Leave No Stone Unturned: A Populist’s Frenzy to Leave His Mark on Everything (Part II)
A look into the deeds & misdeeds of Mexico’s Populist Government, and What Populist Government Means for Doing Business in Mexico
by
Carl E. Koller Lucio
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[Note: Part I of this Article is visible at https://www.dhirubhai.net/pulse/leave-stone-unturned-populist-frenzy-his-mark-part-i-carl-koller-y1ttf/?trackingId=LGVp9id%2FRzKnEzHq5r6lmw%3D%3D ]
It’s the size of the economy, stupid
“It’s the economy, stupid.”
-?????? James Carville, a 1992 election strategist for Bill Clinton
A governmental agenda centered on electorally-motivated welfare programs, mammoth public works and expanding the role of the government in the economy (notably through militarism, as reviewed above) and the effort to continuously control the public narrative, from the president’s daily bully pulpit, seems to leave little room for anything else, and so it seems with the private sector.
For example, when the COVID pandemic hit, AMLO stated that such a pandemic fit his government like a glove (the Mexican saying is “as a ring to the finger”).[1] What exactly that particular bit of morning show celebratory improv was supposed to mean will most likely remain a mystery. What we do know, as regards the economy, is that Mexico’s government was the one to give the least aid to businesses[2], though threats of public denunciation were made by the President regarding businesses that would have fired their employees as a consequence of the COVID pandemic.[3] It may be fair to assume that this reflects the philosophical premise that businesses are entities that, by definition, have an interminable supply of static resources to take care of themselves and of their employees, in other words, the pedestrian view that “businesses are rich”, which of course lends a blind eye to the function of the working capital requirement, and that the flow of wealth is a prerequisite necessary to maintain and increase wealth.
The problem with the lack of focus on the private sector —indeed, the problem for a government vying to generate worthy economic results— is the gross oversight that Mexico, being the world’s 12th largest economy[4], has a private sector that accounted for over 87% of the economy between 2018 and 2023.[5]
This is reflected in a number of aspects:
·????? Mexico’s tax revenue for 2022 was 16.9% of GDP, the lowest among OECD countries, which average 34%.[6] This is reflective of the fact that about 50% of Mexico’s economy is informal.[7]
·????? Consequently, while Mexico had a GDP of 1.47 trillion USD for 2022 and estimated to be 1.8 trillion USD for 2023,[8] the annual federal budget is of $9.066 billion MXN / $503.9 billion USD.
While this implies a relevant government expenditure of about 28% of GDP, tax revenue is of about 15% of GDP (see the statistical summary at the end of the article).
In other words, under this outgoing government, if an equivalent populist and improvised government takes its place in 2024-2030 and continues with the improvised populist governmental style, centered on electorally-motivated programs and pet infrastructure projects, it seems Mexico’s economy will plow ahead, in spite of a lack of governmental vision to lead. Its resiliency will perform, but it’s full potential will remain untapped and badly mismanaged.
Nearsighted on Nearshoring
The country loses investments for six reasons: a lack of renewable energy, competitive incentives, legal certainty, facilitation of commerce, water supply and security.
-??????? Mark Johnson, Deputy Chief of Mission, U.S. Embassy in Mexico, March, 2024.[9]
The commercial rift between China and the U.S., the threat of general fractioning of globalization and the proven frailty of extended international supply chains have generated a notable phenomenon of productive plant relocation to shorten the supply chain and make it more secure, now commonly referred to as nearshoring.
Mexico, with its extended network of free trade agreements, investment protection treaties and double taxation treaties, and its geographic proximity to Canada and the U.S., is in a privileged position to capture a significant amount of such relocation. Its position within the USMCA free trade zone allow it to supply manufactured goods to the U.S. market, provided the goods manufactured in Mexico meet the originating goods thresholds established in the USMCA. Thus, relocation is attractive, not only for North American corporate groups, but for any capital seeking to have a stronger presence in the North American markets. Indeed, foreign capital, not necessarily North American, have become aware of such measure to continue accessing the North American market, and Chinese companies’ keenness to nearshore have raised eyebrows and U.S. national security concerns.[10]
An aggressive relocation capture policy should therefore be a no-brainer for Mexico, with the World Bank’s International Finance Corporation estimating nearshoring could add 1.5% to Mexico’s GDP.[11] However, the downside of an administration with a narrow electorally-driven agenda and a limited field of vision is that the potential is not being actively promoted by the government.
Indeed, the Mexican government has been critically slow to appreciate and react to the phenomenon. As regards competitive incentives, a lack-luster, unimaginative presidential tax benefit decree dished out the usual tax benefits we see in Mexico: immediate tax deduction of new assets and additional deduction for employee training.[12] It is so unimaginative and bland that it may well have been penned by a junior staffer under a government directive to “put something out there” on nearshoring. This decree was immediately questioned as to whether it is USMCA-compliant.[13]
Thus, it is common to read one news piece extolling the potential of nearshoring for the country side by side with another piece of news lamenting the lack of initiatives to create better conditions or missing conditions to promote and service nearshoring.[14] Most recently, the World Bank, in adjusting Mexico’s expected GDP for 2024 downward, openly stated that the country is simply not taking advantage of the opportunities nearshoring presents.[15] The IMF has chimed in on the potential for Mexico (and the LatAm region) and the requirement of a pro-relocation public policy.[16]
The void resulting from governmental inaction is being generally left to the private sector’s own economic potential. In this respect, it was the CCE, Mexico’s top business council, that has laid out a multiple point plan of broad scope to take advantage of nearshoring’s potential, to be expanded upon with Mexico’s next President.[17]
On the diplomatic front, a clear opportunity at signaling was not only let go, it has been interpreted even as disdainful of the Mexico-U.S. relationship[18], where terminology used —nearshoring as opposed to friendshoring or allyshoring[19]— denotes the breathe and depth of a potential, long-term strategic relationship between Mexico and the U.S. Recently, Janet Yellen, U.S. Secretary of the Treasury, on an official visit to Mexico in December 2023 and during the days prior to the same, expressed that Mexico is especially well-positioned to take advantage of nearshoring, with an emphasis in her comments to friendshoring,[20] yet the Mexican government’s inertial lack of attention on the nearshoring potential remains.[21]
THE RELATIONSHIP WITH THE LAW, CIVIL SOCIETY & MEXICO’S INSTITUTIONS
The Assault on Institutions
“If one declares that, having come to power by legal means, one will then break the bounds of the law, that is not legality.”
