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In 2021, Midterm Elections Could be Pivotal in Determining Future of Mexico’s Energy Sector
The June midterm elections in Mexico, set to be the country’s largest single-day election in its history, could either stall or advance President Andrés Manuel López Obrador’s state-centric energy sector platform.
The election would see the entire lower house being voted in, as well as numerous gubernatorial, state legislature and mayoral races.
Wins for his Morena party could give López Obrador authority to formally overturn the 2013-2014 energy reform, which he has railed against since coming to power at the end of 2018.
A counter reform would require a 66% majority in both houses of congress. López Obrador’s ruling Morena party has 60% of the seats in the senate; currently, the Morena coalition controls 65% of house seats.
The Baker Institute for Public Policy’s Tony Payan suggests, however, that Morena is unlikely to regain a majority in both houses of congress, with the possibility of a divided congress the most likely outcome.
He cites that López Obrador is more popular than his party. He also noted that Morena fared poorly in local elections in 2019 and 2020 and that in the last 23 years, the incumbent’s party has lost ground in the midterm elections. Payan also pointed out that most Mexicans polled are undecided, looking for other options or holding their judgement until closer to the June 6 election.
“Mexicans historically have used the midterm vote to strategically rebalance,” Payan told NGI’s Mexico GPI. “I would find it exceptional if most Mexicans would ratify Morena.”
A further counterbalance lies in the opposition’s decision to consolidate its vote.
Traditional rivals Partido Acción Nacional (PAN), Partido Revolucionario Institucional (PRI) and Partido de la Revolución Democrática (PRD), which represent around 60% of voters, have formed a coalition called Va Por Mexico in at least 18 Mexican states. The coalition has decided to support consolidated candidates, which could prove difficult for Morena to defeat.
While López Obrador’s ratings are high at around 60%, a majority of polls also show citizens are weary of the government’s economic policy, as well as its response to the coronavirus and its handling of public safety issues.
“He’s failing in all three of these areas and people are making distinctions between Mr. López Obrador the person and his performance as president,” Payan said. “Morena will do well, will get more governorships, but I would be hard-pressed to think they are going to sweep.”
Another factor that might weigh on the Mexican midterm election is the recently held U.S. election.
“The reality is that most Mexicans will allow the idea that populism failed as an answer in the U.S. to fix the economic and political system, which will allow them the possibility to check López Obrador,” Payan said.
In the unlikely event Morena attains a two-thirds control of congress, there is still uncertainty around whether the president would push for the change in the constitution that is needed to fundamentally alter the country’s energy sector.
Analysts at political risk group Eurasia Group think “it is unlikely that he actually moves ahead with a counter reform to ban private participation in the sector. The current legal framework provides him with significant room to push his nationalistic agenda, especially in exploration and production activities. Moreover, the response from the U.S. and potential legal battles will constrain him as well.”
Eurasia suggests there is a 35% probability that a counter reform would occur.
Regardless of the outcome, politically “the next three years don’t look easy,” Payan said. “If López Obrador wanted to build a broad coalition, he would have done so already. He despises the opposition. He thinks he is right, and everyone is simply wrong.
“If Morena wins the majority, he may push for legislative change. If they don’t, he will not have the majority he needs and he will settle for a de facto reform, but once he is out of office, the next government can resume the energy reform’s implementation.”
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