The midterm elections of June 6 in Mexico were in appearance favorable to Morena, the party of President Andrés Manuel López Obrador (AMLO), with victories in 11 of 15 governorships, even though three are being contested in the courts for alleged irregularities, and a majority in the House of Deputies, although smaller than the one it enjoys in the current legislature and far from the supermajority that he needs to change the constitution at his will.
However, the elections were marred by being the most violent in history in terms of the number of politicians assassinated, and the massive coercion and kidnappings of operatives and candidates of opposition parties, particularly where narco-criminal gangs dominate.
Thus Morena won all but one of the states up for grabs abutting the Pacific Ocean, with the ostensible support of organized crime, which has enormous power in that region, in what the sitting governor of the state of Michoacán called a “blatant narco election.”
Despite the relatively good news, AMLO has been angry and frustrated since the elections because he and his party lost big in Mexico City, their main stronghold and source of money since their movement won the mayor’s office for the first time in 1997.
The opposition won the eight wealthiest and better-educated town halls plus all the councils in the adjoining State of Mexico intertwined with the city, versus seven for Morena. Mexico City’s map today looks very much like occupied postwar Berlin, with roughly the western half in the hands of the opposition and the eastern half managed by AMLO’s allies.
Who was responsible for this failure? AMLO’s political operatives in Mexico City, which he has implicitly acknowledged by firing the most powerful of them, who controlled US$15 billion to give away to their clients to retain their political support. Apparently, this shady character played his own game and not his boss’s, which became clear after the election.
Another guilty party is Claudia Sheinbaum, the mayor of Mexico City and AMLO’s favorite to succeed him in the presidency in 2024, in case he is unable to extend his own term.
But Sheinbaum has other serious troubles as well, which we described in our previous installment of “Mexico’s Demolition Derby” for Asia Times. The collapse of an overpass in the city’s metro system a few days before the election certainly had a devastating effect on the reputation of the mayor, who was further humiliated by AMLO when he assumed complete responsibility of the repairs of the fallen segment.
After meeting alone and behind doors with billionaire Carlos Slim, whose construction company built the overpass, AMLO announced that all the repairs would be paid for by Slim, who in turn declared that the collapse had not been caused by a construction flaw, as the preliminary expert report indicated, which would mean that the reason for the disaster would have been faulty maintenance, Sheinbaum’s responsibility.
But if the construction was faultless, why would Slim offer to pay the many millions of dollars required for its repair? We can only guess, but the reason might be that he has always been close to the government, regardless of the party, because much of his business depends on being in good terms with the authorities.
Now AMLO has started a new war of words against the middle classes, which seems bizarre, since around 70% of the population consider themselves part of that segment. He blames them for not being grateful enough for all the money he gives them to vote loyally for his candidates.
In a discourse that gets weirder as time goes by, he accuses his new foe, the middle class, of “aspiring” to too much instead of being satisfied with the very basics necessary to conduct a modest existence, something uncanny for someone who decided to trade a comfortable but unpretentious presidential house for a luxurious 16th-century vice-regal palace built by the Spanish conquerors he repeatedly denounces.
AMLO’s corruption fight is fake
One of the subjects that he reiterates ad nauseam is that he, his team, and his party are lilly-white honest and that his main goal in government is to fight corruption. This is just propaganda, because AMLO has not acted in a single case of the proven corruption of many of his associates, and increasingly his own family.
A new video surfaced last week in which one of his brothers received piles of cash, the second brother caught in the act of accepting illegal contributions in cash.
Also, more that 80% of the purchases and contracts of his government are assigned directly by the top bureaucrats, dodging procedures in place to conduct competitive bidding. A growing number of cases have been documented where suppliers and contractors are new in the business and have non-existent official addresses.
Civil-society groups like Mexicans Against Corruption that have done a remarkable job at detecting and denouncing dishonesty in this and previous administrations are not only ignored but attacked regularly by AMLO for being “against him and his transformative cause.”
He fired his secretary of public oversight, the firebrand ideologue Irma Eréndira Sandoval, neither for being completely ineffectual in detecting the wrongdoings going on in the government, nor for her dishonesty in accumulating real-estate properties well beyond her and her husband’s academic salaries, but because she tried to impose her brother as a candidate for governor in the state of Guerrero, against the whims of her boss.
So the pattern is clear: In AMLO’s team honesty is irrelevant; competence is irrelevant, as exemplified by the hordes of illiterates who populate his government and bodyguards promoted to highly demanding technical jobs. The only quality required of his associates is personal loyalty to the Enlightened Leader.
Health situation worsens
Besides the complete mismanagement of the Covid-19 pandemic, recorded by international authorities as one of the worst in the world, AMLO’s idea of shutting down the national procurement and distribution system for medicines “because it was corrupt,” something that was never proved, and replacing it with a newly created government-owned enterprise, has been a disaster.