-??????? Heinrich Brüning, 1931.[22]
One cannot deny the consistency with which AMLO has attacked Mexico’s democratic and independent governmental institutions. He has been true to form since he cried out before a crowded public square, shortly after his electoral defeat in his 2006 presidential bid (a defeat he never recognized—indeed, he has never recognized an electoral defeat), “Damn their institutions!”
Once elected president, AMLO, always under the guise of alleged superfluous, exaggerated public expense, floridly disqualified autonomous agencies as “flowerpots” at the beginning of his term. Even the United Nations has not escaped the adjective.[23]
More recently, he expressed his views on such independent governmental institutions, to the effect that, “There are many onerous organisms that don’t serve any purpose, they are superfluous expenses (…), they have to disappear”; “that is another bill for amendments I want to send [to Congress]: how to dismount all this apparatus they created parallel to the government to have control of all the decisions of public power”[24]; “we are not going to keep maintaining these factious, onerous, anti-popular organisms”.[25] At the same time analysts noted that disappearing certain autonomous agencies would be in breach of USMCA.[26]
So, what are these institutions that so draw the attention and apparently the ire of the President? This point merits a few comments.
From 1994 to 2018, Mexico saw the creation of numerous institutions, established under (and with the protection of) detailed constitutional text:
·????? they significantly strengthened the Federal Judiciary, with a Supreme Court empowered to resolve on and annul acts of Congress on the basis of their unconstitutionality;
·????? from a democratic perspective, most notably, the creation of an independent agency —originally the Federal Electoral Institute, IFE, now the National Electoral Institute, the INE— with a professional and permanent civil service staff that, together with citizens recruited and trained for each election, organizes and controls elections;
·????? also, from a democratic, open-society perspective, the creation of an agency that has proven to be fundamental, the INAI, that guarantees public access to governmental information; or
·????? the creation of agencies specializing in anti-trust (COFECE), telecommunications (IFETEL), or assignments of oil exploration and production contracts, or electric energy production authorizations (CRE).
All these agencies institutionalize governmental procedures and premises for action, and clearly check overstepping public power. Indeed, they embody institutionalization: clear, fixed, pre-established rules, procedures and policies that seek certain types of outcomes in a manner that the body politic can anticipate, and where deviations can be legally and effectively challenged by relevant stakeholders, including the institutions themselves. This is something important in a country where officials all too often consider achieving their agenda as considerably more important than inconvenient subtleties such as the law.
Once in power, AMLO has indeed assaulted these institutions under a consistent pattern: if you can’t beat them, emasculate them through amendments; if you cannot legally amend them, then defund them; if that doesn’t work, abstain from designating officials to leadership positions to avoid them having a functioning? quorum, or, better yet, populate their leadership positions with pliable, ideologically locked-in minions (recall that, as AMLO would have it, the standard should be 10% experience, 90% honesty[27]—overlooking the obvious: that unconceded incapacity to perform a public function is not honest, but simply another form of corruption).
Many such autonomous institutions have come under AMLO’s attacks, but the attacks on three key checks-and-balances institutions merit special mention:
The INE. Under the 70-plus year rule of the hegemonic PRI party, electoral control and government instigated electoral fraud became an art and a fixture. Recollection of certain electoral practices evoke the essence of Mexican surrealism: the “crazy mouse” polling booth, set up in difficult to find places where the opposition is likely to have a prevalent vote, making the voter run around like a crazy mouse to find their voting place; cardboard voting cards; and of course a robust number of voting dead.
A series of civic, political and economic events, many unfortunate milestones from the 1968 to 1988 period, forced the opening up of the political arena to a democratic system, one that required a VERY strong and independent State institutional guarantee against electoral fraud. The institution that so arose was the IFE, which substituted the Federal Electoral Commission run out of the Ministry of the Interior (Secretaría de Gobernación), with elections certified by the Chamber of Deputies, as the key electoral authority (reformulated as the INE as of 2014).
Key characteristics are political party funding and oversight, elections structurally run by a professional and independent bureaucracy, and individual polling stations run and overseen by citizens (with ad hoc training for each election), party representatives and electoral observers; results of each polling station independently reported in real time upon poll closing; and with the resulting electoral packages, sealed by the booth president and the other members of the polling station, being escort by the same to central concentration points for the case of electoral challenges.
Not one to overcome the frustration of electoral losses through an institution he does not control, AMLO has never recognized an electoral defeat, even when plainly evident, and has laid much of his discomfiture on the electoral referee, which has seen wave after wave of attacks from his administration. (Note it has been the elections independently run by the INE that gave López Obrador his presidency and his official party the majority number of seats in Congress and a majority of governorships).
Three of these attacks merit special mention: the first one was a failed effort at constitutional amendments that would have eliminated the professional electoral bureaucracy, lodged electoral authority offices in the offices of the federal administration, put voting lists in hands of the government, eliminated the direct election of congress members, reduced the number of electoral districts, and established the public election of electoral commissioners and electoral tribunal magistrates (“Plan A”).[28] A second, feebler attempt was to use the official party majority in Congress to —literally and shamefully— rubber-stamp amendments at the ordinary legal level (“Plan B”), which were promptly challenged by the opposition and annulled given their unconstitutionality by the Supreme Court.[29]Finally, Plan C would be to seek an election-based qualified majority in a new Congress that would allow for the constitutional amendments so desired by López.[30]
The INAI.
“Let the people know the facts, and the country will be safe.”
