Will Herrera Fit the Mold of AMLO’s Expectations?


Mexico’s new Finance Secretary Arturo Herrera Gutiérrez, Photo: El Siglo de Torreón

By RICARDO CASTILLO    

Definitely the outstanding image in Mexico for the week July 8-12 was the stone-cold face of Arturo Herrera Gutiérrez as President Andrés Manuel López Obrador appointed him the government’s new finance secretary. Herrera Gutiérrez looked as if he was attending his own funeral.

The fact is that a lot of political pundits noticed the grave gesture, that commenting that the man surely looked scared. And given the circumstances — he rose to the top financial position in the nation overnight when his boss left the post — he should be. Herrera Gutiérrez had just seen how and why his predecessor Carlos Urzúa got sacked by AMLO, even though publicly he “resigned.”

The day after Urzúa’s firing, AMLO outlined why he had to let him go. “I was shown a National Development Plan (PND) (for 2019-2024),” the president said. “I looked at it, and from my point of view, it did not reflect the change we’re seeking. It could have been written by (economists Agustín) Carstens or (José Antonio) Meade. With all due respect, I turned it down.”

By mentioning Carstens and  Meade, AMLO was referring to former finance secretaries in the abhorred “neoliberal” era. Carstens served under former president Felipe Calderón and Meade under Enrique Peña Nieto.

The National Development Plan, however, was Urzúa’s brainchild. What AMLO meant was that what Urzúa proposed was not a transition leading into his Fourth Transformation (4T), but a continuity of similar finance tactics, meaning more of the same.

AMLO said that he had presented his own version of the National Development Plan, with which Urzúa openly disagreed, leading into a confrontation and the first beheading of a top cabinet member.

Surely, after hearing all this, Herrera, rather than being grim in the abovementioned photo, must have been thinking: “I’d better get acquainted with AMLO’s PND, fast.” And he’d better rehash AMLO’s full campaign promises to 53 percent of voters as Herrera since slated to appear at the Chamber of Deputies next Tuesday, July 16, during which the finance committees will pummel him on the PND subject to confirm him to the post, or not.

Even worse, Mexico is awaiting with great expectations the about-to-be-issued Petróleos Mexicanos (Pemex) Business Plan, due to be made public anytime now. The Pemex Business Plan is expected to put an end to the hot rift that’s been going on recently between the president and international ratings companies.

The reason is that the Finance Secretariat literally administers Pemex at the financial level and Pemex’s $107.6 billion debt can only be solved by the Finance Secretariat, not from within the state-owned oil giant. The way Pemex goes, up or down, so will the government and, of course, the nation.

One rough spot which went public last March was Herrera’s comment that he did not think that AMLO’s pet project, the construction — from scratch — of the Dos Bocas oil refinery was feasible. Herrera was echoing many a voice that contradicted AMLO, claiming  in the recent past that the entire project could be built by the government for under $8 billion. Critics scoffed at the president’s lack of vision of how much a refinery costs and Herrera joined this choir, but he was contradicted by AMLO.

Surely Herrera, by accepting the Finance Secretariat directorship, and rising up from the position of undersecretary, also accepts that he has to follow AMLO’s leadership. However, in Mexican politics the president is there to run the entire national show and the Finance Secretariat – surely the most important post in the cabinet – is in charge of administering the monies that go to each of the other secretariats and dependencies. The question is: Will AMLO give Herrera sufficient leeway to be his own man in a post he’s thoroughly prepared for? We’ll see.

There were a lot of financial events in the one hour separating Urzúa’s resignation and Herrera’s appointment. The peso immediately plummeted by .43 centavos against the dollar, but recovered by .15 centavos after Herrera’s nomination. Still, peso lost 0.8 percent of its value, not much, but still a loss.

The initial parity reaction to Herrera’s nomination was positive and he went on to hold an hour-long press conference in which he denied what yellow journalism financial dailies such as Britain’s The Financial Times and Mexico’s El Financiero, had claimed, that the Mexican economy is already in recession.

“We’re not even near it,” Herrera told reporters. (AMLO said during his Thursday, July 11, press conference that The Financial Times “ought to apologize.”)

In this press conference, a positive note for Herrera was that he has better rapport with reporters and cameras than Urzúa had had.

And Herrera acknowledged that he had to mediate between the aims of the 4T and the disparaging parameters of international rating companies. And that he had to lead the path to deal with Pemex’s mega debt.

What is unquestionable at this point is that there is a disparity between what AMLO has earmarked a clear financial path for his programs and what the new Herrera makes of AMLO’s often-opinionated course of actions.

Both men have their offices at the National Palace in downtown Mexico City, a place that in good times has been one of glory, and others a house of terror.

It will be most interesting to see how these two fit together in this new stage of the AMLO administration.

 

 

 

Categories: Finance, Mexico, Opinion, PoliticsTags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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