A growing scandal within Mexico’s state-owned oil company Pemex (Petroleos Mexicanos) is swallowing up key opposition political figures and could be a blessing in disguise for President Andrés Manuel López Obrador.
Emilio Lozoya, former chief executive of the oil giant that represents 6.6 percent of Mexico’s GDP, issued a declaration to the attorney general’s office that implicates three former presidents in a sprawling bribery scheme, along with a slew of other important political figures.[restricted]
Arrested in Spain in January and extradited to Mexico as a protected witness, Mr. Lozoya is accused of receiving USD 10.5 million in bribes from Brazilian construction firm Odebrecht — the company behind a veritable avalanche of corruption in Latin America — between his 2012-2016 term, in exchange for contracts.
Denying the accusations, the businessman agreed to cooperate with the courts, pointing the finger at former Presidents Enrique Peña Nieto, Felipe Calderón, and Carlos Salinas, as well as many other high-ranking politicians in prior administrations. Mr. Lozoya confessed that Odebrecht distributed the money to several representatives during Mr. Peña Nieto’s term, seeking a legal and administrative modification in the country to allow the participation of private companies in the exploration of Mexican oil.
The attorney general’s office stated that the former Pemex chief met “constantly” with Luis Alberto de Meneses Weyll, then-head of Odebrecht in Mexico. In 2016, Odebrecht executives admitted in a plea-bargain agreement that Mexico was one of the 12 countries involved in its bribery schemes.
While the brunt of Mr. Lozoya’s accusations are leveled at the Peña Nieto government, the 60-page statement expresses that Felipe Calderón also established a “solid scheme of corruption” with Odebrecht during his 2006-2012 presidential term. Carlos Salinas, in turn, had allegedly used his lobby influence as president from 1988 to 1994 to benefit his son Juan Cristóban Salinas, who is linked to a company that held business with Pemex.
According to Adolfo Laborde Carranco, an International Relations Professor at Anahuac University in Mexico, though the Pemex case is not the first corruption scandal involving major political figures, the sheer amount of former head honchos means any decision made will cause “many controversies and discrepancies.”
“There is a constitutional vacuum and multiple interpretations [about whether these authorities could end up in prison]. The president says yes, the opposition says no. Therefore, it is possible that, when these cases go ahead in the court, they end up being discussed in Congress or even in public consultations to understand the view of Mexican society toward it,” Mr. Laborde tells The Brazilian Report.
But the possibility of seeing justice done depends on Mexico’s porous court system. A 2020 report by the University of the Américas Puebla (UDLAP) indicated Mexico as having among the highest rates of impunity in the world, ranking the 10th out of 69. In the Americas, only Honduras, Paraguay, and Guyana are classified as worse in this regard.
For some skeptics, there is more chance of Pemex striking more oil than influential politicians being sent to jail by the scandal. “At least this will guide public opinion,” the professor added.
An opening for AMLO?
All of the politicians mentioned by Mr. Lozoya are members of either the Institutional Revolutionary Party (PRI) or the National Action Party (PAN), the two establishment cornerstones in the country which also form the opposition to President López Obrador. Until 2018, when AMLO was elected, the PRI-PAN hegemony ruled Mexico for more than 90 years, from 1920 onwards.
So, the revelations could serve as an opportunity for the president in what has been a tricky period.
As The Brazilian Report showed in March, the Mexican president has been criticized for some of his lax attitudes towards Covid-19. Also, months before completing two years in office, AMLO’s administration has seen an increase in drug cartel violence: in 2019, the country had increased homicide rates, jumping 2.5 percent from 2018.
And last but not least, the Covid-19 crisis will put Mexico into its most severe economic crisis since 1929. The International Monetary Fund slashed its predictions in July, forecasting that Mexican GDP will fall 10.5 percent in 2020.
But seeing his rivals in the courts’ crosshairs is set to be a boon for AMLO, says Mr. Laborde.
“It is a fact that AMLO will capitalize on this event. The scandal will also benefit the government in a strategic moment: in July 2021, Mexico will have legislative and regional elections, which will choose governments in 15 states.”[/restricted]
Mexican President Andrés Manuel López Obrador said that a deal with Swedish-British pharmaceutical group AstraZeneca guarantees that all Mexicans will have “free and universal” access to the coronavirus vaccine.
AMLO said the Mexican Constitution states that healthcare is a universal basic right, and promised to not leave the country’s poor at the end of the queue. “Other countries may decide to charge for the vaccine or to select who gets vaccinated and who doesn’t. We guarantee the vaccine to all Mexicans,” he said, in a press conference.
It is important to stress, however, that the efficacy of AstraZeneca’s potential vaccine is far from a certainty. The company is running human trials in Brazil — but the results will take months, at the earliest.
