February Update
- Plan-B passage and next steps
The Mexican senate approved the electoral reform package proposed by President López Obrador, better known as Plan-B. The controversial package was voted by AMLO’s coalition, despite harsh criticism from the opposition, the leadership of the electoral body (INE), civil society organizations and experts, domestic and international journalists.
On Sunday 26 March, over 100 thousand people crammed Mexico City’s main square, the Zocalo, to protest against the reform. Opposition parties took part in the demonstration, but the turnout transcended them. It was undoubtedly a success to mobilise such a large number of people from a group — mostly middle and upper-middle class — that rarely takes to the streets.
In our view, Plan B does clearly hurt the INE by making it slimmer, less efficient, less technical and more accountable to the political parties than to the people. However, we do not believe Mexican democracy is at critical risk as some have suggested.
The opposition has understandably rallied around the ostensible threat to Mexican democracy and will carry this flag into the presidential election of 2024. Not only is this the last policy battle before this year’s state elections, but it’s also the issue that carries the most sentimental value to a generation of Mexicans that witnessed the transition to democratic elections.
Challenges to the law have been introduced to the Supreme Court and Electoral Tribunal. The INE has already started adapting to the new law. It will be a hard fought battle in both courts but the possibility of a reversal is latent. One year ahead of the presidential election and a few months before the local elections in Coahuila and the State of Mexico, the biggest risk right now is the uncertainty on the rules of the game if the courts do not make a decision expeditiously.
2. García Luna found guilty
On February 21st, Genaro García Luna, the Secretary of Public Security in the administration of Felipe Calderon (2006–2012) was found guilty in New York of colluding with the Sinaloa Cartel and of criminal enterprise and conspiracy to distribute cocaine in the United States.
A policeman turned politician, Garcia Luna was heavily criticized by the Mexican left, at the same time as he was being praised by the same US agencies that are now convicting him. Garcia Luna was accused of being one of the masterminds of the frontal war against organised crime that gave place to a spiral of violence that still plagues the country.
García Luna will remain a talking point for months to come, as AMLO and his coalition exploit his trial to cast the entire opposition as accomplices to Mexico’s criminal organisations.
3. Tesla to build giga factory in Mexico
Looking to expand its global output, Tesla will open a gigafactory in the state of Nuevo Leon. The announcement was expected to come a few months earlier but President López Obrador had several conversations with Elon Musk trying to change his mind about the location of the factory. Nuevo Leon is governed by the opposition and AMLO hoped Musk would chose Estado de México instead, to favor his party’s chances in the election for governor that will take place in June.
AMLO’s strongest argument against installing the factory in Nuevo Leon is sound: Nuevo Leon is facing a water crisis that has led to limited access to citizens and a reform to the legal and regulatory frameworks of water management could hurt Tesla’s plans. But according to Tesla, only the state Nuevo Leon satisfied their needs to install the factory in Mexico. AMLO considered pushing the bargain to make Musk a Estado de México or nothing offer, but the governor of Nuevo Leon and the Minister of Foreign Affairs managed to convince him otherwise, as Musk was reported ready to open the gigafactory in Texas instead.
Beyond contextual politics, the opening of the Tesla factory in northern Mexico is a new example of North American nearshoring as US companies consider Mexico the best and safest option to move its manufacturing operations in a rapidly changing world.
4. COMMENT
This month’s update is evidence of the often contradicting narratives that populate Mexico’s public discourse. On the one hand, cries of democratic backsliding and endemic corruption would appear to increase Mexico’s country risk as an investment destination. Yet for all the noise, there is no doubt that the country remains hugely attractive given its privileged geographical position and stable fundamental economics. Savvy observers should keep in mind that the noise will only intensify as the 2024 presidential election looms closer, but the fundamentals are unlikely to change in the short or medium term.
Authors:
Gonzalo Escribano & Mauricio Castañeda
