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Central America Awaits as Mexico’s Elections Approach
GCaM Greater Caribbean Monitor
May 17, 2024
Dear all,
We welcome you to the Greater Caribbean Monitor (GCaM). In this issue, you will find:
•AMLO and Arévalo Meet in Southern Mexico
•Sheinbaum, Heir Presumptive to the Mexican Throne
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The GCaM Team
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•AMLO and Arévalo Meet in Southern Mexico
587 words | 3 minutes reading time
Today, Guatemalan President Bernardo Arévalo will meet his Mexican counterpart, Andrés Manual López Obrador (AMLO), who will leave office on October 1. Per both country’s foreign ministries, the meeting will focus on border security and will take place in Tapachula, on the Mexican side of the border.
Two topics will be most prominent: immigration and drug trafficking. Customs and trade will undoubtedly be discussed, but are evidently minor concerns compared to the other two.
The meeting was announced by AMLO a few weeks ago at one of his customary morning press conferences, which Mexicans have taken to calling mañaneras. The Mexican president has heaped praise on Arévalo, deeming him “the best thing that could have happened to Guatemala.”
This isn’t the first meeting between the duo. In September, AMLO and Arévalo met when the latter visited Mexico to attend the left-wing Puebla Group’s summit.
Data. Back in 2022, Mexico exported goods worth $2.86 billion to Guatemala, which in turn exported $692 million to Mexico. This year’s figures haven’t changed much: Guatemala still maintains an enormous deficit with Mexico, which limits the entry of Central American products not through tariffs, but through health regulations.
This happened recently, when Honduran shrimp was banned in Mexico, affecting the rest of Central America. The prohibition, since overturned, was based on suspicions that Ecuadorian shrimp was being sold as Honduran.
Both countries are aware of the issue. They have promised to make regulations “more transparent” through inter-ministerial agreements that are to be signed very soon.
Drugs. One cannot neglect the drug problem, which has turned into a perennial source of criticism for AMLO. Washington is incensed by his policy of abrazos, no balazos (“hugs, not bullets”). The Mexican president has gone so far as to say, “Violence has not increased; murders have.”
AMLO will arrive at the meeting with fully aware of the fact that the DEA’s most recent National Drug Threat Assessment (NDTA) accused his government of tacitly supporting the drug trade and allowing it to flourish in entire regions of the country.
In light of the fact that Claudia Sheinbaum will likely succeed AMLO, it is unlikely that Mexico’s security policy will undergo great shifts. Sheinbaum enjoyed relatively good results when she governed Mexico City, but has avoided discussing security during her campaign, correctly identifying it as the opposition’s strength.
Regarding Guatemala, Semilla’s new left-wing government does not promise much in the way of truly meaningful change. The interior ministry has, however, embarked on what it calls its Territorial Control Plan.
Between the Lines. Immigration is the most important of U.S. priorities. This was highlighted by Secretary of State Antony Blinken’s recent visit to Guatemala, which hosted the Los Angeles Declaration’s ministerial summit only days ago. At the event, Blinken talked a great deal and promised $578 million in U.S. funds for the region, but no real solution to the migrant crisis was found.
The coming encounter between AMLO and Arévalo may be similar. It may result in minor agreements under which Guatemala gradually turns into a buffer state, processing the visa applications of U.S.-bound migrants from further afield.
With regard to Mexico, its priorities are aligned with those of the United States, its main partner. Mexico cannot single-handedly end the migrant crisis, but it does occasionally exercise its ability to restrict and delay the flow of migrants.
Regardless, AMLO and Arévalo get along because they are ideological allies, hence AMLO’s insistence on “borders that unite our peoples.” This will likely continue under Sheinbaum, the heir presumptive to the presidency. Whatever is not achieved at this meeting can be postponed, rather than ruled out.
What We’re Watching
Luis Abinader is poised for a thumping re-election win [link]
The Economist
The article recognizes what few have noticed about Dominican politics: its “technocratic, market-friendly centrism,” that is, the fact that all political parties agree on the basic principles of the country’s economic model. Abinader’s popularity is in large part attributable to his stellar economic performance and reputation as a champion of anti-corruption efforts. The country’s economic fundamentals remain solid: the Dominican Republic’s GDP has grown, on average, at an annual rate of 4.9% over the last 50 years, and its standard of living is growing faster than that of any other Latin American country.
Mexico’s Post-Election Fiscal Reality Check [link]
Carlos Ramírez Fuentes, Americas Quarterly
Mexico holds much promise and can continue taking advantage of nearshoring, although long-running deficiencies in its infrastructure and water supply render growth more challenging. AMLO, initially known for his austerity, leaves Mexico with a fiscal gap of 6% of its GDP, despite having inherited a budget deficit of just 2%. The debt-to-GDP ratio is expected to end the year above 50%, which is worrying for a country that collects only 17% of its GDP in taxes and faces large, growing expenditures in the form of federal pensions. As if this were not enough, Pemex, the state-owned oil giant, has total debts of $102 billion; its refining business suffers immense losses every year. No candidate has acknowledged this situation, instead promising ambitious fiscal expansion packages.
