Mexico's Presidential Frontrunner Blasts Trump's "Neofascism"; Says "Can't Wait To Redo NAFTA"

Last month we wrote about "Mexico"s Fiery, Trump-Like Populist Who Looks Increasingly Likely To Win The Presidency In 2018."  As we noted before, Pena Nieto’s PRI party, which has held power for most of Mexico’s modern history, has seen its popularity eroded in recent months due to a series of corruption scandals, surging gasoline prices and a perception among Mexican voters that Pena Nieto himself has been too soft in combatting an aggressive Trump Presidency.

But, the growing populist sentiment that is sweeping Mexico and forcing Pena Nieto"s ratings to all-time lows, is the same sentiment that has vaulted Andres Manuel Lopez Obrador to the top of the list of likely presidential candidates to be elected in 2018.  Staying true to his reputation, Lopez Obrador spent the better part of today blasting the Trump administration in a series of interviews. 

In fact, speaking at the Washington Press Club earlier, Lopez Obrador said that the poor distribution of income and bad tax policies, not immigrants, were the cause of America"s economic distress.  Per The Hill:

"President Trump"s approach of blaming migrants for the problems of the United States has been excessive. We will not allow that, you can"t implement a campaign of hate against Mexicans because that is neofascism," he said.

Lopez Obrador was in town to present a complaint against Trump"s executive orders on immigration at the Interamerican Commission on Human Rights (IACHR).

"We are denouncing that Secretary [of Homeland Security John] Kelly"s executive measures affect not only Mexicans, but migrants from all over the world," said Netzaí Sandoval, the lawyer who wrote the claim.

Meanwhile, Lopez Obrador vowed to take a more "firm" approach in re-negotiating the NAFTA free trade agreement with the Trump administration saying that while Nafta “didn’t hurt” Mexico"s economy “it is also not our salvation."  That said, he went on to warn that any cooperation between the U.S. and Mexico would be short lived if the Trump administration didn"t change it"s rhetoric on migrants.

Lopez Obrador said that once in power, he would change the nature of the bilateral relationship "without disrespecting anyone, but with firmness."

He said it is "very probable" that he will win the upcoming election, scheduled for July 2018.

"We will convince the government of the United States and Trump that the best thing is a good deal, an understanding based on cooperation for development," he said.

But Lopez Obrador warned the overlap between his administration and Trump"s would be short-lived if the Trump administration did not change its tune on migrants.

As we pointed out earlier this morning, Peter Navarro, Trump"s top trade advisor, seemingly took a slightly less combative stance on NAFTA and was quoted by Bloomberg as saying he wants the US, Canada and Mexico to form a trade "powerhouse", supposedly one which is quite different from the existing "NAFTA" trade arrangement. 

The Trump administration is re-examining a critical component of the free trade pact: the rules of origin, which dictate what percentage of a product must be manufactured in the U.S. for it to carry a Made in America label, Navarro said.

“We have a tremendous opportunity, with Mexico in particular, to use higher rules of origin to develop a mutually beneficial regional powerhouse where workers and manufacturers on both sides of the border will benefit enormously,” said Navarro. “It’s just as much in their interests as it is in our interests to increase the rules of origin.”

For example, under the current agreement, 62.5 percent of the total value of cars sold in North America must originate in the U.S., Canada or Mexico to avoid import tariffs. The U.S. wants to raise that threshold, making it harder for parts from other countries to enter the supply chain.

Since the comment appeared less combative than some more aggressive trade-related statements out of the administration, the market took them in stride and sent both the Canadian Loonie and the Mexican Peso to session highs.

Finally, here"s is Bloomberg"s interview with the so-called "Trump of Mexico".

Meet Mexico's Fiery, Trump-Like Populist Who Looks Increasingly Likely To Win The Presidency In 2018

Last week brought fresh deterioration in diplomatic relations between the US and Mexico after Trump threatened to cancel a White House meeting with Mexican President Pena Nieto, saying if “Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting”.  And while Pena Nieto tried to save face by officially cancelling the meeting over twitter, Mexicans are growing increasingly frustrated with a candidate that they see as too soft in combatting an aggressive Trump Presidency. All of which has caused Pena Nieto"s approval ratings to plunge to historic lows of just 12%.

