The March elections in Italy, saw a center-right coalition take first place, but failed to achieve a majority. The upstart anti-establishment 5 Star Movement (M5S), is now the largest political party in the legislature, taking over 30% of the total. That created a hung legislature, which necessitated the building of new political alliances in Italy.
Italy is the third largest economy in the Eurozone, with a GDP (Gross Domestic Product) of $1.934 trillion USD (United States Dollar). Ongoing political and economic instability here, has reverberated throughout the European Union (E.U.). It is important to note, that the economy has still not returned to the level of GDP, that existed in 2008.
With near 60 million inhabitants, the country is far too large and important to Europe,to remain in crisis mode. This is not Greece,where insolvency was manageable and could be tolerated in the short term.
The center-right coalition headed by Forza Italia which garnered 14% of the total vote and the right wing League, which took 18% of the electorate, together took another third of the vote in the March election.
The League formerly known as the Northern League, has benefited enormously, from the public outcry, over the waves of migrants arriving in Italy. The endless waves of refugees coming from North Africa over the past four years, are escaping for both economic and political reasons.
Along with the third populist party, the far right Brothers of Italy, the anti-establishment parties have captured well over 50% of the vote.
Matteo Renzi Former Prime Minister of Italy
The governing center-left Democratic Party (PD) led by former Prime Minister Matteo Renzi, came in a humbling second place. The party now commands less than 20% of popular support. This is close to 50% lower than its peak, in the 2014 European elections.
The Democratic Party was the senior partner in the previous coalition government, headed by Prime Minister Paolo Gentiloni. In the recent election, it barely received more votes than the League.
The PD appears to have been held accountable by the electorate, for the slow pace economy and the stubbornly high Italian unemployment rate, which remains at 10.9%. Youthful joblessness actually slightly increased in February, to 32.8%.
Given the election results,it became impossible for the previous government to remain in power, beyond the length of time needed, for the creation of a new government.
Sergio Mattarella President of Italy since 2015
Italy is using a new electoral system, in which a political party needs to reach a 40% threshold, in order to form a new government. This made a minority coalition, much more unlikely.
The largest political parties on the populist right, needed to form an alliance, in order to convince President Sergio Mattarella, they could actually form a majority.
Populist parties have been on the rise throughout Europe and Italy, is no exception. Support for populist radical right parties, is now higher than it has been in 30 years.
In the most recent European parliamentary elections, they have on the whole received 16% of the vote total. Twenty years ago, these parties were only attracting a mere 5% of the electorate. There are seen as being anti-elitist, nativist,along with a strong emphasis on law and order.
Right-wing populists represented in the parliament are represented in all shades of blue.
The populists had gained the most traction in Eastern Europe and Scandinavia. Their greatest electoral strength, can be found in Hungary and Poland, where they now have taken control of the national government in both countries.
In Poland, the Law and Justice Party and Hungary’s Fidesz exhibit true populism, coming from the rightist point of view. They have both benefited enormously, from opposing further migration from the Middle East and North Africa.
Similarly the leadership in these countries along with Czech Republic (Czechia) and Slovakia, collectively known as the Visegrad Group, have all used nationalism to advance their respective political agendas.
Bulgaria and Romania have more fractured politics, so nativists have not yet gained political power there.
In Denmark, Finland, Norway and Sweden, populist parties have already been able to garner over 20% of the electorate, in national vote tallies. This permits them to influence legislation, in the representative assemblies in all four nations.
The AfD has now become the third largest party in Germany, in the 2017 elections. At 12.6% of the vote, it has earned representation in the German Parliament. In close votes, AfD party leaders will be able to block legislation. It is the first time in over five decades, that a far right party has entered the Bundestag.
Geert Wilders, leader of the Party for Freedom, the populist party in the Netherlands.
In Austria, the populists from the right, have already taken power, as of last year. This became possible by combining political conservatism, with the rising force of nativist populism.
Even among the normally tolerant Dutch,the Freedom Party has become the second largest political party in the Netherlands.
The issues that propel these politicians forward ,along with immigration and nationalism, include crack downs on corruption and crime. They also invariably oppose, further European Union integration, as well as more progressive policies in social lifestyle.
These politicos find a receptive audience, in a restive population, anxious over the negative effects of globalization. The latter has led to the loss of traditional manufacturing jobs, resulting in rising economic inequality and uncertainty, among the working classes.
