Mexico Trucker Online

2006 is turning into the most anxious year for companies with investments in Mexico since, well, the last Mexican presidential election six years ago.

Thanks to the North American Free Trade Agreement, an independent Mexican central bank and a firm peso, the state of the U.S. economy will continue to determine the health of the Mexican economy more than who is elected July 2.

Mexico’s young and fragile democracy still can cause concern, however, for foreign companies operating in Mexico and international producers weighing whether to manufacture in Mexico or Asia. Mexico desperately needs additional foreign investment to provide jobs for its young population.

The shifts to the political left throughout much of Latin America in recent elections add to the uncertainty. But Mexico’s leading candidate, populist Andrés Manuel López Obrador, is no Hugo Chávez, the flame-throwing Venezuelan president.

That’s the view of Harvard University professor Jorge Domínguez who spoke this week to the Harvard Club of San Antonio at a dinner sponsored by the Port Authority of San Antonio.

None of the three credible presidential candidates is likely to have a party majority in Mexico’s Congress when he takes office in December, Domínguez said, meaning the “democratic gridlock” that hindered the outgoing Vicente Fox administration will continue.

That alone should assure investors that Mexico’s market economy and free-trade philosophies won’t be overturned, stressed Domínguez, who has written numerous books on Latin American politics and economies and has had a hand in several “Frontline” reports on the Public Broadcasting System.

Domínguez said the Fox administration should not be termed a failure despite losing efforts to reform Mexico’s tax, legal and labor systems. Ironically, Fox’s transitional leadership into the democratic era after seven decades of ruling-party dominance meant reduced presidential power and heightened the role of Mexico’s Congress.

Against that backdrop, Domínguez projected the implications posed by the three presidential candidates:

López Obrador of the leftist Democratic Revolution Party leads the polls and is regarded as the loose political cannon in the election due to the autocratic way he ran Mexico City as mayor until last year.

He might run roughshod over political and court procedures but not economic and business policies. López Obrador maintains close relationships with business leaders, notably Mexico City conglomerate owner Carlos Slim, the wealthiest Latin American businessman.

“López Obrador is Slim’s presidential candidate,” Domínguez said.

Yet his governing style could rattle the status quo and make investors nervous.

López Obrador’s lead in the polls swings widely, as much as 10 points from month to month. His popularity runs much wider than his small party, however. If elected, he may be the least able to establish a ruling coalition.

Felipe Calderón recently upset Santiago Creel to become the nominee of Fox’s conservative National Action Party.

Running a close second to López Obrador in the polls, Calderón’s political standing roughly equals the size of PAN’s representation in Congress. The challenge for the former Fox Cabinet member will be to widen his popularity beyond his party’s base.

The candidate for the former ruling Institutional Revolutionary Party, Roberto Madrazo, leaves a vivid impression — he even swayed a Harvard crowd, which initially gave him a hostile reception, Domínguez said. The PRI remains Mexico’s largest political party, but Madrazo entered 2006 with smaller poll numbers than his party’s base across the country.

Domínguez said President Bush qualifies as a bigger issue in the Mexican presidential election than any domestic issue. Mexicans who dislike Bush most likely will vote for López Obrador. Most Mexicans who like Bush will vote for Madrazo. PAN’s Fox had a hot-cold relationship with Bush, which would probably continue with Calderón.

This election will go down to the wire. The nuances of the candidates and their campaigns will yield profound clues about the economic atmosphere that will prevail over the next six years.