?? Mexico. President Andrés Manuel López Obrador faces criticism after playing down the importance of facemasks: “if a mask was an option for reactivating the economy, I’d put one on immediately.” Mexico has more than 41,000 Covid-19 deaths. (Global News)
?? Argentina. Buenos Aires Governor Axel Kicillof confirms a daily USD 6 stipend to encourage people to stay at home. (BA Times)
?? Peru. Last remaining Peruvian ski workers stuck at a U.S. resort due to the pandemic finally head home. (Chron)
?? Venezuela. Oil Minister Tareck El Aissami announced he has “beaten” the coronavirus. Besides him, the virus has infected at least three other Venezuelan authorities. (Notiamerica, in Spanish)
?? Chile. With 340,000 Covid-19 cases (including 2,000 new ones over the past 24 hours), Chile has the highest rate of cases per 1 million inhabitants: 17.5. Brazil, which leads the region in absolute cases and deaths, has a 10.6 rate. (Notiamerica, in Spanish)
?? Mexico. New outbreaks led Mexico to pass Chile as the country with the seventh most cases worldwide (Mexico News Daily)
?? Paraguay. The Paraguayan government postponed the return of football after three players tested positive for Covid-19. The country, however, has the lowest confirmed coronavirus numbers in South America, with only 27 deaths and 3,342 cases (ABC, in Spanish)
?? Panama. The government placed 2.2 million of its citizens under total quarantine for 58 hours to contain the virus (MENAFN)
?? Costa Rica. After the first Covid-19 peak in the country, one bishop went viral after exclaiming: “if you want to die, you can die; you are free to do so.” (El Mundo CR, in Spanish)
?? Argentina. The country suspended exports to China from eight meatpacking plants after cases of Covid-19 were detected among workers (Merco Press)
?? Argentina. Over 57 sailors on a fishing ship in Ushuaia, Patagonia, have tested positive for Covid-19. (Buenos Aires Times)
?? Colombia. Medellín, Colombia’s second-largest city, will impose alternate weekly lockdowns to “prevent a healthcare collapse.” (Colombia Reports)
?? Mexico. Latin America’s second-largest nation reaches 35,000 Covid-19 deaths, the fourth-highest in the world. Only the U.S., Brazil, and the UK have lost more people to the coronavirus. (AP)
?? Paraguay. The government decided to keep Congress closed to avoid a new outbreak, even though the country has the lowest number of deaths in South America: only 25. On Sunday, 128 new cases were registered. (MercoPress, in Spanish)
This is Brazil by the Numbers, a weekly digest of the most interesting figures tucked inside the latest news about Brazil. A selection of numbers that help explain what is going on in Brazil. This week’s topics: Covid-19 cases and deaths, Latin American leaders not immune to the coronavirus, healthcare coverage, Latam airlines in hot water, vaccine trials, football coming back, Mexico-U.S. relations, and oil deals.
The latest coronavirus [restricted]update by the Health Ministry shows Brazil’s coronavirus infections totaling 1,800,827 and recording 70,398 confirmed deaths in the country. Meanwhile, states continue to greenlight more non-essential activities despite warnings from the World Health Organization that the infection curve will only peak in August.
Since the beginning of the month, Brazil has recorded almost 10,000 new deaths. Amazonas, the first state to experience a collapse of its healthcare network, remains with the most deaths per 1 million people: 750.
BRL 7 billion in debt
Latam, the biggest airline in Latin America, added its Brazilian subsidiary to its May Chapter 11 bankruptcy protection filing in the U.S. Initially, the process only included operations in Chile, Peru, Colombia, Ecuador, and the U.S.
In a statement, Latam Brasil claimed that its debts amount to roughly BRL 7 billion (USD 1.3 billion). Before the pandemic, Latam employed 42,000 people and operated 1,400 daily flights in 26 countries, carrying around 74 million passengers every year. In April, operations were reduced by 95 percent.
4 Latin American leaders catch coronavirus
Bolivian Interim President Jeanine Áñez confirmed on Thursday that she has tested positive for Covid-19, adding her case to a list that so far includes four Latin American leaders with the virus. Besides Ms. Áñez, Brazilian President Jair Bolsonaro confirmed his diagnosis on Tuesday. Honduran leader Juan Orlando Hernández was infected last month but was considered cured after 16 days at a hospital in capital Tegucigalpa. Dominican president-elect Luis Abinader — who won the election six days ago — contracted the virus during the campaign, halting activities for two weeks.
283,000 insured patients
More and more Brazilians have lost private healthcare coverage since the beginning of the Covid-19-related economic crisis. At a time when health insurance could be extremely valuable, the number of beneficiaries of private plans fell by 283,000 in the space of two months. The numbers are part of a report released this week by the National Agency of Supplementary Health. In May, 46,8 million Brazilians had private health plans — the lowest number in at least one year.
The National Sanitary Surveillance Agency (Anvisa) authorized the third and final round of testing of a prospective Covid-19 vaccine developed by the Chinese biological institute Sinovac Biotech. The third phase will conduct testing on 9,000 volunteers across four Brazilian states, including Rio de Janeiro, São Paulo, and the Federal District. São Paulo Governor João Doria said vaccines will be administered starting on July 20, beginning with active health workers that have not yet contracted coronavirus.
Football back on August 9
Rogério Caboclo, head of the Brazilian Football Confederation (CBF), announced in an interview with newspaper O Globo that Brazilian football is set to resume activities in August. The second- and third-divisions will start on August 8, followed by the first division on August 9. The Copa do Brasil cup tournament will begin on August 26. The timetable for Brazilian football will have to be readjusted until 2022 as a result, as it will be impossible to finish the season by December. Such an alteration could see games scheduled between December 27 and January 3, a rarity in Brazilian football.
1st AMLO-Trump meeting
Mexican President Andrés Manuel López Obrador took a commercial flight to Washington to finally meet with his U.S. counterpart, Donald Trump. The long-awaited encounter — which also happens to be AMLO’s first international trip as president — takes place as the U.S.–Mexico–Canada Agreement (USMCA) is set to become a reality, starting a new chapter of trade relations between the two major nations. In 2019 alone, Mexico’s trade with the U.S added up to USD 614.5 billion, a 0.48-percent increase over 2018.
AMLO was heavily criticized for celebrating a leader who has so repeatedly pushed anti-Mexican rhetoric. We explained why he did it.
330,000 barrels a day
According to Reuters, Abu Dhabi’s investment fund Mubadala Investment Co. will enter into exclusive talks with Brazil’s state-owned oil company Petrobras to purchase the country’s second-largest refinery Rlam, in Bahia state. The information was confirmed by the company during the week. Rlam produces an average of 330,000 barrels a day.
17.3 million not looking for work
According to the National Household Sample Survey (PNAD) by the Brazilian Institute of Geography and Statistics (IBGE), at least 17.3 million people are not looking for a new job due to the Covid-19 pandemic, mostly out of fear of infection. The study showed, however, that these numbers are dropping progressively throughout the pandemic. Between May 3 and 9, more than 19.1 million were in that situation, almost twice as many as the figures registered by the end of June.
Inflation rises 0.26 percent
Brazil’s benchmark inflation index rose by 0.26 percent in June, after two months of deflation. Yet, the growth was below the market consensus of a 0.3 percent increase. According to Itaú BBA economists, this timid acceleration is aligned with projections of a gradual economic recovery and shall continue in the coming months, with July’s inflation pegged at 0.53 percent.