A coalition of the League and M5S, may offer the country some political stability. This combination will have clear-cut majorities in both houses of the legislature.
Matteo Salvini, leader of Lega Nord, Deputy Prime Minister of Italy
The problem is internationally. A truly populist government may well unnerve foreign investors, creating further apprehension in European stock markets.
Both parties have already pledged to to exceed the Eurozone budgetary limits, which have set upper limits of government deficits, so they will not exceed 3% of GDP (Gross Domestic Product) This has been seen, as the best way to prevent another sovereign debt crisis.
A number of countries including even France, exceed the limit, but have at least pledged to bring government spending, down towards the 3% limit.
This is not the case in Italy. If electoral pledges from both parties are actually put in place, tens of billions of Euros will be added to national debt, which is already more than 130% of GDP.
Italy has the second largest debt level in the Eurozone. There are increasing worries among investors, that the country will be unable to deal, with this pressing issue.
Deputy Prime Minister of Italy,Luigi Di Maio
The two populist parties have different constituencies based on geography. The Leagues power base is largely in the north, despite efforts to have a more broad appeal. M5S had sweeping electoral success in the south. There could be trouble among their individual voters, as the two parties work together in a united front.
Matteo Salvini from the League and Luigi Di Maio leader of M5S are cooperating on a number of issues. At the end of March for example, Salvini gave qualified support, for the idea of universal basic income. How this is financially affordable over the long term, is still not part of the political discussion at present.
At the end of May, after endless weeks of talks and warnings of new elections,a political coalition was finally stitched together.
An inexperienced Giuseppe Conte would now become Prime Minister. Under the deal struck, the League’s Matteo Salvini and 5-Star leader Luigi Di Maio, will be deputy Prime Ministers. Together they are likely to have an inordinate amount of influence, over the untested Conte.
Italy on a global map, shaded in dark green, light green is the European Union.
Their combined platform is calling for lower taxes, at the same time there have been pledges for higher social spending. Without economic growth, the budget deficits will simply ratchet ever higher and add to the punishing high debt, the country is already saddled with from previous profligate governments.
Throughout the spring and into the summer, the Italian markets remained volatile and unstable. The political impasse and dubious platform of the new incoming government, added to investor uncertainty.
It did not help, that both partners in the coalition have in the past, called for a referendum to make a determination, if Italy should even remain in the Eurozone. If the Italian electorate would vote to leave,it could well signal the end of the Euro and the single currency union.
Leaving the Eurozone would not necessarily, bring the immediate financial relief, that many voters would expect. Much of the substantial debt Italy has accumulated over the years, is held by foreign banks.
European nations shaded in blue are members of the Eurozone.
The first real financial test for the new government, will be the submitting of a budget, for the upcoming fiscal year. Italian lawmakers will have to approve this blueprint and then send it to the European Commission, before mid-October.
The populist government is promising a budget that will provide citizen’s income, pension reform and tax cuts. Collectively, these will add billions of Euros to the deficit.
The previous government had carefully and responsibly reduced expenditures so, the deficit was targeted for only 0.8% of GDP. This is far below the 3% threshold, as the maximum prescribed by the European Union.
Analysts are expecting, an increase of at least 1.7% of GDP. This will more than double, the previous target. It will also make it more difficult, in servicing the present debt. Most experts will likely be content, if the deficit remains below 2%. The League will push for more tax reforms and the M5S will lobby for more social spending, but they will be somewhat constrained by the overall cost.
The Chamber of Deputies is the lower house of Italy.
Investors will no doubt carefully scrutinize, if the spending plan is sustainable or is is just pandering to the electorate. The Italian people have been led to believe for years, that the government could borrow and spend recklessly, with little to no consequences.
If the run up in debt had been used to finance needed infrastructural improvements, in the effort to increase productivity, it might have been worth the gamble. Instead it was spent on unsustainable social programs, that has left the country with staggering debt and sluggish growth.
The hangover of debt in Italy and elsewhere in Europe, has somewhat undermined the financial system. The banks were destabilized, leading first to the financial crisis in 2008. This soon was followed in 2009, by the horrifying sovereign debt crisis,which peaked from the years 2010 to 2012.
