Mexico: The Venezuela Next Door?

Mexico: The Venezuela Next Door?

Could Mexico under the leadership of Andres Manuel Lopez Obrador plunge into the political and economic tailspin which we associate with Venezuela under Hugo Chávez?

Still, there are some ominous signs. Most notable is his campaign against Mexico’s electoral institutions, the National Electoral Institute, which administers voting, and the Electoral Tribunal, which hears appeals of electoral disputes. In addition to his charge that the 2006 election was stolen, he has added complaints that certain MORENA candidates for lower offices were not permitted to run—having been disqualified for failing to meet technical requirements. He has mounted a campaign which has pressured an Electoral Tribunal judge to leave his post early, has proposed constitutional changes to make elections “more efficient,” and has called for the entire Electoral Tribunal as well as the board of the National Electoral Institute to resign. He has cut the institute’s budget, while at the same time insisting that it administer a referendum on his continued tenure in office. AMLO, though, is sufficiently popular that it is most unlikely that he would lose, making the referendum simply an effort to underscore the support he still enjoys. It is worth noting that his campaign to achieve a friendly judiciary has extended beyond the Electoral Tribunal to Mexico’s Supreme Court, where he obtained legislation to retain the presiding judge, generally seen as supportive of him, in office beyond his term. (The judge ultimately declined to accept an extension.)

Key to both Chávez and AMLO’s style is a rhetoric which seeks to disparage his opponents, with a strong flavor of class warfare. Chávez typically called the previous political and economic elite of Venezuela “the squalid ones.” AMLO calls his opponents “fifis” (roughly, upper-class twits). Both have made denunciation of critical media a constant theme. And AMLO has with considerable success set himself up as the paladin of anti-corruption in Mexico. There, however, may be limits to how far he can take this message, especially the light of the fact that his own movement has not been free of scandal, notably when a video surfaced showing one of his brothers receiving bundles of cash from one of AMLO’s political operatives, and more recently when it was reported that his son living in Houston had rented a large house from a former executive of a major oilfield services company which did business in Mexico and that he was employed by a firm belonging to a Mexican businessman who had ties to AMLO.

Recently AMLO held a referendum on authorizing the government to prosecute former presidents for corruption (something which it was already able to do under existing law). The referendum was widely seen as a transparent political gesture and failed to gain the minimum level of support required. But generally missing from AMLO’s recipe for governing thus far has been the naked repression of opponents which characterized Chávez from the beginning and which his successor Maduro has continued.

NONETHELESS, THERE have been some ominous developments in recent months. Mexico’s attorney general has mounted a dubious criminal case against distinguished scientists affiliated with the National Science and Technology Council who had objected to personnel and policy changes in the institution. AMLO has denounced the Center for Economic Research and Teaching, a small but distinguished state-funded institution, for having “turned to the Right” and similarly charged his alma mater, the National Autonomous University of Mexico, with having become “neoliberal” and “individualist.” And he has demanded (unsuccessfully) that tax authorities publish the returns of the journalist who reported on his son’s activities. AMLO is, it seems, becoming ever more hostile to those he views as opposed to his project.

Any government with authoritarian tendencies must carefully deal with the one institution which could thwart it—the armed forces. In the case of Venezuela, Chávez had the great advantage of coming from the army, thus knowing its leaders, their personal ambitions, political leanings, degree of honesty, etc. After winning the presidency, he moved methodically to gain control by naming his supporters to top military positions, while those of more doubtful loyalty were put on indefinite leave. With the resources available from high oil prices, he went on a spending spree on military equipment, with money finding its way into senior officers’ pockets. As he expanded Venezuela’s government, creating a vast, politicized welfare state, military officers found themselves in high positions, such as managing the “Mercal” system of state food markets for low-income consumers. There are also reports of military involvement with drug trafficking run by guerrilla groups along Venezuela’s western border with Colombia.

