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AMLO and Mexico’s Fourth Transformation

On December 1, 2018, Mexico’s Andrés Manuel López Obrador (AMLO) was sworn in as president for a six-year term. Following a decisive election in which AMLO more than doubled the vote share of his nearest opponent, the “populist” president-elect promised zero tolerance against corruption and a “Fourth Transformation.” (The other three transformations AMLO referred to were the Mexican Revolution, the reforms of Benito Juárez, and Mexican independence.) Fueled by decades of endemic corruption, low and unequal growth, and a spiraling security situation, AMLO’s victory represented a welcome opportunity for addressing Mexico’s systemic challenges.

Four years into AMLO’s term, however, the Cuarta Transformación looks astonishingly similar to the ancien régime he promised to replace, despite a handful of policy reforms. Nonetheless, López Obrador is remarkably popular and stands poised to handpick a successor in 2024. What, then, explains the success of AMLO, and does the so-called Fourth Transformation stand a chance of ending decades of stagnation in Mexico?

As a leader, AMLO shares many of the traits of past and present Latin American populists. With his folksy charisma, AMLO styles himself a man of the people and excels at trolling a morose opposition and journalistic class. The president’s ideology and style of government, however, occasionally vexes both committed allies and fervent opponents.

On the surface, López Obrador styles himself a leftist. The villains of Obradorismo are usually the “conservative oligarchs” of Mexico’s “political mafia,” along with the globalist entreguistas (appeasers) of recent centrist and center-right PRI and PAN governments. And yet the very same man is a maniacal deficit hawk, a social conservative, a champion of labor, and an economic nationalist. Consequently, the contours of the Fourth Transformation are shaped by complicated ideological elements as well as the president’s idiosyncrasies.

AMLO the Libertarian

AMLO’s fiscal austerity receives little attention in international media, but since he assumed the presidency, social spending has actually declined relative to the previous administration. According to Bloomberg, Mexico also boasts one of the tightest budgets in the world. Since the start of the pandemic, Mexico’s fiscal deficit rose to only 2.3 percent of GDP from 1.8 percent in 2020, while the median of similarly rated peers climbed to 5.8 percent.1 Comparatively, it’s easier to cast the president’s “neoliberal mafiosi” predecessors as big government tax and spenders.

AMLO’s fiscal prudence is easier to understand through the lens of his personal and public frugality. Like Pepe Mujica in Uruguay, AMLO detests the opulence of the offices of high government. The president has promoted what he calls “republican austerity,” with one of his favorite catchphrases being “there can be no rich government in a poor nation.” Among his first acts as president, AMLO slashed congressional and executive agency salaries, and his own presidential pay, by 60 per­cent. He also abandoned the presidential palace in favor of a modest apartment, converting the grandiose Los Pinos into a public museum. Likewise, López Obrador sold the Mexican equivalent of Air Force One, preferring instead to fly coach with his fellow, often swooning, countrymen. The president would no doubt argue that his personal and fiscal austerity derives from a sincere, anti-oligarchic leftism. Still, in terms of policy if not style, AMLO’s austerity resembles that of the most parsimonious deficit hawks.

As noted, during the pandemic, Mexico recorded among the lowest stimulus spending in the hemisphere, 0.6 percent of GDP compared to 3 percent in right-wing Brazil.2 López Obrador refused to increase spend­ing even as millions of Mexicans lost their livelihoods as a result of the pandemic. At the same time, AMLO was vehemently against pandemic lockdowns on the grounds that their economic cost harmed poor Mexicans the most.

In practical terms, AMLO’s covid policy was perhaps even more relaxed than those of Jair Bolsonaro and Donald Trump. Like these counterparts, AMLO himself had little formal authority over Mexico’s federal states, most of which were governed by opposition parties at the time. Consequently, it was mostly centrist and right-wing governors who enacted harsher Covid restrictions, while government-allied states stuck with the more relaxed president.

To be sure, López Obrador was criticized for numerous gaffes, such as refusing to wear a mask and kissing babies during the pandemic. Likewise, Mexico’s vaccine rollout under AMLO’s leadership lagged behind that of regional peers. And yet, in 2022, Mexico’s Covid-related death rate stands at around 2,500 deaths per million inhabitants, ultimately comparable to the rates of more restrictive peers. Colombia and Argentina, for instance, saw around 2,700 and 2,500 deaths per million inhabitants, respectively, despite imposing harsh national re­strictions throughout 2020 and 2021.3

Moreover, in light of rising interest rates, AMLO’s austerity has yielded surprisingly favorable returns. Mexico remains one of the few developing nations with access to international bond markets at a time when investors are wary of investing in countries with deteriorating finances. In the first eight months of 2022, Mexico sold a record $9.47 billion in bonds overseas, more than double the median of the past ten years.

AMLO the Nationalist

With such outstanding fiscal chops and an exceptionally laissez-faire approach to Covid, you’d think that the likes of the Cato Institute would be keen to lavish AMLO with praise. The president, however, is no darling of libertarians, whether foreign or domestic. Despite his budgetary rectitude, AMLO is a committed nationalist. Like Evo Morales in Bolivia, López Obrador views Mexico’s natural resources and energy production as national assets.

Indeed, for most of the twentieth century, Mexico pursued a constitutionally mandated policy of energy sovereignty, self-sufficiency, and industrial development, following the reforms of left-wing nationalist president Lázaro Cárdenas (1936–42). AMLO himself has long subscribed to that tradition, having previously been a follower of Lázaro’s son, and 1988 presidential candidate, Cuauhtémoc Cárdenas.

Since the 1980s, however, Mexico has pursued a path of increasingly doctrinaire free market economics, termed the Washington Consensus. The twin gospel of trade liberalization and mass privatization became hallmarks of the technocratic administrations of recent PRI and PAN governments. Held in thrall to the globalist groupthink of the era, Mexican elites cheered as vital industry and services were sold off to or outcompeted by foreign multinationals.

