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Eclac’s Bárcena: AMLO Grabbed the Bull by the Horns


Economic Commission for Latin America and the Caribbean Secretary General Alicia Bárcena. Photo: ECLAC

By RICARDO CASTILLO

Mexicans are divided between two opinions: One, those who have faith in the “profound economic model transformation” slowly but surely being promoted by President Andrés Manuel López Obrador (AMLO), and two, those AMLO calls “conservative hypocrites,” who are presently even denouncing the Mexican democratic system as nothing less than a scourge for having elected this populist dude by by landslide.

On one side of AMLO are his faithful followers, who still back him up now, eight months into his six-year presidential period. The other side is composed of those who promised to invest, but are holding back their money, waiting for the president to do “something” (whatever) to reverse economic stagnation that’s quickly taking hold, led by the inertia created by what AMLO calls “the neoliberal economic model imposed during the past 36 years” by six different presidents.

In the middle of this ongoing debate, the Economic Commission for Latin America and the Caribbean (ECLAC, or Cepal, for its Spanish initials) Secretary General Alicia Bárcena recently called upon Mexican investors to stop shooting themselves in the foot and start pumping money in their businesses because an economic change “has its cost and that’s what we are living up to today.”

They are withholding investment, she told weekly Proceso magazine last Aug. 4, to several events that have piled up against the AMLO administration through deceleration, consumption decrease and delays in releasing the public budget monies by the Treasury Secretariat (Hacienda).

Of course, she said many of the events that have marked the administration such as the now-infamous for some and famous for others (choose your side) cancellation of the New International Mexico Airport, which was announced a year ago, as well as the Coordinator of Education Workers Union’s (CNTE) nefarious and destructive shutting down of the railroad line stemming from ports Lázaro Cárdenas and Manzanillo during 24 economically nightmarish days, the until-now unheard of strikes at maquiladora industries along the border, and, of course, the frontal war against fuel theft from Petróleos Mexicanos (Pemex), which led to regional shortages.

For Bárcena, a Mexican biologist who holds a Harvard master’s degree in public administration, “the Mexican economy is not in recession, but it is stagnant.”

And most definitely, she mentioned the dire straits state-owned oil company Pemex has been pushed into. AMLO should not be alone in the blame for Pemex, she said. Bárcena said that the demise that has led to a $107.6 billion debt began with President Vicente Fox in 2005, rolled downhill under the next presidents Felipe Calderón and Enrique Peña Nieto.

“You have to understand that the Pemex situation did not start with this administration,” she said. Over the past few months, she said, Pemex has been placed on a rescue plan that includes charging it fewer taxes.

Needless to say, that Pemex salvage plan has not been to the liking of international investors – and has reflected in rating agencies (Fitch and Moody’s) downgrading Pemex from stable to negative, while Standard & Poor’s applied the same rating to the Mexican debt. Investors have reacted in fear to the stance of the rating companies and AMLO’s economic policies.

Bárcena, who presented these points of view in the yearly Cepal report last July 31 at the Cepal headquarters in Santiago de Chile, said that the opinion of the rating companies has to be taken with a grain of salt.

“We have to make an analysis of the ratings companies at a global scale because now they award great ratings to Greece – which has a debt is 180 percent of its Gross Domestic Product – so we have to look at Mexico with objectivity,” she said. “Mexico has the lowest sovereign debt risk in the (Latin American) region.”

In the Proceso interview, Bárcena called upon Mexican investors to believe in AMLO. “Obviously, there’s a change in the business model, in the rules of the game,” she said, “but I believe the private sector is clearly seeing investment opportunities in many of the states, and, frankly, no matter what many claim, I don’t feel there is a great confrontation” between AMLO and investors.

What she considered AMLO’s boldest measure was on Pemex:

“To have the president say ‘I am taking up the Pemex issue and giving it a different direction’ seems to me very important, because it one of the key strategic sectors of the nation,” Bárcena said. “What he’s doing is grabbing the bull by the horns with his decision to reduce Pemex debt, which is now equivalent to 8 percent of Mexico’s GDP.”

Bárcena also supported the public works AMLO has undertaken with the construction of the Dos Bocas refinery, the Maya Railroad and the Santa Lucía Airport. “They will show positive effects for the economy during 2020,” she said.

For Bárcena, AMLO’s direction in his leadership change “is very clear; it is also very important to try to understand what he’s trying to do,” which is look after the most vulnerable people in Mexico.

Cepal forecasts a 1 percent GDP growth for Mexico for 2019 – half of AMLO’s forecast – but still sees “a lot of economic uncertainty in the (LatAm) region.”

But Cepal does not venture into forecasting any immediate results. “We have to wait, it’s too early to tell,” Bárcena said. “The president is outlining a path, which is what we all are watching and analyzing at the moment.”

Maybe Alicia Bárcena is right and maybe she is not, but at least she’s a positive voice amid the minority crowd that’s shouting that AMLO is leading the nation directly to hell.

 

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