What AMLO's Legacy Means For Mexico's Upcoming Election

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Joe Wiesenthal
Hello, and welcome to another episode of the Odd Lots podcast. I'm Joe Wiesenthal. And I'm Tracy Alaway. Tracy, I think we, as a podcast, I think we have to do more on Latin America. LaTam Economics, the business situation.

It's just like a sort of part of the world that I don't think we've covered enough. No, I have to admit, this is a total or almost total geographic and economic blind spot for me. With the exception of Guatemala, I just haven't spent that much time in Latin America. I haven't read that much about it. I think the story there is becoming increasingly interesting, and I think if you look at something like Mexico, for instance, there's all this enthusiasm about the theme of near shoring, the idea that american companies are going to build all these big factories over there.

Bloomberg Audio Studios
It's going to be a big beneficiary of trade tensions with China. But at the same time, there's this ongoing political backdrop, which is, as far as I understand it, about to heat up in the shape of the mexican presidential elections on June 2. Yes, that's right. There is a mexican presidential election coming up on June 2, which is like a perfect news hook for us to sort of set the stakes, understand what this is all about, and sort of use that as an entryway to expand our coverage. It is sort of crazy, just in general in the media.

Joe Wiesenthal
And so, like, I'm not trying to excuse us by implicating the entire media. It does feel like here in the US, there's much attention paid to Europe and the Middle east, obviously, and various things going on in East Asia. And yet the sort of dearth of coverage, I would say, about countries which probably are much more economically and politically intertwined with us than the countries that get most of the sort of foreign coverage. Yeah, it is actually kind of weird, isn't it, now that I think about it. What's that expression?

Bloomberg Audio Studios
Familiarity breeds contempt. Contempt? Yeah. Not contempt, I guess. Ignorance.

Ignorance, you're right. We spend so much time talking about things happening in the Middle east, oil production in the rest of the world, but actually not a lot of that attention trained on Latin America. So, okay, here is our first offering to course correct and actually learn something about specifically Mexico. But, you know, we'll broaden our horizons later and expand. We are going to be the change that we want to see in the world.

Joe Wiesenthal
But, you know, to this point, a really interesting fact that probably people don't really realize. Brad Setzer had some great observations about this. Mexico set to displace China as the biggest source of imports into the US market. We know there is a lot of investment happening. Tesla is building a factory in Mexico.

We know that some of the chinese automakers that are already impaired by tariffs and trade barriers, they're investing in Mexico, maybe as a way of getting a conduit to the US market. So there's more and more investment happening. At the same time, as we know, there are very significant issues with national security violence, the power of the cartels across the country. All of this setting up in terms of like, what are the stakes of this upcoming election? Yeah, I'm just going to reemphasize that I am not entirely up to speed on the situation.

Bloomberg Audio Studios
I meant to come in this morning and sort of speed read my way through what's happening in mexican politics, but then I got really distracted because I read that one of the things that's happening is this huge expansion of the amount of money that the government is spending on the military and the defense programs are basically growing very, very quickly. And one of those is something called the national security infrastructure project. And in addition to building military bases and hospitals and things like that, part of the project is to build an equine reproduction center. So I saw that and I went, I spent an hour going down a rabbit hole of why the mexican army seems to love horses. And there's actually like a lot written about this.

So anyway, instead of reading about politics, I was reading about the mexican army's love of show jumping and things like that. So, okay, let's do it. Let's actually talk about important things. Listeners getting a glimpse into the odd lots episode preparation process right there. We do have the perfect guest.

Joe Wiesenthal
We are going to be speaking with Andrea Navarro, senior reporter covering business for us here at Bloomberg, based in Mexico City. She has a big story out now on the AMLO administration. The legacy of it, the upcoming election and what it all means, and the balancing of these different countervailing forces. So, Andrea, thank you so much for coming on odd lots, and we really appreciate you taking on the task of getting me and Tracy up to speed on what really is an important trading partner, neighbor, and big economic story for us. Hi, Joe and Traci.

Andrea Navarro
Thank you for having me. Let's just start there. Is this mexican presidential election upcoming on June 2. Who are the candidates? What is this election about?

So, yeah, in Mexico, we have elections, presidential elections, coming up on June 2. And the candidates are Claudia Schoenbaum. She was the former major of Mexico City, and she was anointed by Lopez Obrador to be the candidate of his party called Morena. It's very clear right now that she's a likely winner. She has a 50% preference in the polls.