Markets will closely follow any developments, as Central Bank Chairman Roberto Campos Neto signaled that the monetary authority will analyze whether inflation remains well-behaved after recent cuts in the benchmark interest rate before making further moves. In the past 12 months, however, inflation is only 2.13 percent, far below the low end of the country’s inflation target, suggesting a comfortable scenario for further interest cuts.[/restricted]
“Poor Mexico: so far from God and so close to the United States.” The famous quote from Mexican dictator Porfírio Díaz compiles the turbulent history of relations between the two countries. This July 8, President Andrés Manuel López Obrador — also known as AMLO — visited his American counterpart Donald Trump for the first time since he took office late in 2018. The “budding” relationship between the left-wing AMLO and the far-right wing U.S. president seems inexplicable, but it is key to both presidents’ political fortunes as the storm of the Covid-19 pandemic continues to rage in both countries.
The long-awaited meeting, which happens to be AMLO’s first international trip, takes place as the U.S.–Mexico–Canada Agreement (USMCA) is set to become a reality, starting a new chapter of trade relations between the two major nations. In 2019 alone, Mexico’s trade with the U.S added up to USD 614.5 billion, a 0.48-percent increase over 2018.
Now, with a possible 10-percent nosedive in Mexican GDP this year due to the coronavirus crisis, Mexico needs an ally in Washington more than ever.[restricted]
AMLO and Mr. Trump have a history of clashes. In May 2019, Mr. Trump threatened to impose 5-percent tariffs on all Mexican imports “until such time as illegal migrants coming through Mexico stop.” As the final destination before the U.S. borders, many migrant caravans in Latin America see the territory below the Rio Grande as a corridor — something that the White House’s “zero-tolerance” immigration policy wouldn’t accept.
However, this AMLO-Trump crisis was quickly resolved after the Mexican government sent a committee to a three-day-negotiation debate in the U.S. capital, the billionaire president suspended his decision.
While AMLO wrote a book titled Hey, Trump!, decrying the U.S. president’s racially charged attacks against Mexican immigrants, he has embraced a more pragmatic approach to dealing with the notoriously thin-skinned Mr. Trump, offering praise for his U.S. counterpart and indicating his willingness to work together.
The stakes for the meeting have changed with the Covid-19 pandemic and Mr. Trump’s declining re-election hopes, following his bungled handling of the health crisis. As The Brazilian Report has reported, AMLO’s handling of the pandemic has its fair share of detractors and will likely make or break his presidency. With this in mind, who has more to lose and to gain from this appointment?
According to Adolfo Laborde Carranco, an International Relations Professor at Anahuac University in Mexico, the gains might be mutual, but Mr. Trump may need them more in the short term.
“In political terms, a successful meeting is more important for Mr. Trump, mainly due to his electoral process. The U.S. president now faces the loss of 50 million jobs, a scarce public health policy vis-à-vis Covid-19 [he recently left the World Health Organization], and a rupture with international actors, such as China. But, mainly, Mr. Trump aims to garner votes among Latinos, which could be decisive in the 2020 elections,” Mr. Adolfo told The Brazilian Report.
In 2016, Mr. Trump won the presidency with less support from black and Hispanic voters than any president in at least 40 years, per Reuters. But despite his bigoted attacks on Mexican-Americans, his polling among Latinos is higher in 2020 than it was back in 2016, according to Pew Research. Currently, there are around 59.8 million people of Hispanic origin in the U.S. — and they are considered a key demographic in the upcoming election.
Exports from Mexico
Where does Mexico import from?
Why AMLO needs Trump
The World Bank predicts that Latin American and the Caribbean will face an economic skid of 7.2 percent in 2020. Besides a predicted 10-percent shrinkage in GDP, Mexico is staring down the possibility of a veritable job apocalypse. Our own data journalist Aline Gatto Boueri showed that out of the country’s 95.8 million people of working age, 50.3 million are out of the workforce.
AMLO’s approach to dealing with Trump is, as a result, closely connected to hopes of kickstarting the Mexican economy through a new trade deal. The beginning of USMCA could guarantee Mexico preferential access to the world’s wealthiest market, providing more security for new investments.
It also benefits local workers and companies, as the Mexican industrial sector depends on U.S. exports. Since the old North American Free Trade Agreement (NAFTA) was signed in 1994, U.S.-Mexico agribusiness grew sevenfold. The new agreement updates the old order by taking into account electronic business and establishing that the deal will be revised (and, once again, updated) in 16 years. There are other victories for AMLO in the revised bill, including labor reform in Mexico facilitating unionization.
Mr. Laborde Carranco explains that AMLO’s trip was delayed probably due to internal problems in his government. During 2019, the Mexican leader designated his Foreign Minister Marcelo Ebrard to represent Mexico abroad, including in the emergency meeting in 2019 that took place following Mr. Trump’s threats. But, as the old adage goes, better late than never.
“AMLO took a long time to act, but it seems to me that an earlier meeting was not a real option, given all the internal struggles he faced,” the expert told The Brazilian Report. The meeting takes place after a record increase in violence, with 34,582 intentional homicides recorded in 2019 — the deadliest year on record. It represented a 2.5 percent growth compared to 2018, statistics by the National Public Security System (SNSP) showed.
“Despite all these internal issues, Mexico needs the U.S, with 82 percent of foreign trade dependent on the northern neighbors. Even with things to be solved internally, AMLO needs to try to solve this economic problem thinking about improving his image and eyeing the June 2021 midterm local elections, and also to solve the migration problems that started in 2019.”
Most importantly there is significant support for AMLO’s visit in Mexico, according to sociologist Edwin Ackerman. “AMLO is playing to a domestic audience. A recent poll showed that close to 60 percent of Mexicans support the trip. The renegotiation of NAFTA under highly unstable conditions was an important achievement. AMLO sees in his visit an opportunity to claim this as a victory.”
Not that appeasing the U.S. is a priority for Mexico, but the economy will be. While having markedly different politics to Mr. Trump, AMLO could well benefit more from this meeting. As Mr. Ackerman notes, Mexico has evidence that diplomatic pragmatism gets more results than public confrontation.
