Financial information

The Mexican leader should learn from his mistakes

Mexican President Andrés Manuel López Obrador was famous for defying political gravity. Poor economic growth has not dented its popularity. One of the world’s worst excess death rates from the coronavirus hasn’t hurt his polls’ gross health. Voters didn’t seem to blame him for the shocking levels of drug-related killings or for channeling scarce public investment into vain projects such as a $12.5 billion oil refinery devoid of any economic logic.

The explanation lies in the strength of López Obrador’s political brand. His beliefs may be rooted in nationalist, big-state Mexico of the 1960s, but the president’s folksy, down-to-earth charm and frugal lifestyle convinced ordinary Mexicans that he was one of between them. Clever policing of the political agenda via a marathon live-streamed daily press conference also helped. Above all, López Obrador has promised a clean break with the corruption he says has flourished under his predecessors.

So when news broke that López Obrador’s eldest son, José Ramón, was living in a luxury home in Texas with a private cinema and a large swimming pool, the news shook the president’s austere public image. The owner was a former executive of Baker Hughes, an oil services group that is one of Mexico’s state oil company Pemex’s biggest contractors. (Baker Hughes said an external audit found no irregularities.)

The president first tried to sweep the case aside. Then he attacked Carlos Loret de Mola, one of the journalists behind the case, calling him a “mercenary putschist”. He showed a slide during his daily press conference detailing what he claimed was Loret de Mola’s annual income from various employers (the reporter said the numbers were inflated).

Disclosure of an individual’s financial information would be wrong anywhere. In one of the deadliest countries in the world for journalists, with five reporters murdered this year, it was indefensible.

Weeks after the initial revelations, the president failed to quash the ‘Grey House’ case and his ratings plummeted to their lowest level since his election, albeit a still respectable 54%. The promise of an official investigation is not reassuring: the attorney general helped advise the president’s electoral campaign.

When he ran for office, López Obrador correctly diagnosed many of Mexico’s ills: endemic corruption, lackluster economic growth and gaping inequalities. His landslide victory in 2018 gave him the strongest mandate to deal with it.

Yet in the first half of his tenure, these problems have only worsened: poverty has increased and drug-related violence is spiraling out of control. Mexico is the only major Latin American economy yet to return to pre-pandemic production levels, thanks to the government’s misguided refusal to support the economy during the coronavirus. Foreign investors have been scared off and the country’s institutions are under attack by an increasingly intolerant and chimerical ruler.

Nearshoring should represent a golden opportunity for a large manufacturing economy located on the American border, but the government of López Obrador has clearly failed to take advantage of it. The same is true for renewable energies.

The affair of the “Grey House” offers the Mexican president the opportunity to rethink his policy and keep his electoral promises. If he doesn’t, his “fourth transformation” project risks being remembered as the one that took Mexico back to the 1960s rather than propelling it into the 21st century.