In the most recent polls, the distant second is held by a woman named Sochil Galves. Sochil is from a coalition of opposition parties who were severely weakened over the past five or six years. During the Lopez Obrador presidency, they came together to choose an opposition candidate that would have the best chances at really competing against Shamebaum. But right now, the preference that she's showing is around 33%, which is not great. So barring something unexpected and very big, it's very likely that Claudia will win.

There is a third candidate. His name is Jorge Alvarez Mines, and the party he's coming from is Mobimiento Ciudadno. The last thing I read is that he's holding about a 9% preference. It's not likely that he's gonna have a big showing. So it's most likely going to be between Sokil and Claudia.

But as I said, it's basically given that Claudia will win. Jo, I'm just going to say everyone should pray for our spanish pronunciation in this episode, because Andrea just did a phenomenal amount of switching there and getting the accent exactly right. Okay, so Lopez Obrador is, aka Amlo, has been in power for multiple years and is sort of expected to hand off to his successor. Again, I don't know much about Mexico, but one thing I know is that when emerging market analysts start talking about weakening institutions and constitutional reforms, that's probably not a good thing. And some of those notes have been hitting my inbox relatively recently.

Bloomberg Audio Studios
What are they talking about here? Yeah, Amlo, as he is known, did have a string of controversial decrees or reforms that sort of scared the market throughout his presidency. I would say that the very first was right. As he came into power in late 2018, he canceled an airport project that was going to be built near Mexico City to replace our old crumbling airport that's called Benito Juarez. And that project was planned by his predecessor, Enrique Pena Nieto.

Andrea Navarro
And it was going to be a very big airport. It was going to be beautiful. It was going to be state of the art and handle, I think it was like 68 million passengers a year, which is much more than we can handle now. But he amlo, when he was campaigning, he sort of painted the airport as a thing of the elites and that the average Mexican would never use it. And so why was so much money going into a project that was not going to benefit the average Mexican?

So he scrapped it. And that really scared investors, because a lot of businessmen in Mexico were involved in some way or the other. In the airport project. We had Mexico's richest person, Carlos Lim. His company was going to build the terminal, and I think one or two of the runways.

And so coming in with such a strong move freaked everybody out, and he just scrapped it. It ended up being more costly than actually finishing the project because he had to pay off bondholders, he had to pay off so much debt and so much investment that had already gone into the project. But he just went and did it, and he didn't really care. And after that, there were a couple of things that sort of did scare investors. One of them was changing the rules into how airport operators can charge different fees.

We have three big companies here that operate most of the airports in Mexico, and it was just one of those moves where nobody saw it coming. And when he did it, I think it was the largest sell off of those shares that the companies had ever seen. Shares tanked around, like 47% before paring back some losses. He's well known for making these brash announcements and movements that he sort of then pares back, and then people end up feeling that everything is going to be all right. I think that the best way to say it is that he has kept everybody on his toes.

But in the end, if you look at the macroeconomics in Mexico, it's not all that bad. The peso is at its strongest that it's been in, like, 20 years. I think inflation is relatively under control. We have tons of money flowing in. So it's really been surprising, to say the least, to see how he has handled both the businessmen and the macro economy.

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Joe Wiesenthal
Prior to the 2020 election, there was a lot of fear at the time that Trump is gonna build the wall and it's gonna be terrible for the Mexican peso. Thinking back to that time, the peso is actually, through 2020, almost seen as, like, the purest market proxy for market expectations of the outcome. Didn't you have a trade that involved the peso? I seem to remember. I'm not gonna brag about my pretend trade.

Bloomberg Audio Studios
Well, I just gave you. Okay, fine, I'm gonna get it. I did tweet that you sort of took Trump seriously, that the ultimate effect of is going to be this sort of reinvigoration of sort of the north american trade at the expense of east asian trading partners, you might want to go long. Mexican peso against the korean won. That has been a really big winner in my imaginary FX hedge fund.

Joe Wiesenthal
Yes. Thank you, Tracy. I did correctly predict that the mexican peso would be a winner of this sort of new trading environment. And that has been borne out. But we have seen this idea of, like, and it really accelerated after COVID, this idea of, like, near shore shoring or fringe shoring, this real turn away again, particularly China.