Like many other Latin American countries, Mexico signed a series of free trade agreements with the United States, the most significant of which was the North American Free Trade Agreement (nafta) in 1994. AMLO, unsurprisingly, was a decades-long critic of nafta and ultimately signed off on the successor usmca with fellow nafta critic Donald Trump. It’s important, however, to understand the reasons for Mexican dissatisfaction with nafta, as they are distinct from those that have long disgruntled Americans.

It’s certainly true that the agreement allowed U.S. manufacturers to exploit cheap Mexican labor through the outsourcing of some 700,000 jobs, mostly in the automotive sector.4 Indeed, throughout the 1980s and 1990s, Mexico witnessed a burgeoning of its manufacturing sector as its maquila factories sprouted throughout its northern regions. Today, manufacturing represents around 20 percent of Mexican GDP, with 60 percent of exports consisting of diverse electronic and automotive goods.5

And yet, what Mexico gained from the diminishment of American automotive protectionism it lost at the hands of mercantilist agribusiness. In the years following 1994, so-called free trade immiserated Mexican small farmers that simply could not compete with U.S. subsi­dized corn, beans, and dairy products. By 2004, U.S. corn exports to Mexico had quadrupled while Mexican corn prices fell by 66 percent,6 thereby putting some 1.3 million small farmers out of work.7 In the ensuing presidential campaign of 2006, López Obrador campaigned ardently against nafta as Mexico’s remaining tariffs on U.S. beans and corn were due to be lifted in 2008.

With such spectacular growth in Mexican manufacturing, however, surely the gains in that industry offset whatever losses came from competition with U.S. agribusiness? On the contrary, the impact of China’s entry into the WTO was ultimately far more harmful to both Mexico and the United States than nafta’s benefits for Mexico. Confronted by the behemoth of Chinese manufacturing, Mexico’s preferential access to the U.S. market languished as Mexican exports entered into direct competition with Chinese equivalents.

Previously, Mexican maquiladoras added about 800,000 jobs between nafta’s enactment in 1994 and the sector’s peak employment in 2000. Following Chinese accession to the WTO, however, the sector shed around 250,000 jobs by 2003. Today, maquiladoras employ only 550,000 more workers than they did before nafta was enacted in 19948—nowhere near the 1.3 million lost in agriculture during the same period.

For Mexico’s more rural and agricultural central and southern regions, free trade predictably entailed the mass migration of rural farmers north, in large part to the United States. Indeed, the data shows that illegal immigration from Mexico was highest in the decade after 1994.9 In what can only be described as strategic business acumen, American agribusiness proceeded to boost profit margins through the mass employment of undocumented workers. Of the more than two million farm workers employed in the United States, the share of those that were undocumented rose from just 12 percent in 1990 to more than 50 percent in 2000.10 In many cases, these were the same small farmers displaced by the treaty-preferred sale of U.S. agricultural goods.

Notably, AMLO has described Mexican emigration as a national disgrace and the product of decades of “technocrats who govern our country badly [and] do nothing more than copy the bad from abroad.” He certainly has a point. As a leftist, AMLO has long posited that the best method of deterring emigration is through the flourishing of Mexican small farmers (a central pillar of his electoral coalition). A southerner himself, this explains, in large part, his penchant for megaprojects such as the Dos Boca oil refinery in his home state of Tabasco.

The Jewels in the Crown: Pemex and CFE

At heart, AMLO is a profoundly nostalgic character. His Fourth Transformation is in many ways an attempt to recreate the glory days of the 1970s, when Mexico boomed off the strength of its oil industry at a time of high oil prices. Back then, Mexico, like much of the rest of Latin America, practiced import substitution industrialization (ISI), whereby protectionist measures blocked imports that otherwise might have substituted goods made by domestic industry.11

Up until the 1980s, ISI policies resulted in tremendous prosperity for state-owned firms such as Petroleos Mexicanos (Pemex) and the Comisión Federal de Electricidad (CFE), as well as impressive GDP growth. Comparatively, the past forty years have been lackluster. While free trade eviscerated Mexican agriculture, economic liberalization has sav­aged the country’s broader productive apparatus and energy sover­eignty.

More specifically, under the infamously empty-headed President En­rique Peña Nieto (2012–18), Mexican neoliberals secured their greatest triumph, energy privatization. Following a landmark amendment to the constitution in December 2013, Mexico’s state oil and electric companies were subject to competition from private (read foreign) competitors for the first time in seventy-five years.12

Admittedly, oil production had already declined from nearly 4 million barrels a day in 2004 to around 3 million in 2008, before stabilizing.13 After 2013, proponents of the energy reform claimed that competition with the private sector would lead to a 75 percent increase in production.14 Instead, public and private production declined to around 1.7 million barrels by 2019, a 43 percent decrease.

To get a sense of how Mexican nationalists reacted to this development, consider the fact that the amendment in question essentially undid Lázaro Cárdenas’s chief accomplishment, the nationalization of Mexican energy resources in 1937 (to this day a national holiday). Comically, in order to be constitutional, the amendment stipulates that the Mexican state remains the sole owner of hydrocarbons so long as they remain in the ground.15 After 2013, foreign multinationals pounced at the chance to reenter the Mexican energy market at the expense of state firms.16

Since assuming office in 2018, AMLO has done his best to wield the power of the state to save both Pemex and CFE. Among his first initiatives was a decisive crackdown on fuel theft from Pemex’s pipe­lines, a long-standing racket for organized crime. More consequential, however, was the government’s administrative adjustments, allotting preferential contracts to state firms while miring foreign firms in bureaucratic red tape.17

Recent headlines from both mainstream U.S. and Mexican outlets drip with contempt for López Obrador’s nationalist energy policies, from the environmentalist Left, to the business elite, to the husks of Mexico’s congressional opposition.18 Because foreign firms are those primarily involved in the development of renewables in Mexico, such as solar power, AMLO’s preference for domestic extractive industries has provoked cries that his energy nationalism violates trade commitments and eschews climate goals. In July, the Biden administration’s trade representative, Katherine Tai, launched a dispute against the Mexican government under the usmca.

