NEW LEADER IN MEXICO
How it may affect Canada
Andrés Manuel López Obrador won the Presidency of Mexico by a landslide on July 1. Known as AMLO by his supporters and opponents alike, the leftist former mayor of Mexico City ran for president in 2006 and 2012, losing both times. Claiming to speak for Mexico’s underclass, his protectionist, nationalist and isolationist agenda could cause problems for Canada, and for the entire Western Hemisphere.
AMLO was popular during his tenure as Mexico City’s mayor from 2000 to 2005. He spent heavily on social programs and improved infrastructure. Still, a darker side to his political character has always been visible. An admirer of Hugo Chavez and Fidel Castro, he has expressed disdain, time and time again, for commerce, foreigners and anyone who dares oppose him. Having stoked class and racial tensions throughout his entire career, his postelection protests have shut down entire cities and resulted in numerous injuries. A longtime operative of the ruling PRI and then the PRD, he now promises to take apart the political class to which he has belonged since his beginnings in the state of Tabasco.
AMLO is the classic Latin American caudillo, the strongman. His vague promises have little substance; everything will work because he considers himself to be incorruptible and all-knowing. He will raise wages and boost social transfers by saving money lost to corruption. He will freeze prices, raise taxes, discourage foreign investment and, somehow, create millions of jobs. Like the authoritarian Chavez and the dictator Maduro, he muses about nationalizations and gripes about the media. If AMLO follows through on his populism, it will leave Canada facing down two protectionists — Trump and AMLO.
Mexico is Canada’s fifthlargest export destination, and third-largest source of imports. Canadians stand to lose a lot should AMLO choose to leave NAFTA. If this were to occur — and it very easily could — the federal government would likely increase subsidies to Canadians manufacturers and farmers to prevent resulting job losses and shortages from a decline in trade. This spending would lead to a steeper decline in the value of the Canadian dollar.
On the foreign policy front, Canada’s efforts to address the Venezuelan crisis as part of the Lima Group could also be jeopardized. AMLO plans to appoint 73-year-old Héctor Vasconcelos as his foreign minister, a former diplomat who sees nothing wrong with the Venezuelan dictatorship. Without Mexico backing countries such as Canada, Colombia, Panama, Chile and Peru in sanctioning the Venezuelan regime, a critical lifeline could be extended to Maduro and his thugs. Mexico is the second-largest economy in Latin America, and if the Venezuelan military can have dealings with AMLO’s Mexico, who knows how long the dictatorship can continue to repress and starve its people? Canada’s allies of Colombia and Brazil, already hosting nearly three million Venezuelan refugees, will further corrode.
Should AMLO opt to have a radical government, there are things that Canada can do to stave off the damage. Capital flight and brain drain from Mexico have already begun, and Canada needs to be proactive in receiving Mexican doctors, nurses, engineers and investors. With Trump and AMLO walling themselves in, Canada needs to accelerate trade deals and visa exemptions with the Asian Tigers and pro-market Latin American democracies. Relying on a stumbling EU to fill the void does not suit the realities of today’s global economy. To effectively address crises in places such as Venezuela, Nicaragua and Myanmar, a Canada that forms new allegiances could actually stand to be all the more potent, no longer constrained to North America.
AMLO could potentially moderate. But, with his populist rhetoric and past actions, why take a chance? Good things do not come to those who sit and wait for tariffs and quotas. Canada needs to get up and move.