AMLO contradictions fuel Mexico business uncertainty
Business fears AMLO not because of his policies but because they have no idea what his policies will be
Leftist presidential candidate Andres Manuel Lopez Obrador (AMLO) has a 20-point lead in an average of latest polls published yesterday, with 48.2% of voting intentions. Tensions between business leaders and AMLO escalated in May, after he accused several prominent businesspeople of conspiring with the government and putting pressure on their employees to vote against him. AMLO eventually accepted their denials, but the fiasco has pushed many business leaders to speak out against him and step up demands for detail regarding how he intends to implement his economic programme.
What next
AMLO has repeatedly stressed that his government will not engage in extreme measures such as asset confiscation, but his contradictory statements perpetuate doubts about what to expect if he wins. Within this context, business leaders will continue to issue indirect warnings against him, which may fuel his hostile rhetoric and exacerbate political polarisation in the run-up to the July 1 election.
Subsidiary Impacts
- The dispute illustrates the potential political dangers to AMLO of his intolerant position towards those in opposition.
- AMLO’s record as Mexico City mayor suggests he may not follow through on his hostile campaign rhetoric.
- Uncertainty will persist as long as it is unclear whether AMLO’s pragmatism will prevail against the demands of his party’s radicals.
- Should MORENA win a majority of seats in Congress, business confidence will plummet.
Analysis
Mexican business leaders have traditionally held a close relationship with government.
During the period of Institutional Revolutionary Party (PRI) hegemony that ended in 2000, business leaders negotiated directly with the president. However, this changed as competition within the political system increased, pushing business organisations to develop wider and more complex networks with politicians from different parties in order to maintain their influence.
Within this more competitive environment, business groups have increasingly and openly become involved in analysing parties' platforms and sharing their concerns with candidates. This has been done in accordance with regulations issued by Mexico's electoral authority, including restrictions regarding access to the media for proselytising activities.
Good business-state relations were easily maintained under the conservative National Action Party (PAN) governments between 2000 and 2012, given their shared free market ideologies.
The current PRI administration's focus on improving the business environment and pushing reforms that had long been sought by business groups -- in the labour and education sectors, among others -- similarly enabled the continuation of good relations between both sectors.
Even with the main leftist Party of the Democratic Revolution (PRD) that has dominated political life in Mexico City, business groups maintained a largely cordial and positive working relationship.
Electoral preferences
The preferred candidate of business groups is undoubtedly the PRI's Jose Antonio Meade, owing to his qualifications and experience. He represents economic continuity and certainty.
Meade is undoubtedly the favoured candidate among business groups
The PAN's Ricardo Anaya (with 27.5% of voting intentions) also represents continuity, although he is running as joint candidate for the PRD. In contrast to Meade, however, Anaya's lack of experience in the executive branch is seen as a handicap, as is his lack of a strong economic team.
Within this context, businesses leaders have repeatedly stated that they are prepared to maintain positive working relationships and open communication with whoever wins. Indeed, AMLO's apparent moderation in recent months and the largely orthodox economic proposals he has made public during that time have made this possible:
- The incorporation of businessmen such as Alfonso Romo into his team was seen as a rapprochement towards business.
- The 2018-24 government plan of AMLO's National Regeneration Movement (MORENA) addresses key issues of concern for business, such as respecting private property, central bank independence and fiscal discipline.
- AMLO's choice of potential economic cabinet members --Graciela Marquez Colin (Ministry of Trade), Carlos Urzua (Finance Ministry), Gerardo Esquivel (economic adviser) and Jesus Seade (NAFTA negotiator) -- were all well received.
However, since it formally commenced on March 30, the electoral campaign has heated up and accusations among the candidates have increased. Within this context, both AMLO and members of MORENA have adopted an increasingly belligerent stance vis-a-vis business organisations.
Business tensions with AMLO increased markedly in May
Tensions rising
The month of May got off to an angry start, after a video emerged on April 28 showing MORENA's Secretary General Paco Ignacio Taibo calling on AMLO to expropriate assets owned by business people opposed to his proposals.
Rather than attempting to calm tensions, AMLO fuelled them by making a series of claims during May that questioned the integrity of both businesses and individuals:
- In early May, he claimed that several businessmen were seeking to convince Meade and former independent candidate Margarita Zavala to drop out of the race in favour of Anaya (Zavala ultimately did drop out on May 16, but did not endorse Anaya).
- He accused some 30 business leaders of profiting from links to the government and having vested interests, singling out five individuals in particular who have criticised his proposals to stop the construction of the new airport and to reverse education reform (see MEXICO: AMLO win could scupper airport plans - January 24, 2018 and see MEXICO: State violence will embolden CNTE - June 30, 2016).
- He accused three major companies (Aeromexico, Telmex and Coppel), and Mexico's main employers' umbrella organisation (Coparmex) of pressing their employees to vote for Anaya -- a claim they denied.
On May 24, apparently keen to put an end to the spat, AMLO showed his more conciliatory side, and confirmed that Romo had been meeting business leaders to reassure them that MORENA was not against the private sector.
However, just a few days later, on May 28, he once again accused business leaders of plotting against him.
AMLO has run hot and cold towards business, creating suspicion
Business backlash
Much as AMLO's remarks have angered the business community, entrepreneurs are reluctant to back his opponents openly, not least because to do so might be taken as evidence of his claims.
Given the climate of anger towards the PRI, nobody wants to be tainted by association, and there is little to suggest that Meade, on 19.5% of voting intentions, will be able to overtake AMLO (see MEXICO: Ruling PRI faces bleak outlook - May 16, 2018). In any case, for any business leader to come out in support of Meade now would only exacerbate AMLO's allegations of collusion between business and the government.
Similarly, declaring support for Anaya would only appear to prove AMLO right and fuel his claims of plotting.
As a result, business leaders for the most part will remain formally neutral, but will pursue a more combative stance towards AMLO. Juan Pablo Castanon, CEO of the influential Business Coordination Council (CCE), said on May 17 that business leaders are not prepared to lose their freedom to carry out their work.
Business leaders represented in large organisations such as the CCE and Coparmex, as well as individual companies, will appeal directly to voters highlighting the perils of populism -- warnings that are obviously directed at AMLO even if they do not refer to him directly.
This, however, is unlikely to alter the course of the race which AMLO appears set to win comfortably.
In the long term, relations between the government and business will depend entirely on what policies the new administration puts forward from December 1. Given AMLO's mixed messages, and the uncertainty regarding the balance of forces between the radical and more moderate wings of MORENA, predicting such policies will be difficult.
