The second week of November was dominated by the release of the new government’s security and peace plan. On Wednesday November 14th, President Elect Andres Manuel Lopez Obrador gave a news conference in which he and the upcoming Public Security Secretary, Alfonso Durazo, explained some of the details of their pacifying plan. Among the 8 points there is a combination of things such as trying to attack the causes of insecurity by improving economic conditions through education and healthcare, but also the idea of creating a National Guard which would be a militarized police under the supervision of the Mexican army. This last point has caused ample controversy because it has been criticized by many human rights support groups and people who are against the punitive strategy of public security that started 12 years ago with former President Felipe Calderon. It must be noted, that AMLO himself criticized this approach during the Presidential campaign and now has had to backtrack and make this point the central part of his pacifying plan, even though it includes other things such as trying to rehabilitate prisons in order to reintegrate prisoners into normal lives or legalize marihuana. AMLO’s security plan will be based on the following 8 main drivers:
1. Eradicate corruption and reactivate law enforcement; 2. Guarantee employment, education, health and welfare; 3. Complete respect of human rights; 4. Ethical regeneration of society; 5. Reformulate the ways of fighting drug use; 6. Build peace solutions through disarmament and reintegration process as well as creating the Peace Construction Council; 7. Rehabilitation and dignifying of prisons; 8. The creation of the National Guard in order to reassess the public security strategy. On a different topic, the President Elect announced that he would continue to do citizen referendums to gauge how much public support there is for different infrastructure and government programs he wishes to implement. This new citizen referendum includes his top 10 priority programs and the voting ballots are worded in such a way that citizens only have the main description of each project without any other information regarding a cost-benefit analysis. The top 10 priority programs are: 1. The construction of the Mayan tourism train that would connect the states of Campeche, Chiapas, Quintana Roo, Tabasco and Yucatan; 2. The construction of a freight railway train to connect the Atlantic and the Pacific Oceans (and the ports on each side) through the Tehuantepec Isthmus; 3. Build a refinery in Dos Bocas, Tabasco to process gasoline from Pemex; 4. Plant fruit trees in a million acres to create 400 thousand (permanent) jobs; 5. Duplicate old people pensions (68 years or older and 65 in indigenous areas); 6. Grant scholarships and internships to 2.6 million young people who currently do not work nor study; 7. Give a scholarship to all students attending public high schools; 8. Give a pension to a million people with disabilities; 9. Guarantee medical attention and medicines to all the people that lack healthcare services; 10. Provide free internet coverage on highways, public squares and public schools and hospitals of the country. As any reader can see, this is an ambitious list of projects that all involve substantial government investments and for which there are not many details. Furthermore, the results of the citizen referendum are actually irrelevant –and AMLO will decide the course of action –as this new citizen referendum that asks about the Mayan train construction will be held on November 24th and 25th and the beginning of the construction of the railway has been scheduled for December 16th (regardless of the result). This just adds fuel to the fire of the arguments that say that these referendums are just a way of trying to manipulate the people and justify a decision that has already been taken by the upcoming government, as it happened with the cancellation of the new Mexico City airport project. In that regard, it has been leaked that many of the bondholders of the new Mexico City airport project will collectively sue the upcoming administration on December 1st due to their decision of cancelling the airport. It must be noted that many of these investors are foreign investors and institutions that can’t be negotiated as easily as they have negotiated with the Mexican construction firms making the airport. This could proof to be a heavy toll to pay for the Finance Secretary who will have to address these costs in the 2019 budget.
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The first week of November was another where the markets were shaken by something done by the AMLO's majority party in Congress. On Thursday November 8th, Senate majority leader, Ricardo Monreal, presented a bill in which the Morena party proposes to regulate the way commercials banks charge fees for cash withdrawals at ATMs and for other bank services. Even though, the bill is not something that strays too much from international standards in this regard, it caught everyone by surprise and had the greatest negative effect in a day for the Mexican Stock Exchange since the election of Donald Trump. This happened because the banks’ stocks plummeted as a result of the fact that most of the biggest banks in Mexico would be hit very hard with these measures. It must be noted, that these banks are financial institutions that derive a bigger share of their revenues from fees contrary to what happens in other countries. The bill presented was condemned by the banks and it had such an effect that the incoming Secretary of Finance had to release a statement “chastising” the senators from their party for presenting bills that have not been properly negotiated with unforeseen consequences. Let’s remember that this came on the heels of AMLO’s decision to cancel the $13 billion dollar new Mexico City airport and is undermining trust in this new government from investors. In a couple of two weeks, the Mexican peso has fallen around 1.3 pesos against the U.S. dollar surpassing the $20 pesos per dollar threshold again.
On another note, incoming Secretary of Foreign Relations, Marcelo Ebrard, finished his trip to China where he met with Chinese officials seeking to deepen relations between both countries. He said that the new government plans to further relations with the Asian superpower seeking to attract more Chinese foreign direct investment in an attempt to diversify Mexico’s sources of income and reduce the risk of an overdependence on the United States economy. Marcelo Ebrard (and even the President Elect) had also previously met with officials from other Asian countries and visited Japan in the incoming government’s effort to boost economic ties with that region. Returning to the domestic issues, incoming Secretary of Urban and Land Development, Roman Meyer, said that the new government’s National Housing Plan will be a cornerstone of the peacekeeping strategy they plan to implement. He said that AMLO’s government will focus on building new homes in adequate environments. In his opinion, the current housing strategy has built too many homes in places where they should not, as those locations lack the appropriate services, difficult transportation and inhibit social capital development. The new government will focus their efforts in marginalized municipalities as part of their security strategy. |
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December 2018
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