Prominent examples of this include the U.S. recently stepping in to help Mexico meet its quota of reduced oil barrel production per day as part of an OPEC Plus agreement and the securing of at least a thousand of ventilators for Covid-19 patients.[/restricted]
In Brazil and Mexico — Latin America’s largest economies — over half of those of legal working age are out of the workforce. Of this mass, 75.3 million Brazilians, one-quarter have halted job searches altogether, either due to the pandemic or the lack of opportunities in their region.
While nearly all populational strata see trends toward giving up job searches, data suggests it has become more prevalent among Brazilians of color. According to the country’s most recent national household survey, [restricted]black and multiracial Brazilians make up 55 percent of the population of working age, and 57 percent of the workforce. However, they also comprise 67 percent of discouraged unemployed, who have simply given up their search for work.
As we explained in our July 6 Weekly Report, college-educated workers saw an average drop of 15 percent of their usual earnings, while those without a high-school diploma lost as much as 25 percent of their income.
“The pandemic has thrown Brazil into uncharted territory, with extremely rapid changes of scenario,” said Cimar Azeredo, polling director at the Brazilian Institute of Geography and Statistics (IBGE). “The household survey is a study that takes the pulse of the economy, where what happens in April is different from May or June,” he told The Brazilian Report.
The latest data shows that Brazil’s 10.1 million job-seeking unemployed are just over half the total of discouraged workers. “Unemployment data is a delayed estimate. In times of crisis, that number is not representative of reality, especially in the context of a deadly pandemic. That is why we must look at the underutilization of the workforce for a clearer picture,” Mr. Azeredo explains.
Using those standards, we can see 28 million workers who are being “underutilized.”
Mexico’s job shortage, explained
Mexico has 95.8 million people of working age: 50.3 million are out of the workforce, while just 1.9 million are classed as unemployed.
May data from ETOE (Encuesta Telefónica de Ocupación y Empleo), a phone survey of occupation and employment, is quite revealing. Mexicans who were able to work but discouraged due to a perceived lack of opportunities outnumbered the job-seeking unemployed tenfold. There are 18.9 million discouraged workers in Mexico, including those who lost their jobs due to the shutdown of non-essential activities.
Just like in Brazil, the data shows that the crisis has not hit all social groups equally. Mexican women account for 57 percent of people available for work — but not actively looking for a job. They make up 53 percent of the population of legal working age, but account for two-thirds of the non-economically active population.
The trends are very similar in Brazil. Accounting for just over half of the population of legal working age, women make up 62 percent of people who cannot or have not looked for a paying position.
How to look at the data
Both surveys in Brazil and Mexico were developed by official statistics agencies in order to measure the impact of the pandemic in the labor market. In both cases, these surveys are not comparable to previous studies as they have different methodologies and a different data collection time span.[/restricted]
The first two parts of this series covered the rise of Mexico’s President Andrés Manuel Lopéz Obrador and his record in government, before the arrival of the coronavirus. In the third and final part, we turn our attention to recent developments, analyzing how AMLO has tackled the Covid-19 pandemic at the head of Latin America’s second-largest economy.
As with all incumbent world leaders, AMLO’s performance during the pandemic will define his presidency, more so than his measures related to the War on Drugs, or his anti-corruption crusade. At the time of publication, Mexico has recorded 226,089 cases of Covid-19 and 27,769 deaths. Only Brazil has seen higher absolute mortality from the disease, while having 90 million more people and six times the number of confirmed cases.
But how do we gauge success or failure in the handling of a pandemic? [restricted]We know that the coronavirus is raging out of control in Brazil and the U.S. — largely thanks to political decisions made by their respective governments — and that states such as Vietnam and New Zealand have been able to more-or-less eliminate the pandemic for the time being. We also know that acting fast and implementing lockdowns does not necessarily mean the pandemic will not ravage the country, something especially true in nations defined by structural inequality.
Peru, as an example, has the second-highest number of coronavirus cases in Latin America — more than Mexico — despite having a population of 32 million people and implementing strict lockdown measures as early as March 16, before the United Kingdom and many other European countries.
We also know that the damage caused by a pandemic extends beyond its direct human costs; the economic and social damage Covid-19 may inflict on countless countries around the world are almost too horrific to conceive. It is worth reflecting on these questions when trying to come to terms with one nation’s particular response to the pandemic.
Since Covid-19 arrived in the Americas, AMLO has been frequently compared to far-right U.S. President Donald Trump and his denialist comrade-in-arms in Brazil, Jair Bolsonaro, for his alleged “skeptical” response to the pandemic. While it is both unfair and misleading to compare AMLO to Messrs. Trump and Bolsonaro, or Venezuelan President Nicolas Maduro, this does not mean that Mexico’s response has been laudable. There are two primary factors to evaluate in terms of AMLO’s handling of the pandemic, namely the public health response, and the economic approach.
The demonization of AMLO
Unlike Brazil and the U.S., the Mexican government began taking the threat of Covid-19 seriously at an early stage, perhaps as the country has past experience with similar viruses, such as SARS and swine flu. The World Health Organization (WHO) even meted out praise for Mexico’s handling of the pandemic: “Mexico is taking several of the lessons learned by other countries, like China, and applying measures consistent with WHO recommendations; it was the first to set in place a coronavirus detection program and that is a basic premise to reduce the speed of the pandemic.”
Despite this, AMLO has been taken to task for the way he has approached the coronavirus crisis and has been accused of everything under the sun, from wannabe dictator to Covid-19 denier.
In the press, AMLO is frequently depicted as a superstitious populist; indeed, his speeches are often made in a rustic religiously infused idiom meant for the ears of the Mexican peasantry, rather than the urban middle classes. AMLO spent the majority of his political career working in rural Jalisco and he extracted much influence from liberation theology and the popular left tradition tied to the Mexican Revolution.
Using this vernacular, AMLO has made frequent comments that have been depicted as downplaying the seriousness of the crisis, or ignoring the importance of social distancing measures. AMLO’s praise of traditional Mexican beliefs, such as the power of saints to ward off the threats of the pandemic, has often drawn the wrath of his critics. For instance, in early March, AMLO urged people to carry on their lives as normal and not abandon traditional Mexican forms of greeting, such as hugging and kissing.
