South Of The Border And To The Left

A leftist could become Mexico's President this summer. What could change

With Washington focused on immigration reform and border security, the U.S. is paying little attention to what's roiling our southern neighbor: The possible election of a left-leaning populist as the next president of Mexico.

If he wins on July 2, Andrés Manuel López Obrador has pledged to turn Mexico away from its two-decades-old devotion to market economics, renegotiate parts of NAFTA, and clamp down on the business elite. That would be a major change for Mexico, which despite its quarrels with the U.S. has stayed the course, lowering its budget deficit, opening up further to foreign investment, and fusing its economy ever more closely with the American colossus.

The change could happen. López Obrador, the charismatic ex-mayor of Mexico City and a leader of the leftist Party of the Democratic Revolution (PRD), is tied for first place with ex-cabinet minister Felipe Calderón, the candidate of President Vicente Fox's center-right National Action Party (PAN). Both are now polling around 34%. The third contender, from the once-mighty Institutional Revolutionary Party (PRI), has been weakened by defections to both López Obrador and Calderón.

It's ironic that López Obrador's message is resonating with voters even while Mexico enjoys strong growth and low inflation. Many Mexicans believe the free-market policies advocated by the U.S. have delivered stability, but not nearly enough jobs to benefit the 50 million -- half the population -- who live in poverty.

Similar frustration has led to the election of several leftist and nationalist Presidents in Latin America over the past four years. Calderón's campaign ads have labeled López Obrador "a danger to Mexico" and suggested he has links to the radical Hugo Chávez of Venezuela (López Obrador says they never met). "His government would exacerbate class confrontation between rich and poor," says Calderón, whose attack-dog ads have helped tighten the race.

WASHINGTON WORRIES

On the campaign trail, López Obrador tackles these allegations head-on. "They say I'm a danger to Mexico. Do you think so?" he asked the assembled crowd in Matamoros on May 27. "No!" they shouted enthusiastically. Many applaud López Obrador's plan to create jobs through infrastructure projects financed by the private sector, and to pay $70 monthly to senior citizens and the disabled.

What worries Washington and U.S. businesses in all this? One is the possibility of instability if López Obrador loses. A decade ago, López Obrador lost a closely contested state election. He charged fraud, then led mass demonstrations. U.S. policymakers are consulting with political players in Mexico to see if something similar could happen now. "If there is serious disruption over the results, that's going to make Washington nervous, as well as the markets," says James R. Jones, a former U.S. ambassador to Mexico.

What if López Obrador wins? Many U.S. executives note that his actual record as mayor of Mexico City, where he cut government waste to pay for social programs and new roads, does not mark him as a Chávez in the making. And many acknowledge that López Obrador makes good sense when he vows to end the generous tax breaks and lax regulation that have benefited Big Business. There's a chance López Obrador could turn out to be like Luiz Inácio Lula da Silva, the Brazilian leftist who turned into a moderate as president.

Business remains worried, though, that López Obrador will ramp up spending and ruin Mexico's fiscal health. "If he messes things up for six years, it will take another 12 years to repair the damage," says one prominent Mexican businessman.

Calderón, meanwhile, wants to deepen market reforms. A sound idea, but López Obrador is the better communicator. He's "one of the smartest political strategists I've ever met," says Jones. Smart enough to thrill millions with his fiery message.

By Geri Smith

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