And we do see this sort of flood of investment in parts in Mexico. We know that Tesla is opening up a new factory. As I mentioned in the beginning, Mexico set to displace China as the biggest source of imports into the US market. So for whatever reason, and you mentioned Amlo's, the anxiety that he gave to the business community. There are a lot of positive mexican investment stories happening right now.

Andrea Navarro
I think that Tesla was a big example when it was announced. The problem with that is that they haven't really started construction on the plant, and there's some doubts on whether that's going to happen at all or if it's going to happen in five to ten years. But we do know that several suppliers to Tesla already came up and set up shop in the northern parts of the country. And we do have a very big auto industry. Most of the big car companies have big plants here, and some of them have expanded them over the past few years.

So there is a lot of movement. It's important to also mention some of the roadblocks that nearshoring has and why some people are doubting whether Mexico is going to be able to take full advantage of the larger geo economical situation that it could potentially benefit from. There are security concerns. There is water scarcity in the northern part of the country, in revolution in Sonora. There are a lot of states that have been dealing with severe droughts over the past few years.

There's a problem with electricity. There's a big problem with supplying and distributing electricity. So there are a lot of industrial parks that have to set up their own generators, their own grids. They have to go in and connect their plants to the larger grid so that they can get some electricity. It's not cheap.

It's not easy to do. All of those hurdles do represent something expensive, and it's very complicated for some companies to take on all of these problems by themselves. So they have been asking the government for more help with the security, with electricity, with water, because if they don't resolve all of those things, it's going to be very difficult for companies to just take full advantage of being so close to the United States. I was going to ask what's Amlo's approach or feeling towards the near shoring trend? Because when I think of his policies, you know, sort of leftist nationalist, he used to, from what I remember, talk about the moral economy and distributing gains and things like that.

Bloomberg Audio Studios
So I wonder if there's a tension there between that agenda and sort of inviting external capital into the country. But then, of course, you know that capital. Capital leads to jobs, it leads to GDP growth. And there's also a theme here where he has been bulking up the military, he's been beefing up security and trying to crack down on crime, at least publicly. Yeah, I think that the last part that you said about what he says publicly versus what he actually does is a very big difference.

Andrea Navarro
I think that he doesn't really. He hasn't really devoted that much time to talking about near shoring. He knows that it's a thing. He knows that it could be beneficial for the country, but what he's really pushing for is for development in the southern part of the country. So if you look at a map of Mexico, you'll look at the northern states.

And those are the ones that typically have gotten a lot of industrial investment just because of the closeness to the United States. And traditionally, it's just the way it has been. And if you look at the south and especially the southeast, so where you have the yucatan peninsula, Campeche, Oaxaca, some of these poorer states, they have traditionally not received so much investment as their northern counterparts. So what he has really pushed for has been for business to just set up shop down south. And it hasn't really been an easy decision for businesses because of the same things.

Right? Like, you're farther away from the US, and when there's not a big environment already set up for you to come in, it's expensive to just set up everything. And there aren't many hotels, there aren't many roads. It's just a lack of infrastructure that has held some of the businesses back. There's a train that he built.

Well, there's two trains that he built. First is a maya train that's in the yucatan peninsula. That's supposed to be for passengers and for cargo. And a part of it has already been inaugurated. The other part is still under construction.

But his big bet to answer to the new assuring question, I think, is the other train, and it's called the Trans Izmico. So it's sort of his answer to the Panama Canal. He wants us to replace the Panama Canal with this train. And it's very interesting, because if you look at all of the problems with the Panama Canal and with the Suez Canal, you could see some people or some companies potentially using the transismico to ship some of their goods across the ocean. So one ending point of the Salina Cruz, Oaxaca, in the Pacific, and then the other point is in the gulf in Veracruz.

So if that works out logistically, it's not as easy, because it is a train. So ships would have to come into one of the ports, offload all of the goods, upload them to a train, have the train pass over, and then reach Veracruz, where it would have to be uploaded into a ship again. But if that works, that could potentially be very good for the country. And for the economy. It's just not clear that that's what's going to happen.

Joe Wiesenthal
Tracy, as we continue to do more LATAM episodes, we're definitely doing a specific episode on Mexico's ambition to replace the Panama Canal. That sounds like a great, that's a great headline. That's a great episode in its own right. Let's talk about the national security situation. You have a table in your story that shows just how much homicides in the country have increased over the years.