At the same time, investors have howled that prices will rise if Pemex and CFE prevail over competitors. Often in the same article, center-right and center-left liberals bemoan the futility of Obrador’s antiquated thinking, all while conveniently omitting the fact that his policies have kept gas prices astonishingly low. At present, mean gas prices across the whole of Mexico stand at around $3 per gallon. Notably, sales along the Mexican side of the U.S.-Mexico border skyrocketed over 50 percent during the summer, as scores of Americans flocked south to secure, in some cases, up to half off California’s $6 prices.19

Moreover, the overall impact of energy reform on investment in the oil industry’s exploration and refining sectors (still largely dominated by Pemex) is significant. Prior to 2014, investment in each of Pemex’s strategic operations (exploration, refining, gas, and petrochemicals) rose consistently from around $3 billion in 1991 to $27 billion in 2014. And while gas prices in Mexico fluctuated in line with global trends, both investment and broader production did not. After 2014, however, investment dropped more than 25 percent to $20 billion in 2015.20 At the same time, pemex became the world’s most indebted oil company, with an astronomical $100 billion in debt.

Why then did the energy reform fail? Historically (and currently), Mexico’s energy sector was relatively insulated from the global market on the supply side. That production has declined in Mexico has far more to do with internal dynamics within the country than global trends. Market-centric reforms in the 1990s resulted in the outsourcing of duties previously reserved to Pemex, such as petrochemicals, gas distribution, and marketing, which in turn hampered efforts to realize comprehensive goals for production.21

Relatedly, marketization prioritized more profitable activities, namely exploration for export at the expense of processing and refining for domestic consumption.22 Indeed, this is reflected in the actual use of Pemex’s installed capacity of petrochemical complexes. Less than half the total capacity of petrochemical complexes saw active use in 2019.23

The 2013 reform merely exacerbated Pemex and CFE’s historical inefficiencies by doubling down on prior marketization. Proponents argued that competition, foreign investment, and a greater role for the market would jump-start a moribund and neglected energy sector. The irony of this is that privatization resulted in increased or at least more cumbersome regulations, as both the oil and electricity markets were subjected to a nightmarish patchwork of regulators, as well as private and public firms and their subsidiaries operating at cross purposes.

In the electricity sector, for example, CFE and private companies now compete in the generation and sale of power. Said power is then dispatched by an independent operator, cenace, while CFE maintains exclusive or joint control over distribution.24 Predictably, the results of electricity market reforms in Mexico were not unlike those seen throughout the United States. Just three years after the implementation of the energy reform, the “free” market had done its work, and electricity rates per kilowatt-hour rose by around 35 percent.25

That oil production and especially investment were ultimately harmed by privatization also says a great deal about the multinationals that entered the Mexican market. In the context of high gas prices, classical economic theory says that oil producers should be striving to increase supply to match demand. Yet, in the United States, oil producers have preferred instead to return cash to shareholders during the recent price increases.26 Considering the immense investment dearth after 2013, there’s little reason to presume that multinationals active south of the border are not affected by the same incentives.

Similarly, Mexico’s state oil giant has been plagued by a comparable reluctance to invest since the 1990s. Unlike its competitors, however, Pemex has the backing of a single-minded benefactor with deep pockets: one López Obrador at the helm of the Mexican state. AMLO’s rescue package for the company included a much needed $750 million worth of tax breaks for the historically tax-burdened Pemex. The state firm also received a $1.6 billion payout of pension liability promissory notes, a $1.25 billion capitalization, as well as $1.6 billion in savings from a 94 percent reduction in fuel theft.27 AMLO the fiscal hawk has also successfully held Pemex to the target of balanced budgets during his term, preventing further debt increases. Finally, the administration has prioritized Pemex’s refining capabilities through multibillion-dollar investments, such as the aforementioned Dos Bocas refinery. Consequently, oil production is expected to return to two million barrels a day by the end of the president’s term.

The data, thus far, speaks for itself. Unlike its neighbor to the north, Mexico’s active rig count has consistently increased during the current administration. Indeed, even as oil collapsed in 2020 due to the pandemic, Mexico’s active rig count increased to forty-one in July of that year, up from thirty-seven in July 2019. The figure stands at fifty-one as of September 2022.28 Compare this with the volatility seen in the United States (~800 in 2019, ~200 in 2020, ~400 in 2021, 769 in October 2022).

AMLO the Leftist

López Obrador might be described as a leftist but not necessarily a progressive. In an extended podcast with Americas Quar­terly, Denise Dresser described AMLO more or less in those terms. In her closing remarks, she lamented voting for a candidate she had thought would be a “progressive.” Needless to say, casting AMLO within the broader currents of left-wing politics in the United States presents a number of inconsistencies. By Latin American standards, however, it is accurate to describe the president as a classical if also an idiosyncratic leftist.

For instance, López Obrador is infamous for his refusal to leave Mexico and is perhaps the least-traveled leader on the planet. The phrase “representing the esteemed president of Mexico, Andrés Manuel López Obrador,” said on behalf of another Mexican official, is commonly heard at international gatherings, and is probably the most telling state­ment of current Mexican foreign policy. In part, AMLO’s resistance to state-sponsored foreign visits stems from his strict fiscal parsimony and is a welcome departure from the epicureanism of Peña Nieto.

AMLO also seems to believe that the best foreign policy is a good domestic policy. To that end, López Obrador is fond of quoting the great Benito Juárez, in effect reviving Mexico’s previously long-standing tradition of geopolitical neutrality. Consequently, the pragmatic AMLO has simultaneously pursued good relations with actors as diverse as Donald Trump, Nayib Bukele, Evo Morales, and Cuba’s Miguel Díaz-Canel.

