A few days after June midterm election that brought a welcomed sense of democratic normality and political equilibrium to Mexico, President Andrés Manuel López Obrador surprisingly –but deliberately I think– opened up the race for his party’s 2024 presidential nomination. Indeed, he suggested that Morena -his political party nominally leaning left- had a good pool of presidential hopefuls to succeed him. During one of his morning press conferences, he went even further and named five high-ranking officials as potential candidates: Secretaries Ebrard (Foreign Affairs), Nahle (Energy), Clouthier (Economy), the Ambassador to the United States (Moctezuma), the Ambassador to the U.N. (De la Fuente), and Mexico City’s mayor (Sheinbaum). Noticeably, he omitted mentioning the Mexican Senate’s majority leader, Ricardo Monreal, also a member of his party. The scene reminded people of one of the quintessential ways of Mexico’s ancien regime (during the era of one-party rule) when the sitting President hand-picked, or at least maneuvered, to place the person who guaranteed continuity and above all loyalty as the party’s official presidential candidate
As expected, this development prompted all sorts of speculations about President López Obrador’s motives, the odds in the race and traits of each of the potential hopefuls. The public’s and analysts’ interest in the subject is only natural since the President’s Morena party still fares well in the polls. Beyond this however, the real question we should be asking is what is the future of Mexico’s Left? Or even better, what is the best Left for Mexico’s future? It has been argued that the arrival of Mr. López Obrador to the presidency in 2018 resulted in the first Mexican government that was truly left-of-the-aisle since that of General Lázaro Cardenas, who ruled from 1934 to 1940. This assertion might very well be true, but it mises the point. The world, Mexico and politics itself have changed dramatically since then. Moreover, the Left is very much different today from what it used to be then -at least in most countries. Whoever seeks to govern Mexico from the Left starting December 2024, will have to make a clean and objective assessment of what happened during the López Obrador administration. They will also have to think hard about many issues, but two immediately catch the attention: first, how to build a socially inclusive government program while still attracting sufficient private investment, and second, the future of Mexico’s energy sector and its relation to the environment.
One can hardly argue against President López Obrador’s goal to mitigate the high levels of poverty and inequality that prevail in Mexico. However, his methods can certainly be debated. So far, the López Obrador administration has mostly relied on the public money to achieve this objective. Yet, in my view, it has neglected policymaking and guaranteeing an effective rule of law that is needed for Mexico to attract enough private investment. As López Obrador approaches the midpoint of his six-year term of office in December, the economy will still be below its 2018 level, employment will show only a marginal increase and the number of people below in poverty will have grown. It is simply unsustainable if not impossible to accomplish anything significant in terms of social policy if private investment is not really flowing and jobs are not being created. Covid-19 had a terrible impact in the Mexican economy and the government cannot be blamed for that, but the economy clearly exhibits problems beyond those caused by the pandemic. President López Obrador was too quick to dismiss all policies implemented during Mexico’s so-called neoliberal period. However, as early as 1997, the World Bank´s Development Report (“The State in a Changing World”) proposed a clear two-stage strategy: matching the state’s role to its capacity and raising the state’s capabilities by reinvigorating institutions. Smart people on Mexico’s Left seeking to govern the country should be careful not to get caught in a rather obsolete version of the debate on the role of the state in the economy. In any case, they should look instead at some good examples of the European Left that are not backward looking. They should also remember, as Sir Winston Churchill once suggested, there is nothing that the government can give that it has not first taken from society.
At the same time, Mexico’s energy sector has suffered a profound policy reversal under President López Obrador. He views a government-controlled energy sector as a motor for economic development and social equalization and has placed this new policy at the center of his government program and historical legacy. The President has made the “rescue” of the state-owned oil company (PEMEX) and state-run utility (CFE) a top priority and a matter of national pride. In the process, nevertheless, he has spooked investment for the economy overall, spent a lot of money, jeopardized Mexico’s environment and climate commitments, and stopped development of renewables capacity. Modern Left parties around the world are typically fond of environmental causes even if they favor strong regulation of the energy sector. Perhaps this is motivated by the fact that younger voters are much more concerned about the environment than older ones. At a time when people are urging for a carbon-free economy, Mexico seems to be going back to the 1970s when the country tapped into huge oil discoveries. The country’s landmark 2014 reform indeed opened space for private sector participation in the Mexican energy sector beyond what was already permitted. It did so, if not for any other reason, because government simply could not finance even the minimum investments that are needed. López Obrador’s decision to devote scarce public resources towards the production of oil and electricity, instead of sending them to areas such as education, health, and even public security, will soon have to reckon with reality and the scrutiny of Mexican voters. Again, whoever seeks to govern Mexico after López Obrador, will have to make call on whether or not energy policy should continue on the present path.
As the June midterm election proved, Mexico is clearly a politically plural country. Its complex socioeconomic landscape most certainly demands such diversity. Mexico benefits from having a strong and smart political Left. It is just not clear that this is what the country has right now.
* Gerónimo Gutiérrez Fernández is senior advisor at Covington and Burling, LLP and partner at BEEL Infrastructure. Twitter: @GERONIMO_GF