MB Civic

Moment of choice for Mexico

By Adam Thomson and Richard Lapper

Published: June 29 2006 20:34 | Last updated: June 29 2006 20:41

It is early evening in Mexico City’s Zócalo, a huge central square flanked by imposing colonial buildings. In a light drizzle, tens of thousands are gathered for the closing act in the presidential campaign of Andrés Manuel López Obrador.

The leftwing candidate in Mexico’s election, which takes place on Sunday, is cheered by farmers with coarse, wrinkled hands waving the golden flags of his Democratic Revolution party (PRD). Pram-pushing mothers hand out pamphlets and, for several blocks around, young and old join hands and celebrate as if their candidate had already pulled off a landslide victory.

If Mr López Obrador does win – and most opinion polls make him the clear frontrunner – he would become the latest in a long line of leftwing leaders to take office in Latin America in recent years (see chronology below). The possibility that Mexico will continue the trend is especially significant: the country has come to perform a vital function in North America’s industrial machine, as a centre for US manufacturing and a source of the cheap labour that is essential to preserve competitiveness, particularly in sectors such as agriculture, construction, tourism and services.

So the question most asked on Wall Street is whether the 52-year-old Mr López Obrador is more like the moderate President Luiz Inácio Lula da Silva of Brazil or Hugo Chávez, the radical – and vehemently anti-American – Venezuelan leader. The truth, however, is that he defies such straightforward categorisation.

Certainly, there is plenty of evidence to support the benign view. Last year Mr López Obrador told the Financial Times in an interview that he understood the importance of economic stability and would do nothing to risk a return to high inflation. “Macroeconomic stability is simply common sense,” he said.

To the delight of international investors, he has repeated that message more frequently in the closing days of the campaign. At the Zócalo on Wednesday, he said: “We are not going to bring about any economic crisis.” The devotees who packed the square may have been mainly working-class but it was clear that Mr López Obrador was addressing a different audience.

His social programme is ambitious – a pension for all elderly Mexicans, free medicine, grants for the handicapped and single mothers and free education for all – but he is pledging to finance it by finding savings rather than increasing borrowing. And he has extended the hand of friendship to the country’s private sector. “Have no fear,” he told business leaders recently. “On the contrary, you are going to do much better than you are doing at the moment.”

Rogelio Ramírez de la O, his chief economic adviser, and Manuel Camacho, another key PRD operator, have been courting the country’s leading businessmen for months. But critics signal areas of concern.

First, they say, there are some worrying aspects to Mr López Obrador’s proposals. One of these, they claim, is that his budgetary numbers do not add up. For example, he has said he would make savings of 100bn pesos ($9bn, £5bn, €7bn) in the first year of his government, much of which would come from slashing public-sector salaries. Yet many economists point out that even the drastic 50 per cent cut in the wages of mid-level and top civil servants he proposes would yield at best only 8bn pesos in savings.

Another is his refusal to honour part of the 1994 trade agreement that paved the way towards closer relations with Mexico’s northern neighbours. In the Zócalo on Wednesday, for example, he repeated his determination to ignore a clause that obliges Mexico to remove by 2008 tariffs that protect local farmers who produce beans and corn. “That clause won’t come into effect,” he declared.

Next, they say Mr López Obrador has scant regard for transparent and accountable government and has at times been prepared to ride roughshod over the legal process if it did not serve his political interests.

His response to questions surrounding the financing and construction of elevated freeways during his five years as Mexico City’s mayor was to place all related documents in a trust, well beyond public scrutiny. He also refused to pay a fine imposed on city authorities in 2003 by a federal judge in relation to a land dispute. By way of justification, he declared: “The law is made for man, not man for the law.”

His history as a militant shows he has no compunction about harnessing the power of the street. During his more than 30-year political career, much of it spent with the Institutional Revolutionary Party (PRI) that ruled Mexico for 71 years, he won a reputation for organising sit-ins at oil wells in his native state of Tabasco and later vast protests in the capital.

All this has led commentators such as Enrique Krauze, a Mexican historian, to conclude that a López Obrador government would return Mexico to the inward-looking policies of the past while his perceived authoritarian style would again concentrate power in the presidency, setting back much of the democratic progress Mexico has achieved during the last decade.

Maybe. But the considerable body of evidence for both interpretations of Mr López Obrador suggests that the new leftwing governments in Latin America are part of a far more complex and cloudy reality.

While many on Wall Street might prefer to divide the region rigidly into Chávez and Lula camps, such convenient certainties cannot be applied to Mexico’s likely new president. That may be of little comfort to investors. But if the euphoric crowds in the Zócalo are right and victory for their hero is within sight, it will not be long before they can start to judge him by his actions in office.

A YEAR OF POLLING DRAMA

November 2005 Left-of-centre Manuel Zelaya wins the presidency in Honduras.

December Hugo Chávez and allies win boycotted Venezuela assembly elections.

December Indigenous leader Evo Morales gains a landslide victory in Bolivia.

January 2006 Moderate socialist Michelle Bachelet becomes Chilean president.

February Oscar Arias of the centre-left National Liberation wins in Costa Rica.

May Alan Garcia of Peru’s centre-left Apra wins a run-off against Ollanta Humala, a radical nationalist and ally of Chávez.

July Andrés Manuel López Obrador heads Mexico polls against centre-right Felipe Calderón and the PRI’s Roberto Madrazo.

October: Luiz Inácio Lula da Silva looks likely to win Brazil’s presidential elections.

November Daniel Ortega could regain power in Nicaragua after 16 years.

November Ecuador presidential elections.

December: In Venezuela Chávez runs again.

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