-??????? Abraham Lincoln.
While this institution has the high-profile role of forcing the government to reveal information generated in the course of its work —akin to the Freedom of Information Act (FOIA) in the U.S.[31]—, as well as constitutional actions before the Supreme Court within the scope of its competency[32], this instance also allows the individual citizen to access their own records to claim relevant legal benefits for the account of the State.
The bottom line is that the existence of this institute is the difference between the federal government discretionally deciding what it may reveal and release to citizenry, and what it must reveal and release as per the orders of a special purpose authority.[33]
This is too much to countenance by a perfect populist, imbued as they may be in messianism, and so the attacks came, in this particular instance by again claiming the organization as too expensive and irrelevant, and by ordering the pliant official party majority in Congress to abstain from naming new members of the Institute for its correct operation (thus avoiding it meet quorum to hold sessions). The deliberate omission prompted the remaining members of the INAI to sue before the Supreme Court for an allowance to operate without quorum, a petition the Supreme Court resolved favorably.[34]
The official party presidential candidate for this year’s election would likewise do away with the institution.[35]
The Supreme Court.
Don’t come to me with that story that “the law is the law”…
-??????? President Andrés Manuel López Obrador, April 6, 2022.[36]
An essential check and balance in any functional liberal government and democracy, indeed, the last trench in determining what the law is when its applications beget contention, the Federal Judiciary and particularly the powerful Supreme Court is a favorite villain in the current administration. It was also a testing ground for the idea of a presidential reelection.
Under the premise that the Judiciary needed tweaking, certain amendments were passed in 2019. Given the premise that the design of the amendments was done under the then President of the Supreme Court, Arturo Zaldívar, the amendments to judiciary legislation would have extended his term two more years, “to administer the new amendments”; however, the Constitution clearly states that the term for the Supreme Court president, elected by their peers on the bench, is limited to a 4-year term.[37] Rather than immediately reject this bit of legislative largesse, Zaldívar sat on the issue and only many months later did the Supreme Court analyze what to do with the disposition (any constitutional attorney worth their salt should have immediately declined to hold the position beyond his Constitutional term, citing the clear text of the Constitution, making the item moot).
In any case, such Minister President of the Supreme Court amicably administered the docket, with the effect that constitutional challenges to the Administration’s pet projects were slow in resolving. In parallel, the President had many an occasion to name Ministers to the Supreme Court, evidently with the hope of making it more affined and pliant to his government. While a number of nominations devolved from the 15-year terms of Ministers concluding, the first nomination was the effect of a publicized, potential money-laundering accusation against a sitting Supreme Court Minister, who resigned in the context of the accusations.[38] The ex-Minister was never prosecuted, curiously enough …[39]
Much to the President’s chagrin, the first two nominees[40] proved to be highly independent as Ministers, often voting against governmental measures sought by the Administration, although the Minister President and two later additions to the Supreme Court Bench tended to vote systematically in favor of the government’s initiatives. Matters worsened for the President’s plan for an aligned Court with the change of Supreme Court Presidency as of 2023: the Ministers elected a career judge to the Presidency, Minister Norma Pi?a, who has unquestionably affirmed the Judiciary’s independence. The personal attacks against the new President and generally against the Supreme Court were promptly (and predictably) forthcoming.[41]
The assaults have continued: on the one hand, regarding the latest Minister vacancy, the President sent two successive triple nominees, slates so poor and unacceptable he knew would be rejected given the sufficient opposition minority in the Senate; following constitutional procedure, upon the failure of the second slate, he was able to directly nominated the new Minister, an individual lacking in academic or judicial career credentials[42] and seen as dogmatically aligned with the President’s political movement.[43] She has made no effort to dissimulate her affinity to the government, often chastising the Supreme Court for not in turn aligning to certain presidential premises.[44]
In tandem, the President sent a constitutional initiative to have Supreme Court Ministers elected in open electoral processes, a populist euphemism invoking democracy, yet actually a gimmick for filtering in Ministers of choice by government influenced electoral processes. As one incumbent Supreme Court Justice eloquently put it:
“Instead of privileging merit, in place of privileging specialization, in place of privileging neutrality through rigorous and thorough procedure, (…) we are proposed a sort of popularity contest, where grandiose promises are privileged over strong doctrinal bases”.[45]
Most recently, the official party in Congress introduced a bill to eliminate the Federal Judiciary’s ability to issue injunctions in cases were public works are being executed, such as has been the case with the Tren Maya; the measure has been marked as unconstitutional and as an embarrassment by the opposition, and if approved will be challenged before the Supreme Court.[46] The bill was warmly received by the government’s party and railroaded “fast track” through Congress.[47] Whatever you say, Mr. President.
The irony is that, while such attacks may sway a part of the public opinion, the Supreme Court remains popular among Mexicans, with indexes of popularity being reported as similar to those of the President himself.[48]
Distrust of Civil Society (and the Middle Class)
“The contrast between the leaders of free nations meeting at the [Tokyo] summit to deal openly with common concerns and the Soviet government, with its secrecy and stubborn refusal to inform the international community of the common danger from [the Chernobyl] disaster, is stark and clear.”
-??????? Ronald Reagan, 1986.[49]
This aspect merits a brief mention. Civil society, a strong middle class and private initiatives —together with the independent branches of ?government, a strong free press, and independent & plural-thinking universities— are fundamental pillars of a strong, open, free and vibrant democracy and of an open economy, and the nemesis of the good populist. Thus, the views towards these social phenomena can be highly indicative of the populist government’s narrow view on the access to, and hold on power and, in the case of Mexico, a disconnected view of a complex national reality and agenda.
