Mexico Turns A Corner: Andrés Manuel López Obrador’s Presidency Begins

AMLO transitions from campaigning to governing.

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Leftist politician Andrés Manuel López Obradoris now president-elect of Mexiconow that country’s electoral court hascertifiedthe results of the July elections. The official beginning of the transition period means he will now have to translate campaign promises into concrete policies.

López Obrador — or AMLO, as he is sometimes called in the media — rose to prominence campaigning against violence and corruption, which are rampant in Mexico today. Mexicans backed him and gave his Juntos Haremos Historia coalition a majority in the country’s bicameral legislature. It remains to be seen if he can cooperate with certain new senators that came to power in this election and calm corporate nerves while at the same time pursuing a leftist agenda that includes cutting pensions of politicians and capping the salaries of the Supreme Court justices.

López Obrador at age 64 is a fiery individual but one who has promoted a conciliatory image to unite Mexicans across the political spectrum and worked with the private sector in the past.

“He’s going to start working on the transition period with the current administration that is going to be handing over whatever projects are on the way,” says Rafael Elias, director of Latin America research at Exotix.

With his new government comes a new congress replete with some controversial players — including one who was exiled after stealing money from a miners’ union, another who was jailed for kidnapping but then released on a technicality and a third who threatens to nationalize everything.

“What is going to be interesting is how much of an influence [he] is going to have with these people because obviously he has shown some moderation and has been very active in mending fences with his opponents and with the corporate world,” Elias adds.

The peso’s value has risen in the past month and financial markets seem to think that he will follow through on the previous administration’s fiscal and economic policies that have helped the Mexican economy.

Congress begins on September 1 but López Obrador becomes President on December 1, so the three months in between will be something of a barometer as to whether various members of Congress will go rogue or be team players with the new administration.

All eyes will be on the economy, and the energy sector first and foremost. “The energy sector is one of the sectors where we see the most concern among business owners because there are between $100 billion and $160 billion dollars’ worth of investment expected to come in the next 10 years thanks to the auctions of deepwater fields,” Elias notes.

AMLO hasn’t said in great detail what he intends to do with the auction process but some fear he won’t continue with it—even though the sales are a lucrative source of revenue. The Mexican government received half a billion dollars in cash from auction winners and will reap 70% of the profits derived from the exploitation of the deepwater fields.

Traditional Mexican oil sources will soon be exhausted, according to Elias, and production has fallen. Offshore exploration is the only way the Mexican government can continue to profit from the sector.

During the campaign, López Obrador promised additional infrastructure projects to spur the economy, especially rail transit. “He has mentioned a tourism train that goes through the Yucatan Peninsula linking all the different archaeological sites, [and] a speed train going from Mexico City to Monterrey” Elias says. “Another one is a train and highway that would cross the isthmusjoining the Pacific Ocean to the Atlantic and creating an alternative to the Panama Canal.”

Elias notes that López Obrador hasn’t focused on educational reforms which are important because productivity growth has stagnated despite the economy’s growth in recent years.