Philip L. Russell :
AMLO at midterm

Mexico’s president receives mixed grades.

Andres Manuel López Obrador. Photo by Eneas De Troya / Wikimedia. Commons.

By Philip L. Russell | The Rag Blog | October 28, 2021


Listen to Thorne Dreyer’s Rag Radio interview with Philip Russell about the issues discussed in this article, Friday, Oct. 28, 2021, 2-3 p.m. CDT on KOOP 91.7-FM in Austin, or stream it live at KOOP.org. Or listen anytime to the podcast of this show at https://archive.org/details/rag-radio-2021-10-27-philip-russell.


November first marks the midpoint of President López Obrador’s six-year term. Based on his approval ratings alone, one would have to judge his presidency a roaring success. An October poll found 63.7% of the population approved of his presidency while only 35.9% disapproved. His approval rating is up from a year ago, when it was 58.8%. (eleconomista.com.mx, Oct. 26, 2021.)

Several factors contribute to his high ratings. He dominates the daily news cycle with his morning news conferences, the mañaneras. In these conferences, he highlights his social programs and has led people to identify these programs with him personally. In addition, he has had several successes during the first half of his term. He raised the minimum wage, increased tax collection without increasing the tax rate, and aided millions by eliminating abuses associated with subcontracting.

Although AMLO’s support remains high, it is nuanced. When asked about specific aspects of his administration, approval plunges. A poll in September found that only 38% approved of his handling of the economy, only 40% approved of efforts to fight corruption, and 31% of his approach to public safety. (El Financiero, Sept. 2, 2021, p. 37.) As columnist Enrique Quintana noted, “AMLO’s support is based, not on what his government does or does not do, but on who he is.” (El Financiero, Sept. 17, 2021, p. 2.)

Many have described López Obrador (AMLO) as authoritarian. That is unfair when one considers freedom of the press, fair elections, and respect for the judiciary. The press, which the president often criticizes, remains not only free but full of criticism and disparaging cartoons. Freedom House found Mexico’s internet freedom to have improved between 2020 and 2021. (The Economist, Oct. 16, 2021, p. 53.) Similarly, the election apparatus AMLO inherited remains intact. Even though some of the midterm elections were a disappointment for AMLO, he did not claim they were stolen. Finally, the judiciary has remained independent and in several cases has prevented AMLO from instituting changes he favors.

Another label often applied to AMLO is that he is a populist.

Another label often applied to AMLO is that he is a populist. Even though defining that term is problematic, populism is not generally associated with monetary stability — an indicator the AMLO administration passes with flying colors. AMLO has kept the exchange rate stable, public finances in order, and inflation low. This has won praise from business and investors. (El Financiero, Aug. 31, 2021, p. 2.) The peso is now valued at 20.2 to the dollar, an appreciation of 4.5% during the last year.

As AMLO’s low ratings in certain areas indicate, his administration is far from problem free. The economy, the value of the peso notwithstanding, is probably his greatest vulnerability. Many of AMLO’s decisions, such as canceling Mexico City’s partially-constructed airport and his trying to rewrite laws governing electricity generation, have undermined business confidence. As a result, investment fell from 23% of GDP in 2018 to 21% in 2019 and 19% in 2020. (San Antonio Branch, Federal Reserve Bank of Dallas, June 30, 2021.) Though undoubtedly the pandemic influenced this last figure, AMLO’s austerity in response to the pandemic failed to check the decline in GDP. During the first seven months of 2021, $10.51 billion which had been invested in Mexico’s sovereign debt left the country, spurred by uncertainty about the legal environment. (aristeguinoticias.com, Aug. 16, 2021.)

Business confidence has declined.

Although AMLO campaigned on increasing gross domestic product growth to 4% annually, reaching that goal seems increasingly farfetched. Business confidence has declined. The gross domestic product fell by 0.1% in 2019. In 2020, given government austerity and the pandemic, the decrease was 8.2%. This decline was larger than the 6.2% decline in other Latin American and Caribbean nations and more than twice that of Mexico’s major trading partner, the United States. (El Financiero, Sept. 7, 2021.) The U.N.’s Economic Commission for Latin America and the Caribbean predicts Mexico’s growth this year will by 6.2%. Even with this growth, Mexico will not be among the nine Latin American and Caribbean nations that will regain their 2019 GDP level this year. (El Financiero, Sept. 22, 2021, p. 8.)

