The president-elect’s honeymoon with Mexico’s private sector may be over before it has even properly started.
Andres Manuel Lopez Obrador said Monday that he will respect voters’ decision taken in last weekend’s referendum to scrap the partially-built US$13 billion new Mexico City airport in favor of upgrading the capital’s existing facility, as well as revamping the Toluca airport, and transforming the Santa Lucia military airfield into a commercial operation.
Lopez Obrador’s decision to put the future of the new airport to a public vote was criticized by leaders of the country’s business and industrial community, who said such matters should be taken by politicians based on serious expert input. However, almost 70 percent of one million Mexican citizens who participated in the four-day referendum rejected the Tecoxco option, where work is said to be almost one-third complete. The employers’ confederation Coparmex complained the vote was rigged in favor of Santa Lucia, adding that no mechanisms were put in place to prevent people voting more than once. Coparmex had expressed fears that investor confidence in Mexico would be seriously harmed should the new airport at under construction at Tecoxco be ditched.
Mexico’s peso lost around three percent of its value against the dollar following Lopez Obrador’s announcement Monday. Share prices on the Bolsa de Valores (Mexican Stock Exchange) also dropped sharply. Meanwhile, Fitch Ratings changed its outlook on Mexico’s long-term foreign-currency debt issues Wednesday from “stable” to “negative,” citing the potential policies of Lopez Obrador.
Lopez Obrador said Tuesday that he would work with the federal government to ensure an orderly halt to work at the Tecoxco site. He does not take office until December 1.
The president-elect said he believes arrangements can be made so contractors employed at the Tecoxco airport will be able to continue their labors at the new site. He estimated that in the long term switching to the Santa Lucia option would save the federal government close to 100 billion pesos ($US5 billion).
He also announced plans to turn the Tecoxco site – which lies on a dried-up lake bed – into an ecological park.
In a statement, the American Chamber of Commerce of Mexico said the referendum “lacked legality” and does not reflect the will of the entire Mexican people. Furthermore, canceling the project will only “polarize” the country, the chamber noted.
Swiss financial giant UBS said abandoning the project would be “extremely costly” and set a dangerous precedent that could put future private investment in Mexico at risk.
The International Air Transport Association (IATA) called the decision “bad news,” that will set back the development of Mexico air transport industry between five and ten years.
The Latin American and Caribbean Air Transport Association called the plan to have three airports in Mexico City “unworkable” and that the project would end up costing more than the current one. Estimates of time taken to connect between the three airports vary between 55 minutes and two and a half hours (Santa Lucia and Toluca).
Former Mexican President Vicente Fox said canceling the airport was like “spitting in Mexico’s face.”
Writing in the daily Milenio, columnist and broadcaster Carlos Puig slammed the “illegal” referendum called by the president-elect, which he said was skewed to attract members of Lopez Obrador’s own party, who cast votes knowing zero about the relative technical merits of the two projects.
Puig, one of Mexico’s most respected commentators, called the process “a farce”and a “blow to democracy.”
Although Lopez Obrador has insisted that contractors won’t be left out of pocket, there is huge uncertainty as to how this will work out.
Carlos Slim, Mexico’s richest man, has a massive investment in the Tecoxco project.His Grupo Carso is building the futuristic terminal (designed by renowned British architect Norman Foster and Slim’s son-in-law Fernando Romero), as well as one of the runways. The two contracts are worth around $US4.5 billion.
Jalisco Governor Aristoteles Sandoval said the cancellation of the airport could herald the “stagnation” of Mexico’s economic development in the coming years. “We will have to study the alternatives to see if they are viable,” he said.