Even before starting his electoral campaign for the 2018 presidential election, López Obrador indicated, “I have much distrust in all that they call the civil society or independent initiatives”.[50]
Ill-conceived aggressive amendments to civil society non-profits, which place them in a vulnerability before the tax administration, followed.[51] Upon taking power, the agency promoting entrepreneurship was promptly eliminated.[52]
He expressed unveiled anger at the middle class, which evidently voted for his candidacy expecting a fundamental change in 2018, yet did not fully support his party in the 2021 mid-term elections, upsetting his plans for counting on a broad congressional majority to wave through his desired constitutional amendments (including a generally held view the messianic idea that he could easily set himself up for reelection in 2024). His frustration was well framed in his reproach that Mexico’s middle class should not be “aspirational”; indeed, he went as far as to qualify Mexico’s middle class as “aspirational without moral scruples.”[53] This belies another misunderstanding of the Mexican electorate: it is much more diverse, complex and intuitive than the political class and many citizens assume.[54]
This also underlines one of the President’s key flaws: to not fully understand the country he is governing. If one remounts themselves to the 1970’s, a full quarter of the population was illiterate (now about 5%), one of the reasons Mexico’s peso bills have traditionally been of different colors and Mexico City’s metro stations identify by both their written name and their individualized logos. In 1970, the middle class may have accounted for 25% of the population; by 2010, it was 42.5%.[55] This of course is Mexico’s middle class, which may in many aspects not compare with that of the U.S. or Europe, when comparing standards of living, but it does reflect middle class expectations, and economic potential and participation in the internal market.
In this context, one overall irony of AMLO’s administration, therefore, will be that, while he profoundly distrusts civil society, his attacks on Mexico’s democratic institutions have been the sole principal factor and driver behind a highly relevant mobilization of civil society to protect such institutions the likes of which we had yet not seen until this Administration.[56]
A Curious Connotation of Corruption
“You are entitled to your opinion. But you are not entitled to your own facts.”
-?????? Daniel Patrick Moynihan
AMLO’s accusations of corruption towards individuals he groups as “our adversaries” or Mexico’s institutions, have been manifold, but his proof of his accusations, beyond commonplace affirmations or generic innuendo, seems inexistent.
Probably most notably, because it was the initial decision that will permanently mark his administration with a question mark, was his alleged motivation to cancel the new Mexico City International Airport based on the corruption supposedly involved. This cancellation went through although the project was 35% advanced upon the initiation of his administration and it promised to be an international hub with a competitive potential of the airports of Miami, Dallas-Fort Worth or Panama City’s airport. It is now a common-known fact that his allegations of corruption have similarly never been proven. The true motivation probably lies in that the president could not countenance a key, highly visible piece of permanent infrastructure and economic growth being identified as a success story of administrations prior to his own.
And so it goes with the approach to any individual, organization or government-organized structure that finds itself in the President’s eyesight, and can in anyway be a counterweight, put the President’s Administration in bad light or simply be an inconvenience. Trusts set up to finance academic R+D were said to be corrupt; none was proven. The Federal Judiciary is, of course, said to be plainly corrupted. Independent agencies are said to be at the service of “the hierarchy”. The effective distribution system of health products was considered “corrupt” because it catered to the public health system, and was cancelled in short order (generating a shortage of health products that has lasted the whole Administration). Etc.
This is not without irony; as we have seen, the white handkerchief is no substitute for institutional design to fight corruption, something that has entirely stalled in this Administration. And, as is usual with a populist, accusations tend to boomerang. Take, for example, the recent cancellation of bidding to private contractors for federal highway repair and maintenance, and the assignment of the task to the military; according to the president, “if that same work goes to contactors, it won’t 1,000, but rather it will be 2,000, it will be 3,000 or 4,000, or 5,000 and it won’t be done in a year: in two years, in three, in four, or it’s not done at all, because they take even the down-payment. Then, let them go steal elsewhere. That is over.”[57] The irony cannot be lost: he could have been referring to the construction of Dos Bocas refinery or the Tren Maya.
In the end, it would seem that, for the President, what is not under his control —any significant governmental structure or program that does not hail from his drawing board— is “corrupt”. As such, it becomes another factor cancelling civic discourse between his government, on the one hand, the opposition, the media and the population at large, on the other, and the opportunity to use a fruitful exchange of ideas and positions as the means to better and perfect Mexican government, governance, Rule of Law —a concept characteristically absent from the populist rhetoric— and institutions.
CONCLUSIONS
Morena’s ironic gift: a blueprint towards perfecting Mexico’s institutionalism
One of the ironies of the official party’s assault over this administration of the institutions Mexico developed in the 1994-2018 period is that such manipulation of the rules and effort to suppress or alter them lays out a roadmap to protecting Mexico’s institutionalism.
Here, a note is important, as regards the function and characteristics of Mexico’s Constitution plays in the country’s institutional life.
A noted intellectual, Gabriel Zaid, recently observed the detailed and extensive text of Mexico’s Constitution, noting such characteristics make it unwieldly to handle and difficult to understand.[58]While such characteristics are indeed true, they are a reflection of the nation’s temperament, the political class, and the need to have certain references actually stabilized above ordinary law as State policy. This leaves important legal premises outside the purview of the administrative scope of action of the government in turn, which, as stated, will often see their agenda as a justification to trump law. The complexity is not necessarily an impediment to Constitutional efficacy: different interest groups know where to look for Constitutional support, and how to litigate such constitutional norms before the Federal Judiciary. Indeed, its complexity notwithstanding, the convoluted constitutional text has its intended effect and is a living document.
Now, having seen the abuse of constitutional law management to debilitate constitutionally established institutions, it would actually be advisable to see established in the Constitution aspects such as the following:
·????? Members of the Supreme Court and of the constitutional independent agencies, such as the electoral authority or the anti-trust watchdog, should remain on their seats, even after their term has run, until their substitute is elected by Congress.
·????? As regards the designation of Supreme Court justices, the President should be limited to two opportunities of submitting slates of three candidates for election by the Senate.
A failure of the Senate to elect the President’s nominees should be taken as a failure of the President to select ideal candidates for Supreme Court service, and therefore the selection of the new justice should be left exclusively to the Senate, requiring nominations from each represented party and a consensus of a two-thirds majority. A President should not be rewarded with the ability to select a Justice of the Supreme Court when acting cynically, or out of ineptitude or perfidy.
