Manuel Suárez Mier †
*This was originally published on May 29, 2019, by the Asia Times.
This is the first of a two-part series on Mexican President Andrés Manuel López Obrador’s first six months in office.
Just as the new president of Mexico, Andrés Manuel López Obrador, also known as AMLO, was about to be inaugurated six months ago, I wrote in this space (Asia Times November 29, 2018, published by Sepgra on February 23, 2022)** about the costs that his misguided and rash decisions had already imposed on the country even before he formally took the oath of office.
After a half a year on the job, there is no doubt that he is persevering in installing a personal fiefdom, imposing broad government control of the economy, obliterating independent institutions, and relentlessly attacking the press, the checks, and balances that allow democracy to function. His tenure will lead the country to complete disaster.
Super delegates
The method AMLO devised to neuter Mexico’s federal pact is by personally naming “super-delegates” in each state to oversee the disbursing of all federal budget funding. The government officials allocate funds directly to the specific spending projects of the central government, circumventing the mandate of locally elected governors, a scheme which violates the laws that regulate the budgeting and spending processes between the states and the federal government.
The “super-delegates” have become de-facto local officials but respond only to AMLO. They have not been popularly elected for anything and are in all cases politicians that belong to AMLO’s National Regeneration Movement political party, popularly known as Morena. The idea is that by the time there are elections for governor in the states, these loyal followers with the checkbooks at their disposal will be in an unbeatable position to win governorships.
Supreme Court and Congress
In the case of the Supreme Court, AMLO has already been able to name three loyal partisans to serve on the eleven-member bench. Under the Mexican system, justices on the high court serve terms limited to 15 years and there were several vacancies when he took office.
A qualified majority of the Senate is needed to approve nominees for the court, but the catch is that if it rejects them twice, as was the case with AMLO’s candidates, the president can name them directly, which is exactly what he did.
The competence of the new justices was questioned by legal experts and the likelihood of conflict of interest was highlighted. One of the newly appointed justices is the wife of AMLO’s favorite contractor and main opponent to the construction of the long-planned, and now-canceled, new Mexico City airport. The cancellation will cost the country around $500 billion, or 4% of GDP.
AMLO already has a majority in Congress, which has helped him pass most of the laws that he has proposed, but his party, Morena, continues to lure opposition legislators into its fold with all sorts of “inducements.” The efforts may succeed in creating a Morena super-majority that would allow AMLO to modify the Constitution at will.
Control over military
In order to acquire an effective control over the armed forces, which he badmouthed and even insulted throughout his decades-long political campaign, he has entrusted them with enormous power and responsibilities, unheard of in a democratic republic. They are now in charge of creating a new National Guard, nominally under civilian authority, which will combine personnel of the military police forces with that of the federal police, a civilian corps years in the making that is being terminated.
The armed forces will also be directly in charge of building a new airport in the main air force base in the country, some 50 kilometers away from the old Mexico City airport, which also will continue to serve, despite its decrepitude and conflicting air space with the proposed new airport.
They are being entrusted too with the development of a huge piece of land in Mexico City that was part of the largest army installation in the center of the country. The use of the military in civilian tasks on top of lucrative jobs for the top brass were taken from Hugo Chavez’ playbook in Venezuela, an effective tool to neutralize their potential opposition to the regime.
Undermining independent institutions
AMLO has also undertaken what is, so far, a sideways assault on the many autonomous entities created in recent years to ensure a level playing field between a powerful government, civil society, and the private sector.
The Mexican president hates such organizations because they are independent and he has harassed them by lowering salaries drastically. He began dismembering the Energy Regulatory Commission, the arbiter in the oil and electricity sectors between the new private sector participants, state monopolies and the government, by naming inept candidates – also rejected twice by the Senate – to fill vacancies.
He has similar intentions with the electoral authority that finally rendered Mexican elections credible and fraud-free; the telecommunications regulator, in charge of ensuring equal access and competition in the sector; the human rights commission, which has played a crucial role in defending individuals against government abuse and misuse of power; and particularly, the entity in charge of assuring government transparency that AMLO blames of being “an accomplice to the neoliberal corrupt regimes.”
He has been more careful with the country’s central bank, a cornerstone of the country’s economic stability in the last 25 years, but he has already named two of its five governors. Although they are regarded generally as competent economists, they are not experts in monetary policy.
Without the checks and balances of an independent judiciary, Congress, state governors and local authorities, autonomous entities and a free press, the newly-empowered executive in Mexico is continuing to consolidate power and is resorting to the armed forces for non-military objectives. It is the perfect recipe for a debacle.
**https://asiatimes.com/2018/11/new-president-plots-a-course-of-economic-suicide/?_=7994498. https://sepgra.com/new-president-plots-course-of-economic-suicide/
The Demolition of Mexico’s Economy and Democracy (II)*
Manuel Suárez Mier †
*This was originally published on May 30, 2019, by the Asia Times.
This is the second of a two-part examination of the administration of Mexican President Andrés Manuel López Obrador
Yesterday, I wrote about Mexican President Andrés Manuel López Obrador’s (AMLO) efforts since he took office last December to consolidate power and undermine the country’s democratic institutions. In this second installment, I detail the scale of incompetence evident in his administration as well as his doomed security and economic policies.
