By Beatrice E. Rangel
When grilled by journalists on the negative outcome of the referendum on the half built new airport for Mexico City president elect Andres Manuel Lopez Obrador shouted "Who do you think is encharged? The people of course. You did not believe it!!"
Next the peso slipped in forex markets, Mexicans began to send money abroad and FDI commitments froze. All these developments did not bode well to the much-announced economic revival goals touted by the president elect.
And while many believe that Mr Lopez Obrador was just showing off his political might to Mexican elites, the incident has planted doubts among foreign investors about the wisdom of sinking capital in Mexico only to find that Mr Lopez Obrador changes the rules of the game to their disadvantage so that they end up losing money. Many are also thinking that Mexico could take the Venezuelan road to disaster. These fears need to be addressed by the incoming administration lest it wants to settle for low growth rates during the next six years.
Given that Mr Lopez Obrador has clearly indicated that he will become the greatest supporter of middle-class growth, he surely aims at boosting GDP growth to a 3-3.5% growth rate.
This he knows not to be possible without foreign investment. Further he also knows that Mexico needs to conquer foreign markets different from the U.S. And these goals run counter to plebiscitary ruling, as they demand firm economic policies that break monopolies and open the Mexican market to competition.
And perhaps this is the hidden message he is sending through his decision to convene a rag-tag referendum on Mexico's City airport. Because the airport is being executed by a consortium that demonstrates what is wrong in Mexico.
To begin with, it is delayed and is running tremendously over costs.
Second, participating companies are a guided tour on chummy capitalism: Led by Grupo Carso Carlos Slim's development company with participation of his Spanish hunting pals FCC and Acciona. Norman Foster, the world famed architect has a local counterpart Fernando Romero, Mr Slim's son in law. In short, a petri dish with live crony capitalism bacteria.
And this is precisely what Mr Lopez Obrador has denounced throughout his political career. Thus, by supporting the referendum, he might be announcing that this will effectively be the last public work that is finger assigned to businessmen that are close to the government. But he might also be signaling yet another aspect of the issue: corruption. According to many observers , the airport consortium has been a spring for political contributions. And Mr Lopez Obrador will certainly see that it ends.
And what better way to end a nefarious practice than to say that you will consult the people.
To be sure, when it comes to corruption people seem to know better than leaders the who, what, and when of corruption. Should this be the case, Mr Lopez Obrador is heading towards turbulent waters, as it is virtually impossible to rule in Mexico without incurring in corrupt practices.
Corruption networks are so pervasive and powerful that they could paralyze his government or even cut his presidency short. And it is for this reason that he resorted to a dubiously valid referendum to initiate the fight. In such case one must say he chose the right weapon. But he now needs to calm international markets and investors.Beatrice Rangel is President & CEO of the AMLA Consulting Group, which provides growth and partnership opportunities in US and Hispanic markets. AMLA identifies the best potential partner for businesses which are eager to exploit the growing buying power of the US Hispanic market and for US Corporations seeking to find investment partners in Latin America. Previously, she was Chief of Staff for Venezuela President Carlos Andres Perez as well as Chief Strategist for the Cisneros Group of Companies.
For her work throughout Latin America, Rangel has been honored with the Order of Merit of May from Argentina, the Condor of the Andes Order from Bolivia, the Bernardo O'Higgins Order by Chile, the Order of Boyaca from Colombia, and the National Order of Jose Matías Delgado from El Salvador.
You can follow her on twitter @BEPA2009 or contact her directly at BRangel@amlaconsulting.com.