Populist Commands Mexico’s Spotlight

Before the sun has risen, while most public officials still slumber, a 51-year-old gap-toothed politician departs his modest flat and is driven in a late-model compact to City Hall. There, a pack of yawning journalists waits in a windowless room. At 6:35 a.m., one of them suddenly barks: “He’s coming!”

In strides Andres Manuel Lopez Obrador, mayor of North America’s largest city, possibly Mexico’s next president and unquestionably this nation’s man of the moment.

He yells a good-natured “Good morning, cheer up!” to the heavy-lidded reporters, who try to grill him on how his administration’s new rapid bus system has snarled a major thoroughfare. The mayor -- crisp in a charcoal suit and natty orange tie -- smoothly rebuffs them. He hails the mass transit as a bargain for taxpayers and a boon for the elderly, who ride for free. “It’s getting better every day,” he says with his trademark smile, adding, “This is a city that keeps its promises.”

This daily predawn jousting between Lopez Obrador and journalists is just one more demonstration of why the shopkeeper’s son from the poor state of Tabasco is wildly popular among working people, loathed by many of the elite and a force to be reckoned with heading into next year’s presidential election.

On Friday, he will step down as mayor to campaign full time for the presidency. A lock to win the nomination of his Democratic Revolution Party and leading all potential rivals in opinion polls, he has tapped into growing public discontent with free-market policies that have failed to cure Mexico’s economic ills.

His remedy is to expand anti-poverty programs to help Mexico’s most vulnerable, build big-ticket public works projects to boost employment and halt the privatization of key state industries that has further concentrated wealth in a few hands.

Such policies have earned him unflattering comparisons to Hugo Chavez, Venezuela’s fiery leftist strongman, whose tumultuous presidency has been punctuated by massive strikes and violent protest that have riven his nation along class lines.

But that shorthand doesn’t accurately convey Lopez Obrador’s mixture of populism, pragmatism and personal asceticism.

Millions of ordinary Mexicans identify with him. Lopez Obrador is a widower and father of three with a Phil Donahue-esque thatch of gray hair, and his very name comes from the Spanish verb “to work.” The mayor cut bureaucrats’ salaries and perks -- starting with his own -- redirecting tax money to pensions for the elderly, school supplies for youngsters and infrastructure such as the new Metrobus system.

“He thinks about the poor instead of about getting rich,” said Patricia Rodriguez Camacho, a disabled Mexico City resident who credits Lopez Obrador for her small stipend.

Opponents see the mayor as an insular demagogue, oblivious to criticism, whose spending binges would wreck Mexico’s finances if attempted on a national scale. Mexico’s tradedependent economy, they say, is inextricably linked with the outside world, particularly the United States.

Yet Lopez Obrador doesn’t speak English, has rarely traveled abroad, is suspicious of globalization and favors Depression-era government spending to move Mexico forward in the 21st century. A political science major and career public servant, he lacks the business school education that had become de rigueur for Mexican presidents.

President Vicente Fox, who by law is limited to a single, six-year term, has warned the public to beware of “populist messiahs” as it prepares to choose the country’s next leader. He has urged Mexicans to continue down the path of deregulation and free trade, policies that, he says, have helped turn their economy into the 10th-largest in the world.

But the fact that Lopez Obrador, a former indigenous-rights activist with a fondness for big government, is the front-runner to succeed Fox, a worldly former Coca-Cola executive, shows how disillusioned Mexicans have become with free-market solutions.

Similar frustrations have fueled the rise of left-of-center governments across Latin America in recent years, including in Brazil, Argentina, Uruguay and Venezuela. The neoliberal formula of fiscal discipline, deregulation, privatization and free trade has failed to lift millions out of poverty.

Austerity measures have helped Mexico tame inflation and stabilize its peso, no small achievement given the country’s experience of past devaluations that devastated millions of households. Yet economic growth in real terms has been virtually flat for two decades. The underground economy is the nation’s primary job engine. Illegal Mexican immigration into the United States is at an all-time high, with an estimated 450,000 people a year leaving their homeland.

“You don’t have populists just come out of the dust,” said Bret Rosen, assistant vice president of Los Angeles-based Trust Co. of the West, which manages assets worth $5 billion in Latin America and other emerging markets. “There are reasons for it.”

Some here blame neoliberal policies for all of Mexico’s economic woes.

Others say the nation botched the first wave of reforms and hasn’t moved aggressively enough to undertake new ones to stay competitive in the global economy. Fox’s proposals to overhaul Mexico’s feeble tax system, stodgy labor code and inefficient energy sector have gone nowhere.

Lopez Obrador has staked out the middle ground. Although he doesn’t favor unraveling past reforms, he is reluctant to push farther down the free-market path, looking instead to New Deal-style government spending to propel the economy.

Call it FDR meets the IMF.

For example, he has promised to adhere to anti-inflationary policies. He likewise said he wouldn’t seek wholesale revisions to the North American Free Trade Agreement, the landmark 1993 accord that lowered economic barriers among the U.S., Canada and Mexico.

But he rejects calls to privatize Mexico’s bloated, state-owned energy sector, and he wants to spend big on Mexico’s poor. In Mexico City, the mayor set up the nation’s first universal social security system, which provides seniors in the capital a stipend of $64 a month, a modest sum here. It’s the kind of program Lopez Obrador would like to put in place nationwide to help narrow Mexico’s yawning income gap.

