Jude Webber/FT: Mexico’s purge on
technocrats fuels fears of expertise shortfall
Mexican president Andrés Manuel López Obrador has blamed 'irresponsible technocrats' for
decades of pro-market policies that have failed to lift growth and living standards in the country
Critics claim President Andrés Manuel López Obrador is becoming deaf to advice
Mexico City - At 7am every day, Andrés Manuel López Obrador talks directly to Mexicans, promising voters the unvarnished truth. Sometimes the leftwing nationalist president praises the “wise” people but also uses the broadcast to bash “irresponsible technocrats”.
Orthodox policy wonks educated at elite US institutions have dominated Mexican policymaking for three decades. But Mr López Obrador has accused them of political bias, and blamed them for Mexico’s inability to escape sluggish growth, corruption and inequality.
After taking office in December, he promptly purged government departments of layers of senior and middle management.
Mr López Obrador has, in addition, promised to hold a “people’s poll” on March 21 on whether Mexico’s past five presidents should be put on trial for pursuing “failed” neo-liberal economic policies that he claimed “pillaged” the country.
“They’re definitely hostile to technocrats,” said one former senior official.
In an age of rising populism, the Mexican president, though, is not alone in his suspicion of policymakers. US President Donald Trump prefers to follow his gut, Indian prime minister Narendra Modi has ridiculed western-educated economists and piled pressure on the reserve bank, while UK cabinet minister Michael Gove stated bluntly that people “have had enough” of experts.
" It’s a learning curve. But it’s steep and it’s going to cost us Jorge Andrés Castañeda, IMCO think-tank
But the war on technocrats has had consequences beyond Mexico.
When the country’s new government and Pemex held a roadshow in New York in January, it received crushing reviews. One investor described the state oil company’s performance as “absolutely disastrous”, displaying “little clue of finance”.
Critics blamed the ramshackle roadshow on a dearth of expertise.'
Under an austerity drive, Mr López Obrador has limited consultants to three per ministry. And his vow to prevent officials from earning more than the president has led to an exodus of experienced officials — many at the Bank of Mexico, the finance ministry and Pemex — who quit instead of swallowing big pay cuts.“
All of this experience will take a long time to recover — they’re shooting themselves in the foot,” cautioned Alejandro Schtulmann, a political consultant.
Mr López Obrador’s cabinet may include respected academics and a former supreme court judge, but critics fear the president is deaf to advice — and worry that no one is willing to challenge him.
“It’s a learning curve,” said Jorge Andrés Castañeda at IMCO, a think-tank, of the new policymaking.“But it’s steep and it’s going to cost us.”
The president has ploughed ahead with his priorities: a national energy policy, a crackdown on fuel theft, a new security strategy, higher social benefits and an apprenticeship programme to create opportunities and growth.
At the same time, the finance ministry has quietly backtracked on its firing binge, hiring some staff back to new roles. “They know they need [technocrats], they just under-estimated how many,” said the former official.
While Mr López Obrador is hugely popular, his methods have alarmed investors.
He announced, after a “people’s poll”, that he would scrap a partially built $13bn airport that senior officials had privately assured investors was safe. The president wants to supplement the existing airport by expanding a military base, spurning expert advice that operating the two simultaneously was incompatible.
“A lot of the technocrats were very arrogant and, at the end of the day, didn’t deliver...you can see why they would be unwilling to talk to them,” said one former policymaker.
Andrés Manuel López Obrador said he would scrap the $13bn airport in Texcoco
“Hopefully experience will teach López Obrador that aside from good intentions and being courageous, you need to think things through — and listen to other people.
”But John Ackerman, a law professor whose wife is the government comptroller, defended the changes.
“Some types of knowledge are presented as neutral expertise but have a political agenda,” he said. “All these years, people have been saying ‘we know best’. This is refreshing,” he said.
Technocrats are not Mr López Obrador’s only target among the old “establishment”. He has also blasted the media for publishing news with which he disagreed. He said the IMF was wrong when it lowered its 2019 growth target for Mexico to 2.1 per cent from 2.5 per cent. And when Bank of America Merrill Lynch cut its forecast to 1 per cent, Mr López Obrador said: “I have other data.” He also called Fitch Ratings’ downgrade of Pemex “hypocritical”.
So far, the government has been praised for financial prudence — but investors wondered what would happen if slower growth endangered flagship programmes and promises.
“For much of the past couple of decades, Mexico... was rarely grouped with ‘problem’ or fragile large emerging market economies,” Alonso Cervera at Credit Suisse wrote in a note to clients.
“We think that over the coming years, Mexico will run the risk of becoming a more typical EM country... and that this will impact how Mexican assets trade — more vulnerable and more volatile.”
Jude Webber has been the Financial Time 's correspondent for Argentina, Chile, Uruguay and Paraguay for the last five years. Before that, she worked for fifteen years as a correspondent for Reuters news agency, with postings in London, Madrid, Dublin, Rome and Lima; and assignments in Albania, Macedonia, Venezuela, covering a broad spectrum of corporate, economic and political stories. Petroleumworld reprint this article in the interest of our readers and does not necessarily reflect the opinion of Petroleumworld and its owners.
Editor's Note: This article was originally published by Financial Times on Feb. 05, 2019. All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld.
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