The president, however, frequently opines on political developments in neighboring states, usually in support of fellow leftists. During Colombia’s recent presidential election, AMLO reflexively backed the leftist Gustavo Petro despite the latter’s vocal critique of Mexico’s environmental and extractive policies. The irony is that Petro’s populist opponent was an avid admirer of AMLO and modeled much of his 2022 campaign after the Mexican leader. Similarly, following the purported Bolivian coup against Evo Morales in 2019, Mexico granted asylum to the former president and has condemned the prosecution of Julian Assange.

Reflecting AMLO’s commitment to domestic over foreign policy, the current sexenio includes a variety of significant accomplishments for Mexican labor. Mexico’s governing coalition increased the federal minimum wage by 22 percent for 2022, the fourth consecutive increase since 2019. In total, real minimum wages have increased by 65 percent during AMLO’s term, a remarkable achievement for a country that once had one of the lowest minimum wages in the hemisphere.29

Contrary to libertarian theory, however, increases in the minimum wage have not resulted in meaningful increases in unemployment (3.3 percent in 2018 vs 4.4 percent in 2021). Similarly, inflation is slightly lower in Mexico than in the United States, though it remains exceptionally high relative to recent decades.

Since assuming office, AMLO’s coalition has also enacted reforms that allow workers to submit grievances, overturn sham contracts, and form independent unions.30 Earlier this year, GM workers in the city of Silao, Guanajuato, voted overwhelmingly to join an independent union, ending their contract with CTM, a relic from the days when unions were mere outcroppings of the one-party PRI regime. These and other re­forms stand to benefit Mexican workers after decades of decline.

AMLO the Conservative

In and of itself, it is not especially surprising that the leftist leader of deeply Catholic Mexico is socially conservative. Indeed, the left-author­itarian regimes of both Nicaragua and Venezuela are resolutely among the most socially conservative of all Latin America. Of course, this does not mean that our neighbors to the south have been entirely spared from the influence of North American progressivism.

Just as SARS-CoV-2 originated from Wuhan, China, the woke pandemic has its genesis in the most esteemed U.S. universities, the very same ones that educate much of the Latin American elite. At UCLA or UT Austin, one need only speak to the blue-haired, gender-fluid progeny of Mexico’s career diplomats to get a sense of AMLO’s immensely “problematic” tendencies.

Interestingly, however, Mexico’s elected officials are among those least affected by the sway of yanqui social justice. Certainly, AMLO himself occasionally speaks of justicia social, yet it’s important to note that historically in Latin America, figures such as Lázaro Cárdenas and Juan Domingo Perón used the term mainly to refer to the rights of labor. Broadly, the penetration of American ideas on matters of gender and identity remains uneven in its distribution and scope, a fact borne out by the traditionalist Obrador.

Like most Mexicans, AMLO is highly religious, though the subject of his specific faith is something of a mystery. A number of reports have suggested that the president was raised as a Protestant, with some claiming a Seventh Day Adventist affiliation. For his part, López Obrador claimed during his 2006 campaign for the presidency that he was a good Catholic. More recently, however, he claimed he was a nondenominational Christian.

In turn, AMLO has forged close ties with Mexico’s evangelical churches. Indeed, among his most ardent supporters are members of the evangelical Social Encounter Party (PES), one of two junior partners within the governing coalition. As a result, much of the administration’s social policy has incorporated both Protestant and Catholic churches. In 2020, for instance, the National Confraternity of Evangelical Churches announced that an existing federal scholarship program would also include tutoring in biblical subjects.

Moreover, just ten months prior to the Dobbs decision in the United States, Mexico’s Supreme Court decriminalized abortion in the first fifteen weeks of pregnancy. Previously, López Obrador had suggested that Mexico could hold a referendum on the legality of abortion, a measure almost certain to maintain the status quo. Following Dobbs, however, AMLO was rumored to have consulted with former ministers of the court regarding the possibility of overturning the Mexican court’s decision using arguments from the conservative wing of the U.S. bench.

Unsurprisingly, AMLO’s social postures have not endeared him to Mexico’s feminist movement, a constant thorn in the administration’s side. Mexican feminists have staged countless marches against the president’s leadership. Mobilizations in the lead-up to the 2021 decision encouraged the court to ultimately legalize abortion.

AMLO himself has not been shy in expressing his distaste for Mexico’s feminists, going so far as to refer to many of them as “conservatives.” That AMLO would refer to feminists as conservatives says much about his worldview. For AMLO, conservatives are not those that ascribe to traditional norms regarding the nation or the family. Rather, conservatives are essentially those that compose the upper classes of Mexican society.

In what would otherwise be unthinkable in the United States, López Obrador is a rather pointed critic of Mexico’s middle class, which he accuses of being excessively materialist and status-driven. Thus, AMLO’s electoral coalition consists mainly of poor, noncollege-educat­ed and, by extension, working-class Mexicans. López Obrador’s most fervent critics are almost universally the college educated, foreign and domestic media, social progressives, environmentalists, and Davos men.

The fact that both AMLO and Donald Trump share so many of the same political enemies explains, in part, the good relations the two leaders enjoyed. Indeed, just days prior to AMLO’s visit to the White House in July, Trump referred to the Mexican president as a “socialist but the kind of socialist I like.” AMLO, for his part, stated months prior, “I like Trump even if he is a capitalist” and referred to a mutual understanding between the two leaders.

Still, the good feeling between both presidents was surprising given López Obrador’s criticism of Trump prior to assuming office. Naturally, AMLO is a committed defender of Mexican Americans and has long called on U.S. leaders to regularize the status of undocumented migrants. AMLO even went as far as to write a book titled Oye Trump (“Hey Trump”), a rallying cry against xenophobia toward migrants in the United States.

Analysts typically contend that AMLO’s fondness for his recent Republican counterpart was mostly attributable to the Trump administration’s minimal scrutiny and interference in Mexican domestic affairs. Jared Kushner implies in his new book that AMLO and Trump struck an informal agreement soon after the former took office. The United States would not comment or interfere in Mexican domestic affairs so long as Mexico supported the administration on migration goals.