·????? Budgeting must be established on the basis of objective analysis, and no governmental act should be authorized without the adequate budgetary support, thereby impeding capricious budgetary assaults on independent governmental instances.
·????? Minimum budget guarantees for such independent institutions and the Federal Judiciary should be established in the Constitution.
·????? Salaries in the bureaucracy must be indexed to a middle-class standard, with individual safeguards against salary cuts, that makes a long-term, civil service career attractive for individuals trained in the liberal and other relevant professions.
·????? The recall election mechanism was deliberately set up, in a great degree due to the na?veté of the political opposition, in 2019, with ambiguous terminology, allowing it to be used as a presidential promotion mechanism of “ratification”, instead of an authentic mechanism to get rid of elected, but visibly corrupt or incompetent officials that have in a short term lost the trust of a very significant part of the public. This allowed for one such self-promotion farce of the President in 2021 at public expense.[59] Thus, the recall election mechanism should be expressly reformulated to proceed on the basis of a loss of trust, and not as a state-funded, personality-cult promotional device. (Note that a resentful political movement could still use this device to attack a competent, loyal incumbent).
·????? Military administration of civil matters should be exceptional in duration, and authorized only by Congressional decree issued by a two thirds qualified majority of both chambers of Congress.
·????? The Presidential press representation must be accountable for any falsehoods issued out of the Presidency, and a right of reply out of the same venue using public resources and guaranteed equal diffusion by media must be established when individual citizens or institutions are attacked from such instance by the President.
领英推荐
·????? It may be wise to bring up the qualified majority requirement for voting constitutional change for essential aspects of Mexico’s institutionalism to a 75% majority in each chamber of Congress, to avoid a one-off, cross-roads majority being able to undo so much that generations of prior Mexicans have achieved.
In a nutshell: one may see how the populist government has used the law to coopt or undermine institutions and the Mexican system of checks & balances, and one will know what parts of the design need strengthening and tweaking to protect Mexico’s democracy and institutions.
Conclusion: So, what may a continuing populist trend in Mexico mean for business in the country?
An incumbent Supreme Court Minister has eloquently described Mexico’s current institutional challenges to their permanency thus:
“We find ourselves at a crossroads. As so many other times in our history, we are asked to choose between two roads: the continuity, the consolidation and the perfecting of our institutions or their complete demolition […] .The tree of democracy requires time to mature and requires time to begin to render its fruits and its trunk is not yet sufficiently robust to withstand the onslaughts of populist rhetoric that pretend to portray it as a true obstacle to a new project of a nation … in the last years this onslaught, which began as a relatively moderate gale, has reached cyclonic proportions from all the public tribunes that, given their nature, the branches of government have developed; declamations to discredit the labor of courts sound one day so and so another. … When the Executive of the country, from a privileged pulpit, portrays the judiciary personnel as part of an elite detached from the people, lacking in legitimacy, … any effort at defense is inadequate and insufficient”.[60]
On June 2, 2024, Mexico will hold its largest elections to date. A new president will be elected, and so will the full federal Congress, as well as numerous governorships, state legislatures and lesser elected officials. At stake are essentially two government models: either the continuation of the institutional government model for a democratic, open society slowly built up between 1994 and 2018, which acknowledges and builds on the nation's achievements over the last decades, or the president-centric model with much of the efficiency of governmental agenda depending on the energies, talents, areas of interest and field of vision of a few elected officials, the populist stirring and exploitation of the country's post-colonial complexes & insecurities, a diluted system of checks & balances, a dysfunctional & one-way civil discourse, and a subdued, pliant role left to play by Congress and the Judiciary.
Should a populist regime be generally elected, yet without a sufficient qualified majority to amend the Constitution to the regime’s will, it is likely a pliant four Minister minority in the Supreme Court will be eventually achieved by a populist president —indeed, the new president will already be in position to nominate new Ministers to the Supreme Court as of December of this year. This will impede the Court from generally annulling unconstitutional measures provoked deliberately by the new government, as such annulment requires an eight Minister majority (out of 11 Ministers). Although individual constitutional litigation called amparo does not require such qualified majority of Ministers for constitutional relief, and individual measures shall be able to challenge attacks on Mexico’s institutionalism, institutionalism shall still suffer. In the opposite scenario, should a generally pro-institution government be elected, the populist party will resist and block the strengthening of Mexico’s current institutions, so a status quo in their design and efficiency may be expected; clear opportunities to strengthen and refine them shall not prosper.
What this means for business is an inertial continuation of the current context, with the uncertainty that attaches for infrastructure development, energy availability, private property reliability of very long-term investments in strategic areas, corruption, security and Rule of Law. The current Administration’s dilution of Mexico’s institutionalism as regards conduct of business shall be felt for a long time: the learning curve for a new professional bureaucracy will unto itself lend important challenges to a smooth operation of government and business. The scope of Mexico’s position in Mexico’s full potential shall therefore remain untapped. This includes, of course, the nearshoring potential. The country’s size, internal market and regional & international supply chain position shall continue to motor the country forward. FDI shall continue to arrive or be reinvested[61], but growth will be moderate and fresh investments will of necessity continue to ponder whether Mexico is the best jurisdiction for new projects. The almost there, should be there, but can’t get there pathos —so familiar to so many generations of hardworking, private independent citizen Mexicans— and the three blind mice political class may well continue.