Five Star Movement Movimento 5 Stelle
The nations of Cyprus, Greece, Ireland, Portugal and Spain each in turn, became unable to repay or refinance, their government debt. In addition,they all faced challenges, concerning their domestic banks.
Italian assets have continued to underperform this year. The main stock index is still down 1%, since the beginning of 2018. The yield on the 10-year Italian bond is still around 2.9%. That is 1.6% higher than the equivalent bond from Spain.
A sign of investor anxiety and lack of confidence, with the current fiscal situation, is exemplified by the fact that corporate bonds in Italy, are still outperforming sovereign debt.
A major problem that Italy faces, is the lack of growth both domestically and throughout the Eurozone. For the first half of 2018, the economy in the zone increased a mere 0.3%. This is the lowest rate of growth, since the second quarter of 2016.
Map of Italian regions by GDP per capita.
In Italy the economy slowed from 0.3% in the first quarter to only 0.2%, in the second quarter. At the end of 2017, the Italian economy was expanding at double that rate (0.4%).
The International Monetary Fund (IMF) has identified that the combination of political uncertainties and the overall weak Italian economy, have further weakened the Euro.
The latest example of this being, the large exposure Italian banks have in Turkey. The Turkish lira is in free fall, due to ill advised government policies and sanctions from the United States. The country will soon have difficulty in servicing loans from banks in France, Spain and of course, Italy.
Another issue facing the new government, concerns the migrants and refugees, that have swamped Italy. It has been reported that Matteo Salvini, has called for the deportation, of all undocumented individuals.
Refugees and migrants arriving in Italy by sea, 1997–2015
This would be in violation of European asylum rules. These regulations of course, are growing increasingly unpopular in Italy, given that the country is a front-line state. Arrivals will come to Italy first. Nations elsewhere in the EU, are growing progressively reluctant, in accepting new migrants.
Italy’s new government is insisting on a more streamlined system, of sharing the burden of migrant arrivals. There is also the expectation, that more money should be allocated to countries within the E.U. that are under increased fiscal strain, due to the numbers who have already arrived.
The new Italian government has already taken the step, of refusing to take in some recent migrants. It is likely this policy will escalate, as the E.U. fails to create a more equitable, overall framework.
Senegalese workers at the Potato festival in Vimercate (Lombardy) in 2015
In foreign policy, the populists are keen in moving the country, in a more independent direction. They have for example, called for the lifting of the sanctions against Russia. This again, is at odds with most of the other countries in the E.U.
The election in March has provided somewhat of a mandate, that voters want change. The populists have promised that new endeavors abroad, will be based more on what is in the interest of Italy, rather than the entire E.U.
The populists in Italy as elsewhere, were swept into power due to a restive electorate, that has tired of the status quo. The political movement will be expected to deliver, on its promises. Success will depend not only on achievement, but in tempering expectations of impatient and exasperated voters.
The center right government of Argentine President Mauricio Macri, in power since December 2015, has been struggling to reverse 12 years of financial and economic mismanagement, under the former left-wing populists President Cristina Fernandez de Kirchner and her husband Nestor Kirchner.
Argentina, once the wealthiest country in the region,remains the third largest economy in Latin America, after Brazil and Mexico. However, it is quite evident that Colombia will slowly close the gap, unless Argentina adopts a more long term pro-growth model.
The full extent of the damage to the economy of Argentina, was somewhat obscured under the previous administration. This was due to the fact, that once the government had taken over the Statistics Institute (INDEC) in 2007, the political manipulation of the data, soon undermined its reliability.
Cristina Fernández and Néstor Kirchner occupied the presidency of Argentina for 12 years, him from 2003 to 2007 and her from 2007 to 2015.
By 2013, a number of foreign agencies, banks and investors, no longer had any confidence in the INDEC.
When Macri first took office, real inflation was running at an annual rate of at least 26%. Yet, the government was reporting a level, near half of that. During the first year of his presidency, Macri ordered a statistics emergency, allowing INDEC a year, to begin calculating more accurate figures.
In the meantime, private firms estimated that inflation throughout Argentina for the year 2016, likely exceeded 40%. This was to be even higher, than the presumed rate of 38% from 2014.
