Thursday, September 23

Silence and divestment: this is the relationship between the business sector and López Obrador | Economy


The president of Mexico, Andrés Manuel López Obrador, addresses businessmen and bankers during the last banking convention, last March.
The president of Mexico, Andrés Manuel López Obrador, addresses businessmen and bankers during the last banking convention, last March.Presidency of Mexico / EFE

For Andrés Manuel López Obrador everything is ideology and also the management of the economy is subject to his political project, even in the midst of the emergence of covid-19. This model, of which the Mexican president came to venture this week that it is “recognized worldwide”, has been arousing doubts and concerns in the business sector, both national and foreign, for years. However, those most affected by the path of the so-called Fourth Transformation have, for the most part, opted for silence.

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Former Mexican Foreign Minister Jorge Castañeda wrote in 2019 a column in EL PAÍS in which he assured that the silence of businessmen who, in private, disagree with the president and his Administration “leaves a void impossible to fill in a country so oligopolistic and so unequal ”. At that time, Castañeda asked that, just as they make public their availability to work with him, they also make their criticism public. Today, two years later, says the former head of Mexican diplomacy during Vicente Fox’s term, they have more misgivings about the government’s plans, but they remain as silent as before.

“Deep down they have many more doubts, many more fears, many more criticisms and, deep down, there is much more animosity for López Obrador than two years ago,” says Castañeda. “What has not changed is that they do not want to make it public, either individually or collectively,” says the New York University academic.

If the protagonists do not speak -THE COUNTRY has contacted large businessmen in the country and employers’ organizations, which have declined to comment-, the numbers do. According to data from the Bank of Mexico, more than 15,000 million dollars have emerged in the money market, which has to do with highly liquid short-term debt, since López Obrador won the presidential election in the summer of 2018. The This year’s first quarter output is the highest for any first quarter since 1991, the first year on record. And much of this money is from entrepreneurs, both from their personal fortunes and from their companies.

Gross fixed investment in Mexico has fallen sharply during the six-year term. This reflects the government’s resistance to spending but also that of private initiative. Meanwhile, according to a report prepared by the investment promotion agency in Spain ICEX, Mexican companies were the only ones in the Latin American region that increased their investment in foreign countries during 2020 compared to the previous year. The estimate of investment outside of Mexico during the past year reached 9,573 million dollars.

“This behavior is also linked to rumors, impressions or anecdotes of entrepreneurs buying houses in Madrid, Houston or San Antonio, Miami, Vail, etc. and sending their families to the United States,” says Castañeda. In the United States, as in many countries in Europe and even in Latin America, employers and company managers openly support or criticize the government in turn. In Mexico, with some exceptions, this is not the case. In 1973, the sector faced President Luis Echeverría after the assassination of Eugenio Garza Sada, one of the most important businessmen in the country. In 1982, when President José López Portillo nationalized the banks, businessmen again criticized the president.

“But, in general, in Mexico this does not happen,” continues the former foreign minister, “Why? by the characteristics and history of the Mexican business community. And now, because they believe that López Obrador has a very heavy hand and that also this “will pass.” Although that ‘already happened’ is more and more debatable ”. The government is writing the latest chapter in a relationship, which affects local and international companies and is on the way to open hostility.

The electricity reform and the new hydrocarbons law, two initiatives promoted by the president to strengthen state companies such as the Federal Electricity Commission (CFE) and Pemex, call into question future investments. Not only because of the disincentive they represent, but also because of the climate of mistrust they generate. This energy agenda is today paralyzed in the courts, but the president has given signs that he will do everything possible to unblock it and has responded to the criticism with a counterattack against foreign capital, especially against Iberdrola, teaching the exit door. However, the Mexican subsidiary of the company chooses not to comment and from Spain its president, Ignacio Sánchez Galán, already scrapped new projects in Mexico at the end of last year.

Investments in the electricity sector have contributed more than 17,500 million dollars to the country since the last reform, according to the calculation of the Ministry of Economy itself. López Obrador has preferred, however, to bury the plan of his predecessor, Enrique Peña Nieto, and make it difficult for big capital. He has done it, like almost everything, in the name of a supposed fight against corruption, which always coincides with the fight against his political adversaries and the break with past administrations. The Mexican Institute of Competitiveness (Imco) He pointed to the cancellation of the Texcoco airport, announced in 2018 before the president’s inauguration, as a precedent that gave a signal of distrust to potential investors. From that moment, controversial decisions such as these energy laws, the delays of a tax reform that the Treasury promised to address after the June 6 elections or the breaches of the T-MEC trade agreement with the United States and Canada were added.

In this context, López Obrador has also launched some supposedly reassuring messages to businessmen. At the last banking convention, in March, he stated: “Make no mistake, we will always be respectful of companies and banks, of the national and foreign private sector. I repeat: we are in favor of doing business in Mexico, within the framework of the law and with reasonable profits. What is not allowed is corruption and influentialism ”. However, the relationship with the sector and divestments often indicate otherwise.

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