END
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Statistical Summary
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[1] Adrián Espallargas, “El coronavirus vino ?como anillo al dedo? a México para afianzar su transformación, dice López Obrador”, ABC, April 3, 2020. (https://www.abc.es/internacional/abci-coronavirus-vino-como-anillo-dedo-mexico-para-afianzar-transformacion-dice-lopez-obrador-202004031552_noticia.html )
[2] Jon Martín Cullell, “México es el país emergente que menos estímulos dedica frente a la crisis del coronavirus”, El País, Oct. 14, 2020. (https://elpais.com/mexico/2020-10-14/la-debilidad-de-los-estimulos-fiscales-ante-la-crisis-situa-a-mexico-a-la-cola-de-los-paises-emergentes.html )
Leticia Hernández, “México está entre los 5 países de Latinoamérica que menos recursos destina a contener crisis por COVID-19”, El Financiero, July 13, 2020. (https://www.elfinanciero.com.mx/economia/mexico-esta-entre-los-5-paises-de-latinoamerica-que-menos-recursos-destina-a-contener-crisis-por-covid-19/ )
Christian Tellez, “Solo 7.8% de las empresas recibió apoyo por COVID-19”, El Financiero, July 23, 2020. (https://www.elfinanciero.com.mx/economia/covid-19-afecto-al-93-de-las-empresas-mexicanas-segun-encuesta-de-inegi/ )
[3] “AMLO sugiere un 'Quién es quién' para empresas que despidan a trabajadores durante emergencia sanitaria”, El Financiero, April 1, 2020. (https://www.elfinanciero.com.mx/nacional/amlo-plantea-un-quien-es-quien-para-senalar-a-empresas-que-despidan-a-empleados-durante-emergencia-sanitaria/ ) Not all in his party were of the same mind early on in the pandemic; see: Víctor Chávez, “Morena se suma a la oposición y pide apoyo urgente a empresas por COVID-19”, El Financiero, March 22, 2020. (https://www.elfinanciero.com.mx/nacional/morena-se-suma-a-la-oposicion-y-pide-apoyo-urgente-a-empresas-por-covid-19/ )
[5] Enrique Quintana, “Las recomendaciones de AMLO … ?a Claudia”, El Financiero, Feb. 22, 2024, page 2.
[6] ”SAT registra crecimiento en la recaudación de 12.3% en el 2023, pero se queda corta”, El Economista, Jan. 15, 2024.
[7] Cfr., “Desocupación llega a mínimos al cierre de 2023 por formalidad”, El Financiero, Feb. 27, 2024, page 4: according to this source, at the close of 2023, 32.5 million employmees worked in the informal sector of the economy, while 26.9 million worked in the formal sector of the economy.
“Informalidad en el mercado laboral cerró el 2023 por debajo de 55%”, El Economista, March 27, 2024, page 1.
On purchase power parity (PPP) estimate for 2023 is of $2.67 trillion.
[9] “México deja ir oportunidades de nearshoring: Embajada de EU”. El Financiero, March 22, 2024, page 1. See also, for example, the op-ed: Enrique Campos Suárez, “Romper el lastre del nearshoring”. El Economista, March 21, 2024.
[10] Jassiel Valdelamar, “EU buscará bloquear autos eléctricos chinos fabricados en México”, El Financiero, April 4 , 2024. (https://www.elfinanciero.com.mx/economia/2024/04/04/buscara-eu-bloquear-autos-electricos-chinos-desde-mexico/ )
Jassiel Valdelamar, “Triangula China desde México a EU, advierten”, El Financiero, April 12, 2024, page 9.
[11] “Nearshoring agregará 1.5 puntos del PIB adicional al crecimiento: IFC del Banco Mundial”, El Economista, Nov. 30, 2023.
[12] Diario Oficial de la Federación, Oct. 11, 2024.
[13] “Decreto de fomento a exportaciones, bajo la lupa a la luz del T-MEC”, El Economista, Oct. 11, 2023.
[14] For example, as regards nearshoring potential: “Jalisco podría captar hasta 35% de la inversión por nearshoring”, El Economista, March 21, 2024, page 32.
In the same edition, as regards missing conditions: “Iniciativa privada de CDMX, preocupada por falta de propuestas sobre nearshoring”, El Economista, March 21, 2024, page 33.
See also, on concern for missing conditions or unattended nearshoring potential, for example:
“Falta de infraestructura eléctrica frenaría IED: INDEX”. El Economista, March 5, 2024, páge 37.
“México no aprovecha ola del nearshoring, afirman economistas”. El Financiero, March 20, 2024, page 5, noting there is still more reinvestment of profits that fresh capital investment, as regards direct foreign investment in Mexico. Similarly: “Nueva inversion, en su nivel más bajo desde 1999”, El Financiero, February 16, 2024, page 5, noting that only 7% of the potential is being taken advantage of.
“México no tiene una estrategia integral ante el nearshoring: Comce”, El Economista, Nov. 21, 2023.
“Pide IP certeza regulatoria ante nearshoring”, El Financiero, March 20, 2024, page 10, further noting sustainability is key for relocation.
[15] Felipe Gazcón, “Banco Mundial duda de impacto del ‘nearshoring’ en México”, El Financiero, April 11, 2024. (https://www.elfinanciero.com.mx/economia/2024/04/11/banco-mundial-duda-de-impacto-del-nearshoring-en-mexico/ )
[16] Yolanda Morales, “México, un beneficiado del proceso mundial de fragmentación: K. Georgieva”, El Economista, April 19, 2024, page 39.
See also: Yolanda Morales, “’Varios países de AAL pueden aprovechar el nearshoring’”, El Economista, April 19, 2024, page 39.
[17] Lilia González, “CCE alista estrategia para aprovechar el nearshoring y crecer al 5% anual”, El Economista, April 2, 2024. (https://www.eleconomista.com.mx/empresas/CCE-alista-estrategia-para-aprovechar-el-nearshoring-y-crecer-al-5-anual-20240402-0073.html )
Raúl Castro-Lebrija, “CCE presentará a nuevo presidente propuesta de política industrial”, Revista Fortuna, April 2, 2024. (https://revistafortuna.com.mx/2024/04/02/cce-presentara-a-nuevo-presidente-propuesta-de-politica-industrial/ )
The publication presented by the CCE is: Arturo Oropeza García, (Coordinator), Nearshoring: La oportunidad de un nuevo Desarrollo económico y social para México. Universidad Nacional Autónoma de México / Instituto de Investigaciones Jurídicas, México, 2024); see the publication at: https://cce.org.mx/wp-content/uploads/2024/04/NEARSHORING_libro_version_digital_060224.pdf
[18] Enrique Campos Suárez: “Estados Unidos insiste: no es nearshoring, es friendshoring”, El Economista, Dec. 13, 2023, and “Romper el lastre del nearshoring”, El Economista, March 21, 2024.