AMLO’s record on public security, a subject which is often cited as Mexico’s major problem in polls, is also lacking. Mexico’s horrendous homicide rate remains unacceptably high. In 2020, the murder rate was 29 per 100,000 population, roughly six times the U.S. rate. (Reforma, Aug. 6, 2021, p. 8.) Using official figures, columnist Jorge Ramos calculated that through June of this year, murders averaged 95 a day — a figure more than 60% above the murder rate during the terms of AMLO’s two predecessors. (Reforma, Aug. 21, 2021, p. 8.)

During the decades AMLO campaigned for the presidency, he stressed the need to address poverty. To confront this problem, AMLO raised pensions for senior citizens and established job creation programs. However, several factors have blunted his administration’s efforts to lower poverty. One is the low rate of tax collection by the government. The government only collects 13.5% of the GDP as taxes, a rate below those of other Organization for Economic Cooperation and Development members and of other Latin American nations.

Second, despite new anti-poverty programs, most government spending is directed to high-income households. Government funds, including salaries and pensions, received by the 50% of wealthiest households rose 114% between 2018 and 2020. Households at the bottom half of the income scale only saw a 17% increase in government funds.

Finally, in economic terms, the pandemic hit informal sector workers, such as street vendors, especially hard. Not surprisingly, according to the National Council for the Evaluation of Government Social Development Policies (CONEVAL), a government agency, the poverty rate rose from 41.9% of the population in 2018 to 43.9% in 2020. (Reforma, Sept. 11, 2021, p. 10.)

Corruption is often cited as Mexico’s main problem.

Corruption is often cited as Mexico’s main problem. María Amparo Casar, of Mexicans against Corruption and Impunity, commented: “Corruption in Mexico is in robust good health. There is talk against corruption but there is no anti-corruption policy.” (The Economist, July 17, 2021, p. 32.) Her observation is supported by the World Justice Project’s rating of nations worldwide in terms of their level of corruption. Of the 139 nations considered, Mexico came in 135th. Only four nations were deemed to be more corrupt. (World Justice Project, 2021: 121).

The AMLO administration has not only had few successes in addressing chronic problems, but failed to adequately address an unanticipated problem — the Covid pandemic. AMLO played down the pandemic, failed to wear a mask, and set a poor example by continuing to mingle with large numbers of unmasked people. Not surprisingly, Mexico has the fourth highest death toll from the pandemic worldwide, while it is only the tenth largest nation in terms of population. (Reforma, July 25, 2021, p. 9.)

The trends noted above seem likely to continue during the second half of AMLO’s term. In his September 1 state of the nation address, the president gave no indication of any changes in policy. His attempt to amend the constitution regarding electrical generation will further undermine business confidence regardless of whether the amendment passes. The low rate of tax collection in relation to gross domestic product will limit possible government action. Finally, as the end of his term approaches, investors will adopt a wait-and-see attitude since they will be unsure of what the next presidential term will bring.

Reference:
World Justice Project (2021) WJP Rule of Law Index 2021
https://www.bing.com/search?q=WJP%20Rule%20of%20Law%20Index%202021&FORM=AFSCWO&PC=AFSC


[Austin-based writer Philip L. Russell has written six books on Latin America, including The Essential History of Mexico (Routledge, 2016), and is the editor of the Mexico Energy News. He frequently writes for The Rag Blog and is our guest on Rag Radio.]


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3 Responses to Philip L. Russell :
AMLO at midterm

  1. Jay Jurie says:

    Thanks, informative. Your piece is one of the few I’ve seen on Mexico of late.

  2. Meizhu Lui says:

    In terms of “business confidence,” are you referring to international business? AMLO is juggling the need for investment with transitioning to an economy in which México can exercise its sovereign control over its energy sector. This lack of control opened the door to foreign investors, and a money flow out of the country. Foreign money in, Mexican resources out…. but without money in, it will take time to stabilize. However, the path he’s taking seems correct for the longer term.

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