AMLO has had to tread more carefully with the military, as he has lacked Chávez’s origins in the institution, as well as the oil wealth which he had enjoyed to assure its acquiescence. However, AMLO has clearly favored the armed forces. He has taken pains to appear supportive and has expanded their role in internal security—using the military police as the basis for the creation of a new paramilitary “National Guard” to substitute for discredited existing police entities.

And he has moved decisively to keep the military happy when its prerogatives are threatened. The most striking example occurred when a former senior army officer was arrested in Los Angeles by U.S. authorities on drug trafficking charges. After initially remaining quiet, AMLO, feeling pressure from the military, threatened to cut off all counter-narcotics cooperation with the United States if he were not released. The U.S. Department of Justice gave in and let him go.

Internationally, AMLO’s policies have marked a reversion to typical Mexican form of the 1980s and before, with occasional sharp criticism of the United States combined with pragmatism on sensitive issues such as immigration and the renegotiation of NAFTA. He has made gestures of friendship to left-leaning governments such as Argentina and, recently, Peru, and a shown reluctance to criticize human rights violators, especially those of a leftist hue. (Mexico was slow off the mark in condemning Nicaragua for Ortega’s jailing of his principal political opponents.) However, AMLO has not gone anywhere near as far as did Chávez during Venezuela’s glory days of high oil prices, when he became Cuba and Nicaragua’s banker, showering both states with subsidies.

If AMLO’s political maneuvering is a variant of Chávez-style Left populism, albeit constrained by significant limitations, much the same can be said of his economic program. Both have couched their policies in the most grandiose of terms, with AMLO having promised Mexico’s “fourth transformation” while Chávez pledged to create “twenty-first-century socialism.” Both visions rely upon the state-owned petroleum sector as the engine to finance highly visible mega-projects as well as expansive welfare programs. 

BOTH AMLO and Chávez looked back to the 1970s, when their state oil corporations, PEMEX and PDVSA respectively, had monopolies on oil production dating back decades that had become gigantic money makers when OPEC tightly controlled much of global production. Oil prices, of course, subsequently crashed, leading both countries to swallow hard and let international oil companies enter into joint ventures which brought in needed capital and technology, though both in Mexico and Venezuela there was always a strong leftist current committed to resource nationalism which bitterly criticized this perceived betrayal.

The tide turned first in Venezuela, where Chávez enjoyed a boom in oil prices which started almost upon his taking office in early 1999. He began to squeeze the international oil companies, demanding a greater share of earnings and eventually largely driving them out. At the same time, he exercised fierce political control of state oil producer PDVSA, cutting back on investment and using its profits to build his political and security machine. (Ironically, with the collapse of Venezuela’s economy, he and his successor were forced to turn to new sources of foreign oil investment from Russia and China.)

AMLO, long a proponent of petroleum-based nationalism, has taken some moves in the same direction. He has not gone as far as actually rolling back the existing presence of international oil companies, whose entry had been encouraged by earlier constitutional changes, but he has shown a strong preference for state oil giant PEMEX despite its history of corruption and enormous indebtedness. He has sought to reverse the pro-private sector constitutional changes, a task which may have been made harder by his failure to secure a two-thirds majority in the last midterm congressional election. However, he has taken steps under his executive powers such as insisting that PEMEX serve as the operating partner in an existing joint venture with Houston-based Talos Energy on a large new offshore deposit.

He has also sought to increase the state presence in downstream operations, pushing forward with the construction of a major new refinery in his home state of Tabasco for Mexico’s heavy crude oil. This is despite the fact that many industry observers do not see this as making economic sense and it is located in an environmentally-sensitive area. Chávez had similar ambitions, vowing to construct a refinery to be called “Bolivar’s Final Dream,” which amidst Venezuela’s economic collapse has yet to be built. AMLO has shown particular hostility towards foreign participation in the electric power sector, seeking passage of legislation which would give priority to the state-owned enterprise, the Federal Electricity Commission, in generation, transmission, distribution, and supply. This recalls Chávez’s outright nationalization of previously privatized utilities such as the Caracas power distributor, which had belonged to U.S. firm AES Corporation.