social problems.

AMLO’s Support Base and Policy Proposals

These domestic challenges are very much interrelated. Slow economic growth, persisting poverty, and lack of economic opportunity fuel the drug trade and criminal activities as such activities provide sources of wealth and opportunity not found elsewhere in the economy, especially for unemployed young men, who have the highest unemployment rate. The drug trade also fuels government corruption. Public concern for the country’s corrupt rulers (the “power mafia” in AMLO’s words) and lack of physical security have probably been the two main issues that have produced AMLO’s strong mandate. Middle and upper class Mexicans, even members of the business community, some perhaps past supporters of the right centre Popular Action Party, have sought an alternative leader who they hope will finally have some success in coping with these serious problems.

At the same time, AMLO has a long-standing base of support (probably about 1/3 of the electorate) among poor farmers and low-paid and precariously employed workers who have been harmed the most by the lack of physical security and government corruption. However, these groups also have other concerns, which AMLO addressed during the election campaign. He has been a consistently strong proponent of resurrecting support for the small and communal farmers of southern Mexico, who were hard hit by the inflow of subsidized corn from the United States. He has pledged government subsidies for the production of basic Mexican food staples produced by these farmer (beans and corn) and has said that Mexico must become self-sufficient in such basic foodstuffs. He has (reasonably) argued that such support is necessary to stem out-migration from south/central Mexico northward. On the employment issue, AMLO has promised infrastructural development as a way to expand employment and indicated concern for improved labor conditions and wages, although not for the already better-paid workers in the country’s automotive industry as demanded by U.S. NAFTA negotiators. He has also promised increased social spending. All of this, he claims, will not entail increased taxes or debt.

AMLO’s Balancing Act

Certainly, AMLO will not be able to solve all of these problems. However, he must make some inroads into meeting the very high public expectations raised by his recent election. In order to fund his ambitious social and infrastructural programs, Mexico will need economic growth, particularly if the public deficit and debt are to be kept in check. For this, he will need the confidence of the country’s private business sector and of international capital. Hence his efforts to reassure business, reflected, for example. in his promise that all contracts with the private sector signed following the recent opening up petroleum sector will be honoured—despite the fact he had previously claimed that he would reverse the 2013 opening up of the petroleum industry to private capital. His opposition on this issue had appealed to his nationalist support base.

Mexico has a history of strong entrepreneurial opposition to state intervention in the economy. Mexican business has long been critical of what is seen as wasteful government spending on social programs and subsidies and it has evinced an ongoing concern about public spending. AMLO will have to balance the pressure from the business community with the expectations of his support base for improved living standards. Addressing the needs of the country’s poor corn farmers is going to be particularly tricky. Subsidies are an expensive proposition for poor countries—tariff and quota protection is a cheaper route. In addition, AMLO’s goal of self-sufficiency in basic food staples will ultimately run up against the interests of big American corn farmers and powerful Mexican-based agribusinesses, groups that have obtained an important share of the Mexican market. High economic growth rates depend on business confidence, but there are plenty of reasons to anticipate sharp business criticism of AMLO’s social and stimulus programs and a consequent drop in private investment and growth.

If AMLO is to maintain his broader support from the country’s middle classes, he must address both crime and corruption. As noted above, he sees employment expansion and poverty reduction as a key component in reducing crime. In this, he is supported by considerable scholarly literature that links poverty/inequality and violent crime. However, the contribution of employment expansion and poverty reduction to reduced crime is long term because the hope is that those tempted to turn to crime will be drawn into other, safer, economic opportunities. The strategy may do little to encourage those currently involved in violent crime to move into other (probably less lucrative) activities. AMLO has also suggested amnesty for those engaged in crime, an approach that will likely run up against middle-class sensibilities.

The Intractable Challenge of Corruption

AMLO has been vague on how he will tackle corruption, a problem that is a deeply entrenched part of the political system due, in large part, to some seventy years of Institutionalized Revolutionary Party rule during which the dispensing of material rewards was key to maintaining political support. However, corruption has certainly worsened, a development related to the expansion of the drug trade that has permeated all levels of the state apparatus, particularly the judiciary, and the return of the PRI to power in 2012. As we know from Brazil’s left regimes (Luiz Inácio Lula da Silva and Dilma Rousseff), left leaning leaders find it difficult to play the political game differently from the way it has been played in the past. In deeply divided societies, corruption is part of the panoply of informal arrangements that are often integral to keeping political opponents at bay and supporters onside. Corruption of government officials is also the principle means by which the drug cartels fend off government interference—meaning that reducing corruption has to involve tackling the drug trade, with all of the attendant difficulties that this entails. Given that corruption has permeated all levels of the Mexican political system, making progress may necessitate a concentration of political power and a type ruthlessness not seen in prosecuting corruption in the past. Such a strategy might incur considerable criticism from those who see power concentration as an infringement on democratic practices.

AMLO biggest challenge, however, is keeping his disparate support based intact (poor farmers, the urban poor, workers and the middle classes). Doing so depends on economic growth, which in turn is closely dependent on domestic and international business confidence. AMLO has a very difficult juggling act ahead of him. He needs to make some progress on the main issues identified in this post or Mexicans’ faith in democracy, already among the lowest in Latin America, will sink even further. If he does not, Mexico’s political future will be fraught with even greater uncertainty.