But, the growing populist sentiment that is sweeping Mexico and forcing Pena Nieto"s ratings to all-time lows, is the same sentiment that has vaulted Andres Manuel Lopez Obrador to the top of the list of likely presidential candidates to be elected in 2018.  Per Bloomberg, Lopez Obrador is a two-time presidential loser but Trump"s aggressive stance toward relations with Mexico and the resulting national rage sweeping the country plays well for the man who has promised to end the "relationship of "subordination" to the U.S.."

The politician known locally as Amlo is the early frontrunner in Mexico’s 2018 presidential race. By itself, that may not mean much: Polls are unreliable, voting is a long way off, and Lopez Obrador is a two-time election loser in a country that stood aloof from Latin America’s populist turn and instead tethered its economy ever closer to the U.S..

But good luck selling that line to Mexicans right now. The momentum on Amlo’s side is palpable. Amid a spasm of national rage, voters are increasingly sympathetic to the cries of a radical outsider who promises to end a relationship of “subordination” to the U.S. and rebuild the domestic economy. In other words, Trump -- with his brash pledges to rewrite Nafta and stick Mexico with the bill for building the wall -- has created the perfect climate for an anti-Trump south of the border.

Among other things, Lopez Obrador, like Trump, has vowed to pursue more of a protectionist economic agenda saying that "Mexico will consume its own gasoline and food on his watch, instead of importing it."

Lopez Obrador would add the country’s U.S.-friendly energy and agriculture policies to the catalog of woes. He says Mexico will consume its own gasoline and food on his watch, instead of importing it.

That would mean changes to Nafta, probably not the ones Trump has in mind -- assuming the trade pact survives at all. Its impact on Mexico is hotly debated in any case, and both sides can cite data that backs up their arguments.

Nafta has made no inroads into Mexico’s poverty rate. It stood at 53 percent in 2014, pretty much unchanged from two decades earlier when the trade accord went into effect, according to the World Bank. But the country has attracted billions of dollars of foreign investment in that period, turning it into the worlds seventh-largest automaker and creating thousands of jobs.

Lopez Obrador and his supporters take the glass-half-empty view.

“Nafta is a straitjacket that has kept 50 percent of our society in poverty” said Senator Manuel Bartlett of the Labor Party. “This is not about being antagonistic to the United States, it’s about being nationalist in defense of Mexico’s interests.”

All of which bodes well with an electorate overtaken with a sense of national pride and fed up with a weak Pena Nieto which one voter described as a "boot licker" unwilling to "stand up to Trump and tell it like it is."

Popular feeling is running so strong that Mexican politicians have little choice but to fall in line. Online campaigns are calling on Mexicans to vacation at home (“Adios Disneylandia... Hola Mexico”).Local governments and activists demand boycotts of U.S. products. Many Mexicans have draped the national flag across their social media pages.

It just sounds less convincing coming from leaders who’ve made a career out of close U.S. ties. Pena Nieto’s approval rating is 12 percent. Jose Hernandez Solis, a 56-year-old street vendor at an Amlo rally in Mexico City on Monday, certainly wasn’t persuaded.

“The president is a boot-licker,” Solis said. “Lopez Obrador has the guts to stand up to Trump and tell it like it is.” Straight talk, of course, is exactly the reason many U.S. voters gave for backing Trump.

Something tells us that Lopez Obrador is going to be even more reluctant than Pena Nieto to pay for Trump"s "fuckin" wall", as Vicente Fox would say.  Should be a fun race to the bottom.

