TheEconomistJuly 13th 2019 311I
n mexico’s leftist populist govern-
ment, Carlos Urzúa, the social-democrat-
ic finance minister, was a reassuring fig-
ure. The president, Andrés Manuel López
Obrador, has unorthodox ideas about how
to develop Mexico. Mr Urzúa (pictured,
right) would help make sure, investors
hoped, that he pursued them without
wrecking the economy. But on July 9th,
after seven months in office, he quit,
abruptly and noisily. In a venomous letter
he said his ministry had been forced to em-
ploy unqualified people. “I am convinced
that economic policy should be based on
evidence” and free from “all extremism,
whether of the right or the left”. This belief
“found no echo” in the government, la-
mented Mr Urzúa. “I’ve never seen a letter
like this in Mexico,” says Luis Rubio of ci-
dac, a think-tank.
Mr López Obrador (pictured, left), who
took office in December, has lost other offi-
cials, including the environment secretary
and the head of the migration institute.
Some have left not because the president is
spendthrift, but because he has slashed
ministries’ budgets to make room for hispet projects. Cuts to health spending
prompted the resignation in May of the
head of the social-security institute.
Mr Urzúa’s departure will hurt more. It
dims the aura of a president who still has
high approval ratings. It exposes infighting
within his team. It will make economic
management more difficult at a time when
growth and investment are faltering. Most
important, it raises the question whether
Mr López Obrador’s coalition of radical ac-
tivists new to government, defectors from
the establishment and centre-leftists like
Mr Urzúa can agree on a sensible governing
programme. The markets are worried. The
peso dropped by 1.5% after Mr Urzúa quit.
In his parting letter he wrote that deci-
sions “taken without sufficient basis” were
among the factors that prompted him to
leave. It is not clear what these were. Mr Ur-
zúa took the job fully aware of Mr López
Obrador’s most contentious proposals,
such as building an oil refinery at a cost of
$8bn (about 0.7% of gdp) or more and a
“Maya train” (with a price tag of $6bn-8bn)
in Mexico’s impoverished south. Mr Urzúa
is thought to have opposed a governmentplan to force a renegotiation of gas-pipe-
line contracts with a Canadian firm that the
previous government had signed. The plan
damaged investors’ confidence in Mexico.
The biggest source of tension was prob-
ably Pemex, the ailing state oil company. It
is soon to present a plan for dealing with its
$100bn debt. The finance minister draws
up the company’s budget, so Mr Urzúa
would have been involved. The president
views oil as a foundation of Mexico’s great-
ness, insists the state should control it and
opposes selling off money-losing parts of
the company (see Business section). Rocío
Nahle, the energy secretary, shares the
president’s views. Mr Urzúa may have
clashed with both of them. A plan that fails
to reform Pemex would probably result in a
downgrade of the firm’s credit rating to
junk status, says Pablo Medina of Welli-
gence, an energy consultancy.
Mr Urzúa may also have been frustrated
by the president’s deep cuts to salaries and
benefits of civil servants. These prompted
the exit of many of the officials who have
run the finance ministry for decades.
Mr López Obrador named the minister’s
successor within an hour of his resigna-
tion. His choice of Arturo Herrera, a fi-
nance undersecretary, helped calm the
markets’ nerves. Mr Herrera, who has
worked at the World Bank and as finance
secretary in Mexico City when Mr López
Obrador was its mayor, is thought to be
wonkish and to understand the impor-
tance of the financial markets.
But Mr Herrera is likely to have the sameMexicoResigning with rancour
MEXICO CITY
The finance minister’s abrupt departure worries investorsThe Americas
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