“We can’t have progress in Mexico, we can’t have stability, security or the ability to govern if the impoverishment of the people isn’t slowed,” he said in a recent interview.

Since the 1980s, Mexico has sold off hundreds of state-owned companies with the goal of spurring competition and efficiency. Instead, critics contend, the program has replaced public monopolies with private ones. Forbes magazine this year listed Mexican telecom mogul Carlos Slim as the world’s fourth-richest man, with a net worth of $23.8 billion. The news provoked outrage in a country where telephone rates are exorbitant, service is lousy, 60% of households don’t have a land line and nearly half the population lives in poverty.

NAFTA helped turn Mexico into an exporting powerhouse, with more than 1 million Mexicans employed in maquiladora manufacturing plants. Yet Mexico has fewer total factory hands now than it did in 1994, when the agreement took effect. Meanwhile, a flood of low-cost American agricultural products has devastated Mexico’s farm sector, sending millions of people fleeing north.

The neoliberal “model has simply not delivered the jobs or the growth that Mexicans were expecting or that they feel they deserve,” said Gray Newman, chief Latin America economist for brokerage Morgan Stanley in New York.

To spur job growth, Lopez Obrador wants to invest heavily in the nation’s crumbling infrastructure, putting tens of thousands to work in the process. His signature project as mayor was adding a second level to a major highway to help ease the capital’s infamously snarled traffic.

Paying for these programs without deficit spending is another matter. Mexico’s underground economy is so large and the country’s revenuers so inept that the nation’s tax take is among the lowest in the world for an economy of its size. Lopez Obrador wants to raise more revenue through better enforcement and by simplifying the tax code. But those ideas aren’t new, easy to put in place or likely to generate large sums quickly.

Mexico’s fiscal jam is so severe that the conservative Fox, hardly a tax-and-spend liberal, tried to produce a quick $9 billion for social programs by extending the nation’s value-added tax to food and medicine. That effort was blocked by the opposition-controlled Congress, and Fox was branded an enemy of the poor for seeking to tax staples such as tortillas and beans.

Lopez Obrador clearly intends to avoid that minefield. Relaxed and confident in an interview with the Los Angeles Times, he sounded like a GOP stalwart on the subject. “We don’t need to raise taxes or create new ones,” he said.

But his math doesn’t add up for many in the business community who fear that, as president, he would abandon fiscal restraint to fulfill campaign promises. In a country where past presidential transitions have sent the economy into tailspins, some fear the worst.

Claudio X. Gonzalez, president of the Center for Economic Studies of the Private Sector, summed up the feelings of many Mexican industrialists in an interview with a business publication this year. He called Lopez Obrador a “retrograde and dinosaur-like” leftist who would spook investors and threaten the nation’s hard-won economic stability. “If populism returns ... Mexico could be left in bankruptcy,” he said.

Lopez Obrador rejects such criticism as a ruse to frighten voters and foreign investors. Nevertheless, he has been meeting quietly with Wall Street analysts and institutional investors to try to allay fears that he is “some sort of left-wing wacko who will be another Hugo Chavez,” said Pamela Starr, a political scientist and Mexico expert.

The mayor is aware, Starr said, that Brazil’s economy wilted in the run-up to the 2002 election of leftist President Luiz Inacio Lula da Silva and suffered for months afterward on unfounded fears that he would socialize the economy.

Lopez Obrador “knows there was a great deal of capital flight out of Brazil during that time and doesn’t want Mexico to pay that price of electing a leftist,” Starr said. “So he is making himself very accessible to investment people, demonstrating that he is not the boogeyman or the devil, so that they will react to his political success, if it comes, more calmly.”

Experts say the recent solid economic performance of Latin American nations with left-of-center governments, including Brazil, Chile and Argentina, has made many investors more comfortable with the idea of populist leaders. The mayor has impressed many with his frugality at City Hall, which has squeezed hundreds of millions of dollars from the bureaucracy. And Lopez Obrador’s enemies may have unwittingly helped make him appear more presidential.

This spring, a legal proceeding against him over a minor land deal -- perceived by many as politically motivated -- threatened to block him from the ballot. But that backfired when an estimated 1 million Mexicans took to the streets on his behalf. Federal prosecutors ultimately dropped the case, but not before giving Lopez Obrador an international stage on which to exhibit coolheaded leadership. The atmosphere could have easily turned violent but for his repeated calls for calm.

“He surprised a lot of people with his statesmanship,” said Alberto Bernal, head of Latin America research for IDEAglobal in New York. “I think a lot of people came away with a more positive view of what a Lopez Obrador presidency would look like.”

Anything could happen between now and the July 2006 election. A recent poll showed Lopez Obrador losing ground to potential rivals. Business leaders continue to brand his economic policies as a retreat for a nation that desperately needs to leap forward to compete with rising economic powers such as China and India.

But Lopez Obrador counters that those content to stick with a system whose legacy has been inequality and grinding poverty are the ones stuck in the past.

“They don’t want things to change in this country,” he said. “But Mexico needs a change. We can’t go on like this.”

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Andres Manuel Lopez Obrador

* Born: Nov. 13, 1953, in Tepetitan in the Mexican state of Tabasco

* Education: Bachelor’s degree in political science and public administration, National Autonomous University of Mexico

* Career highlights:

1977: Named head of the Indigenous Institute of Tabasco

1984: Moved to Mexico City to work at the National Consumer Institute

1996: Named head of Democratic Revolution Party

2000: Elected mayor of Mexico City

Source: Times research

Los Angeles Times