Mexico’s response to the pandemic has been in the hands of the Health Department, and Deputy Health Secretary Hugo López-Gatell Ramírez. While AMLO’s comments have been often clumsy, Mr. Lopez-Gatell — who has a doctorate in epidemiology from Johns Hopkins University — has been a model of public health expertise, delivering daily case counts and fielding questions about government strategy.
AMLO’s initial response to the crisis was to urge Mexicans to continue “living life as usual.” He reversed his messaging by March 28, when he released a video urging people to stay home and maintain social distancing, before declaring a public health emergency on March 30.
Mr. López-Gatell explained the rationale behind the government’s response: in a country where over half of the population lives in poverty and around 60 percent of the workforce has informal employment, quarantines have limited staying power — people are unable to stay at home indefinitely.
AMLO’s government has been also criticized for ending lockdowns too early: the least affected municipalities began reopening on May 18 and the rest of the country was set to begin the same process on June 1. Mexico City, with a population of around 22 million and a surge in Covid-19 cases, decided against a return to work.
Mexico has been plagued by accusations of undertesting and the underreporting of deaths, but this has been repeated in almost every country around the world, regardless of material resources. After an anti-corruption think-tank claimed that there were four times the number of deaths attributed to the coronavirus in Mexico City than the official statistics, the mayor of the capital denied these claims. AMLO also claimed in May that Mexico had tamed the pandemic.
While AMLO’s administration has been met with such unbridled criticism, the same hasn’t been said of other major countries around the world. In the United Kingdom, for instance, we know that numbers of deaths were concealed during the peak of the coronavirus in April, but its government’s inept handling of the crisis was not depicted as a sort of populist authoritarian project.
This doesn’t mean that the criticisms of the Mexican government are not legitimate, but rather the urge to portray the country as another example of left populism gone wrong makes it harder to evaluate the success or failure of Mexico’s government’s responses. The coming months will make it clear whether or not Mexico has in fact been remiss in addressing the public health crisis.
In line with global and regional trends, Mexico’s economy is predicted to shrink by at least 8 percent this year, which would dramatically hurt the country’s budget deficit.
On April 6, AMLO announced an economic plan to combat the effects of the pandemic, based upon opening up new credit lines and cash transfers to small businesses, along with personal mortgages, advances on pension payments, and faster tax reimbursements. Crucially, this program did not include bailouts for big corporations.
He also announced more public spending cuts, closing ten government departments, freezing hires, and cutting government salaries by 25 percent. In response to criticism, AMLO claimed that at least 15 of the country’s biggest companies owed back taxes of USD 2.07 billion. While the government has not extended a hand, Mexican corporations have been granted access to credit from the Interamerican Development Bank.
AMLO’s austerity has led to an ironic political landscape where the right-wing is calling for increased spending, while the left government preaches fiscal conservatism. Publications such as the Financial Times — known for their support of austerity and structural adjustment programs — are attacking AMLO for his alleged fiscal conservatism and calling for deficit spending. Leading media figures compare him to Ronald Reagan and Margaret Thatcher, or dub him “Mr. Scrooge” for his perceived stinginess.
Government assistance has so far not stemmed the tide of job losses: 12 million Mexicans dropped out of the labor force in April, according to state statistics institute Inegi. Many of those who kept their jobs have suffered severe wage losses.
The opposition has been seeking to regain its bruised political capital by attacking the government’s response. Mexico has seen a number of anti-AMLO right-wing motorcade protests, for instance. If Covid-19 has proved anything so far it is that AMLO’s bet on being able to fund social programs through republican austerity and anticorruption drives has failed, and that he will almost certainly have to abandon his frugal fiscal approach in the near future.
The opposition could capitalize on AMLO’s perceived failures in the handling of the pandemic, but they would have to outflank the government from the left on fiscal issues, which is unlikely, considering their main approach so far has been defending privatizations, trade deals, and handouts to the private sector, that helped confine them to current moribund political state.
While many have voiced their fears of the emergence of a new right-wing populist threat in Mexico, à la Jair Bolsonaro, such a political force has yet to really crystalize in Mexico, despite hard-line anti-communist paranoia and social media-driven conspiracies. However, if the government’s response to the crisis destroys its credibility and the mainstream opposition continues to sink into irrelevance, all the conditions are there for a new anti-democratic force to rise in Mexico.[/restricted]
In the first installment of a three-part series on the political shifts Mexico has experienced, we analyzed the election of President Andrés Manuel López Obrador. In 2018, AMLO won a notable victory running as an anti-crime and anti-corruption candidate from the left-wing, and in the second part of this series we will examine his record in government so far, until the Covid-19 pandemic hit Latin America.
AMLO finished his first year in office with a staggering approval rating of 86 percent, with such achievements as paying scholarships for more than 10 million students, implementing subsidies and price supports for small farmers, offering interest-free microcredit to small business, opening a new public bank to distribute benefits to the millions shut out of the private banking sector, setting up a public telecoms company to provide internet to those overlooked by private ISPs, and increasing the minimum wage by 16 percent.
However, his government has faced immense difficulties and increased opposition while enacting its program.[restricted]
AMLO on crime
AMLO came to power promising to end Mexico’s War on Drugs and restore a semblance of normality, following over a decade of carnage that has left anywhere between 115,000 and 250,000 dead. His anti-crime platform was based on three key positions: ending the drug war, replacing the army with a national guard, and granting amnesty and social opportunities rather than death or jail for those caught up in the drug trade, a campaign he dubbed “hugs not bullets.”
However, violent crime is higher than ever. Mexico recorded a record number of 11,535 murders over the first four months of 2020, notwithstanding the Covid-19 pandemic. Furthermore, femicide has also risen to new horrific highs: April was the deadliest month in five years for Mexican women, with 267 murders.
AMLO has been confrontational on the femicide issue, accused feminist groups drawing attention to the problem of being part of a conservative anti-government agenda, even though these movements backed him in the 2018 elections. Mexico’s femicide problem certainly predates AMLO — one needs only take a step back to hundreds of unsolved murders of young women in the border city of Ciudad Juárez in the late 90s, famously chronicled by Roberto Bolaño in his magisterial novel 2666. But the president has tended to downplay or even dismiss the murder of hundreds of Mexican women.
