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December 4, 2020

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MEXICO: Romo exit could seal more radical turn

BY Nicholas Watson

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( 3 mins)

President Andres Manuel Lopez Obrador (AMLO) on 2 December announced that Alfonso Romo, head of the Office of the Presidency, was stepping down. A successful businessman, Romo has been the AMLO administration’s most market-friendly senior official and its main bridge to the business community. Romo has had one foot out of the door for months and his effectiveness as a check against AMLO should not be overstated – as various business-hostile AMLO decisions over the past two years demonstrate. Nonetheless, Romo’s departure, together with AMLO’s confirmation earlier today that he is scrapping the Office of the Presidency altogether, is a blow for pragmatism and balance within the administration and could make government relations with business more problematic.

With his business background and previous support for Vicente Fox (2000-2006), Romo was always something of a fish out of water in the AMLO administration. His value came not just from his understanding of business concerns and his own (highly successful) private sector experience, but also his closeness to AMLO, if not as a counterweight exactly, at least as someone who could speak directly and critically to the president. Clearly, Romo’s role as a bulwark against AMLO’s more radical instincts was very far from perfect (the cancelation of the Texcoco airport and Constellation Brands brewery project were just two instances when Romo could not restrain AMLO). Rumors about Romo’s dwindling influence go back a while, though they had intensified in recent months. It seems that the government’s controversial initiative to end the “abuse” of outsourcing and subcontracting, which the private sector opposes, was the final straw.

Although AMLO has said that Romo will remain as his “principal link” to the private sector, this seems unlikely to amount to more than political window dressing. In fact, the risk is that there is now little holding AMLO back from going down a more radical path. AMLO’s denial of official data showing the devastating effects of the Covid-19 pandemic and associated restrictions on medium-, small-, and micro-enterprises (20% of which have shuttered since 2019, according to the INEGI statistics agency) is just the most recent example of AMLO’s refusal to face facts. In this context, a scaling down of controversial infrastructure projects looks even more unlikely than it did previously, despite their questionable value, while the future of other infrastructure projects that have been announced in recent weeks faces new uncertainty. Above all, relations with the business community look set to worsen, which risks undermining already-weak recovery prospects.

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