Government and Power

Mexico today  – February 2,  2021

The paradox of power is old and well known: the greater power one has, the more its misuse is overlooked and, consequently, the greater the risk of it being abused. The Mexican economy grew for several decades in the 20th century due to the fact that government was the steward of political stability and for almost two decades maintained a healthy economic strategy befitting Mexico’s -and the world’s- circumstances at the time. When the Mexican government abandoned those principles in the 1970s, the economy collapsed. The contrast between those two moments explains the nature of the problem facing Mexico today and why the path chosen by President Andrés Manuel López Obrador (AMLO) will not prove more obliging than back then. Like López Obrador today, the Mexican administrations in the 1970s also implicitly attempted to carry on a “regime change”.

 Concentrating power is useful only if you know where you are going and why. It seems clear that by systematically eliminating checks and balances, president López Obrador intends to recreate the Mexico of the 20th century when things worked well. He does not realize that those conditions answered to a specific moment in history. López Obrador is not attempting to destroy independent government agencies regulating Mexico’s energy sector or access to public information merely for the sake of eliminating “unnecessary” checks and balances, but because he believes -like his predecessors of the 1960s- that he himself can be the steward of Mexico’s destiny. The problem is that López Obrador is behaving exactly like the Mexican presidents of the 1970s, minus fiscal deficit considerations. The lesson that López Obrador learned from the 1970s is not that the country’s political stability and economic certainty were obliterated, but that the Mexican administrations then overreached in fiscal matters. In a nutshell, López Obrador aims to recreate that 1970s era, but without financial excesses.

The outcome will be no different, except that the agony will be drawn-out. Political power in 1950s and 1960s Mexico was highly concentrated in the presidency. However, these in office back then knew that any breach to stability and certainty would translate into severe economic cost. Mexican presidents back then didn’t cater to their whims via rigged or sham referendums, as López Obrador is doing today, but rather negotiated their actions and decisions with actual powers in society, like anywhere else.

Power in Mexico during the 20th century was concentrated, but not arbitrary. That changed in the 1970s due to the sudden appearance of increasing resources in the hands of the executive. These resources came first as a product of the availability of foreign debt and, later, by the promise of huge resources that would be produced by the recently discovered oil fields in the Gulf of Mexico. Those two factors, debt and oil, changed Mexico because the presidents of that time felt they could do as they pleased without consequence. But the consequence was a decade of recession and almost hyperinflation in the 1980s. It also resulted in an enormous difficulty for the Mexican administrations of that decade to regain the confidence of citizens, investors and businessmen, without whom the economy (the Mexican and all the others ) cannot work. President López Obrador wants to recreate the part of that history that suits him, disregarding the attached cost. Today, the Covid-19 pandemic crisis has inexorably accelerated those costs.

This blindness has led president López Obrador to make decisions that stand to reason in his stunted vision of Mexico and the world, and to close himself off from today’s enormous challenges. It’s easy for López Obrador to think that he can disband independent government agencies such as the Federal Institute for Access to Public Information and Data Protection (INAI), the Energy Regulatory Commission (CRE) and others. However, dismantling each one of those institutions would be a step towards economic and political catastrophe. These independent government agencies were founded in recent years not because the previous Mexican Presidents liked them, but because they were the only way to confer certainty to citizens. Every time López Obrador destroys an independent agency he alienates a sector within Mexico’s economy or society and increases uncertainty. Mexico lives in the paradox of the certainty of uncertainty. Progress under such conditions is impossible.

Mexico faces formidable challenges, ones that a government should ponder and anticipate to avoid and overcome pitfalls. Worse, several of them will prove particularly demanding for an administration such as López Obrador’s guided by so many dogmas and prejudices. Energy is a case in point: the world is slowly weaning itself off oil. Meanwhile the Mexican government here expects that the state-owned oil company (PEMEX) to work magic.

Exports are by far the greatest engine of the Mexican economy and our main export are cars and automobile parts and components, an industry which is quickly abandoning fossil fuels. What does the López Obrador government foresees on this issue? Which leading energy, electrical, or automotive companies is it seeking to attract to invest in Mexico?

Going forward there are other questions the Mexican government should ponder. What does it see happening in U.S.-China trade relations? What is Mexico doing so that companies and industries having to leave China see the country as a feasible alternative option? And not least importantly: How does the López Obrador administration anticipates its relationship with the new Biden administration in the US? What geopolitical risks does it perceive? In short, does the López Obrador administration care about the future or -knowingly or unknowingly- is Louis XIV its sole role model?

* Luis Rubio is chairman of México Evalúa-CIDAC and former chairman of the Mexican Council on Foreign Relations (COMEXI).  A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.

 Twitter: @lrubiof