That inflation was going to be higher, during the beginning of the Macri Presidency, is coming at a high political cost. Even in 2017, the rise in prices was still near 28% and is expected to be about 23% for the entire year of 2018. As to be expected, the electorate is starting to lose patience, with the reformist fiscal and economic agenda.
Macri also made the difficult decision, concerning the Argentine currency. Once he allowed the peso to float, by removing capital controls, it devalued by 29% in short order. This dramatically increased the price of all imports, coming into the country, further fueling inflation.
Buenos Aires the capital of Argentina,is the 2nd largest city in South America. It is 1 of the only three “Alpha -” cities in South America & it’s the most visited city on the continent.
This comes on the heels of growth, that has been slow for an emerging market. Although the economy did grow 2.8% in 2017, it followed a recession from the previous year, where the economy contracted -1.8%.
There was 2.7% growth in 2015, but once again that followed a recession in 2014, where there was a -2.5% shrinkage of the economy.
Unemployment has fluctuated between 7% and near 9% since 2013. The present rate will not be reduced by much, until the economy is allowed to grow faster, creating more jobs.
As the financial crisis deepens with Argentina,real GDP (Gross Domestic Product) growth which was expected to be near 3.5%, has been reduced to just 1.4% this year and 1.5% to 2.5% in 2019. The World Bank in particular, has reduced a 3% forecast of growth in 2019, to just 1.8%.
Some emerging markets have been crushed, in 2018,mostly caused by a stronger USD (United States Dollar). Brazil‘s stock market lost -16% this year,Argentina’s is down -22%, and Turkey‘s is lower by over -25%.
Argentine agriculture is relatively capital intensive, today providing about 7% of all employment.
Argentina is a commodity dependent emerging market. Previous governments have almost consistently made the mistake, in attempting to artificially create a middle class, without modernizing the economy.
Despite previous governmental efforts, 25.7% of the total population is still considered poor. They are living on the equivalent of $130 USD or lower monthly. A full 35% of households, earn an income that falls below the poverty line.
Middle class people are getting by at $341 USD and the wealthy between $910 & $13,681 USD.
This means wealthiest 10%, earn 120 times the income of the poorest 10%.
The economy of Argentina is now in a trap, with all options likely to inflict pain on the electorate . In addition, time for Macri may well be running out, as frustrated voters lose patience.
Outside observers have identified two critical mistakes, the new government likely made.
The first was the premature lifting of all exchange controls. This was done before the reduction of inflation and a stabilization of the economy. It left the economy extremely vulnerable, to any reversal in international capital flows.
Argentina on a global map of South America.
The second was the policy of gradualism to the major economic in-balance inherited from 12 years of gross mismanagement, under the far more leftist and populist Kirchners.
The two most important issues now are the huge budget deficit and the external current account deficit.
If United States (U.S.) interest rates had remained exceptionally low, foreign investors may have continued to buy Argentine debt. However, with the U.S. Federal Reserve (central bank) tightening the money supply, and U.S. 10 year Treasury yields moving to 3%, investors are finding Argentina too risky.
Tightening monetary conditions elsewhere, have reduced global liquidity, putting the Argentine stabilization effort in jeopardy. The peso is now down by a third for 2018. This was despite the central bank selling USD in the foreign exchange market on a massive scale, in an attempt to support the peso.
The Argentine peso is now the worst performing major currency worldwide.
To help stabilize the peso in early May of this year, Argentina hiked the benchmark interest rate to 40%. In was a dramatic bid,to shore up the currency with 3 rate hikes in 8 days. No modern economy can sustain interest rates at these levels for long, without a resulting recession.
Chances of an economic recession have risen from 24.4% in April to 68.1% in May, according to one university study inside the country. If a recession arrives, it will be the fifth one in the past decade.
Inflation is currently running at about 28%. Argentine consumers are already losing confidence in their own currency, once again. There is a heavy rush of citizens already hoarding dollars, as the expectation is that the current financial and economic situation, will only worsen.
Historical economic growth of Argentina from 1961 to 2016.
Government inflation targets are 17% for 2019, 13% for 2020 and 9% for 2021. This means that consumer prices will continue to rise at a rapid rate, and interest rates will need to stay elevated in response.
At the same time, public debt continues to rise,both internally and externally. It increased from 43.5% in 2013 to 52.6%, at the end of 2015. Despite the change in government, debt continued to rise from 53.3% in 2016 to 57.1% in 2017. Although the total percentage is still relatively low, the rapid rate of increase, remains troubling to many investors.