The homicide rate during both the AMLO administration but also the previous EPN administration, more than double than what it was during the Vicente Fox administration in the early two thousands. What is the sort of big story here and what has AMLO tried to do, and perhaps tried to do unsuccessfully to improve the national security situation? Yeah. So if you look at that chart and the numbers from starting in 2000, what happened very clearly was around 2008 when Felipe Calderon declared a war on drugs and on cartels, and he just deployed the military into the country and sent him out to fight the big cartels. And back then we did see this splash of violence just across the country, across newspapers.

Andrea Navarro
It was horrible. It wasn't what the country was used to, but then it sort of became the way of life. It's very sad to say it, but I think that Mexicans lost some sensitivity to seeing so many murders and so many homicides just splashed across the country. And it did get a little bit worse during the Enrique Pena Nieto years just because the dynamics of cartels and how they work, you kill off the leader and tenu leaders come up. And so right now what we're seeing is that the three or four cartels that used to run the criminal organizations, they have been spread out and they have sort of multiplied into these cells and these smaller groups that are harder to fight, harder to control, and that have taken on several pockets of the country.

So instead of having the big Sinaloa, Tijuana, or Gulfo cartels, now you have so many different groups. I think that they were spread out more across the northern states back then, but now you see headlines where they're taking on several towns that are not that far from Mexico City, which is not something that we were used to seeing, and homicides as a result have just shot up. Now, if you ask Amlo, he's going to tell you that a closer look at the numbers will show a tiny slowdown in the rate that could be true. But there are also many people who say that that's because statistics in Mexico aren't really that trustworthy. There's a big rate of impunity.

There's many crimes that go unreported. If you look at homicides, they have shot up, but AMLO will tell you that they slowed down a little bit. There's doubts on how trustworthy the numbers are and the numbers that have come down. It's such a tiny slowdown that it could just be a statistical error, not really a change in the trend. So in the intro, I mentioned the national security infrastructure projects.

Bloomberg Audio Studios
Could you maybe talk a little bit more about, which include the equine reproduction center? I feel I must repeat this. Could you talk a little bit more about the Defense Department and its role in the economy and what we've seen there recently under AMLO? Of course. So the defense ministry has always been the central ministry under which most of the army or the military runs.

Andrea Navarro
But I would say that under this administration, its profile and its power and its budget have grown in a way thats been unprecedented and very surprising. And what we did in the story was take a closer look at the budget, and not only at the money that was given to them, but how the money is actually being used. And so we found a program in Mexico, we call it Apartida, and it's literally the line in the budget that's called k zero one nine. It's Casiro de Acnuebe. And that partida is specifically for the use of the military, for its own infrastructure.

Because the military in Mexico has been given so many infrastructure projects over the AMlo years, it's easy to think that that's the money that they're using to build the airports or the trains that the president has handed them over. But it's not the money in this partition that specifically is for their own use. So it was very hard to find what contracts they were making with this money. But we did find, as you say, a lot of spending on horses, a lot of spending on gyms, on upgrades to their headquarters here in Mexico City. And so it does paint a picture of an army that's taking some of the money that they're being given for its own use.

And another thing that's important to mention about this partida specifically is that Congress did not really approve this money for this use. So how it works in Mexico is that the president or the executive chose the Congress, a proposal for the budget. Congress then analyzes it, and the lower chamber has to approve it, the spending portion. And what we realized is that over the past few years, the military has used this tool that's called modifications to just change money from different partidas, to move it around and to use it at their discretion. So for this specific partida, the money that was spent eventually there had not been approved by Congress.

They just approved a tiny portion, but then they spent whatever they wanted on whatever they wanted. And it's very hard for Congress to keep track of this. And it's very hard for anybody to just find the contracts and see where the average taxpayer's money is going to, which is very. It's very sad. It's interesting.

Joe Wiesenthal
We recently recorded an episode on some of the structural flaws of the egyptian economy. And part of the story there was just like, how many aspects of the economy are implicitly or directly under the control of the egyptian military and some of the problems there, it feels very redolent of that. But just go into this a little bit further, because it's still sort of counterintuitive. I think you say in, in your story that defense spending during the Amlo years is up 128%, which is extraordinary. But talk more about this disconnect between the surge in defense spending and the lack of progress and somebody arguably, perhaps, backsliding in terms of security and violence.