His grip on organized crime and drug trafficking also seems to have slipped, encapsulated by an incident last year, in which federal police released Ovidio Guzmán López from prison — son of notorious drug lord Joaquin “El Chapo” Guzmán — following his brief detention during a military operation. AMLO claimed that he had ordered Mr. Guzmán López’s release to prevent bloodshed, as hitmen belonging to the Sinaloa Cartel had flooded Culiacán, a city of a million people, taking the families of police officers hostage and erecting roadblocks. Similar incidents have been occurring for decades in Mexico and entire regions of the country have been controlled by organized crime for years. Intensifying the violence of the drug war is a solution that has failed again and again, wherever it has been tried.
Critics have accused AMLO of continuing the drug war by another name, using his newly formed National Guard, and it is worth outlining the logic behind this policy. Large swathes of the country are occupied by the military, meaning that millions of Mexicans are essentially living under the rule of the armed forces rather than the constitution. Human rights violations — including torture and mass killings along with the targeting of journalists — in the areas under military occupation have been widespread.
Regardless, the continued presence of the armed forces is largely supported by the Mexican population, who see the military as preferable to the local police, widely regarded as even more corrupt and violent.
While the head of operations of the National Guard is a military officer, the force is technically under civilian control, and those accused of abuse are tried by criminal courts and not military law. In essence, it is a bid to restore civilian and constitutional order to much of the country.
At this juncture, the brutal conclusion may well be that the horse has bolted and nothing can be done to restore the rule of law and end the brutal cycle of violence in Mexico. The militarized drug war has been one of the most catastrophic failures in recent history and efforts to chart a new approach are almost impossible, given the dozens if not hundreds of criminal factions that populate the country, and the scale of organized crime profits. The fracture of large cartels has increasingly resulted in the emergence of new smaller outfits that gain their profits from the control of localized territories and criminal rackets, rather than transnational trafficking. The continued economic woes faced by the country — intensified by the coronavirus — likely means that millions of Mexicans will become even more reliant on illicit economies to eke out a living.
A different brand of anti-corruption in Mexico
AMLO’s vision of anti-corruption differs from the carceral and technocratic approaches promoted by transnational organizations such as Transparency International. It is in essence the antithesis of Brazil’s celebrated Operation Car Wash, which ended up spilling over into Mexico. Rather than locking up the bad guys and promoting ‘transparency,’ accountability, and other such bromides, AMLO promotes what he calls “Republican Austerity.”
For AMLO, corruption is fundamentally a matter of popular sovereignty. Republican Austerity’s central premise is that the savings from ending corruption can pay for social programs needed to reinvigorate the Mexican Republic.
Corruption in the country is deeply encoded within the structure of the state. It was vital to the 71-year-long rule of the Institutional Revolutionary Party (PRI): it depended on clientelist networks built up over decades to maintain the corporatist system that sustained their “perfect dictatorship.” Following the 1980s debt crisis, the PRI embraced privatization, portraying it as a form of democratic anti-corruption, dismantling the clientelist networks that had governed the country.
Corruption had been conceived as the maneuver of money from state-owned companies to the pockets of crooked politicians, and privatization was a form of democracy that would end these networks. However, the reality is that the neoliberal era beginning in the 1990s saw a new orgy of corruption, as bribes became the currency for divvying up the spoils of state-owned enterprises into the hands of politically connected individuals, giving rise to the Mexican version of the Russian oligarch, embodied by figures such as business magnate Carlos Slim.
AMLO’s predecessor in office, President Enrique Peña Neto of the PRI, brought about a new golden age of Mexican corruption. His six-year-term saw ten of the PRI’s 19 state governors face serious corruption accusations, with many fleeing the country and some ending up in jail. The most infamous case involved former Veracruz governor Javier Duarte and his theft of an estimated USD 3 billion.
Upon being sworn in as president, AMLO promised to let sleeping dogs lie and refused to investigate previous governments and presidents for corruption. Instead, he claimed that corruption was deeply linked to neoliberalism and inequality; real anti-corruption would instead reduce government largesse, wasteful spending, and the theft of state funds, channeling the money saved into social programs that would benefit the poor.
The majority of AMLO’s anti-corruption efforts have been symbolic. As a few examples, he transformed the presidential palace in Mexico City into a public museum — preferring to live in a simpler abode — he slashed his own salary by 60 percent, and sold off luxury government jets and expensive cars, promoting personal austerity in the presidential office. His first act in office was to reduce the salaries of the elite of the federal bureaucracy, including judges. In a country defined by the symbolic distance between the upper crust and society at large, these moves enjoyed popular traction.
His major anti-corruption effort in his first year in office consisted of a crackdown on the fuel racket built around the large-scale theft of gas from state-owned oil company Pemex, which was then sold at private gas stations. This entire criminal industry was worth over USD 3 billion a year. AMLO’s predecessors had tacitly allowed this racket to spiral out of control in order to justify their attempts to privatize Pemex. It is no coincidence that the country’s most important pipelines are also located in areas with the highest incidence of cartel violence, as crime syndicates such as the Zetas have been deeply involved into the petroleum industry, including using terrorism to clear people off communally owned land sitting atop shale gas reserves.
AMLO’s plan was to send troops to protect strategic pipelines and implement reforms within Pamex. Despite facing a media-driven opposition campaign against this crackdown, AMLO was able to reduce oil theft by 95 percent — from 81,000 barrels per day in November 2018 to just 2,000 per day in 2019. The money saved was then channeled toward social programs. Other efforts include clamping down on tax evasion and forcing companies to pay back taxes, which the press has widely condemned as an authoritarian move.
It is too early to properly gauge the success of these efforts but they offer a fascinating alternative to the spectacle of Brazil’s Operation Car Wash and other heralded international anti-corruption drives in the region. However, AMLO and his party have not been immune from corruption allegations. His National Regeneration Movement (Morena) party remains mostly inchoate, lacking strong leadership and direction, with the president maintaining his distance and claiming it is up to the party to define its own path.