The Argentine economy is already being battered by rising international oil prices and a prolonged drought, the worst in 50 years. Part of the decline this year, can be attributed to the severe drought in the Pampas grain belt. It will drastically reduce, the size of the corn and soybean harvest.
Soy field in Argentina’s fertile Pampas. The versatile legume makes up about half the nation’s crop production.
Given the importance of agriculture to both the domestic and international market, the effect will be felt throughout the economy. Argentina witnessed a 30.8% drop in the agricultural sector in April alone, due to poor weather conditions.
By the middle of May, Argentina’s peso had fallen to a record low. It had tumbled almost 7%, to 25 per USD. The currency has already fallen by 26% in 2018, the worst in emerging markets,as the IMF (International Monetary Fund) said it would not set any exchange-rate targets for a stand-by arrangement.
By June, the country was moving towards a crisis. Argentina was on the brink of a financial collapse, when the IMF had begun bailout negotiations,with the peso falling even further against the American Dollar.
Vineyard in Mendoza Province. Argentina is the 5th largest producer in the world
The Argentine peso can hardly recover, with the nation dogged by persistent budget deficits,high inflation & trade imbalances.
Foreign borrowing to finance the deficit, was causing the current account deficit to explode.
Later in June, the IMF agreed to give Argentina a $50 billion line of credit, to help the country out of a deep financial crisis, since the peso had dipped 20% versus the dollar, since late April alone.
The reliance on the IMF for a bailout remains controversial, since many politicians on the Argentine left, still blamed the 2001 economic crisis, on this international monetary agency.
Buenos Aires Central Business District
The month of June also saw the government of Argentina, moving to replace both its energy and production ministers, in addition to replacing the former Central Bank President Federico Sturzenegger, who had resigned.
In spite of the infusion of the IMF money in the form of SDR, the Argentine peso plunged another 7% in the first week of July.
The depreciating currency, along with the rapidly rising inflation, despite sky high interest rates, make a recession now far more likely. If the government budget deficit continues to widen, it will subsequently threaten the deal with the IMF.
Railway workers laying track on the Belgrano Railway, following state investment.
The government will need to find another $8.9 billion USD in further cuts in 2018, to meet the revised fiscal deficit target of 2.7% of GDP. This is down from an earlier rate of 3.2%.
The deficit was 3.9% in 2017. As part of the agreement with the IMF, it will need to drop to a shortfall to 1.3% of GDP next year and to zero by 2020.
To meet this fiscal goal, the federal payroll will need to be substantially reduced. Consumer subsidies will have to be drastically cut and fiscal transfers to the provinces, significantly pared.
Major infrastructure projected will either have to be postponed or possibly canceled.
Argentine stocks did reverse somewhat at the end of the second business quarter, after index provider MSCI, upgraded the country to its emerging markets index, a respite from months of dismal economic news. But this development will only provide temporary relief.
The Vaca Muerta shale oil field holds 16.2B barrels of oil & 308 cubic feet of natural gas. It is estimated to be the 3rd largest in the world.
If a recession occurs, the budget deficit will automatically widen, as tax collections decline. This will force even more stringent, spending reductions. These of course, will be politically unpopular. This will be the second recession, since Macri has taken office. Presidential elections are now drawing near, the next one is in 2019.
Although Macri’s party did well in the October 2017 elections, nerves and patience are beginning to fray. His popularity is still at 40%, but is under increasing pressure. It is also important to note, that President Macri lacks control, in either house of the Congress.
As usual, Argentine voters have the expectation that a new president and government, can simply erase decades of politically expedient, but economically ruinous policies.
The opposition left leaning Peronist party, continues to agitate for higher wages and is organizing strikes, to force the government to meet ongoing labor demands.
The General Confederation of Labor, the largest trade union in Argentina, called for a general strike on June 25th. It was in the protest of present government economic policies. The work stoppage brought the country, to a near standstill.
Argentina is one of global G-20 major economies.
Further labor disruptions can only be expected. If President Macri is forced to give into concessions, to partially satisfy worker demands, it will retard further progress with budget deficits and the rate of inflation.
