October 29, 2018 / 11:10 PM / 23 days ago

'Who's in charge?' Next Mexico leader clashes with business over airport

MEXICO CITY (Reuters) - Mexican President-elect Andres Manuel Lopez Obrador’s decision to cancel a multi-billion dollar Mexico City airport has pitched him into conflict with business elites, auguring a rocky start to his plans to revive the economy.

Mexico's President-Elect Andres Manuel Lopez Obrador talks to reporters before casting his vote in a public consultation on the fate of a $13.3 billion USD Mexico City International Airport project, in Mexico City, Mexico October 25, 2018. REUTERS/Andres Stapff

The partly-built $13 billion (£10.1 billion) airport on the eastern flank of Mexico City was the biggest public works project of outgoing President Enrique Pena Nieto, intended to relieve pressure on the current hub and serve the metropolis for decades to come.

But during the campaign that catapulted him to a landslide victory in July, the left-leaning Lopez Obrador attacked the new airport as a nexus of corruption between business interests and the political class as he vowed to end graft in Mexico.

Business leaders bristled at his decision on Monday, made on the basis of a divisive four-day referendum organised by Lopez Obrador’s National Regeneration Movement (MORENA) party.

Juan Pablo Castanon, head of Mexico’s CCE business lobby, said the cancellation cast doubt on the continuity of projects across administrations, and put the economy at risk.

“This seriously affects the prestige of Mexico in the eyes of the world and its ability to attract investment,” he said.

The decision sparked fears of protracted legal disputes and concern that steps to liberalize Latin America’s second-largest economy could be reversed. Mexican markets reeled.

“It’s a test of strength against Mexican businessmen,” said Raul Benitez, a political scientist at the National Autonomous University of Mexico (UNAM).

The American Chamber of Commerce of Mexico, which groups some of the largest investors in the economy, said in a statement it was “highly concerned” by the “polarizing” move.

Announcing the cancellation at a news conference, Lopez Obrador dismissed his critics, saying they would have to get used to a new reality, and questioned whether Mexico should be “subordinated to financial markets.”

“A message has gone out that there’s a clear divide: a division between economic and political power,” he said. “Who’s in charge? Is it not the people? Is it not the citizens? Is that not democracy? This is the change.”

The 64-year-old Lopez Obrador also attacked Pena Nieto’s decision to open up the oil and gas industry to private capital, reviving fears that he could also walk back that reform.

Lopez Obrador, who takes office on Dec. 1, has said the energy opening could also be put to a vote. His priority is to revive state oil company Pemex and reverse declining oil output.

Mexico’s peso currency and stocks suffered their biggest falls since Donald Trump’s election as U.S. president two years ago after a campaign laced with hostile rhetoric towards Mexico.

Lopez Obrador, who has vowed to boost annual economic growth to 4.0 percent from just over 2.0 at present, said markets would settle down. Companies could participate in his alternative plan to build a cheaper airport north of the capital, he said.

The referendum was widely criticized. Some Mexican journalists reported being able to vote several times.

Barely a million people took part in the poll on the airport, which has been under construction since 2015. Around 750,000 voted against it, less than 1 percent of the electorate.

Before the vote, opinion polls suggested the public favoured allowing the completion of the new airport, whose futuristic terminal building was co-designed by British architect Norman Foster and the son-in-law of business tycoon Carlos Slim.

Slim’s family is also co-building and co-financing the hub. He has yet to comment publicly on the decision. A spokesman for Slim did not immediately reply to a request for comment.

Gustavo de Hoyos, president of Mexican employers’ confederation Coparmex, told Reuters he would explore legal options to prevent the airport from being suspended.

Monday’s decision, he added, sent out “a very negative signal before (Lopez Obrador’s) administration has even begun.”

Reporting by Dave Graham; Additional reporting by Ana Isabel Martinez and Julia Love

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