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WSJ

Mexico’s Democracy Test

lunes, 3 de diciembre de 2018

WSJ

By Mary Anastasia O'Grady

After Andrés Manuel López Obrador dons Mexico’s presidential sash on Saturday, the republic could soon find itself wading into uncharted waters. Can its young democratic institutions withstand an executive who aspires to centralize power in the same way the legendary Institutional Revolutionary Party (PRI) did in the 20th century?

Markets seem to be bracing for significant strain on the rule of law. Bloomberg reported last week that three of the world’s five worst-performing quasi-sovereign bonds for this quarter are Mexican. Topping that list are bonds for Mexico City’s airport; it also includes bonds issued by the state-owned oil company Pemex and Mexico’s Federal Electricity Commission.

One worrying indicator is Mr. López Obrador’s decision to invite Venezuelan dictator Nicolás Maduro and Bolivian strongman Evo Morales to the ceremony. Both are poster boys for repression and are personae non gratae among the region’s democracies. The fear that Mr. López Obrador will befriend Bolivarian thugs as a way of appeasing his supporters on the hard left now seems well founded.

Other pre-inauguration decisions by AMLO-as the president-elect is known-are equally troubling.

The 65-year-old cut his political teeth in the southern state of Tabasco as a PRIísta. In the late 1980s, when the party was pushing economic reform, he was among a group of “dinosaurs” who broke away to form the left-wing Revolutionary Democratic Party. In 2014 AMLO registered his own party, calling it the National Regeneration Movement, or Morena.

Greater electoral competition has changed Mexico’s political landscape over the past three decades. But it has not changed AMLO. He maintains his reputation as a rabble-rouser who calls his constituents to the streets when things don’t go his way. In the immediate aftermath of his victory in July he made some effort to moderate his radical speech to stabilize the peso. But as the months have worn on, his cautiousness has worn off.

The saga of the $13 billion New Mexico City International Airport is illustrative. Some $6 billion in bonds have been sold internationally to finance the facility located in the municipality of Texcoco in the state of Mexico.

AMLO thinks the new airport is a waste of money and that the bidding processes were corrupt. He wants to scrap it, even though it is almost 40% complete with an estimated $5 billion in sunk costs. He proposes instead to add capacity to the existing Benito Juárez International Airport by building two new landing strips at the Santa Lucía air force base 30 miles away.

This is unlikely to serve the needs of sprawling Mexico City and surrounding communities. One problem is that the metropolis sits in a valley at an elevation of 7,000 feet, mostly surrounded by mountains. The tricky orography narrows the options for safe landing-approaches, meaning that Santa Lucía’s new runways wouldn’t arithmetically increase traffic capacity because flight paths would overlap with Benito Juárez.

In 1996, when it was clear that Benito Juárez was reaching maximum traffic capacity, Mexico retained the Virginia-based nonprofit research group Mitre to study expansion options. After years of research, it recommended the dry lake-bed in Texcoco.

Last week Mitre issued a “clarification statement,” reiterating its finding that Texcoco is “the ideal place to create an airport” and that the plan’s initial three landing strips can be “operated simultaneously.” The statement added that the Texcoco project, “already under construction, as it has been designed in phases, would cover the air-traffic operational needs of [Mexico City] for much of the rest of this century.”

As mayor of Mexico City from 2000-05, AMLO resisted the Texcoco plan, presumably because it is outside the district’s tax jurisdiction. Now it seems personal.

A Morena-sponsored referendum in late October was designed to prove public support for his plan. The survey sample wasn’t statistically representative, nor were the questions impartially worded. Not surprisingly it found that a majority of the 1.2% of voters who participated prefer the Santa Lucía solution.

It isn’t known if the Federal Aviation Administration will certify the AMLO plan, a necessary step for U.S. carriers to fly there. But last week AMLO said that the airport in Texcoco is dead.

He has tried to assuage contractors by promising them future government projects, though public-bidding rules don’t give him that authority. Meanwhile, markets are taking him at his word. The opinion column “Fourth Transformation” in Mexico’s El Financiero newspaper claimed last week that bondholders in New York are already preparing to sue.

If this were only about a bad airport decision, Mexicans might relax. But a president who believes he can tear up contracts and rule by decree won’t stop at canceling new runways. For a developing nation heavily dependent on private capital for growth, it’s an ominous sign.

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