Economic Planet | Mexico’s Strange Approach

Since the extension of the North American Free Trade Agreement in 2020, relations between the three amigos that signed the treaty have not made much noise. There was the US election and the pandemic, which damaged rapprochement at the top. But now the Russian invasion of Ukraine is throwing a wedge between Mexico and its Canadian and American partners.

Posted at 8:00am

Helene Baril

Helene Baril
The press

Mexico is one of the few countries that refuses to impose sanctions on Moscow. Deputies from President Andrés Manuel López Obrador’s party, who has been in power since 2018, even just formed a friendship group between Mexico and Russia, infuriating Americans, the newspaper reported last week. The world

The Mexican president, accused of hosting Russian spies, denied, replying that “Mexico is a free, independent, sovereign country. We are not a colony of Russia or China or the United States.”

AMLO, as the president is called, is a special head of state in several respects. He has turned his back on the reforms of his neoliberal predecessors to return power to the people, as he promised.

He set an example with a radical change in presidential habits. He has a frugal lifestyle and never travels abroad. The presidential plane, a Boeing 787 Dreamliner, went on sale as soon as it took office. Since it could not find a buyer, it was made available to Mexicans who wanted to organize weddings and parties there.

At the same time, the president has launched pharaonic investment projects that are bleeding the state treasury. A train linking Yucatán’s archaeological sites is under construction, a 1,500-kilometer project estimated to cost at least $1.4 billion. The project has been met with a lot of resistance because it seems to have no other purpose than to transport tourists interested in the Mayan civilization.

As soon as he took power, AMLO halted construction of the new airport in Mexico City, with a third completed, to allow the military to build another in a different location. The new terminal was inaugurated a few weeks ago and the State has absorbed the losses of this plan change.

But it is the energy sector reform undertaken by AMLO that has raised most of the frowns on Mexico’s trading partners, including Canada and the United States. The Mexican government wanted to regain control of oil and electricity production, which began opening up to foreign investment.

Private companies that had designs on the Mexican energy sector no longer feel welcome. Some of those who have ongoing projects are considering solutions.

Examples of this change of course: The Mexican president wants to increase production of Pemex, the national oil company, but not export. He wants to keep the oil in the country, where the price is subsidized.

The president does not trust private companies that were willing to invest in renewable energy. But Hydro-Quebec, a Crown company, had found favor in his eyes. In a video posted to YouTube in 2019, he shamefully praised the Quebec-based company that wanted to help modernize Mexico’s power grid. The partnership was announced, but there were no follow-ups.

slow recovery

Meanwhile, the Mexican economy lost its springs. The country is one of the few that has not provided financial support to businesses and workers affected by the pandemic. The losses, in bankruptcies and jobs, are significant. There are no restrictions on travelers either and the country has one of the highest death tolls in the world for the number of deaths from COVID-19 per million inhabitants.

While the economy in Canada and the United States has recovered nicely, the recovery in Mexico is slower and growth forecasts for 2022 have just been revised down by the Treasury Department. Government figures also show that the investment level is 15% lower than in 2018.

Despite everything, the Mexican people still stand behind AMLO. The disastrous containment of the pandemic, the increasing violence and the stagnant economy, nothing helps, the president is still popular, according to the result of the referendum on April 10.

Without being obligated to do so, this strange president officially asked voters two years after the end of his term whether he should stay or leave. Turnout was low, but 90% of voters said they would stay against AMLO.

“Let no one forget that it is the people who are in command,” he had launched on the day of the vote. To be checked in two years, to know what the people will order in the elections.

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  • 130.1 million
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