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Mary Anastasia O'Grady /WSJ:How
AMLO Is Like Venezuela's Chávez
Xinhua/Zuma press
Manuel Lopez Obrador
The spirit of the Mexican president's government is about centralizing power.
Mexican President Andrés Manuel López Obrador —a k a AMLO—has been known to bristle when critics liken him to the late Hugo Chávez. But the parallels between the spirit of Mr. López Obrador's two-year-old government and that of the Venezuelan strongman's in its early years are impossible to ignore.
Morena, AMLO's party, launched an effort in the Mexican Senate in December to seize autonomy from the country's central bank. The lower house, the Chamber of Deputies, will discuss the bill this week. The president seems to be backing off the idea, but if so it is only a tactical retreat.
AMLO is on a mission to complete what he calls “the fourth transformation” of Mexico, and he has to centralize power to do it. He has already wrested control of the Supreme Court, and last month he proclaimed that autonomous regulatory bodies like the federal antitrust commission and the office that provides transparency in federal contracts should be eliminated.
Ahead of the June midterm elections he is signaling that he is ready to buck the authority of two independent bodies charged with ensuring election fairness. Mexican democrats are in a fight for their political lives.
There are obvious differences between AMLO and Chávez. But when the history is written I suspect most of them will turn out to have been driven by economic constraints on the Mexican caudillo, not choice.
Chávez had control of Venezuela's state-owned oil monopoly PdVSA when oil prices took off in the early 2000s. Awash in oil income, he was able to buy off opponents while spreading money around to create the illusion that the masses were getting richer. He had the resources to militarize his government, and Cuba had been infiltrating the barracks for decades.
AMLO's world is one of moderated oil prices and a diversified economy. Revenues generated by Pemex, the state-owned, debt-laden petroleum company, are dwarfed by the boom in manufacturing and services born of the 1994 North American Free Trade Agreement.
So AMLO can't copy Chávez play by play. But his aspirations are hauntingly similar and so is his modus operandi.
Chávez was a demagogue and he used his television show—“Aló Presidente”—to bond with the man in the street against the Venezuelan establishment. AMLO uses his daily morning press conferences to the same effect—though he has been absent since his Covid-19 diagnosis a week ago.
His words sow resentment and division while justifying abuses of power in the name of corruption fighting. His critics are dismissed as elites—or “fifi” in his lexicon. There is no civil discourse.
Up to now he has used “legal” instruments like the anti-money-laundering Financial Intelligence Unit inside the Mexican Treasury to purge institutions of nonbelievers—including a Supreme Court justice and the head of the energy regulatory commission. Neither has been charged with a crime. He has also boosted the army's role in the economy.
Morena controls the Senate, where the bill passed in December would obligate Banxico, Mexico's central bank, to buy foreign-currency cash from Mexican banks.
Watchdogs on both sides of the border are alarmed. Cash is a nonissue for legally compliant financial institutions because they verify its origins and are able to ship it to correspondent U.S. banks.
Morena claims that the change in the law is necessary to ensure that migrants aren't forced to change their dollars at disadvantageous rates. Yet Banxico reports that only about 1% of total remittances are cash.
It isn't clear who Morena is trying to please by obligating the central bank to take cash dollars. But it is certain that passing the law would break a longstanding taboo in place to protect the monetary authority from becoming a tool for transnational criminal organizations to launder money. Who else walks into Mexican banks with suitcases full of unexplained cash?
Banxico says the law threatens its autonomy and its ability to do its job. In a Dec. 9 communiqué it said the draft legislation “would force the Central Bank to carry out high-risk active operations that may compromise” international reserves and “the compliance with the constitutional mandate to preserve the purchasing power of the National currency.”
Sharp criticism from the international financial community seems to have given AMLO second thoughts. He knows that if Mexico is marked a money launderer, the peso will hit the skids, and so will his presidency. His finance minister now says the government is working on an alternative idea for migrant cash transactions.
If he and Morena back off, it will be a small but important victory. Preserving Banxico's autonomy may not be a sufficient condition to save Mexican pluralism from the Venezuelan fate, but it is a necessary one.
Write to O'Grady@wsj.com.
Mary Anastasia O'Grady writes "The Americas," a weekly column on politics, economics and business in Latin America and Canada that appears every Monday in the Journal. Ms. O'Grady joined the paper in August 1995 and became a senior editorial page writer in December 1999. She was appointed an editorial board member in November 2005. She is also a member of the board of directors of the Indianapolis-based Liberty Fund. Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld.
Editor's Note: This article was originally published by Thw Wall Stree Journa (WSJ) , on January 31, 2021. All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld.
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