Politics: De facto expropriation of section of rail line and the political decomposition it entails

MEXICO - Report 30 May 2023 by Guillermo Valdes and Francisco González

When Mexican Marines took control on May 19 of a 75-mile stretch of rail line operated by a subsidiary of Mexico’s second largest conglomerate, Grupo Mexico, the seizure was a form of expropriation as officials have never indicated when, if ever, they might return it. The takeover is part of President López Obrador’s grand plan to develop the Interoceanic Corridor of the Isthmus of Tehuantepec including the Isthmus of Tehuantepec Railroad, the development and future management of which he has turned over to the Mexican Navy.

While there appear to be ongoing talks between government and Grupo México officials, the main reason for this legally dubious seizure is AMLO’s rejection of private property in his strategic projects—it has to be State property. On other occasions he has said that handing over public assets and projects to the military (either soldiers or marines) is designed to ensure that no government after his will dare to privatize them as that would entail a direct confrontation with the military.

López Obrador has from the start of his administration attempted to redefine the relationship between the business community and the State, making the latter as independent as possible from the former. Until now, with his mix of neoliberal policies and populist statism, he has been careful to avoid direct confrontations with the largest corporations and wealthiest business leaders in Mexico, even providing them with government concessions and contracts. With only a few notable exceptions, those same business leaders have responded by abstaining from criticizing his decisions and attacks on economic freedoms. Nevertheless, in practice they have quietly expressed their distrust by reducing investment and withdrawing capital from the country.

This week we analyze the broader ramifications of López Obrador's move against Grupo Mexico, including what it implies for future relations with the private sector and both politics and governance going forward.

Now read on...

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