To Kushner’s credit, this seems to have been precisely the case. Not long after the creation of the Mexican National Guard in 2019 (one of AMLO’s campaign promises), the new force was quickly dispatched to Mexico’s southern border with Guatemala to repel migrants. The in­cumbent administration also enacted increasingly stringent visa require­ments for potential migrants even after Trump left office in 2021.

On this point, it’s important to note that Mexico’s increasingly restrictionist immigration policies are not exclusively the result of U.S. bullying. Particularly in light of present migratory flows, Mexican public opinion has turned decidedly against migrants. One poll found that around 58 percent of Mexicans were against allowing migrants entry.

Returning to the nexus of Mexican and American populism, at this point it is hard to dispute that AMLO had a genuine affinity for Trump. Much as AMLO reflexively defends fellow leftists in the region, so too did he back his “capitalist” ally. AMLO was among the last leaders to recognize Joe Biden’s victory in the 2020 presidential election and was quick to denounce Twitter’s deplatforming of the former president following the events of January 6. More recently, AMLO rushed to the defense of both Trump and Argentina’s Cristina Kirchner in light of the legal “persecution” that continues to haunt the two leaders.

By all accounts, AMLO enjoyed better relations with Donald Trump than he does with President Biden. Here, analysts again contend that the Biden administration’s greater scrutiny of human rights and institutional norms have created friction with the fiercely independent Obrador. AMLO regularly criticizes what he describes as U.S. meddling in Mexi­can affairs—whether it’s criticism over the frequent killings of journalists or the government’s energy policies. On the latter point, López Obrador claims that Trump was sympathetic to his administration’s goals of energy sovereignty.

As such, AMLO’s recent visit to the White House proved to be rather irksome for Joe Biden. Seated across from each other in the Oval Office, the Mexican president gave no quarter as he enumerated a litany of real and perceived offenses to Mexico’s sovereignty by the Biden administration. In closing his rather long-winded tirade, AMLO prodded his U.S. counterpart by noting the hordes of Americans journeying to Mexico to fill up their gas tanks.

The United States, he jested, could learn a great deal from Mexico’s energy policies. Weeks after, AMLO’s response to the USTR’s trade dispute under usmca was to play a clip of the cumbia hit, “Uy, Que Miedo” (Oh, I’m so Scared) by fellow Tabasqueño Chico Che. That AMLO had such good relations with leaders such as Trump is telling not only of his pragmatism but also of his inherently populist nature.

AMLO the Populist

Imagine waking up every morning to the sight of the silver-haired and stocky Obrador on TV. If you’re lucky, you’ll catch him debating Jorge Ramos on crime rates or flaunting (somewhat tongue-in-cheek) his handy $2 dollar bill, a supposed amulet against the coronavirus. Such displays are relatively common features of what are colloqui­ally known as the mañaneras, AMLO’s daily press conferences. Yes, every morning, Monday to Friday, AMLO confronts a largely captive audience of around fifty journalists from Mexico’s most important media outlets.

What’s key to note here, however, is that rather than the press, it is López Obrador that dominates the often three-hour-long affairs. Indeed, both AMLO’s literal and political stamina are impressive. At sixty-eight years old, AMLO has missed the mañaneras on only a few occasions (such as the two times when he caught Covid-19). Moreover, the mañaneras are a direct import from Obrador’s term as mayor of Mexico City. Then as now, the president exploited his daily conferences to run circles around the Mexican press.

Like other populists throughout the hemisphere, AMLO’s success derives primarily from the utter discrediting of his opponents: the media and closely allied PRI and PAN as well as smaller center-left parties. For López Obrador, trolling that opposition is something of a sport. And while opposition figures such as Denise Dresser decry the “debasement” of democracy and the free press under the current administration, AMLO’s “attacks” on the press have been largely confined to words rather than legal action.

What’s more, even controlled affairs such as the mañaneras represent a drastic departure from—and boon for a press previously subject to—the reclusive indifference of Enrique Peña Nieto. Contrary to the alle­gations of Mexican Chavismo and headlines of democratic backsliding, AMLO has not demonstrated any interest in perpetuating himself in power despite having commanded overwhelming control of both cham­bers of congress and high approval ratings.

Similarly, his daily press conferences actually occasion routinely difficult questioning from the press. That the president tends to come out unscathed from these confrontations is more telling of the press and opposition’s failure rather than any corruption of democracy. If nothing else, Donald Trump can be credited for his skill at manipulating a recalcitrant media to his benefit. For all his skill as a showman, however, Trump never defeated his media foes to any mean­ingful degree in the court of public opinion. Trump remains broadly unpopular; his whims can just as easily sway public opinion against his own interests. By contrast, AMLO’s detractors, once dominant, have been tactically and intellectually cowed by their lifelong nemesis.

Perhaps most representative of AMLO’s success is the very same mañanera in which he lamented both Cristina Kirchner’s twelve-year prison sentence and the FBI’s raid of Donald Trump’s Mar-a-Lago residence. In referencing both events, the president condescendingly gave thanks for the performance of his conservative critics. The fruits of the Fourth Transformation, he said, included a media and opposition far “better behaved” than those of regional counterparts.

The Fourth Transformation

By now, some readers may be packing their bags and perusing the cheapest flights to Mexico City. Sadly, anyone even remotely familiar with business as usual south of the border knows that Mexico is no paradise. While AMLO has been extraordinarily popular throughout his term, it’s hard to describe Mexico as anything other than dysfunctional. Despite inroads, thus far the Fourth Transformation largely resembles the reign of the neoliberal mafia.

The greatest failure of AMLO’s term has been his inability to adequately address Mexico’s severe crime problem. In a single weekend in August 2022, some 260 people were killed in the states of Jalisco, Guanajuato, Chihuahua, and Baja California. Whatever one’s thoughts on abortion, moreover, Mexican feminists have been entirely justified in protesting AMLO’s apparent indifference toward the country’s epi­demic of femicides. Under the president’s leadership, femicides rose to a record of over a thousand in 2021, a 135 percent increase since 2015.