Social policy in AMLO’s Mexico
AMLO inherited a sluggish economy hampered by structural issues, high unemployment, and bleak prospects. As of writing, things have only gotten worse and this predates the arrival of the Covid-19 pandemic. While economic growth has been lackluster, the president has argued that the success of his government should not be measured by GDP growth. AMLO’s main policies have essentially been soft Keynesianism without deficit spending or massive tax hikes. And, crucially, the openly left-wing Mexican government has so far refused to raise taxes on the rich and large corporations.
The original plan was to use the money saved by his anti-corruption drives to fund large-scale social initiatives, such as job programs for young adults — in part to encourage them to avoid the temptations of crime — major infrastructure projects, and price guarantees, and subsidies for small agriculture producers to encourage them not to grow poppies — and veer away from the heroin trade.
AMLO has faced significant criticism for his austerity measures and resistance from indigenous groups, liberals NGOs, and some sections of the left, who are hostile to his infrastructure projects that include a new airport for Mexico City and a proposed railway line on the Yucatán peninsula.
While in some ways laudable, AMLO’s social policy has so far been too little too late in the face of mounting crises, and even those on the right-wing have called for the president to embrace deficit spending. It seems increasingly likely that his central premise of using recovered funds from anti-corruption efforts to substitute the need to tax the rich was a mistake.
Despite AMLO’s mixed record in government so far, Mexico’s opposition remains moribund. Traditional parties are discredited, and opposition politicians have been struggling to craft a credible alternative. Their main platforms — reigniting the drug war and pushing privatization — remain unpopular. Furthermore, the consistent attempts to tar AMLO as the Mexican version of Venezuelan President Nicolás Maduro, launching Mexico’s own Bolivarian Revolution, have been mostly ineffective.
Myriad failed opposition fronts have been launched, all of which came to nothing despite great media fanfare. Most recent polling indicates that AMLO’s Morena party is set to sweep next year’s legislative elections.
Like Brazil, the main locus of opposition has moved from Congress to Mexico’s powerful state governors. While the PRI and PAN have been reduced to rump parties at a federal level, governors continue to exercise power and are attempting to present states like Jalisco as oases of moderation and pragmatism compared to the federal government, with an eye on the next election. The opposition still can count on the support of Mexico’s leading business figures and the majority of the mainstream media.
In essence, Mexico faces deep structural problems accumulated over decades and it is too early to judge AMLO’s term pre-Covid-19. But the crises faced by the Mexican president already seemed insurmountable, even before the pandemic arrived in Mexico.[/restricted]
Over the past week, Mexico has recorded an average of 672 coronavirus deaths per day — trailing only Brazil and the U.S., despite testing fewer patients than most countries. With over 227,000 total confirmed cases and one of the world’s highest coronavirus fatality rates, critics in the foreign and domestic press have equated the attitudes of left-leaning President Andrés Manuel López Obrador, also known as AMLO, to those of his denialist populist counterparts Donald Trump in the U.S. and Brazil’s Jair Bolsonaro — but just how fair is that comparison?
What is actually happening in Latin America’s second-largest economy and what lessons Brazil can draw from it? In this three-part series, we break down the current state of Mexico, beginning with AMLO’s rise to power in 2018.
Like Jair Bolsonaro in Brazil, AMLO came to power through the collapse of Mexico’s existing political system in the wake of rising crime and corruption scandals that devastated the country’s traditional parties. His own political outfit, the National Regeneration Movement (Morena) went from being AMLO’s personal electoral vehicle to the largest party in the country overnight in 2018, gaining solid majorities in Mexico’s Senate and Congress.
AMLO himself emerged victorious with 53 percent of the presidential vote, 30 points higher than his closest contender and winning 31 out of Mexico’s 32 states. In fact, Morena’s victory in the 2018 elections may well have been the largest electoral victory in history for a left-leaning political party.
Mexico’s political system
For 70 years, between 1921 and 2000, Mexico was run by the Party of the Institutional Revolution (PRI), in what the Peruvian novelist Mario Vargas Llosa once described as “the perfect dictatorship.” Following two decades of economic and social crisis, as well as electoral reform, the right-wing National Action Party (PAN) won the 2000 elections, bringing an end to the PRI’s electoral dominance, even if it remained the largest party in the country.
The last left-wing Mexican president, before AMLO, was Lázaro Cárdenas del Rio, who ruled the country between 1934 and 1940. Mr. Cárdenas is remembered as one of the country’s greatest leaders, largely for his radical land reform, popular education programs, and nationalization of Mexico’s oil industry. In fact, AMLO’s politics stem from this left-wing nationalist tradition within the hegemony of the PRI, intimately tied to the popular mobilization of the peasant class: key to Mexico’s War of Independence in 1821, the War of Reform and Expulsion of the French (1861-1867), and, of course, the Mexican Revolution between 1910 and 1920.
Rather than being Mexico’s answer to other prominent left-leaning leaders around Latin America — such as Hugo Chávez or Luiz Inácio Lula da Silva — AMLO hails from a uniquely Mexican political tradition, which has been apparent throughout his 40 years in public life.
In the wake of the 1988 general elections, Lázaro Cárdenas’ son Cuauhtémoc Cárdenas Solórzano helped to found the Party of the Democratic Revolution (PRD), a left-wing offshoot of the PRI, which had been perceived to have embraced neoliberal economics. An earlier guise of the party contested the vote in 1988, claiming to represent the authentic spirit of the Mexican Revolution, losing to the PRI in what is widely regarded as a fixed election.
AMLO joined the PRD, running for governor in his home state of Tabasco and then becoming the party president in 1996. In 2000, he was elected mayor of the Federal District of Mexico City, making his national political bones as an immensely popular mayor known for his social programs. He left office in 2006 with an 84-percent approval rating having “kept 80 percent of his promises,” according to one newspaper, Reforma.
In 2006, AMLO came within a hair’s breadth of winning a contested election as the PRD candidate, losing out to the PAN and Felipe Calderón, by a margin of just 0.58 percent. The result of the vote was contested, triggering a mass protest movement that severely damaged the credibility of the incoming president.