As Minas goes, so goes Brazil [link]
Bryan Harris, Financial Times
Minas Gerais is the country’s bellwether state; it is to Brazil what Ohio used to be to the United States. Since the restoration of democracy, no candidate has won the presidency without also carrying Minas Gerais. The state is considered the country’s “synthesis”: the south of Minas Gerais is heavily industrialized, while the west exports the agricultural commodities that have contributed so much to Brazil’s economic growth. The north, for its part, has historically been much poorer, but the energy transition and the lithium boom are revolutionizing its economy.
•Sheinbaum, Heir Presumptive to the Mexican Throne
664 words | 3 minutes reading time
Mexico will hold elections on June 2. Claudia Sheinbaum (MORENA, left), current president AMLO’s hand-picked successor, is likely to win. Democracy is famously fickle and the final results may differ, but according to El País, the Spanish-speaking world’s newspaper of record, she has an 86% chance of winning.
For El País, Sheinbaum will take 56% of the vote, outclassing AMLO’s showing at the 2018 election, where he won with 54.71% of the vote. Other polls speak of a landslide, with Sheinbaum obtaining more than 60%.
Xóchitl Gálvez (Strength and Heart for Mexico, big tent) is the main opposition candidate. She has struggled to define herself in ideological terms. To GCaM’s knowledge, only one poll gives her a fighting chance.
Thus, Sheinbaum expects a comfortable victory. Mexican presidents have a history of affording their successors a significant degree of deference; at any rate, AMLO has said that he will not become an elder statesman and will instead retire from public life.
Between the Lines. In a recent interview for the Financial Times, Sheinbaum pledged to advance AMLO’s “transformational” agenda. Essentially, she offers the electorate social justice, public services, and the death of “neoliberalism,” which she seems to regard as the source of all evils. Sheinbaum also promises significant spending increases, although she will have to contend with a 6% deficit and growing public debt.
During the interview, she favored AMLO’s proposed constitutional reforms, which would, among other things, provide for Supreme Court justices to be elected by popular vote. Such an amendment is currently unfeasible, but Sheinbaum expects to secure a congressional supermajority at the coming elections.
Sheinbaum also agrees with AMLO’s wish to limit the power of the federal bureaucracy and the judiciary. In U.S. terms, she wishes to “drain the swamp,” and deems Supreme Court justices too political.
Overall, Sheinbaum approves of AMLO’s packet of 20 wide-ranging reforms and constitutional amendments, which are regarded as his political last will and testament. When asked if she believes in checks and balances, she said she believed “the people should decide.”
The Successor. Mexican presidents govern for a single, non-renewable six-year term. A 2014 constitutional amendment provides for the transfer of power to take place at midnight on October 1, depriving AMLO of his last two months in power. He doesn’t seem to mind and believes he leaves the National Palace in good hands.
One must recall that Sheinbaum is his hand-picked successor. For her sake, AMLO risked an internal schism within his party, MORENA, since he effectively crushed former Foreign Secretary Marcelo Ebrard’s political aspirations.
Sheinbaum shares the broad strokes of AMLO’s ideology, but the two are far from identical. AMLO is an old guard leftist in the style of the 20th century PRI, Mexico’s formerly hegemonic party. He is a statist and a populist in the original sense of the term, promising handouts and investments to ordinary Mexicans.
On the other hand, Sheinbaum represents the contemporary, U.S.-influenced, and “woke” left. She is concerned with such things as climate change and renewable energies. The two may speak in the same terms with regard to “social justice,” but in truth, they are referring to different concepts.
What’s to Come. Until now, Sheinbaum has appeared as AMLO’s anointed, promising to continue what AMLO enjoys calling the “fourth transformation” in Mexico’s republican history. This pleases investors, who, despite not being particularly fond of AMLO, always place a premium on stability, certainty, and predictability.
Sheinbaum—a bourgeois metropolitan liberal—would struggle winning elections without AMLO’s blessing. Even with the president’s support, the opposition has labored to deny her Mexicanness.
Mexico, then, seems slated to have more of the same for the next six years. AMLO, despite his mediocre record, remains astonishingly popular; Sheinbaum, whom one wouldn’t typically regard as a strong candidate, will thus ascend the throne.
AMLO, as mentioned, claims he will abandon politics; like a Roman dictator of old, he plans to retire to the countryside and conduct research on indigenous populations. If so, his greatest achievement may very well be MORENA, which is on track to become Mexico’s hegemonic party, a new PRI.