Ironically, back in 2018, López Obrador had originally promised an end to the militarized approach of prior presidents in fighting Mexico’s infamous drug cartels. Instead, the current administration has doubled down and expanded upon militarization, with soldiers taking on roles far beyond mere repression, such as overseeing infrastructure projects and customs duties. AMLO seems to have calculated that entrenching the military beyond matters of security will ultimately stifle efforts by successors to undo specific policies.

A case can be made, however, that militarization caused Mexico’s rather recent explosion in violence. While Mexico has long held a reputation for drug trafficking and brutal cartel kingpins, it’s worth noting that until 2007, homicide numbers were comparable to those of the United States (seven versus six homicides per hundred thousand people). By 2018, the number had risen to thirty per hundred thousand.

The explosion in violence seen after 2007 came as a direct result of President Felipe Calderón’s decision to drastically expand the role of the military in fighting crime. That Calderón and his successors can boast of arresting numerous kingpins is small consolation for the subsequent cartel infighting and fivefold increase in homicides since 2007.31

The creation of Mexico’s National Guard also elicited talk of broader police reform at the time. In Mexico, as in the United States, police forces serve at the municipal, state, and national level. Historically, this has led to rampant dysfunction as each force answers to a specific regional authority (mayors, governors, presidents), who are often of different political parties and have competing alliances with regional drug cartels. AMLO, however, simply liquidated Mexico’s national police and replaced it with the National Guard, in effect swapping one pair of uniforms for another. Indeed, the government now seems hell-bent on bringing the civilian-led National Guard under direct military control.

On the subject of corruption, AMLO has a handful of accomplishments, but the broader picture is not promising. Several high-profile arrests, such as that of former Pemex president Emilio Lozoya have been lauded by both analysts and the broader public. Similarly, the establishment of a truth commission for the 2014 disappearance of forty‑three students in Ayotzinapa, Guerrero, unveiled a massive cover-up by the Peña Nieto administration that led to the arrest of then attor­ney general Jesus Murillo (though allegations of interference from the president seem to have compromised several findings).

Still, critics accuse the president of focusing excessively on the crimes of his predecessors as well as concentrating power and reducing the ability of independent state agencies to fight corruption, a credible charge. Overall, Transparency International ranks Mexico a dismal 124 out of 180 in its corruption index, somewhat worse than when AMLO assumed office. Indeed, though AMLO’s most recent approval rating stood at around 62 percent, Mexicans rate both the president and his government poorly on the issues of fighting crime and corruption.

But what of the Mexican economy? Surely the Fourth Transformation has more to show for itself than just low gas prices. Sadly, AMLO’s promises to deliver 5 percent GDP growth per year have not come to fruition. When viewed from afar, Mexican stagnation has been remarkably consistent both before and during AMLO’s term, with about 1 to 2 percent growth on average.

The most charitable assessment of AMLO’s efforts are that, like Cárdenas before him, the fruits of the Fourth Transformation may well come in the years after the president’s term. AMLO is slated to go down as the most powerful Mexican president since the end of single-party rule in 2000. López Obrador and his party, Morena, have presided over a period of significant reforms that stand to produce long-term benefits for workers, energy production, and overall state capacity.

As we have seen, however, the president has a propensity for idiosyncratic and/or poorly executed policy commitments. Mega­projects such as the Maya Train and Dos Bocas refinery are both behind schedule and severely over budget. The former has been a colossal environmental boondoggle that is already around 70 percent over its original $12 billion price tag.32 Similarly, Dos Bocas has been plagued with logistical issues and is expected to cost more than double its original $8 billion budget.33

Furthermore, for three years, the governing coalition held a two-thirds supermajority in both chambers of congress and thus had the ability to amend Mexico’s constitution at will. Yet rather than undo the 2013 reform on day one, AMLO and Morena chose to pursue largely symbolic amendments such as the provision for a presidential recall. Having forgone energy reform while he had the chance, AMLO’s energy policies have provoked the ire of the Biden administration under the usmca and given his opponents cause for celebration (though recent reports suggest a détente from both parties).

Particularly on the right, Latin American leaders (as well as economists) have been content to chide voters that the path toward development lies in either resource colonialism or an expansion of the service economy. The pinnacle of Latin American innovation and entrepreneurship, they argue, are Uber and Doordash equivalents, or what former Colombian president Ivan Duque called the “Orange Economy.” Never mind the fact that such services further entrench informal labor in countries where substantial portions, if not a majority, of the population exist mostly outside the legal workforce.

Countries such as Mexico illustrate the apparent paradox of both high bureaucratization and low state capacity. In this context, neoliberal policies that prioritize the free flow of capital at the expense of state capacity merely exacerbate the problem. As more and more workers continue to pour into the informal workforce, tax and government revenue remain low, and state capacity continues to falter. “Limited government” means something very different in a nation where the state can barely fulfill basic functions and obligations.

Chicago schoolers are correct that, in Latin America, import-substitution policies were prone to cause inflation and did not result in development as successfully as Taiwanese or South Korean import-substitution programs. They conveniently omit, however, that both Mexico and other Latin American countries performed significantly better under import substitution than under the current neoliberal paradigm (Mexico averaged around 5 percent GDP growth per year between 1950 and 1980 versus 1–2 percent since). Indeed, Mexico’s growth largely tracks the whole of Latin America.