Mexican Protesters Seize Control Of U.S. Border Crossing In Tijuana

A couple of weeks ago we highlighted the protests that had engulfed Mexico after the finance ministry announced plans to raise gasoline prices by 20.1% starting January 1st.  While many people have looted gas stations and/or threatened to burn them down altogether, the latest protesting strategy of pissed off Mexican motorists is to seize control of border crossings with the United States and allow for a free flow of motorists into Mexico.  According to the AP, over the weekend roughly 50 protesters were able to take control of the Otay Mesa crossing that connects San Diego to Tijuana as border officials abandoned their posts.

Protesters took control of vehicle lanes at one of the busiest crossings on the U.S. border Sunday to oppose Mexican gasoline price hikes, waving through motorists into Mexico after Mexican authorities abandoned their posts.

Motorists headed to Mexico zipped by about 50 demonstrators at the Otay Mesa port of entry connecting San Diego and Tijuana, many of them honking to show support. The demonstrators waved signs to protest gas hikes and air other grievances against the government of Mexican President Enrique Pena Nieto.

Other protests closed southbound traffic for hours at the San Diego-Tijuana San Ysidro port of entry, the busiest crossing along the 2,000-mile border, and halted southbound traffic at one of two crossings in Nogales, Arizona. U.S. Customs and Border Protection and California Highway Patrol officers closed southbound Interstate 5 to block access to the San Ysidro crossing, diverting traffic several miles east to the Otay Mesa port of entry.

Despite a free flow of motorists into Mexico,  U.S. Customs and Border Protection officials confirmed that inspections were normal for all travelers entering the U.S. from Mexico.

Of course these latest protests follow reports from last week that Mexico"s drug cartels have been looting Pemex oil and gas pipelines in an effort to create their own brand new black market for petroleum products.  With a modest upfront capital investment of $5,000 - $8,000, the cartels have realized they can tap directly into state-owned gas pipelines and withdraw seemingly unlimited supplies of gasoline which they then sell along the highway at a discount to official government prices.  It"s a win-win situation whereby the drug cartels make 100% profit margins and citizens get "cheap" fuel.

The black market is booming. Several states experienced gasoline shortages at the end of last year as more thieves tapped into state-owned Petróleos Mexicanos (Pemex) pipelines. The pilfered fuel was sold to drivers hoping to save money. Pipeline theft in 2015 increased sevenfold, to more than 5,500 taps, from just 710 in 2010. Pemex attributes the company’s 12-year slide in crude production in part to the growth in illegal taps.

The drug cartels have turned to fuel theft as a side business worth hundreds of millions of dollars each year, and crime groups focused solely on gasoline robbery have sprung up, says Alejandro Schtulmann, president of Empra, a political-risk consulting firm in Mexico City. “You only need to invest $5,000 or $8,000 to buy some specific equipment, and the outcome of that is huge earnings.”

Fuel theft creates a vicious cycle: The theft increases costs for Pemex and makes the official gasoline supply more scarce, contributing to higher prices for legal consumers. Theft amounts to about $1 billion a year, says Luis Miguel Labardini, an energy consultant at Marcos y Asociados and senior adviser to Pemex’s chief financial officer in the 1990s. “If Pemex were a public company, they would be in financial trouble just because of the theft of fuel,” he says. “It’s that bad.”

Of course, the biggest loser in this whole situation continues to be Enrique Peña Nieto who has basically become the least popular President in Mexico since one-party rule ended in 2000.

All this is creating headaches for Enrique Peña Nieto, whose popularity was already the lowest of any president since one-party rule ended in 2000. Peña Nieto is limited to a single term, and polls show potential candidates from his Institutional Revolutionary Party (PRI) trail populist opposition leader Andrés Manuel López Obrador in the race for the mid-2018 presidential election. López Obrador has made the jump in gasoline prices his latest rallying cry against the administration.

“This is definitely going to have consequences for the PRI,” says Jorge Chabat, a political scientist at the Center for Economic Research and Teaching, a university based in Mexico City. “Frankly, I don’t see any way that they can win in 2018.”

If all else fails, we hear that the tequila served in Tijuana is a very good, cheap and highly combustible alternative to gasoline.

