Mexico Treads a Familiar Path Toward Populism

Mexico Treads a Familiar Path Toward Populism
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Mexico's gradual move toward populism has made headlines for more than a year. The foreign press in particular has reported extensively on the popularity of presidential candidate Andres Manuel Lopez Obrador, creating a narrative of a recent, inexorable leftward shift among Mexican voters. The underlying reality is far more complicated. Lopez Obrador's popular approval is the product of Mexico's enduring, widespread poverty and steadily diversifying political landscape, among other broader, longer-term trends. It's also the result of prevailing, discrete events, such as the Mexican government's perceived complacency when faced with U.S. threats during talks to renegotiate the North American Free Trade Agreement. These dynamics will likely create a competitive presidential election in 2018, in which Lopez Obrador or a challenger from a traditional party such as the National Action Party (PAN) or the ruling Institutional Revolutionary Party (PRI) could narrowly clinch power. In keeping with recent history, however, whoever wins next year's election will enter office relatively weak and will struggle to implement populist policies, especially if Congress and the country's economic elites disagree with them.

A Slow Change Coming

Lopez Obrador's populist message clearly resonates with a political minority in Mexico. According to recent polls, nearly a third of Mexican voters would be willing to vote for him in July 2018. This receptiveness to populism is not a recent trend, however; it even predates Lopez Obrador's previous presidential runs in 2006 and 2012. The PRI, for example, was far more populist when it emerged in the 1920s after the Mexican revolution than it is now under President Enrique Pena Nieto. Historically, poverty and corruption have created fertile ground for populist political messages, but in recent decades, as Mexico became more economically intertwined with the United States, political leaders' enthusiasm for populism waned and the country's political parties began to favor business-friendly technocrats for president. For two decades, presidential leadership in Mexico has been primarily about keeping the status quo in domestic politics and foreign affairs, particularly in international trade.

Mexico's rise from a largely rural society and exporter of agricultural and mineral commodities to a manufacturing hub is a more recent phenomenon. Less than half of Mexico's population lived in cities in 1950. Today, about 80 percent of Mexicans do, and Mexico's role as a commodity exporter has subsided in favor of manufacturing exports to the United States. Despite this change, nearly half of the country's labor force remains informal; it's composed of people who receive low wages, don't receive labor benefits, often lack a steady income and pay few if any taxes. Even as rising foreign trade improved the economy and drove down emigration to the United States, Mexico retained a large, impoverished population. In recent years, this population has increasingly been victimized by periodic upticks in violent crime. It's also faced stagnant wages relative to its NAFTA peers in the United States and Canada. For comparison, Mexico's average yearly salary (in the formal sector of the economy) is about one-fourth of the average annual salary in the United States. Low wages have benefitted Mexico's competitiveness in manufacturing, but they're a point of contention between the Mexican population and its leaders.

If Lopez Obrador becomes president in 2018, it will be because he was in the right place at the right time. Over a decade, voters steadily shifted away from the PRI for a variety of reasons — the rise of political alternatives, perceptions that the party mismanaged the 1994 economic crisis, corruption scandals — until in 2000 they elected Vicente Fox, the first president from an opposition party in post-revolutionary Mexican history. After two PAN governments, the PRI made a comeback in 2012 when Pena Nieto narrowly edged out Lopez Obrador, receiving only slightly more than one-third of the vote in Mexico's single-round, plurality-wins presidential election. The general trend in Mexican politics was clear even as Pena Nieto ascended to the presidency: Future presidential races would be three-way competitions in which the PRI, PAN or a third challenger could conceivably gain power. U.S. President Donald Trump and his administration's protectionist trade rhetoric and singling out of Mexico for criticism are merely short-term drivers of Lopez Obrador's rise as a contender. The political ground already was prepared for a populist message, but the Trump administration's contentious relationship with Mexico may end up giving Lopez Obrador the extra push he needs to win the presidency.

Blocking the Populist Path

Even if Lopez Obrador wins next year, the structure of Mexico's government will ensure that he remains relatively weak. Both houses of Congress will be divided among four major political parties, including Lopez Obrador's National Regeneration Movement, after 2018's federal elections. The need to bring other parties into the policymaking process will temper and limit Lopez Obrador's legislative agenda. In addition, political and economic elites can harness legislative power to stymie Lopez Obrador. While he will be able to reexamine some of Pena Nieto's economic reforms (Lopez Obrador has hinted he will review energy contracts awarded under Pena Nieto if he is elected, for example) and press for limited populist reforms through decrees, sweeping changes to the tax code and to Mexico's regulatory and financial systems will be virtually impossible without a legislative majority.

The 2018 elections could bring a new party to power, which would be a watershed moment for Mexican politics. Then again, a more established party such as the PRI or PAN could eke out a narrow victory with around a third of the vote. Whatever the outcome, the trend toward competitive elections in Mexico is clear. The country's political system is in transition and electoral results can no longer be taken for granted. In addition, the divisions in the system will work to block populist leaders, making a sweeping political shift toward populist or leftist rule virtually impossible, at least in the short term.

A Stratfor Intelligence Report.
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