Lopez Obrador, the Mexican Messiah?

Lopez Obrador, the Mexican Messiah?

Mexicans will go to the polls on 1 July 2018 to elect a new president. The presidential campaign of Lopez Obrador, or AMLO, poses a serious threat to the political establishment in Mexico. However, his impact will not be isolated to the domestic context. The left-wing, populist leader might also constitute a threat to Mexico’s relationship with some of Latin America’s leading economies.

The Mexican Messiah?

Obrador, popularly known as AMLO, is currently at the forefront of the political opposition in Mexico. His party, Morena, is anti-establishment and has positioned itself against the corruption that has plagued Enrique Peña Nieto’s administration. More generally, it aspires to rid Mexico of the systemic corruption which has undermined the country’s political integrity for years.  

The likelihood of AMLO’s victory in July 2018 appears strong amid the systematic failure of the Mexican state to solve the country’s corruption and security issues. In recent years, contracts, money laundering and collusion with some of the country’s most powerful drug cartels have made corruption a key issue in Mexico’s political arena.  

The proximity of corruption to Mexico’s main political institutions and ruling party is a key driving force for AMLO’s popularity. Since 2014, ten of Mexico’s state governors have come under investigation for corruption cases, eight of which came from the ruling Institutional Revolutionary Party (PRI).

Mexico’s intensifying struggle with corruption is intertwined with the country’s security issues. The police and local authorities have been implicitly or explicitly involved in the disappearance of thousands of people. Of the people reported missing since 2006 alone, the whereabouts of 27,000 remain unknown.  This September was a grim reminder of how much feeling this issue commands, as Mexicans marked the third anniversary of the disappearance of 43 student-teachers in the town of Ayotzinapa.

Mexico’s deep culture of corruption and the resulting insecurity has led to a trust deficit between its citizens and its leaders. This lack of public confidence in the authorities is bolstering AMLO’s campaign efforts. Speaking at a rally in September, AMLO claimed that a vote against Morena was a vote in support of the ‘corrupt mafia’ in Mexico City.

AMLO’s tough rhetoric seems to be working. In a poll by El Universal in September, Morena was the leading party, capturing 23% of potential votes. The threat of ALMO to Mexico’s leading parties was evident in June when Morena narrowly lost the gubernatorial race for the state of Mexico, a seat held by the ruling party since 1929.

Mexico First

AMLO has vowed to put his country and people first, echoing the populist sentiment north of the Rio Grande. This rhetoric is nothing new for AMLO. Since rising to political prominence in the 1990s, the charismatic leader has condemned attempts to modernise and internationalise the Mexican economy. He was a strong opponent of the 1994 NAFTA agreement, and his election would likely add to the growing uncertainty surrounding the future of the free trade agreement. Speaking at the Woodrow Wilson Center’s Mexico Institute, AMLO insisted the Mexican people are averse to the involvement of foreign governments in their affairs. Similar to Trump, he aims to restore faith in Mexico by focusing on national production.

Given these isolationist stances, the election of AMLO could drastically change Mexico’s international trade relations. This is a concerning prospect to international investors who have become used to Mexico’s weighty trade presence in the last 20 years. On the issue of imports, he has advocated an import-substitution policy, stating ‘‘we are going to produce what we eat. We will no longer buy from outside the country’’. He has also promised to support small and medium sized enterprises, especially in agriculture, which have suffered as a result of NAFTA.

AMLO’s anti-trade rhetoric poses a further threat to Mexico’s energy industry. If elected, AMLO promises to reverse president Nieto’s planned privatization of the energy market. On the issue of privatisation, he succinctly stated it is “a synonym of robbery.” In addition to opposing a liberalization of the energy industry, he plans to terminate the import of cheap fuels.

If the PRI and Mexico’s political establishment continues to struggle to improve legitimacy ratings and AMLO’s campaign maintains its momentum, the dynamics of the Mexican economy could be facing a period of unprecedented change.

AMLO and the implications for Mexico-Latin American relations

In the last two decades, Mexico has enjoyed positive trade relations south of its border, while its role as an observer of MERCOSUR and its membership in NAFTA has underscored its commitment to neoliberal principles. However, at a time when some of Latin America’s most significant economic players are returning to those neoliberal economic policies, the isolationist ideology of AMLO’s party, could pose a serious threat to Mexico’s relations south as well as north of its borders.    

Fifteen years ago, the rise of the left in Latin America appeared to symbolise the decline of Western influence in the region. In Argentina, Peronist leader Nestor Kirchner astonishingly defaulted to the IMF and defied the ‘Washington Consensus’ that provided the country with economic guidelines and structures during the 1990s. Brazil and Venezuela also experienced shifts to the left under Da Silva and Chavez.

However over the last few years, political ideology in Latin America has taken a shift to the right. In 2016, centre-right Michel Temur replaced his leftist predecessor Dilma Rouseff as President of Brazil. In Argentina, neoliberal Mauricio Macri is seeking to boost international investor support and sees international markets as the best route to eradicate the economic difficulties that arose during the presidency of Cristina Kirchner. Additionally, in Chile centre-right businessman Sebastían Pinera is leading the polls for the presidential elections which take place on November 19.

The election of Lopez Obrador could compromise Mexico’s regional potency. Credible international investors favour strong and stable institutions and fear populist leaders who threaten to dismantle bureaucratic norms and structures. Considering his willingness to prevent the implementation of pro-market reforms, AMLO’s potential election will create negativity in the markets surrounding Mexico’s future. A decline in the value of the peso coupled with Mexico’s slower growth compared to other Latin American economies is likely. Moreover, his adversity towards foreign influence in Mexico’s economy will not be welcomed in some of Latin America’s most important economies. His ‘Mexico First’ stance could cause countries such as Chile and Argentina to review their trade policies with Mexico.

AMLO’s ambivalence regarding Venezuela could also add to Mexico’s regional isolationism. He claims that Venezuela has a better functioning democracy than Mexico, and has avoided condemnation of Nicolas Maduro and his policies. Some analysts have also likened his war on corruption to the election campaign of former Venezuelan president Hugo Chavez in the late 1990s. Although he has avoided praising Maduro, his refusal to condemn the regime in Caracas and comparisons with the late Chavez will only add to the wary view of Mexico from the rest of Latin America.    

A victory by AMLO has the potential to completely reshape the region at-large. As populist sentiment sweeps across the globe, analysts are looking towards Mexico with increasing anxiety. The repercussions of an isolationist Mexico under AMLO would cause a seismic shock in a region that has benefitted from close economic integration over the last two decades.   


About Author

Niall Walsh

Niall Walsh is a political risk analyst for GRI. He holds a BA in History and Spanish from University College Dublin and an MA in International Relations from Leiden University. His main focus concerns national and regional political risk in Latin America.