The shortage of medicines is widespread in the public health system as well as in private hospitals and drugstores, and has become so serious that the relatives of children with cancer who are not being properly treated are regularly blockading the access to Mexico City’s airport in protest.
What is the response of AMLO and his accomplices? That the grieving relatives of dying children are part of an international cabal to overthrow his government. And that the public health system has never failed to receive and attend patients, despite overwhelming evidence to the contrary.
Insecurity in the country worsens
Despite AMLO’s claims to the contrary, Mexico is increasingly moving toward chaos and ungovernability, as criminal bands extend their hold on larger areas of the country, with his government remaining committed to a “hug them instead of shooting them” policy, equivalent to giving them a nod to continue with their nefarious activities without consequences.
The narcos used to control “territories”; now they rule whole counties and states, something that is well known to AMLO and his military establishment, which seem to enjoy co-existing with them. Otherwise, it is inexplicable that the president said after the election that “the narcos had behaved well,” when their criminal groups operated an electoral fraud with the tacit consent of the government.
The key issue here is if the US understands the gravity of the situation, considering that the head of the Central Intelligence Agency visited Mexico just before the election and Vice-President Kamala Harris did the same one day after the election.
They must be aware of the gravity of the threat that such a large part of Mexico in the hands of organized crime poses to the national security of the US, when the most vulnerable political issue for President Joe Biden’s administration these days is the situation on the southern border.
Among AMLO’s many contradictions is that before he became president, he was committed to return the armed forces to their barracks, and that he would pacify the country with a social pact and amnesty for criminals. When he assumed the job, he threw his promises into the garbage and fully militarized the country’s security, erasing the federal police force and replacing it with a national guard, which is just an arm of the military.
He ceased going after criminals with the idea that if they were left alone to conduct their business, violence would disappear. This “strategy” has been a failure: Since AMLO took over, there have been more than 89,000 assassinations, compared with about 44,000 in the same period of the previous administration, and about 32,000 in the corresponding years of the Felipe Calderón government (2006-12).
As part of the militarization of Mexico, AMLO has handed the management of the country’s seaports and customs to the armed forces, which is the most effective way to ensure that they will be corrupted, just as their civilian predecessors were, instead of copying the best practices of the nations that manage these operations honestly and efficiently.
Economy in shambles
The president decided to get rid of his secretary of finance, Arturo Herrera, and put him forward as chairman of the board of governors at the central bank, a position that will become vacant on January 1 next year.
Why this was announced with such anticipation is something that no one understands, but it is bad news for the country and the crucial institution in charge of maintaining financial and price stability, since Herrera has been a weak and obsequious underling to his boss, something that does not bode well for the future autonomy of the Bank of Mexico.
The new minister of finance will be Rogelio Ramírez de la O, someone who has been close to AMLO for many years and has had only one job as an economic consultant in Ecanal, a firm founded by British economist Redvers Opie, with whom Ramírez de la O worked, and eventually succeeded as company president.
This means that he has no experience whatsoever in the workings of a complex bureaucracy. He studied at Cambridge University, and appears to be a moderate but it is unclear how much real influence he will have in drafting the economic policy of the administration.
These days the only engine of growth of the Mexican economy is exports, because investment has fallen 15% from the level it had in 2018, and consumption continues to be depressed, hardly growing at all. It is possible that this year the economy could grow 6%, but considering that last year it collapsed by 8.5% it is still far away from recovering the levels of economic activity of 2018.
The government’s only economic plan seems to be to throw money at the monopolized production of oil and electricity by the ailing state-owned behemoths, while scaring away private investment by irrational decisions like the one announced last week.
The government decided that Pemex would be the sole owner of a large new underwater oil deposit in the Gulf of Mexico, which was discovered by Talos, a private foreign consortium that had already invested $350 million. This dispute, which will end up in international courts with Pemex losing, is another clear signal that private investment is not welcome in Mexico.
In the electricity sector, the situation is just as bad, if not worse: This is the third year in which the value added by CFE, the government monopoly, has fallen, and the number of blackouts throughout the country continues unabated.
On top of this, inflation is getting out of hand, with a rate of 5.9% in June, well above the central bank’s objective of 3% (+/-1%), with the board divided about increasing its base interest rate by 0.25 percentage point, a decision passed by a tight majority with two of the governors, named by AMLO, voting against it. The meaning is clear, they do not care about inflation.
All these elements present an ominous outlook of stagflation, financial instability and the growing possibility of an exchange rate and financial crisis before 2024, the last year of AMLO’s government.
Manuel Suarez-Mier is an economist and former central bank official, economic diplomat and professor at Georgetown and American universities. He may be reached at email@example.com.