Macri despite his pro-business pragmatism, may well be forced to reinstate capital controls.
He has pledged to gradually unwind the numerous government subsidies, that have distorted the market over the years. His goal was to attract a new wave of foreign investment to Argentina, which is now under threat, given the lack of financial stability.
The question now remains, can President Macri turn the economy around, before facing the voters again in 15 months? Or failing that, will the Argentine electorate give him more time, to reform the daunting financial and economic difficulties, still facing the country?
Presidential Candidate Andrés Manuel López Obrador
Mexico is now facing one of the most crucial elections in decades. It is the largest one in the country’s history, with more than 18,000 seats being contested at the local, state and federal level. Depending on the outcome, voters will either endorse fundamental and dramatic change or support continuity.
In addition to the presidency, the 88 million Mexicans eligible to vote, will be choosing 128 senators, 500 deputies in Congress, 9 governors, 1,600 mayors and who will occupy thousands of local and state offices. It is important to note, that for the first time in a century, the deputies and senators can be re-elected.
After years of government directed industrialization with an export focus,far too many Mexicans remain poor. More than 40% of the population remains impoverished.
GDP by State in US Dollars (2008)
The Mexican peso has fallen dramatically against the United States Dollar (USD). The downward movement has accelerated recently, due to trade tensions, with its northern neighbor the United States.
The threat made by the American President not to maintain NAFTA the (North America Free Trade Agreement) has been quite damaging to both the Mexican economy and stock market. The United States is Mexico’s most important market, with 80% of all exports being sold there.
The electorate has tired of the political establishment complacency, with widespread crime and ongoing corruption. Over 150,000 people have been killed over the last 12 years and thousands more are still missing. Mexican law enforcement and the judicial system seem to be inadequate and totally overwhelmed, with these rather dismal statistics.
Banner supporting López Obrador in front of the Palacio de Bellas Artes.
Out of desperation, a sizable portion of the population in Mexico, now seems willing to gamble on electing someone, who may well undo the hard won democratic reforms of the 21st century.
Polls show that former Mexico City mayor Andres Manuel Lopez Obrador, will likely win the presidential election on July 01. The most recent projection have him an average of 20 points, ahead of his three political rivals. He has the approval of at least 50% of the electorate.
Obrador is from the far left in his philosophy,as well as being a nationalist and populist. He is leading the leftist Regeneration Movement known as Morena (founded just four years ago), into the election and unlike previous occasions, has an excellent chance for success this go around. This is his third bid in running for the presidency.
National Regeneration Movement Political party
A number of political analysts are also now predicting that Morena may well win a majority of seats in the Congress. This of course, would strengthen Obrador’s hand, when he begins working on the reforms he has promised.
As a clear indication of the fraying institutions of democracy in Mexico, at least 130 politicians including 48 electoral candidates, have been murdered, since the start of the campaign season last September.
The mass kidnapping of the 43 students in Iguala on September 26, 2014 triggered a nationwide protest
Assassinations have been carried out in 22 out of 31 states. It is no wonder that, around 600 individuals have abandoned their candidacies, in the face of the rising mayhem.
The wave of non-stop violence, is due to the influence of various organized crime syndicates, many of which are involved in the drug trade, attempting to manipulate and exert control over local governmental officials.
The murder rate in Mexico was the highest on record last year, with 29,168 homicides, according to government data, which many suspect is understated. This has given the nation a bad reputation for rampant crime.
In addition to the rising violence, tens of thousands of ballots have already been stolen or destroyed.
Institutional Revolutionary Party Partido Revolucionario Institucional
The democratic institutions of Mexico can be traced back to 1928, when President Calles created the Institutional Revolutionary Party or P.R.I. The authoritarianism would continue, but would be limited to individual six year terms. Henceforth, the way to the power was through winning favor with the outgoing president and his circle of associates.
This system survived for the next 70 years. Other political parties would arise, but since the government held the elections and counted the votes, as well as holding the patronage of state and local positions, the political monopoly was strictly maintained by the P.R.I.
The end of the 20th century, brought a number of economic and political crises. Mexican voters finally rebelled. In the elections of 2000, a candidate from the center right National Action Party or P.A.N. put an end to P.R.I. ascendancy. After a six year term, President Vicente Fox would be followed by Felipe Calderon.
