Analysis: Mexican President’s Looming Election Victory Masks Economic Concern By Reuters


2/2 © Reuters. Alfonso Durazo, a former security minister and candidate for governor in Sonora, appears during an interview with Reuters in Mexico City, Mexico, on April 22, 2021. REUTERS / Edgard Garrido 2/2

By Dave Graham (NYSE 🙂 HERMOSILLO, Mexico (Reuters – Mexican President Andrés Manuel López Obrador’s clashes with business elites have helped him reach the pinnacle of the midterm electoral triumph, but have also undermined investment and investment economic recovery from the coronavirus pandemic. Now, a contrasting and friendlier message for businesses is emerging from officials and candidates of the ruling Movement for National Regeneration (MORENA) who look ahead to the rest of their term, eager to show that they can generate jobs and growth. “I will prioritize investment wherever it comes from,” said Alfonso Durazo, López Obrador’s former security minister, who is launching a series of projects to revitalize the northern state of Sonora if he is elected governor of MORENA in the vote. June 6. So far, Mexicans have backed López Obrador in his disruptive drive to renegotiate or cancel thousands of millions of dollars in contracts that he says were the product of entrenched corruption between big business and politicians who conspire to scam Ayers taxes. Opinion polls suggest that MORENA and his allies will dominate national, state and municipal elections, win most of the 15 governorates at stake, and could approach a two-thirds majority in the lower house of Congress. But that support partly reflects discontent with older parties, and officials, lawmakers and voters say MORENA must improve its economic record to stay on top in the long run. MORENA’s gubernatorial candidates for states like Baja California and Sinaloa in the north and Tlaxcala in the center, as well as mayoral candidates in and around Mexico’s second city, Guadalajara, have made proposals to investors. And the Minister of Finance, Arturo Herrera, has especially insisted on the need to promote investment. Gabriela Cuevas, a federal congresswoman from MORENA, said the party had always made it clear that it would shake up the system, but now needed to explain how the new rules for business would work. So far it has followed “more of a deconstruction strategy, rather than building a new economic policy,” he said. In Sonora, while voters broadly support MORENA, many also cite concerns about the economy, along with gang violence and a rising death toll from the pandemic. “There is not enough work in Mexico. What we have to fight is jobs, so we don’t need to migrate to the United States,” said Julián Fernández, a 51-year-old worker from Hermosillo, the capital of Sonora, who voted for López Obrador. as president, but is now leaning toward Durazo’s main rival governor. POPULARITY López Obrador took office in December 2018 with the promise of reducing crime and increasing economic growth. Instead, the next two years saw more homicides than ever, and Mexico’s economy was contracting even before the pandemic hit. The economy contracted 8.5% in 2020, although it is now regaining ground, driven by US demand. However, the latest official gross fixed capital investment figures are still below 20% since López Obrador won the elections in July 2018. Corporate lobbies, rating agencies and some of Mexico’s main diplomatic allies They have said that the uncertainty stemming from their restructuring of the The business outlook has hurt investment. López Obrador has mitigated the economic turbulence with popular welfare plans and used his daily press conferences at 7 a.m. to keep the opposition on the defensive, ridiculing them as the puppets of greedy plutocrats. “People are tired of being ripped off over and over again,” said Álvaro Urquijo, a Durazo supporter in Hermosillo, using a phrase popularized by the president. Urquijo, a 42-year-old lawyer, argued that MORENA deserved more time to turn Mexico around. But he emphasized that he was not married to the party, having previously voted for López Obrador’s opponents. Durazo, the favorite to win in Sonora, promises to make the most of his relationship with López Obrador. “The governor has never had the leeway that I will have,” he told Reuters in an interview. With the help of private investment, Durazo wants to turn Sonora’s main port, Guaymas, into an important commercial center, convert one of its airports into a regional center, reform the road network and establish the state as a stronghold of tourism. He also wants outside capital to help boost solar power generation in the hot and arid state, although the president has discouraged renewable energy in his battles with private energy providers that he has compared to colonial invaders. Not everyone is sure that Durazo will get away with it. “No one is going to be able to twist the president’s arm,” said Kurt Gerhard, director of the Coparmex employers’ federation in Hermosillo. But many local executives are quietly betting on Durazo, believing he will get more from López Obrador than an opposition governor, another business leader said, speaking on condition of anonymity. López Obrador, who by law can only serve one term, has framed the election as a referendum on his social spending, saying the opposition wants to capture the lower house of Congress so it can cancel the programs and pocket the money. The message resonates. José Adán Armenta, a 64-year-old accountant from Hermosillo, said his seven brothers backed MORENA out of fear that they would otherwise “lose their pensions.” Armenta will not join them, expressing alarm at the steps López Obrador has taken to concentrate presidential power and seeing it as a drag on the economy. Given the concerns, MORENA’s promising candidates had no choice but to gain court support from local businesses, said Jorge Buendia, director of polling firm Buendia & Márquez. But López Obrador would likely continue his confrontational strategy, he argued. “His big problem continues to be inequality,” Buendía said. “(The gubernatorial candidates) are thinking beyond this government. I don’t think López Obrador is thinking beyond this period.”