Mexican Drug Cartels Looting State-Owned Gas Pipelines For Black Market Sales

A couple of weeks ago we highlighted the protests that had engulfed Mexico after the finance ministry announced plans to raise gasoline prices by 20.1% starting January 1st.  Amid the chaos, the country"s powerful Jalisco New Generation cartel threatened to to burn down gas stations as retribution for taking advantage of "the majority of the people who don"t make even a minimum wage."

But before readers blow this off as just another protest by an angry population which fails to grasp the "global deflationary collapse" while focusing on "fringe, outlier events"  - at least in the words of central bankers -  things suddenly got serious when none other than the country"s powerful Jalisco New Generation cartel has entered the fray, threatening to burn gas stations in response to the price hikes, according to Jalisco authorities cited by TeleSur.

"They are speculating in order to obtain million dollar profits from the majority of the people who don"t make even a minimum wage, we have already realized that the (shortage) of fuel is because dealers don"t want to sell fuel unless they can do so at a profit, all of our people are now ready to start the mission," the Mexican drug cartel stated in a WhatsApp message circulating in Jalisco.

"The CJNG, in support of the working class, commits itself to making burn all the gasoline stations that to December 30 of the current year, at 10:00 p.m." — before the price increases go into effect — "have not normalized the sale of fuel at the fair price," the message said, according to the Mexican news outlet Aristegui Noticias.

Alas, after the knee jerk reaction to riot subsided, which would have only resulted in gas prices soaring even higher anyway, Mexico"s drug cartels did what any clever black market entrepreneurial organization would do:  they decided to steal the gasoline and sell it themselves.  With a modest upfront capital investment of $5,000 - $8,000, the cartels have realized they can tap directly into state-owned gas pipelines and withdraw seemingly unlimited supplies of gasoline which they then sell along the highway at a discount to official government prices.  It"s a win-win situation whereby the drug cartels make 100% profit margins and citizens get "cheap" fuel.

The black market is booming. Several states experienced gasoline shortages at the end of last year as more thieves tapped into state-owned Petróleos Mexicanos (Pemex) pipelines. The pilfered fuel was sold to drivers hoping to save money. Pipeline theft in 2015 increased sevenfold, to more than 5,500 taps, from just 710 in 2010. Pemex attributes the company’s 12-year slide in crude production in part to the growth in illegal taps.

The drug cartels have turned to fuel theft as a side business worth hundreds of millions of dollars each year, and crime groups focused solely on gasoline robbery have sprung up, says Alejandro Schtulmann, president of Empra, a political-risk consulting firm in Mexico City. “You only need to invest $5,000 or $8,000 to buy some specific equipment, and the outcome of that is huge earnings.”

Fuel theft creates a vicious cycle: The theft increases costs for Pemex and makes the official gasoline supply more scarce, contributing to higher prices for legal consumers. Theft amounts to about $1 billion a year, says Luis Miguel Labardini, an energy consultant at Marcos y Asociados and senior adviser to Pemex’s chief financial officer in the 1990s. “If Pemex were a public company, they would be in financial trouble just because of the theft of fuel,” he says. “It’s that bad.”

Of course, there are some losers in all of this as Enrique Peña Nieto has basically become the least popular President in Mexico since one-party ruled ended in 2000.

All this is creating headaches for Enrique Peña Nieto, whose popularity was already the lowest of any president since one-party rule ended in 2000. Peña Nieto is limited to a single term, and polls show potential candidates from his Institutional Revolutionary Party (PRI) trail populist opposition leader Andrés Manuel López Obrador in the race for the mid-2018 presidential election. López Obrador has made the jump in gasoline prices his latest rallying cry against the administration.

“This is definitely going to have consequences for the PRI,” says Jorge Chabat, a political scientist at the Center for Economic Research and Teaching, a university based in Mexico City. “Frankly, I don’t see any way that they can win in 2018.”

State-owned Pemex is also one of the losers with the company expected to lose about $1 billion to theft this year...but no one really pays taxes anyway so it shouldn"t be that big a deal.