An increasingly inept administration
AMLO has said that the ills of Mexico stem from a “neoliberal” economic model, which he asserts has ruled the country since 1983. As such, one of his first priorities was to get rid of the “patrician” technocrats by firing them directly, in most cases breaking prevailing labor laws.
He has also decreed that no one in the public sector can earn more than the president, including employees of the federal government, as well as members of Congress, the judiciary, state-owned enterprises and autonomous state entities. At the same time he lowered his own salary to US$5,596 per month (at the prevailing exchange rate at the time of writing).
As was to be predicted, that edict meant that thousands of well-paid and highly competent technocrats, most of them with degrees from the best universities of the world, left the public sector and many also left the country.
On top of the devastating loss of human capital, the new government has placed patently incompetent – but loyal – apparatchiks in virtually all high-ranking jobs in the public sector. One example suffices to illustrate this disaster: the chairmanship of Pemex, Mexico’s oil conglomerate and the country’s largest corporation, was entrusted to AMLO’s old pal Octavio Romero, an agronomist from a fourth-tier provincial university in Tabasco, the home state of AMLO.
The list of inept or sinister characters that populate this administration is unprecedented and it has already had dire consequences for the country and its economy. Those that are somewhat competent – though not when compared to previous administrations – are overwhelmed or, worse, charged with impossible tasks for which they do not have the personnel, talent or resources to achieve. A few examples illustrate this situation.
All the purchases of the public sector have been centralized in the Secretary of Finance’s office of administration (Oficialía Mayor, in Spanish), which represents a huge bottleneck for a well-functioning economy. Some of the results have been devastating:
- – The country had severe gasoline shortages at the pump level in January and February because the order to import the necessary amounts was rescinded by someone who didn’t understand the consequences. AMLO used the real problem of illegal extractions from pipelines as a cover, but it had nothing to do with the lack of fuel.
- – For more than a month earlier this year the splinter union of teachers – not its main union, the SNTE, but a highly radicalized faction of rebellious teachers with a stronghold in the poorest states – decided to block the passage of railroads near several crucial seaports, causing billions of dollars in losses to business. After failing to limit the damage, the government caved in to demands that have dashed the hope of much-needed education reform.
- – Only two weeks ago, Mexico City, which has a long record of severe pollution due to its geography, was choked with the worst air in its history as the result of the dry season and an unusual proliferation of forest fires. It turned out that the Ministry of Finance had cut the budget to entities in charge of firefighting and the special program to hire extra workers just when the fire season was arriving. Hasty and misguided cost-saving such as this has been used to fund AMLO’s populist hand-outs and pet infrastructure projects.
- – Just last week the CEO of the Social Security Institute – the IMSS is an institution that doubles as medical-care provider and pension fund – resigned with a nine-page letter where he describes in detail how the IMSS budget was mercilessly axed, making an already mediocre service provider much worse. Other health sector entities have suffered a similar fate and the country is now facing a crisis of scarcity of medical attention and supplies.
Doomed security and anti-corruption policies
In his eagerness to change everything, AMLO decided to destroy 18 years of experience in developing a national police force capable of restoring security to the nation and invented, instead, a national guard that is nominally a civilian force but will be run by the military.
The force is organized like the army and most of its members will come from the military. The operational logic of this new force is designed to be territorial and not functional, very much like how military bases are deployed throughout the country. There is no mention of units performing key jobs of intelligence, investigation and forensic science, as in the now-defunct federal police.
There are no incentives for the state and local police forces to improve, and some experts believe that this will lead to a substitution of the local forces by the National Guard, entailing more centralization. The civilian command of the guard is in the hands of one politician with no relevant experience to speak of.
One of AMLO’s guiding principles is not to fight transnational criminal organizations since he attributes their rising power to the precarious economic conditions that resulted in poverty in many parts of the country. He expects, in return for a de facto truce with drug cartels, a decrease in violence. So far, he has fulfilled his part of the deal, while organized crime has increased its activities rendering the first semester of AMLO’s tenure as the bloodiest in the country’s history.
Regarding corruption, AMLO’s attitude is equally naïve. Since he declares himself to be personally honest, that means that everyone around him must be the same. Meanwhile, 85% of the contracts of the public sector and its enterprises have been granted to suppliers without competitive bidding, far more than any previous administration.
With this careless procurement process, much lower salaries for the bureaucracy and no transparency or oversight mechanisms, corruption is sure to flourish as never before.
How is the economy doing?
All the indicators are that the economy is screeching to a halt as there is no private investment and government spending is down substantially. The key economic problem is uncertainty, mainly from two sources: lack of confidence in the new administration and its economic strategy, and doubts about the viability that the revised North American Free Trade Agreement will be ratified by the US Congress.
So far, public finances have remained under control, but only due to the savage cutting of spending by slashing salaries, firing people and radically cutting crucial government functions, as illustrated above. But this will not be sufficient to support the spending whims of AMLO and his absurd projects, all of which will demand an increase in resources that will have to come from deficit financing.
While the value of the Mexican peso has remained relatively stable in recent months due to extremely tight monetary policy, that will all change when rating agencies downgrade Mexico and strip it of its investment grade rating. When this happens in the second half of this year, as I expect, the exchange rate will sink as portfolio investment flees the country in massive capital flight.
Opinion polls that gave AMLO an astonishing approval rating of 80% after his first 100 days in office have finally started to fall. As more people suffer the direct consequences of this government’s ineptitude, popular support will surely plummet.
† May He Rest in Peace