For global investors, predicting President Andres Manuel Lopez Obrador’s moves has never been easy. And now as he enters the home stretch of his presidency, it might get even harder.
Last week, Monterrey billionaire German Larrea woke up to find the government had seized a 120-kilometer stretch of a rail line he owns. The Navy took the section at 6 a.m. under a presidential decree citing “public use,” meaning that it serves a greater benefit for the government. On Monday, AMLO, as the president is known, denied that the government had expropriated Larrea’s rail; it had acted only to recover a concession, or the permit to manage the railroad.
The move shocked a business community that until now has been enjoying a surge in growth in foreign investment. One large business group said it could damage investor confidence in the country, while another said Lopez Obrador’s recent actions have held up tens of billions of dollars of investments.
Lopez Obrador has 15 months left to fulfill his promise to transform Mexico. Over the past four years, he has created an environment where most business decisions must receive his seal of approval while weakening regulators central to the perception of a stable and safe business environment. “It’s a step back to the Mexico of the 60s, the 70s, where companies had to sit down and negotiate directly with the president and no one knows what the rules are,” Guillermo Garcia Sanchez, associate professor at Texas A&M University School of Law, stated.
Source: El Financiero