Mexico's president likely to leave big projects unfinished

Mexican President Andrés Manuel López Obrador loves big projects and hates to leave them unfinished, but that is likely what he will do when he leaves office late in 2024.

The president pledges his big construction projects will be done by then. But one — a tourist train line in the Yucatan peninsula — will have to be jacked up on stilts for 50 miles to run over some of the most fragile and environmentally sensitive geography in the world.

Meanwhile, an oil refinery — and a string of planned industrial parks — don’t have a natural gas supply. And a government internet-for-all scheme has spent hundreds of millions of dollars without even matching private service coverage.

López Obrador has completed one of his top projects, building a new Mexico City airport. But because it was rushed into operation more than a year before rail and road links will be finished, it is little used. He cancelled another airport project his predecessor wasn't able to finish, thus his rush.

López Obrador admits the government is unwieldy — he often calls it a “rheumatic elephant” that must be pushed. He also blames delays on what he calls a broad conspiracy of conservatives, businessmen and U.S.-funded non-governmental organizations.

“Pseudo environmentalists come from Mexico City and other parts of the country, financed by the government of the United States, and they file these injunctions against us,” the president complained.

Few disagree with his desire to bring jobs, development, banking services, internet and decent health care to Mexico’s poor and the remote countryside. But his big plans have been stymied, in large part by his own belief in a few central rules.

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THE GOVERNMENT MUST DO EVERYTHING

López Obrador has relied almost exclusively on state-owned companies of the kind that dominated Mexico’s economy in the 1970s, most of which were sold off by his predecessors.

Some he has recently created, like the government mining company he gave a monopoly over lithium deposits to hoping to jump on the U.S. electric car boom, touting its reserves of the key battery component. But the company has no experience in producing or refining lithium and hasn’t yet turned a shovelful of dirt.

The president also wants to revive some state companies, like a small government-owned bank for which he envisions building thousands of branch offices, and Mexicana, the defunct state-owned airline. Elsewhere, countries are walking away from such nationalized consumer companies.

Perhaps less controversial is López Obrador’s “internet for all” program. While Mexico’s private and foreign telecoms already offer coverage on about 85% of Mexico’s territory, Mexico’s poorest citizens live in communities so small or remote that it is not profitable to serve them.

López Obrador entrusted the task to the state-owned electrical utility, which has no experience in the field, and a small, cash-strapped telecom firm that the government bailed out and took over.

Gerardo Flores Ramirez of the Mexican think tank Telecommunications Law Institute notes that despite spending almost $900 million from 2020 to 2023, the government system has coverage of only about 70% of the country, and won’t reach even modest, reduced goals of 92% until 2028.

“They are not going to meet the goals,” said Flores Ramirez.

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GOVERNMENT CAN FORCE PRIVATE SECTOR TO DO ITS BIDDING

López Obrador seeks to persuade private companies to help with his goal of moving jobs south, farther into Mexico and away from the U.S. border, and to start using government infrastructure that doesn’t really suit their needs. He alternately cajoles them and threatens them.

Early in his term, he forced natural gas companies to re-negotiate supply contracts that he considered too lucrative. And he changed the rules for foreign-owned renewable- and gas-fired electrical power plants, to favor dirtier, state-owned power generation facilities.

He has, however, avoided expropriating anything, even things he really wants, like a limestone quarry owned by Alabama-based Vulcan Materials near the Caribbean coast resort of Playa del Carmen.

The president wants to turn the crystalline quarry pools into a tourist attraction — though they are full of crocodiles — so he's tried to force the company, so far unsuccessfully, to sell out, by ordering it closed and encouraging Mexicans to bring complaints against the firm.

Likewise, he has struggled to get airlines to use his new Mexico City airport despite limiting flights into the older one closer to the capital.

López Obrador is also desperately looking for customers for the rail-and-road corridor connecting the Pacific with the Gulf of Mexico, across the narrow waist of Mexico known as the Isthmus of Tehuantepec.

He hopes to build a string of about 10 industrial parks along the corridor, to lure foreign-owned manufacturing plants from the U.S. border. He has threatened not to grant any more permits for water-intensive industries on the border, where most firms cluster for reasons of logistics and proximity.

López Obrador — known in Mexico by his initials, AMLO — has basically issued an ultimatum to a U.S.-based firm to build a liquified natural gas terminal in Mexico. But the gas pipelines to feed such a plant would have to be built. Private companies have stayed away, instead announcing plans for LNG ports on the U.S. side of the Gulf.

“The government capacity to move projects forward has been weak and out of focus, as in the case of increasing the supply of natural gas,” said Adrian Duhalt, research scholar at Columbia University’s Center on Global on Energy Policy.

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START A PROJECT, THEN FIGURE OUT HOW TO COMPLETE IT

López Obrador started off his administration with a big dream: the 950-mile (1,500-kilometer) Maya Train, a tourist line to run in a rough loop around the Yucatan Peninsula, connecting beach resorts and archaeological sites.

On the stretch between the Caribbean resorts of Cancun and Tulum, it was first planned to run on elevated tracks over the coastal highway, where most hotels are. But hotel owners complained about the effects of construction, road closures, and impacts on land on either side of the highway.

So López Obrador decided to change the route — with no environmental study — to cut a 68-mile (110-kilometer) swath through the jungle between Cancun and Tulum.

Environmentalists battled the tree-cutting, and pointed out the line would run over and probably collapse the area's extensive network of underground caves and sinkhole lakes where some of the oldest human remains in North America have been found.

López Obrador changed the project again. Now he says that 50 miles (80 kilometers) of the double rail line will be built on an elevated platform 2.5 yards (meters) above the forest floor, supported on thousands of concrete pillars that purportedly won't hurt the caves beneath.

China built a longer railway in similar terrain, and it took seven years. López Obrador has given army engineers one year to do the job in Mexico.

Few believe it can be done in that amount of time — if at all.

“This isn’t a farcical project, only because it’s not a project, it’s just a farce,” said Jose ‘Pepe’ Urbina, a diver who has explored the caverns for decades.

“This is not going to get finished, and it is going to cost a lot more than it was supposed to. It is going to cost the taxpayers today a lot, and the next generation will have to repair what is being damaged.”