[19] See, for example: Mohamed El-Erian, “From near-shoring to friend-shoring: the changing face of globalization”, The Guardian, March 9, 2023; as regards Mexico, this author indicates: “While this process will produce winners and losers, their identity will depend to a significant extent on how policymakers adapt to the global economy’s new operating model.?Mexico , for example, stands to gain from US friend-shoring, as well as the corporate sector’s shift to more diversified supply chains. Yet, as the Mexican government itself has recognised, notional demand will not be translated into effective demand unless policymakers accelerate progress on infrastructure, clean energy, deregulation, and the like.”
See also: “Es lo mismo nearshoring que allyshoring”, https://cegresados.udlap.mx/es-lo-mismo-nearshoring-que-allyshoring/
[20] Felipe Gazcón, “México es un aliado de EU en ‘friendshoring’: Janet Yellen”, El Financiero, Dec. 7, 2023.
[21] See, for example: Fausto Pretelín Mu?oz de Cote, “Relación de AMLO con EU: operativa, nunca diplomática”, El Economista, Feb. 28, 2024.
[22] William L. Patch, Jr., Heinrich Brüning and the Dissolution of the Weimar Republic. Cambridge, 1998, pages 228-9, as cited by Richard J. Evans, The Coming of the Third Reich. The Penguin Press, New York, 2004, page, 274, in turn as cited by Peter Ross Range, The Unfathomable Ascent. Little, Brown, New York, 2020, page 241.
[23] “AMLO contra la ONU: ?Cuántas veces la ha calificado de ‘florero’ y por qué?”, El Financiero, April 16, 2024. (https://www.elfinanciero.com.mx/nacional/2024/04/16/amlo-contra-la-onu-cuantas-veces-la-ha-calificado-de-florero-y-por-que/ )
[24] Diana Benítez, “AMLO va por eliminar entes autónomos y ataca a “ministros cretinos’”, El Financiero, Dec. 12, 2023, page 32 (and see page 1).
[25] Elías Camhaji, “López Obrador lanza una nueva cruzada contra los organismos autónomos y anuncia que buscará eliminarlos”, Jan. 18, 2024. (https://elpais.com/mexico/2024-01-18/lopez-obrador-lanza-una-nueva-cruzada-contra-los-organismos-autonomos-y-anuncia-que-buscara-eliminarlos.html# )
[26] “Retroceso y violación al T-MEC, si eliminan organismos: expertos”, El Financiero, Dec. 12, 2023, page 4 (and see page 1).
[27] “Los funcionarios de mi administración deben tener 90% honestidad y 10% experiencia: AMLO”, El Universal, Nov 28, 2019. (https://www.eluniversal.com.mx/nacion/los-servidores-de-mi-administracion-deben-tener-90-honestidad-y-10-experiencia-amlo/ )
[28] For a summary of these proposed amendments, see: Carlos E. Lucio, “La demolición de la democracia mexicana en 4 cortos pasos?(y 2 bolas rápidas): Aspectos principales de la Iniciativa Político-Electoral del Presidente”. (https://medium.com/@CarlosELucio/la-demolición-de-la-democracia-mexicana-en-4-cortos-pasos-3c7563370e54 )
[29] Rolando Ramos, “Invalida la SCJN el ‘plan B’ electoral de AMLO”, El Economista, June, 22, 2023. (https://www.eleconomista.com.mx/politica/La-Suprema-Corte-declara-la-invalidez-del-plan-B-electoral-de-AMLO-20230622-0047.html )
[30] “Se le acaba el abecedario: Este es el ‘Plan C’ de AMLO para una reforma electoral”, El Financiero, May 9, 2023. (https://www.elfinanciero.com.mx/nacional/2023/05/09/se-le-acaba-el-abecedario-este-es-el-plan-c-de-amlo-para-una-reforma-electoral/ )
[31] “The Freedom of Information Act (FOIA)?gives any person the right to request access to records of the Executive Branch of the United States Government. The records requested must be disclosed unless they are protected by one or more of the exempt categories of information found in the FOIA.”
As cited in:
[32] Art. 105, section II, subsection h), of the Federal Constitution.
[33] An emblematic reference to the difference between open, democratic and closed, opaque government is how the Soviet government dealt with the Chernobyl disaster in 1986, with Western European governments taking action to protect their populations even before the more directly affected Eastern European populations. As Ronald Reagan noted at the time: “The contrast between the leaders of free nations meeting at the summit [in Japan] to deal openly with common concerns and the Soviet government, with its secrecy and stubborn refusal to inform the international community of the common danger from [the Chernobyl] disaster, is stark and clear.”
[34] Arturo Rojas, “SCJN avala que Inai sesione con cuatro comisionados”, El Economista, Aug. 24, 2023. (https://www.eleconomista.com.mx/politica/SCJN-avala-que-Inai-sesione-con-cuatro-comisionados-20230824-0002.html )
[35] “Sheinbaum propone una “simplificación administrativa” para desaparecer al Inai”, López Dóriga Digital, April 1, 2024. (https://lopezdoriga.com/nacional/sheinbaum-propone-simplificacion-administrativa-desaparecer-inai/ )
[36] Pedro Hiriart, “Victoria para AMLO: Corte considera constitucional que Ley Eléctrica beneficie a CFE”, El Financiero, April 7, 2022.
