The Economist - USA (20212-12-04)

36 TheAmericas TheEconomistDecember4th 2021

but the infrastructure outside—from roads

to  ports—is  of  poor  quality,  says  Mr  de  la

Calle.  Businesses  complain  of  problems

obtaining  inputs.  The  likes  of  Panasonic

and  Össur  import  many  of  the  materials

they  need.  Similarly  Össur  nearly  pulled

out  of  Tijuana  because  it  could  not  find  a

company to apply chemical processes to its

products, which include prosthetics. (bap

eventually stepped in.)

Some  of  the  causes  of  Mexico’s  pro­

blems  are  outside  its  control.  When  the

government  of  the  United  States  talks

about  “near­shoring”,  it  really  means  on­

shoring, says Bill Reinsch of csis, a think­

tank in Washington. It can be protectionist

in  negotiations  with  Canada  and  Mexico.

usmca,  the  revised  trade  deal  agreed  in

2020 between the three countries, is strict­

er  than  its  predecessor,  nafta—indeed  it

was  negotiated  in  part  to  preserve  manu­

facturing jobs in the United States. 

But  Andrés  Manuel  López  Obrador,

Mexico’s  populist  president,  has  not

helped.  In  2018  his  administration  re­

placed  one  of  the  most  business­friendly

(if corrupt) governments in Mexico’s histo­

ry,  that  of  Enrique  Peña  Nieto.  Mr  López

Obrador,  in  contrast,  seems  to  enjoy  un­

nerving investors. 

Soon  after  taking  office  he  cancelled  a

new  airport  for  Mexico  City,  after  the  dig­

gers had been working for three years, at a

cost of at least $5bn. In 2020 he also pulled

the  plug  on  a  $1.4bn  investment  in  a  new

factory by Constellation Brands, an Ameri­

can  brewer,  which  was  near  completion.

He  has  weakened  independent  regulators

by  absorbing  them  into  government  or

slashing their budgets.

Mr  López  Obrador  is  also  reversing  his

predecessor’s opening of the energy indus­

try  to  private  firms  and  favouring  ineffi­

cient state­owned outfits. Along with mak­

ing electricity dirtier and less reliable, this

sends  forbidding  signals  to  investors.  In

November  the  boss  in  Mexico  of  General

Motors  (gm),  an  American  carmaker,  said

the  company  would  not  invest  further  in

the country without laws that promote re­

newableenergy.Earlierthisyeargmhad

said it wouldinvestmore than $1bnto

makeelectric carsinMexicofrom2023.

LastyearTesla,aleadingmakerofsuch

cars,consideredopeninga factoryinMex­

icobutoptedinsteadforTexas.Although

Tesla did not explain its reasons, Elon

Musk, itsboss, hasgrumbled aboutthe

Mexicangovernment’sclosureofsomeof

thefactoriesofitssuppliersduringcovid­

relatedlockdowns.

Mexico risks “shooting itself in the

foot”bynottakingadvantage ofshorter

supply chains, says Michael Camuñez,

whostarteda seriesofmeetingstoboost

theeconomicrelationshipbetweenMexi­

co andthe UnitedStates duringBarack

Obama’sadministration.(MrLópezObra­

dorandPresident JoeBiden relaunched

this“economic dialogue”inSeptember.)

UnfortunatelyitisMrLópezObradorwho

hashisfingeronthetriggerand,ifhispast

treatmentofforeigninvestorsisanyguide,

seemslikelytopullit.n

Taking off (for now)

United States, share of aerospace imports from

%

Source: US ITC *To September

4

3

2

1

0

21*1510052000951989

China

Mexico

Honduras

A leftward turn

H

ondurans oftenvote with their feet.

The  United  States  says  it  caught

320,000 of them trying to cross its border

illicitly last year. That is equivalent to 3% of

Honduras’s population, though many were

doubtless caught more than once. 

On November 28th Hondurans voted in

a presidential election. Some hope that the

apparent winner, Xiomara Castro, will help

them build a country they no longer wish

to escape. Preliminary results suggest that

Ms  Castro,  of  the  leftist  Libre  party,  has

won the presidency, ending 12 years of rule

by  the  National  Party.  With  her  allies,  she

may secure a majority in Congress, too. Ms

Castro, the wife of a former president, Ma­

nuel  “Mel”  Zelaya,  rose  to  prominence  by

leading  protests  against  his  ouster  in  a

coup in 2009. Her win is part of a backlash

against organised crime in Honduras, and

against incumbents across Latin America. 

The poll was peaceful. At 68%, turnout

was the highest for over a decade. Fears of a

repeat  of  the  fraud  and  violence  seen  in

2017 proved unfounded. Back then at least

29 people were killed when President Juan

Orlando Hernández was re­elected in mur­

ky  circumstances—and  after  the  Supreme

Court  had  changed  the  constitution  to  al­

low him to run for a second term. Ms Cas­

tro  will  be  the  first  female  Central  Ameri­

can president.

She will have a lot to do. Mr Hernández,

one of the most unpopular leaders in Latin

America, is accused of having turned Hon­

duras into a narco­state. In 2019 he was im­

plicated in a trial in the United States that

found his brother guilty of drug trafficking.

(He denies any involvement.) The country

is  the  second­poorest  in  the  region,  after

Haiti. In 2019 around half the population of

10m  lived  on  less  than  $5.50  per  day.  The

covid­19  pandemic  has  made  matters

worse.  And  although  the  murder  rate  has

fallen  by  half  since  2011,  it  remains  the

fifth­highest in the world. 

Ms  Castro  talks  about  rebuilding  de­

mocracy,  creating  a  fairer  economy  and

getting rid of corruption. She says her gov­

ernment will work for poorer people, such

as teachers and farmers, rather than elites.

Some  promises,  like  selling  the  presiden­

tial plane, should be relatively easy to keep

(although Mexico’s populist president, at­

tempting the same gimmick in 2018, could

not find a buyer). But other ideas are either

vague or improbable. 

For  example,  she  has  promised  on  the

first  day  of  her  presidency  to  organise  a

vote for a body to write a new constitution.

Lester  Ramírez  of  the  Association  for  a

More Just Society, an ngo, reckons she may

delay these plans and focus on job creation

instead. Ms Castro also says she will tackle

corruption  by  inviting  in  a  un­backed

commission  to  come  into  the  country,

along  the  lines  of  the  one  in  Guatemala

which helped prosecute two former presi­

dents and numerous officials. Tiziano Bre­

da  of  the  International  Crisis  Group,  a

think­tank,  suspects  that  donors  may  be

loth  to  back  such  a  body,  after  the  one  in

Guatemala  was  booted  out  by  the  govern­

ment in 2019.

It  is  also  unclear  how  her  government

will be able to afford to create more gener­

ous  social  programmes  or  support  small

Xiomara Castro will be Central

America’s first female president

Red and ready to rule