Enrique Peña Nieto 57th President of Mexico
The presidency would then be recaptured by the P.R.I. in 2012, with the election of Enrique Pena Nieto. At the time, Nieto was seen as a relative newcomer. He advocated for accountability and transparency. He had managed to beat the runner up Obrador, quite easily.
The past six years has seen a steady erosion, in the popularity of President Nieto. When he was elected, he was at a 54% approval rating. By the beginning of 2018, his support had dropped to just 17%, due to rumors of scandal. This cast a long shadow on the P.R.I. and has likely doomed its electoral prospects.
Jose Antonio Meade, a former finance minister, is the candidate representing the P.R.I.. He is well behind in the polls.
Democracy in Mexico although under strain, is still functioning. The Congress is comprised of various parties, with rather diverse constituencies. Freedom of expression is far more prevalent than in the previous century, as evidenced by the public awareness of the extensive corruption.
The Supreme Court remains independent and various national entities like the Mexican Central Bank and the National Electoral Institute, operate in a far more professional manner, than would have been possible in the 20th century.
2011 Mexican protests against cartel violence and government disregard.
The growing frustration on the part of the electorate is understandable, given the lack of government progress on perennial issues, that continue to plague the country.
Along with the corruption, that seems to permeate throughout the society,Mexican voters are dealing with rising violence, that is making a large segment of the society feel quite insecure.
Some private companies have even pulled out of a number of areas around the country, due to the lack of civil order.
The ruling elites have also failed to deliver on promised economic growth. Inequality and general poverty are consistent problems, that seem insurmountable in many parts of Mexico.
Citizens might be far more tolerant of government malfeasance in efficiency and honesty, if the economy was growing at a pace, where there was an obvious improvement in the standard of living.
Governments in Southeast Asia for example, have provided far more rapid economic growth, so the populace has been more tolerant, of the lack of accountability and openness, in the how public officials conduct business.
Ricardo Anaya President of the National Action Party.
Ricardo Anaya is the P.A.N. candidate and is in alliance with the center-left Party of the Democratic Revolution and Movimiento Ciudadano. Anaya is still trailing Obrador by double digits, in the most recent polls.
Anaya insists that a populist like Obrador, is a type of political rebel, that cannot really be trusted to manage the economy. In response, Obrador accuses both the P.R.I. and the P.A.N. of being part of the same mafia of power.
The electorate is also dealing with inaccurate and dishonest news, coming from social media. In one video, there is a supposed connection between the Venezuelan government and the Obrador campaign.
Over 100 polling stations will not be open for voting across Mexico, due to various forms of social unrest and violence.
Obrador has campaigned on defending the poor and disadvantaged in Mexico.
Although at the same time, there has been criticism directed at him, for his on-going shifting positions on a number of issues.
Andres Manuel Lopez Obrador (center) in San Baltazar Chichicapam, Oaxaca
Although fighting corruption is the central tenement of the Obrador platform, he is promising a better wage structure and to double the senior pensions. He is pledging additional aid to both farmers and students. These will not be achieved easily, given the present state of Mexican finances.
Obrador also seems to want things both ways. He states he supports NAFTA, but at the same time, insists the country will be fine without it. He is already calling for substituting agriculture and energy imports from the United States, with more homegrown ones.
Obrador is also giving mixed messages on investment. He says he wants to encourage more private and foreign investment, to replace government spending.
Mexico on a global map
However, conversely he is calling for a review of recent energy and public works contracts, given to both domestic and international companies. This will include the $9 billion USD airport, being built outside the capital of Mexico City.
In addition, the candidate is calling for a tougher stance in dealing with the United States. Such an approach may well endanger the cooperation with Americans on border security, crime prevention, immigration, environmental concerns and most importantly trade.
There also remains the concern that an Obrador Presidency, will look to further consolidate power in executive hands, as a way to better push through his reformist agenda.
This will over time lead to resistance, where the new President may well be tempted to further limit personal freedoms and the independent powers of other government entities and businesses. Allowing a stronger opposition, has been a facet of the new Mexico beginning in 2000.
Will Obrador continue this tradition? Or will he begin to dismantle, the very democratic institutions he is supposed to defend? The one true check on his power, is the single six year term. A word of caution for impatient reformers everywhere, these constitutional limits are being abridged in many countries on a global scale.