Mexico also represents something of a paradox in the region. Unlike its neighbors to the south, whose economies consist mainly of services and resource extraction, Mexico maintains a significant manufacturing sector. In earlier periods, while countries such as Brazil built burgeoning industries in manufacturing under import-substitution, Mexico resem­bled its extractive brethren, Venezuela and Peru. In 2022, however, Mexico is essentially the only country in the region with a significant manufacturing sector. Lamentably, the rest of Latin America consists almost entirely of resource colonies in mineral and agricultural goods (Brazil, Argentina, Peru, Chile, Colombia, Bolivia, Ecuador, Paraguay, El Salvador, Honduras, Guatemala). The only other exceptions are a handful of countries in the Caribbean Basin that depend on tourism and financial services—including considerable tax evasion operations—such as Panama and the Dominican Republic.34

Buoyed by high commodity prices and an ascendant China during the 2000s, countries such as Brazil, Colombia, Chile, and Peru experienced a period of relative prosperity. As Chinese growth slowed and commodity prices suddenly declined in the mid-2010s, however, the region has regressed to prior stagnation.

Mexico was essentially the only country in the region that did not benefit from high commodity prices or China’s entry into the WTO during the 2000s. Mexico likely would have seen stronger growth had it instead joined its neighbors as yet another resource colony for a rapacious China. Instead, Mexican manufacturing suffered from Chinese competition within the U.S. market.35 Why then has the Mexican economy not developed along the lines of the Asian tigers?

Economists have posited a series of dubious explanations, such as crime, corruption, and proximity to the United States to explain why Mexico, despite having a robust manufacturing base, has not followed a path of development comparable to East Asia.36 The first is demonstrably nonsensical given that crime rates in Mexico were relatively low throughout the 1990s and much of the 2000s. Similarly, corruption is not a reliable indicator of growth or stagnation in developing countries given China’s infamously rampant corruption. As Yuen Yuen Ang has argued, corruption can either detract or promote economic growth depending on the manner in which it occurs.37 Corruption in Mexico has remained more or less stable during periods of both growth and decline.

Proximity to the United States, while hardly compelling, at least approaches the heart of the issue with Mexican manufacturing: it’s simply not competitive. The fact that Mexico, with its preferential access to the U.S. market, saw so many of its exports outcompeted by a country half a world away says a great deal about the weakness of Mexican industry. More to the point, even the term “Mexican manufacturing” is something of a misnomer. Mexico is not a titan of manufacturing; it is an assembly colony for the United States.

Broadly, workers employed in the manufacturing sector labor at plants owned by multinational companies that assemble goods for ex­port to the United States. Of Mexico’s thirteen largest private companies, four could be said to specialize to some degree in manufacturing, ALFA, Fomento Económico Mexicano, Arca Continental, and Grupo Bimbo, the latter three of which specialize in food and beverage processing. Only the ALFA conglomerate oversees some degree of manufacturing in petrochemicals and auto components. In the end, Mexico’s diversification into heavy industry merely altered the character of dependency on the hegemon to its north.

In this context, AMLO’s efforts to promote Pemex and CFE represent a departure insofar as they promote strategic energy sovereignty and government revenue (Pemex and CFE are still Mexico’s first and third-largest companies overall in terms of revenue). López Obra­dor has also shown foresight in nationalizing lithium reserves in April of this year and creating a state lithium company, Litio para Mexico, that is set to begin operations in 2023.

Still, critics are correct that the broader vision of the Fourth Transformation is myopic. AMLO’s strategy for development essentially consists of digging holes in the ground. And while said strategy may well prove to be more fruitful on the whole under nationalist rather than neoliberal precepts, the reality is that neither resource extraction nor assembly colonialism will lead Mexico out of the middle-income trap.

Both Korea and Taiwan also began their industrialization through initial export assembly. Their firms, however, eventually gradu­ated into original equipment manufacturing and own-brand production.38 Like China, Japan, the Asian tigers, western Europe, and the United States before it, Mexico must promote and protect manufacturing and employ­ment by Mexican firms. Moreover, it must ensure that its national companies, both public and private, innovate and can eventually compete with peers outside of just the Mexican market. Manufacturing will always be a better driver of formalized labor in developing countries. Indeed, the government’s labor reforms ultimately mean little for the broader public so long as more than half of the Mexican workforce remains informal.

Lessons for Export

The Fourth Transformation provides a number of lessons for diverse sectors of political thought and analysis. Libertarians can oddly take solace in the fact that many of their fiscal goals are fully capable of being implemented by actors beyond just the center-right and center-left. Progressives, conversely, should take note that popular and electoral success comes from understanding both the cultural and economic proclivities of the working class. Rather than alienating large swathes of voters, progressives should focus on building big-tent movements capable of sustaining coalitions diverse in more than just identitarian characteristics.

American conservatives, moreover, particularly those inclined toward populism and nationalism, would do well to recognize that they share more in common with figures such as AMLO than the shallow elitists of the Mexican Right. More broadly, the Right in Latin America remains politically and intellectually bankrupt. Throughout the region, right-wingers tend to be successful only insofar as they can conjure the specter of tyrannical leftists such as Nicolas Maduro and Daniel Ortega. AMLO’s vision may be flawed, but it is ultimately better than the alternative offered by the Mexican opposition.

The Mexican case also shows just how often domestic malaise is self-inflicted. Whether it’s China’s never-ending commitment to Zero Covid or Germany’s decision to sabotage its own energy infrastructure, technocratic self-immolation is by no means a uniquely Mexican phenomenon.

Like the United States, Mexico has suffered from an unwillingness to challenge free market orthodoxy even as recent decades have decimated entire sectors of domestic industry. Mexico is in dire need of an alternative and transformative consensus, one that AMLO at least promised to deliver. Sadly, the Fourth Transformation seems unlikely to realize that vision under AMLO himself.

This article originally appeared in American Affairs Volume VI, Number 4 (Winter 2022): 151–72.

Notes
1 Maria Elena Vizcaino and Carolina Wilson, “AMLO’s Penny-Pinching Ways in Mexico Are Paying Off in Bond Markets Now,” Bloomberg, August 30, 2022.

2 Benito Berber, “How AMLO Became Latin America’s Fiscal Hawk,” Americas Quarterly, May 12, 2020.

3 Covid-19 Coronavirus Pandemic: Reported Cases and Deaths by Country or Territory,” Worldometer, accessed September 27, 2022.

