The Covid-19 crisis is devastating the country with increasing strength, while AMLO continues to deny facts
By MANUEL SUÁREZ-MIER
The destruction of Mexico’s institutions, economy and democracy under the inept and increasingly autocratic regime of President Andrés Manuel López Obrador (AMLO) has accelerated in the last few weeks with his incompetent management of the Covid-19 pandemic. The crisis is devastating Mexico with increasing strength, while he continues to deny facts and invent his own rosy scenario with a daily barrage of lies that raise questions over his mental health.
Until just three weeks ago, he denied that the pandemic was a serious threat and kept advising fellow citizens to go out and embrace people, something he has done himself during his feverish travel schedule across the country.
Last week he changed his tune and declared that the pandemic was “a godsend to ensure the consolidation of the ‘transformations’ that he plans for the country.”
His government has been hiding the true number of people infected with the virus that causes Covid-19, with an official tally of just 4,000. Even according to his own spokesman on the pandemic, the number is at least 10 times as large.
Under his orders, the government has been classifying victims of the pandemic as suffering from “atypical pneumonia” – or other respiratory ailments – instead of Covid-19. Part of the reason the official number of infected is so small is the dismally low number of tests performed: 32,000 in a population of 130 million.
The health system is in a disastrous situation thanks to AMLO’s dramatic reduction of the health program budget, not buying sufficient drugs and medical devices on time, and stubbornly fixating on centralizing all purchases in the hands of an aide who lacks the necessary expertise.
As a result, hospitals do not have the means to treat patients properly. One example involves a regional hospital of Pemex – the country’s huge oil monopoly that provides high-quality medical care for its employees – in which a dozen patients died from contaminated drugs.
In addition, AMLO canceled universal health insurance for catastrophic illnesses, daycare centers that served nearly a million children (which allowed mothers to work), communal food kitchens for the poor, and many other highly effective programs, in order to centralize everything in his hands and allow him to give money directly to 22 million people that he believes will provide an unbeatable base of electoral support.
All in all, the country’s health system is utterly unprepared to deal with the current crisis, which, according to reliable models, is a long way from its peak.
A key flaw in AMLO’s health plan involves his decision to import medical personnel from Cuba, just as Venezuela’s Hugo Chávez once did. Unfortunately, AMLO appears to trust them more than Mexican doctors and nurses who are better positioned to provide important help in communicating how to avoid catching the virus.
The pandemic will also have a disastrous effect on Mexico’s economy, which, thanks to AMLO’s disastrous policies, was already falling into recession. According to a recent study by the Organization for Economic Cooperation and Development (OECD), the pandemic’s immediate effect on Mexico’s gross domestic product will be a 30% decrease. The reasons are straightforward:
- There is a supply shock on goods and services resulting from the breakdown of global production chains and the shutdown of large parts of the global industrial trade system; massive amounts of bankruptcies that are already occurring and will only accelerate; and the collapse of global trade and travel.
- A demand shock of incalculable size is happening thanks to a huge loss of jobs, which in the last three weeks erased all employment created in 2019. The situation is probably much worse for the informal economy that employs the majority of Mexicans. Add in the lack of public investment, which has been falling since last year; the complete absence of foreign investment that will worsen as the result of the recent government closing of a beer plant investment of US$1.5 billion which had already been two-thirds completed. There are also personal wealth losses resulting from the collapse of stock exchanges and the peso, which has lost 30% of its value in the last few weeks.
- The third shock could cause the flight of massive amounts of capital due to the falling confidence in the country and the imminent loss of its investment-grade rating on sovereign debt, which will trigger an additional depreciation of the currency and very likely runs on the banks.
What has been the AMLO government’s reaction to this looming disaster? Absolutely nothing. Instead, he has continued with his fixation on hoarding money he presumably wants to give his political allies, and to waste even more of the nation’s resources in building pet projects, which are certain money losers.
Unlike every other nation affected by the pandemic, Mexico has refused to devote any resources to confront the economic fallout that will bankrupt hundreds of thousands of small and medium-sized businesses, and perhaps even large ones. One particularly vulnerable business is tourism, where droves of hotels and restaurants have already closed for good.
AMLO is not doing anything to cushion the devastating impact on businesses, while he also hardens his government’s stance on the need for businesses to pay taxes on time and in full. Meanwhile, he threatens corporations with punitive charges if they fire employees or stop paying them, even if they are closed and have no revenue.
Perhaps this explains his belief that the pandemic is a godsend, since it could position him to commandeer or expropriate the many private companies unable to pay wages.
Manuel Suárez-Mier
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Manuel Suárez-Mier is an economist and former central bank official, economic diplomat, and professor at Georgetown and American universities. He is also a consultant residing in Washington, DC. [email protected]