Andrea Navarro
Defense spending has grown 128% over the first five years in Namdo's administration. Over the past year, just a single year, it grew 63%, which is not nothing. And the problem here is that a closer look at the budget will show you how the money is being spent on these big ticket infrastructure projects, on airports, on a state run airline that nobody thought we needed, on the trains. And the amount of money that's being actually directed to training soldiers, to deploying them, to buying them weapons and equipment has stayed the same ever since the Calderon years. That program hasn't really grown.

And that tells you a lot, because when you talk to people on the ground, they will tell you that the National Guard members don't have gas money to do the patrolling that they have to do on highways. So we did talk to a couple of people who told us that they called the National Guard after, after thefts, after highway thefts that they had run into, and the National Guard couldn't get there because they had no gas money. So there's this huge disconnect into how it could be that they're getting the largest budget they have had in years, and they're just not doing what they should be doing with it. You know, some of the planes that the military has are now being used for the state owned airline that's called Mexicana and that's, we know, and I'm sure that you guys are very aware of how hard it is to take on new planes, to buy new planes from Boeing or to get lessors to give you a plane. It's not the easiest thing in the world, but the president thought it would be.

So he just launched an airline. He said it was going to have ten planes. And then after realizing that it was going to be more difficult than he had thought initially, he just got some planes from the military to run the airline. So what we see now is that that has been at the expensive security in Mexico. As I said before, we have had several instances of cartels just running parts of the country, and we're hearing things as they're charging people for Wi Fi connections, they're charging people for the right to have a party, they're throwing mini bombs from drones and just killing scores of people.

So there are parts of the country that are just becoming no man's land, and they're being abandoned, and cartels are just running the show. We mentioned the presidential election is coming up in June. The official campaign kicked off, I believe, at the beginning of March. How much continuity could we expect between AmLo and his anointed successor, assuming that the party stays in power? And then I guess, just to add on to that, how much political presence will AMLO have even after the term limit comes into effect and he is no longer president?

Bloomberg Audio Studios
Because my understanding is, again going back to that weakening institutional and controversial constitutional reform point that you see from some of the EM analysts right now is that he has been instituting some changes to the judiciary and things like that that could possibly pave the way for him to still have some influence in the political sphere. I think that that's a million dollar question, Tracy. I think that nobody is really wondering what's going to happen on June 2. Everybody's pretty sure that Claudia is going to win. I think that the true question is whether or not Amlo is going to let her actually be the president.

Andrea Navarro
And we're not going to know that for a while. Right? So he has maintained that he's going to leave. He has a ranch in his hometown, and then he's going to just go and retire and live a quiet life. But nobody really believes that.

So that's what we're wondering as well. And I think that one of the bigger questions is what she's going to do exactly on security. If you look at what she did in Mexico City, she had a very strong police force, which is against what Amlo did at the national level, and her security ministry here was led by a police person, a policeman that's now going to be in the Senate, probably. So if she follows through with the strategy that she had here, it's going to be a clear divergence from Amlo's strategy, which was to prop up the military. So it's going to be very interesting to see whether she follows her own lines or whether she has to fall in line with that.

Whatever Amlo tells her to do.

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Joe Wiesenthal
Hey there, it's Joe Wiesenthal and Tracy Alaway, and we are the co hosts of the Odd Lots podcast. And we want to tell you about a new podcast here at Bloomberg. We're really excited about money stuff, the podcast. That's right, friend of the pod Matt Levine is teaming up with our other friend and Bloomberg TV host Katie Greifeld to bring the money stuff newsletter to life. Every Friday, Matt and Katie will dive into all the Wall street, finance and other things that make Matt's newsletter such a hit.

You can listen to money stuff, the podcast on Apple podcasts, Spotify, or wherever you get your podcasts, going back to the expansion of the military budget and the lack of improvement on the security front. So you mentioned that a lot of this money is going to the building of airports, and you talked about the rail lines, and one of them is in existence in some of this infrastructure. Setting aside the lack of progress on security, is the infrastructure spending bearing fruit? Because obviously that's important too, and that's, you know, critical if for ongoing GDP expansion. Are these infrastructure projects delivering in some manner in terms of making parts of the country more hospitable or more business friendly or better for the public than they were before?

