Photo Credit: The White House
By Manuel Aguilera-Prieto
On April 20, the Senate of Mexico passed a new Mining Law nationalizing all lithium reserves in Mexico. This decision will have severe ramifications for the Mexican economy given lithium’s growing global demand. Consistent with the policy platform of President López Obrador, the Mining Law reveals the myopic underpinnings of his nationalist and anti-democratic administration.
Mexican President Andrés Manuel López Obrador (AMLO) was elected on a platform of reform, change, and political renewal, all while promising a more equitable society. His new MORENA (National Regeneration) movement was the first non-mainstream party to win the presidency in the country’s history. However, many of his policies—particularly those involving energy—have marked an obstinate return to an antiquated and inefficient form of nationalist populism.
AMLO’s latest endeavors have dealt primarily with the energy sector. His proposed energy bill, which failed to pass the lower house of congress, would have provided a majority of the market to a state-run electricity commission and diminished the authority of independent regulatory bodies. Dissatisfied by this outcome, López Obrador has moved on to another significant sector of the Mexican economy: lithium. The northwestern Mexican state of Sonora is home to the Bacadéhuachi reserve, which became the world’s largest reserve when UK-based Bacanora Lithium discovered it in 2018. Known for its wide variety of applications such as batteries and manufacturing, lithium has been highly sought after for decades. After COVID-related supply chain issues led to a spike in price, lithium has become so valuable that it has been dubbed “white gold,” and President Lopez Obrador’s recent political posturing indicates that he is well aware of this.
Only a few days after his energy bill failed in Congress, AMLO’s lithium initiative was sent to the legislative body, receiving well over half of the votes needed to officialize it. Effectively nationalizing all of Mexico’s lithium reserves, the new law prohibits foreign investment, barring a few concessions which will be heavily monitored and regulated. This will undoubtedly result in short and long-term losses, seeing as how Mexico does not have the infrastructure to mine this resource adequately. Moreover, the prospect of a new stable job market in the industry is undermined by this decision, and the Mexican government will have to accept this opportunity cost as they would be unable to create such an economy without the presence of foreign companies. There are also worries that the lithium law will violate the specifications of the USMCA, the successor to NAFTA. U.S. congressmen and diplomats alike have expressed their concern that many North American companies will be excluded from the market, circumventing the guidelines stipulated in the free trade agreement. If these concerns are not addressed, U.S.-Mexico relations would be strained further, and the onus would be placed on Lopez Obrador’s government to reconcile these incidents.
Bearing the numerous egregious and detrimental consequences in mind, one must ask why AMLO’s government would pursue this course of action. The answer lies in the underlying rhetoric that has guided much of the president’s decision-making for the past few years. López Obrador can be categorized as a left-wing populist. He has made concrete efforts to reduce economic inequality by implementing a social safety net for students, the elderly, and those of low socioeconomic status. His populist platform consists of exposing decades of corrupt party politics, which he calls the “mafia of power.” The neoliberal economic policies of his predecessors have also been subject to the president’s criticism. He views neoliberal economics as part of the ancien régime of Mexico that it is inextricably linked with corruption. Regarding the lithium policy, López Obrador seeks to diminish foreign influence in his country to protect its national resources. His rationale as to why it must not be left to the market is that such a valuable resource would be exploited, and Mexico would consequently continue to lose wealth at the hands of imperialistic forces.
Although AMLO’s populist and nationalist rhetoric resonates with a large segment of Mexican society that has little trust in the system, it also undermines the institutional and diplomatic progress that previous administrations have made. The president’s blatant disregard for liberal values can be observed in his scathing remarks and sparse tolerance towards the free press, non-governmental organizations, and civil society. The president’s inaction toward the alarming rate of violence against journalists illustrates that he does not consider it a significant issue. More broadly, AMLO’s nationalist platform showcases his enmity against international organizations. The Americas Summit, which took place June 6, barred both Cuba and Venezuela from attending. This drew criticism from the Mexican president, who kept his promise to miss the event if the exclusion of those left-wing states was not reversed. This could substantially harm Mexico’s diplomatic influence in the region, seeing how the government would rather affiliate with authoritarian states instead of its powerful northern neighbors.
The neoliberal international order is by no means a perfect system. Free trade certainly produces clear winners and losers, and the differences become apparent in such a globalized and interconnected world. López Obrador has been heralded by his supporters as the hero of the masses who combats the issues affecting his country internationally and domestically. However, his anti-democratic and populist approach has been decidedly inefficient in achieving his goals. His latest activities regarding the energy industry encapsulate the errors in his rhetoric. An overt disregard towards foreign investment—as is the case with the state’s lithium reserves—will lead to considerable losses that will affect all segments of the population while Mexico struggles to recapture its pre-pandemic growth rates. As long as AMLO continues his current nationalist and populist agenda, Mexicans will find themselves in a familiar stage, mired by political inefficacy and economic helplessness.