Mexico Criminalizes Investment – WSJ

It’s in the U.S. interest that Mexico grow faster and strengthen its democratic institutions. Mr. López Obrador doesn’t care about growth and is trying to tear down independent institutions because they stand in the way of his power to dictate the political economy. Those who disagree with him are branded greedy and corrupt.

Exhibit A is the president’s recent threat to jail his political opponents and prosecute investors who don’t get on board with his energy agenda. This Putin-style thuggery is unlikely to secure convictions, but criminal complaints lodged with the attorney general can result in years of investigation, harassment and even preventive detention.

Last week Mr. López Obrador announced a constitutional-reform initiative to end the independence of the federal body that runs all elections in the country and of the tribunal that settles electoral disputes. The initiative would also make all seats in the Chamber of Deputies, Mexico’s lower house of Congress, chosen by proportional representation, a change that would empower his Morena party.

The initiative isn’t expected to garner the necessary two-thirds majority votes in Congress to pass. But that’s not important for AMLO, who according to polls still has better than 50% approval ratings. He’s telling his supporters that Mexico’s representative democracy is run by a “mafia of power” that denies them their rights. According to his narrative, only he can protect their interests. If this electoral reform fails, it strengthens his argument.

The left calls what AMLO wants “participatory democracy” but it is instead a dangerous flirtation with mob rule.

When he took office in 2018, Mr. López Obrador promised to deliver an irreversible “fourth transformation” of Mexico, an ambiguous utopian vision that seems to require the centralization of political power and the state as the dominant player in the economy. With only two years and seven months left in his six-year term, he’s running out of time.

The April 17 defeat in Congress of constitutional reforms to reverse the 2014 opening of Mexico’s energy markets is a major setback for AMLO. Those reforms were aimed at restoring the monopoly power of state-owned oil company Petróleos Mexicanos, or Pemex, and of the state-owned Federal Electricity Commission, or CFE.

Mexicans don’t seem to see a future in inefficient and corrupt state energy monopolies. The reforms never had backing from the necessary qualified majorities in Congress. Even Morena knew they were a long shot, which is why it tried to reduce the number of opposition legislators who would show up to vote by scheduling the session during Holy Week and then abruptly moving it to Easter Sunday. Desperate Morena supporters even tried to get up a rabble to block opposition legislators physically from entering the chamber.

AMLO and Morena are furious about the defeat. The day after the vote the president accused those in Congress who opposed the reforms of treason. Members of his party have echoed the sentiment, creating “wanted” posters of some dissident congressmen on social media.

This is absurd, but it may not go away. A week ago Morena leader

Mario Delgado

proposed a “popular consultation” to determine whether the 223 congressmen who voted against the reform ought to be tried for treason.

The president has turned to an electricity law passed in Congress to try to enforce his energy agenda. The new law makes private generators sell their power to the CFE, which means that it sets prices as a monopsony. Opponents say not so fast.

Seven out of 11 Supreme Court magistrates voted that the electricity law is unconstitutional. Because striking it down would have required an 8-3 majority, it stands. But with a majority of the court in opposition, lower courts have issued stays against it while investors, many of them foreign, pursue legal recourse.

Mr. López Obrador and Morena are vexed about this too. In a March interview with Mexico’s La Jornada, CFE Director General

Manuel Bartlett

said that criminal complaints against Spanish companies in the electricity industry could be forthcoming. Translation: Either renegotiate your contracts or face legal armageddon. Some analysts expect that investors would eventually prevail, but that’s not much comfort when the path from here to there is through the mud.

There is no way to sugarcoat the reality that the Mexican government, led by Mr. López Obrador, is practicing extortion.

Joe Biden,

champion of democracy, might want to take note.

Write to O’Grady@wsj.com.