The full quote is: “Que no me vengan a mí con que la ley es la ley, que no vengan con ese cuento de que la ley es la ley. No, lo que se va a demostrar es si son abogados que defienden el interés público o son abogados patronales, empresariales”. [“Don’t come to me with that the law is the law, don’t come to me with that story that the law is the law. No, what they are going to prove is whether they are attorneys that defend the public interest or they are company attorneys, business attorneys”.]
[37] Article 97, fifth paragraph, of the Federal Constitution.
[38] Fernando Gutiérrez, “Unidad de Inteligencia Financiera denuncia a Eduardo Medina Mora por triangulación de recursos”, El Economista, Oct. 5, 2019. (https://www.eleconomista.com.mx/politica/Unidad-de-Inteligencia-Financiera-denuncia-a-Eduardo-Medina-Mora-por-triangulacion-de-recursos-20191004-0061.html )
[39] Financial Times / Michael Stott, “La justicia en América Latina convierte la ley en un arma”, publish in El Financiero, April 8, 2021. (https://www.elfinanciero.com.mx/financial-times/2021/04/08/la-justicia-en-america-latina-convierte-la-ley-en-un-arma/ )
[40] Ana Margarita Ríos Farjat and Juan Luis González Alcántara Carrancá.
[41] See, for example: Daniela Wachauf, “Intelectuales, políticos y organizaciones condenan ataques a la ministra Norma Lucía Pi?a”, El Universal, March 19, 2023. (https://www.eluniversal.com.mx/nacion/intelectuales-politicos-y-organizaciones-condenan-ataques-la-ministra-norma-lucia-pina/ )
[42] Diana Benítez, “Sin carrera judicial ni académica, Lenia Batres va a la Suprema Corte”, El Financiero, Dec. 15, 2023. (https://www.elfinanciero.com.mx/nacional/2023/12/15/sin-carrera-judicial-ni-academica-lenia-batres-va-a-la-suprema-corte/ )
[43] “Ministra ‘carnala’: Lenia Batres, hermana de jefe de Gobierno, llegará a la Corte”, El Financiero, Dec. 14, 2023. (https://www.elfinanciero.com.mx/nacional/2023/12/14/ministra-carnala-lenia-batres-hermana-de-jefe-de-gobierno-llegara-a-la-corte/ )
[44] “Lenia Batres asume cargo de ministra y acusa a la SCJN de ‘extralimitarse’”, Forbes, Jan. 4, 2024. (https://www.forbes.com.mx/lenia-batres-asume-cargo-de-ministra-y-acusa-a-la-scjn-de-extralimitarse/ )
“Corte responde a ministra Lenia Batres que por ley no puede inscribirla al ISSSTE ni bajarle el salario”, Animal Político, Jan. 8, 2024. (https://animalpolitico.com/politica/corte-lenia-batres-por-ley-no-puede-inscribirla-issste-bajarle-salario )
[45] Pedro Hiriart, “México en encrucijada: “Fortalecer instituciones o demolerlas por completo”, El Financiero, April 17, 2024, page 32.
[46] “Eduardo Ortega, “Avanza reforma para maniatar al Poder Judicial de la Federación ante leyes inconstitutionales”, El Financiero, April 11, 2024, page 30.
[47] Eduardo Ortega, “En fast track, Senado aprueba reformas a Ley de Amparo; ‘no se podrán frenar obras’”, elifn, April 18, 2024, page 39.
[48] See graphics in: Alejandro Moreno, “AMLO cumple su quinto a?o con 56% de aprobación: Encuesta EF”, El Financiero, Dec. 4, 2023. (https://www.elfinanciero.com.mx/nacional/2023/12/04/amlo-cumple-su-quinto-ano-con-56-de-aprobacion/ )
[49] Referred to in: Adam Higginbotham, Midnight in Chernobyl. Simon & Schuster, New York, 2019, page 201; full citation checked in: Jack Nelson, “Reagan Criticizes Disaster Secrecy : Soviets ‘Owe World an Explanation’ for Chernobyl Blast, President Says”, Los Angeles Times, May 4, 1986 (https://www.latimes.com/archives/la-xpm-1986-05-04-mn-3685-story.html )
[52] Esther Herrera, “?Hay vida después del INADEM?”, El Financiero, June 18, 2019. (https://www.elfinanciero.com.mx/monterrey/hay-vida-despues-del-inadem/ )
[53] “López Obrador arrecia su ataque contra la clase media “aspiracionista””, Los Angeles Times, June 21, 2021; “López Obrador reitera que la clase media es de “aspiracionistas sin escrúpulos morales””, El Economista, June 14, 2021.
[54] Cfr., Ciro Murayama, “El electorado mexicano: racionalidad y complejidad”, El Financiero, April 10, 2024, page 28.
[55] Notimex, “Aumenta clase media en México: INEGI”, El Economista, June 12, 2013. (https://www.eleconomista.com.mx/politica/Aumenta-clase-media-en-Mexico-INEGI-20130612-0064.html )
[56] See, for example: “Sube la marea rosa por encima de las cifras oficiales”, El Financiero, Feb. 27, 2023. (https://www.elfinanciero.com.mx/opinion/confidencial/2023/02/27/sube-la-marea-rosa-por-encima-de-las-cifras-oficiales/ )
[57] “Si esa misma obra se entrega a contratistas, ya no son 1,000, ni son 2,000, son 3,000 o 4,000, o 5,000 y ya no se hace en un a?o: en dos a?os, en tres, en cuatro, o no se hace, porque se llevan hasta el anticipo. Entonces, que se vayan a robar más lejos. Ya eso se acabó”
?
[58] See: Gabriel Zaid, “Estabilizar la Constitución”, Letras Libres, Dec. 22, 2022.
[59] Cfr., Carlos E. Lucio, “Por qué no voté el 10 de abril”, April 17, 2022. (https://medium.com/@CarlosELucio/por-qué-no-voté-el-10-de-abril-6b8c3d3beab9 )
[60] See note 157.
[61] Enrique Quintana, “La apuesta por el país, al margen de la elección”, El Financiero, April 11, 2024, page 2.