The War on Drugs
Looking to shore up his political credibility and increase his clout with the U.S. President George W. Bush, Mr. Calderón launched Mexico’s War on Drugs at the beginning of 2007, unleashing over 13 years of carnage on the nation.
It is impossible to overstate just how deadly Mexico’s War on Drugs has been: the death toll is anywhere between the official total of around 115,000 and other more accurate estimates north of 260,000. Around 60,000 to 80,000 people have been disappeared and innumerable lives have been destroyed by a conflict resembling a civil war rather than clashes between drug cartels and the government. There are hundreds of mass graves littered across the country — rape, public decapitations, mass murder, and videos of grisly torture posted online are all common. Those who report on the unfolding atrocities are often murdered or forced into hiding. Since the year 2000, over 140 journalists have been murdered.
Mexico’s murder rate was actually declining before Mr. Calderón sent the military to fight the ‘traffickers.’ Human rights abuses by the Mexican state are common, such as the massacres of Tlatlaya, Apatzingán, Tanhuato, and Ayotzinapa, to name but a few.
Mexico’s drug trade has a long history, but traditionally it had been managed by the PRI, who let traffickers move their product across the border in exchange for funds and dictated who ruled the roost. Mexico’s cartels originally entered the cocaine game as a transit hub to the U.S. for Colombia’s mega-cartels. In recent decades, however, Mexico’s drugs gangs moved into the methamphetamine, heroin, and fentanyl trade to supplement the cocaine business. And when Colombia’s cartels were destroyed in the 1990s, the power of their Mexican partners ballooned, and their profits and resources expanded.
It was with the end of the PRI’s 70-year rule that the Mexican drug game changed profoundly, as the power of cartels increased and their byzantine political squabbles could no longer be regulated or contained by the government. What was once a relatively united federation under the iron rule of Miguel Ángel Félix Gallardo became divided into a vipers’ nest of competing factions with ancestral grudges. Just one year after the PRI left power, drug kingpin Joaquín Archivaldo “El Chapo” Guzmán Loera escaped prison, leading his Sinaloa Cartel in new wars against its rivals.
However, we now know the drug war was a sham from the start, embodied by revelations that Mexico’s chief drug crusader, ex-Defense Secretary Genaro Garcia Luna, was working on behalf of the Sinaloa cartel for years. He is now in a U.S. prison. As the Mexican journalist Anabel Hernandez puts it:
“In both cases the ‘strategy’ has limited itself to providing protection for the Sinaloa Cartel. The guarantor of the continuity of this protection has been the sinister police chief Genaro García Luna . . . [He] has even gone to the point of stating that there is no other option except to let El Chapo operate freely and ‘establish order’ among the other criminal groups, as it will thus be easier for the government to negotiate with one cartel rather than five.”
The U.S. also stands accused of favoring the Sinaloa cartel. In 2014, Mexican newspaper El Universalpublished documents showing that the U.S. Drug Enforcement Administration had secured cooperation from Sinaloa operatives that would allow them to continue their trafficking activities in exchange for intelligence on rival groups.
Mr. Calderón’s successor, the PRI’s Enrique Peña Neto, fared no better — he also stands accused by El Chapo himself of accepting a USD 100 million bribe upon taking office. His corruption-plagued administration and the cover-up of the infamous massacre of 43 students in Ayotzinapa, likely carried out by the police and armed forces, stained the PRI’s image.
While El Chapo may be sitting in a U.S. prison along with many of his former rivals and colleagues, the removal of major kingpins from the drug game only made things worse. Locking up and killing bosses only served to open up new job opportunities for legions of ambitious narcotraficantes.
Most of the major cartels have split into dozens of smaller rivals, fighting over territory across the country and expanding into domestic drug sales, kidnapping, oil theft, the avocado trade, illegal mining, and extortion leading to innumerable localized conflicts. The result was Mexico’s murder rate soaring to an all-time high and both political parties in charge during this period being left utterly discredited. And despite billions of dollars and hundreds of thousands of lives being wasted on fighting the war on drugs, the supply of controlled substances has not let up, even during the coronavirus pandemic.
The Peña Nieto Disaster
Enrique Peña Nieto will go down as perhaps the most disastrous leader in the history of the PRI, destroying the once all-powerful party once-and-for-all. His main electoral promise was to restore calm and the rule of law to a traumatized nation, which he decidedly failed to deliver, leaving office with a country that was more violent than ever.
Despite promising to kickstart economic growth, the economy was still an utter mess by the end of his term, with 50 percent of the population stuck in poverty. His much-touted education and oil privatization programs amounted to very little. Meanwhile, the right-wing PAN supported Mr. Peña Nieto almost uncritically, leaving them almost as tarred as the PRI.
It was into this vacuum of power that Andrés Manuel López Obrador emerged as a leading candidate in the 2018 elections. He courted the anti-establishment vote by ditching his own PRD party, mired in corruption scandals, the embrace of neoliberal economic reforms, and sordid links to drug cartels. And in an interesting example of asymmetry with Brazil, a lifelong left-winger successfully pursued an anti-crime and anti-corruption ticket.
While Jair Bolsonaro promised to shoot his way through corruption and crime in Brazil, AMLO promised to demilitarize the war on drugs and introduce a new redistributive regime funded by the money saved through anti-corruption efforts.
AMLO claimed that Mexico’s endemic corruption was linked to the country’s embrace of neoliberalism by a ‘powerful mafia’ that rules the country, saying that ending it would require a new form of republican civic virtue. Interestingly, AMLO doesn’t rally against a capitalist class or one-percenters exploiting the country, he prefers to label his enemies a ‘mafia’ — which his critics claim is dangerous social polarization.
The collapse of legitimacy of both the PAN and the PRI saw them utterly routed in the 2018 elections, and it was the voice of those who felt betrayed by Mexico’s corrupt political class, those who had lost loved ones in the drug war, and those who just wanted to a new start for the country that brought AMLO to the presidency. Given the scale of the disaster he inherited, much of AMLO’s mission was to make normal politics possible again. In the next article I will examine to what extent has been able to accomplish this mission.[/restricted]