MEXICO CITY �� Andres Manuel Lopez Obrador sailed into power with overwhelming support from Mexicans embracing his promises to fight crime and corruption. But the headlines in his first week as president were dominated by airport bonds.
Lopez Obrador's plan to cancel a $13 billion airport project sparked concern that his government would have to immediately pay $6 billion in bonds sold to finance the construction. It was a stark example of how Lopez Obrador has few qualms about roiling the business community.
His followers, though, are still fresh off the glow of his inauguration celebration a week ago. To them, Lopez Obrador's presidency is exemplified by the man on his knees covered in a cloud of incense at an indigenous ceremony, in front of a crowd of 150,000 in a public square. Or the 2-hour speech that followed, in which he rattled off 100 promises to end corruption, pull them out of poverty and stop a grisly crime wave.
The president's first week in power has widened the gap between his base and his critics, who see a man who appears to care less and less about what the world and their markets think of him. The next test for investors will come when he delivers the budget next Saturday, which some worry may not offer realistic proposals to pay for all the social programs he's promised.
"Despite recognizing the collective wisdom of the market, Lopez Obrador has made it clear that his priorities lie in governing Mexico and consulting the people, rather than listening to investors in New York or London," said Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington. "Ultimately (he) may find that he compromises his own capacity to govern."
Lopez Obrador dug himself into a hole with investors by promising to cancel the airport project, which he said was bloated by graft. But he may end up spending as much as $10.5 billion just to pay off investors and contractors, according to Banco Bilbao Vizcaya Argentaria, with no world-class airport to show for it.
Much of that money would come from redeeming bonds, $6 billion of which could come due immediately if the airport cancellation triggers a default. Lopez Obrador's government presented a buyback plan to placate bondholders two days after he took office, but a group of them said they wouldn't accept the conditions.
In his inaugural Lopez Obrador came out swinging against some policies favored by the financial sector. He called an energy reform that opened Mexico to private drilling "disastrous" and pledged to end the country's neoliberal era, which is how he describes policies he sees as favoring investors over the best interests of the nation's roughly 131 million people.
Lopez Obrador would argue that he does care about business interests. He said he decided against repealing energy reform altogether to prevent critics from attacking him. Past administrations have put markets first to help achieve stable but slow growth in an economy valued at more than $1 trillion.
Regardless, most Mexicans won't remember Lopez Obrador's inauguration week for the energy reform, or the airport. They'll recall images of cyclists approaching his white car on the way to his swearing in ceremony to shake his hand. They'll remember the tour his administration gave of the $219 million presidential Dreamliner he put up for sale to save public money (though a sale may come with a $76 million loss).
Or perhaps they'll point to Lopez Obrador converting the country's verdant presidential mansion into a cultural center the day he took office. In a week, it's already been visited by more than 100,000 people.