4 Jeff Faux, “Nafta’s Impact on U.S. Workers,” Economic Policy Institute, December 9, 2013.

5 James Gerber, “Why Isn’t Mexico on China’s Growth Path?,” Revista de Globalización, Competitividad y Gobernabilidad 6, no. 1 (2012): 91–106.

6 Isabel Morales, “Mexico’s Corn Farmers and Nafta’s Uneven Impacts,” Panoramas, March 30, 2022.

7 M. Angeles Villarreal and Marisabel Cid, “Nafta and the Mexican Economy,” Congressional Research Service, November 4, 2008.

8 Sandra Polaski, “Mexican Employment, Productivity and Income a Decade after Nafta,” Canadian Standing Senate Committee on Foreign Affairs, February 25, 2004.

9 Ana Gonzalez-Barrera and Jens Manuel Krogstad, “What We Know about Illegal Immigration from Mexico,” Pew Research Center, June 28, 2019.

10 “Farm Labor,” Economic Research Service, U.S. Department of Agriculture, last modified March 15, 2022.

11 C. A. Ramírez Pascualli and C. A. S. Hall, “The Relation of Oil to the Mexican Economy: Past, Present and Future,” Ecological Dimensions for Sustainable Socio-Economic Development, ed. A. Yáñez-Arancibia et al. (Southampton, U.K.: WIT Press, 2013), 119.

12 Tim R. Samples, “A New Era for Energy in Mexico: The 2013–14 Energy Reform,” Texas International Law Journal 50, no. 4 (Spring 2016): 603–44.

13 Julio Gutiérrez, “Cae La Producción de Pemex; En Octubre, La Más Baja En 41 Años,” La Jornada, November 26, 2020.

14 Linda Doman and Laura Singe, “Energy Reform Could Increase Mexico’s Long-Term Oil Production by 75%,” U.S. Energy Information Administration, August 15, 2014.

15 James Cypher, “Energy Privatized: The Ultimate Neoliberal Triumph,” nacla Report on the Americas 47, no. 1 (April 2014): 27–31.

16 Eduardo León, Iván Martén, Raul Livas, and Marcelo Mereles, “The Promise of Mexico’s Energy Reforms,” Boston Consulting Group, April 9, 2014.

17 Leonardo Beltran, “Mexico: When Trade and Energy Policy Collide,” Americas Quarterly, August 18, 2022.

18 Michael Lynch, “Can America Save AMLO’s Energy Policy from Himself?,” Forbes, August 5, 2022; Silvia Olvera, “Resultaría Histórico el Castigo por la Disputa Energética,” Mural, August 13, 2022.

19 Maya Averbuch, “American Drivers Score $3.11-a-Gallon for Gas over the Border in Mexico,” Bloomberg, July 25, 2022.

20 David Gutierrez Silva, David Bonilla Vargas, and Atziri Moreno Vite, “Energy Reform in Mexico: Its Impact on Pemex’s Productivity,” Extractive Industries and Society 8, no. 2 (2021): 4–6.

21 Gutierrez, Bonilla, and Moreno, “Energy Reform in Mexico,” 2–4.

22 Bruno Sovilla, Eusebio Gómez-Ramírez, and Manuel Sánchez-Pérez, “La Reforma Energética y el Problema Petrolero en México,” Revista CEA 7, no. 13 (2021).

23 Gutierrez, Bonilla, and Moreno, “Energy Reform in Mexico,” 9–10.

24 Richard H. K. Vietor and Haviland Sheldahl-Thomason, “Mexico’s Energy Reform,” Harvard Business School Case 717-027, January 2017 (revised August 2017).

25 Arturo Solís, “Tarifas Eléctricas Aumentaron 35% con la Reforma Energética: CFE,” Forbes México, February 12, 2021.

26 Julius Krein, “Corporations Aren’t Greedy Enough,” UnHerd, June 6, 2022.

27 José Alberto Ibarzábal Hernández and David Bonilla, “Examining Mexico’s Energy Policy under the 4T,” Extractive Industries and Society 7, no. 2 (2020): 673–74.

28 Author calculations from Baker Hughes, “International Rig Count,” accessed October 19, 2022.

29 Jon Martín Cullell, “El Salario Mínimo en México Subirá un 22% en 2022,” El País, December 1, 2021.

30 Joyce Sadka, “The Labor Reform Transition in Mexico: 2019–2023,” Testimony for the Committee on Ways and Means, United States House of Representatives, June 25, 2019.

31 Angélica Durán-Martínez, The Politics of Drug Violence: Criminals, Cops and Politicians in Colombia and Mexico (Oxford: Oxford University Press, 2017); Gustavo Flores-Macías, “The Consequences of Militarizing Anti-Drug Efforts for State Capacity in Latin America: Evidence from Mexico,” Comparative Politics 51, no. 1 (October 2018): 1–20.

32 Andrea Navarro, “Mexico’s Maya Train Project to Cost Up to $20 Billion, 70% over Budget,” Bloomberg, July 26, 2022.

33 Amy Stillman, “Mexico’s Largest Oil Refinery Is Now Open. It’s Just Not Making Fuel,” Bloomberg, July 1, 2022.

34 Tatiana Palermo, “Examining Latin America’s ‘Puzzle’ of Low Growth,” Geopolitical Intelligence Services, December 2, 2020.

35 Gordon H. Hanson, “Why Isn’t Mexico Rich?,” Journal of Economic Literature 48, no. 4 (2010): 987–1004.

36 Gerber, “Why Isn’t Mexico on China’s Growth Path?”

37 Yuen Yuen Ang, China’s Gilded Age: The Paradox of Economic Boom and Vast Corruption (Cambridge: Cambridge University Press, 2020).

38 Gary Gereffi, “Development Models and Industrial Upgrading in China and Mexico,” European Sociological Review 25, no. 1 (2009): 37–51.


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