Mexicans Vote in Midterm Election Seen as Referendum on Populist President -- Update

By Juan Montes and David Luhnow

MEXICO CITY -- Mexicans were set to vote Sunday in a midterm election that will determine whether populist leader Andrés Manuel López Obrador faces significant constraints on his drive to concentrate power and boost state control over the economy during the second half of his presidency.

Mexicans will elect the 500 members of the lower house for the next three years and vote to fill nearly 20,000 local positions across the country, including mayors, councilors and state legislators. Voters will choose a new governor in 15 of the 32 states, including Nuevo León, an economic powerhouse near the border with Texas.

"What is at stake is whether López Obrador will have free hands the rest of his term, or whether Mexicans will establish some checks and balances in the president's power," said Jesús Silva-Herzog, a political-science professor at Mexico's Tecnológico de Monterrey university.

More broadly, the midterm vote is seen as a referendum on the president himself and his policies, Mr. Silva-Herzog said. It will also gauge whether Mexico's opposition parties can recover their footing after the populists' landslide presidential win in 2018 sent them into disarray.

Most polls show Mr. López Obrador's Morena party is close to keeping its majority in the lower house. According to the average of five recent polls, Morena would get 40% of the vote for the lower house followed by the centrist Institutional Revolutionary Party, or PRI, with 18% support and the conservative National Action Party, or PAN, with 17%. The PRI and the PAN dominated Mexico's politics for decades before Mr. López Obrador's victory in 2018.

Controlling the lower house is important in Mexico because it has the sole right to pass the spending side of the annual budget.

If Mr. López Obrador wins a big majority again, he would have freedom to spend on his social programs for the poor and flagship infrastructure projects, such as an $8 billion refinery and a 950-mile train track in the Yucatán Peninsula, analysts say. On the other hand, losing the majority could lead to political gridlock. Mr. López Obrador has already said he would veto any budget approved by the opposition.

An even bigger prize for the Mexican president would be a two-thirds supermajority that could open the door to changing the constitution. The Mexican president said he may seek to undo a landmark 2013 energy overhaul that opened up the oil and electricity sectors to private investors. Even if his party gains a two-thirds majority in the lower house, it would still fall short of a similar supermajority in the senate, which is also needed to approve constitutional changes.

"If they are close to that threshold, investors and business leaders will likely be anxious as to the government's potential intentions in the second half of the administration," said Alonso Cervera, the chief economist for Latin America at Credit Suisse.

Mexicans have become sharply polarized under their populist leader, who says he is fighting to transform the country on behalf of the poor against a corrupt traditional political class that introduced free-market reforms over the past three decades and enriched themselves at the expense of ordinary Mexicans.

Fernando Villanueva, a 42-year-old accountant standing in line to vote in Mexico City, said the choice for him was clear: "There are only two options, the project of the fourth transformation, and the corruption of neoliberalism," said Mr. Villanueva.

But not far away stood Edmundo Trigos, a 72-year-old systems consultant. Mr. Trigos said he worried about Mr. Lopez Obrador concentrating too much power.

"This election is crucial for Mexico, not just for Mexico but also for Latin America," he said. "I think it's an error to have power concentrated in a single group; there need to be checks and balances."

During his first three years in power, the 67-year-old leader has scored some clear political successes. He pursued an austerity program that cut salaries for top government bureaucrats, shut some departments and used the savings to increase social spending, in particular doubling a cash pension for the elderly. He sharply raised the minimum wage several times.

He has proved to be a master of symbolism and communication, particularly with Mexico's poor. He moved out of the posh presidential residence of Los Pinos and turned it into a public museum visited by millions. He is trying to sell the presidential Boeing 787 Dreamliner aircraft and flies economy on commercial flights, delighting fellow passengers. In a country where presidents hardly ever meet the press, he holds a daily weekday news conference that can last for two hours, excoriating enemies and selling his vision of a new Mexico to voters.

That has forged a deep connection with many Mexicans. "For the first time, I found hope in a different kind of discourse, a different kind of politician, someone who denounces corruption," said Lizette Arditti, a 73-year-old psychologist and painter who lives in southern Morelos state and did social work for nearly two decades in impoverished communities. "AMLO is honest and a fighter for social justice, by far the best choice compared to the thieves we had before," she added, referring to the president by his acronym.

But it hasn't been a smooth ride. Some of Mr. López Obrador's early moves, such as canceling Mexico City's partially built new airport, spooked business investment, and the economy fell into recession even before the pandemic, which has hit Mexico particularly hard. Mexico has logged more deaths per capita than all but a handful of countries, and the economy fell 8.5% last year, partly because the president carried out by far the smallest stimulus of any emerging market, at just 1% of gross domestic product versus 8.3% for Brazil.

Despite the weak economy and the pandemic, Mr. López Obrador's approval ratings have remained high at about 65%, with many ordinary Mexicans saying they give him the benefit of the doubt.

"It's not easy. There are a lot of interests against him; we have to be realistic," said the accountant, Mr. Villanueva, citing the resilience of the Mexican peso as a positive.

The president's critics, however, say keeping control of the lower house could intensify his authoritarian streak. He has already said he wants to overhaul the electoral agency and end the independence of many autonomous agencies, such as the transparency institute.

Mr. López Obrador wants to hold a recall referendum in 2022 for Mexicans to decide whether he should stay in power or not for the rest of his term, a tool that has been used by leaders in Latin America to cement authoritarian rule.

His party recently extended the term limit of the Supreme Court chief justice, who is close to Mr. López Obrador, a move that could set precedent to extend the president's own term limit. Mexican presidents are constitutionally barred from re-election after one six-year term. The Mexican president has vowed to step down after his term ends.

At the same time, Mexico's opposition parties have still not recovered from Mr. López Obrador's victory in 2018, when he won by more than 30 percentage points over his closest rival.

Political analysts say the opposition hasn't offered a coherent message as an alternative to Mr. López Obrador and lacks strong leadership. The conservative PAN, the centrist PRI and Mr. López Obrador's old party, the leftist Party of the Democratic Revolution, are so weak that they formed a joint coalition in an effort to win the majority in the lower house.

--Anthony Harrup in Mexico City contributed to this article.

Write to Juan Montes at [e-mail] and David Luhnow at [e-mail]

(END) Dow Jones Newswires

06-06-21 1228ET