Latin America’s leftwing populists have a well-earned reputation as big spenders. Venezuela’s Hugo Chávez, Bolivia’s Evo Morales and Dilma Rousseff in Brazil all drained government coffers to pursue their political dreams. All ended in economic or political ruin.
Mexico’s president has been the exception to the rule. Andrés Manuel López Obrador may have alarmed business and investors with his tirades against neoliberalism, a pursuit of questionable big projects and promises of a revolutionary transformation. But at least, they could assure themselves, he was averse to borrowing binges and spending sprees. The investor consensus was that Mr López Obrador’s policies meant gradual institutional decay and increasing economic stagnation: a missed opportunity, but no disaster.
The coronavirus crisis has now exposed new and dangerous weaknesses. Mr López Obrador’s bungled responses and erratic behaviour in the first weeks of the pandemic suggest that the country is heading for a much worse crisis in the remainder of his six-year term unless there is a dramatic change of course.
Over the past month, the Mexican president has brandished a six-leafed clover he says will protect him against the coronavirus and he has repeatedly violated his own government’s advice on social distancing, on one occasion shaking the hand of the mother of the country’s most infamous convicted drug trafficker. He has also urged Mexicans to patronise restaurants and hug one another long after the rest of the world locked down, even suggesting the coronavirus “fits perfectly” with his plans to transform Mexico.
Some of this behaviour, particularly the coronavirus denial and undermining of medical experts, echoes his fellow populists in the Americas, Donald Trump and Jair Bolsonaro. Where Mr López Obrador is in a class of his own in denying the need for big fiscal and monetary stimulus to rescue the economy from recession. Yet the market consensus is that Mexico will be among the countries worst hit by the pandemic because of its reliance on US manufacturing, tourism, remittances and oil. While the US and Brazil have announced large countercyclical stimulus packages, Mexico’s leader has ruled out extra borrowing, tax breaks or bailouts.
Instead, Mr López Obrador’s prescription for his country’s ailing economy is more austerity, including a second round of pay cuts for government officials. He has doubled down on his costly pet projects, including boosting crude production and building an $8bn oil refinery just as demand is evaporating. He has been relaxed about the country’s dire shortage of hospital beds and a rate of coronavirus testing which is among the lowest of any major nation. The Mexican president resisted this weekend’s oil supply deal aimed at stabilising prices.
More and more voices in Mexico’s elite are speaking of a looming tragedy. Business leaders have proposed an alternative virus response plan. The odd dissenting voice within Mr López Obrador’s governing alliance can sometimes be heard. But Mexico has an imperial presidency and an imperious president. Time is perilously short.
Politicians across party lines, state governors and business leaders should unite to agree a comprehensive economic and health programme to deal with the coronavirus and press it upon their president. Legal challenges should be launched against some of his more questionable policies. The appalling humanitarian catastrophe of Venezuela stands as a clear warning of what another four and a half years of Mr López Obrador could do to Mexico.