Andrea Navarro
That's a good question. I would say not yet. It takes a while for airports to just ramp up, and it takes a while for people to realize that instead of the airport here in Mexico City that you've always used, there's another one that's an hour away, but it's probably less crowded. That airport that's called Santa Lucia or Felipe Angeles, I've never been there, but people are telling me that there is usually one or two flights a day, and some of those flights aren't all that full. So it's not clear yet that it's going to be a big success.

But there is potential. And the same for the one in Tulum, for example. It's only an hour away from the one in Cancun. So it's not clear that it was the biggest necessity ever. But it could potentially, in the future, alleviate some of the traffic that Cancun is getting, because a lot of international fliers use Cancun airport instead of coming to Mexico City.

As for the trains, as we said, one of them, if it has potential to replace the Panama Canal or at least compete with it, it's going to be a huge success. But that's not clear yet. And for the trenmala, the one in the yucatan peninsula, it's been a very controversial train because the part that's already running is pretty easy. It was pretty easy to do. They just had to expand some highways and it wasn't all that technically complicated to build.

I do think that that has potential to connect some of the towns that didn't have any airports or any bus terminals around. So that could have some success. But the other part that's still under construction, it's going to be very hard for them to manage that successfully. The terrain in which it's built, it's these open ended caves. I don't know if you know what I'm going to talk about, but they're called cenotes, and there are these limestones that are very fragile.

And so when you try to put like a cargo train or a passenger train on top of them, real risk of collapse. And I did a story on this a couple of years ago. It's very strange, and it's very hard to build a train on these grounds, but that's just what they're doing. So we're going to have to see whether it works, whether they're constantly having to stop them because of collapses of the caves or accidents. We hope not.

That's not the case, but it could happen potentially. All of the projects that he has chosen have been, in theory, good, but nobody really thought that it was something that we absolutely needed. There are things that. There are smaller things, smaller highways that you could build, smaller water systems, smaller electricity projects that you could do to improve the lives of people that aren't in the big cities. But those projects aren't newsworthy.

You know, like that's. I think that that's what he figured these big ticket projects are, he views them as his legacy, and in the end, he's going to leave two railroads, about a dozen airports and an airline. So that's what he chose to focus on. This is actually exactly what I wanted to ask you about, because I'm struggling to wrap my head around one thing, which is there are these big ticket headline infrastructure projects. There is the expanding military budget.

Bloomberg Audio Studios
But I think overall there's also a discussion of, or a perception that AMLo is sort of, he's into austerity and the sort of republican austerity ideals. So how do we square those two things? So these big ticket items, more money for the military versus the perception, or at least the stated ambition to be more, more disciplined when it comes to spending. He has been very disciplined in spending, and that's something that we can give him. He has pulled that off.

Andrea Navarro
But as you say, when you try to square it, the thing or the ministries that have suffered are smaller programs, health education, domestic violence programs, nature programs, or if not, they have just simply disappeared because he hasn't taken on large debt for the country, but he has had to just pull money from other projects or ministries that he doesn't view as essential in order to fund some of these big ticket items that he does view as his legacy. He's very popular. I mean, we can, so we can talk about, okay, the national security situation has not improved, arguably gotten worse during his term in office. Many of these infrastructure projects maybe will have potential, but have yet to bear fruit for most people, certain levels of austerity, cutting these programs, et cetera. And yet, according to a poll I'm looking at right now, his approval rating at 60%.

Joe Wiesenthal
And as you mentioned, still the likelihood is that his successor will win the election. What is the source of his persistent popularity? It's him. It's very strange, but it's just him. He has a magnetic pull and he has a very loyal fan base.

Andrea Navarro
And he has just been involved in mexican politics for so long that people do view him as a savior of some sorts. He has, to his credit, done things to improve the lives of a certain demographic in Mexico. He has spent a lot of money on direct welfare programs where people, old people or students, they get scholarships. He increased minimum wage for the country quite a bit during his administration. So there is a demographic that thinks that he's done well for the poor, he's done well for the macro economy.

And security is a pending matter that a lot of people are worried about. But his approval rating, it stayed very high. And, yeah, as you say, right now it's close to 60. He only has a few months left in office, and it's probably going to be that way when he goes. But at the same time, you have to take a look at the other numbers.

You know, 46% of the people perceive that security has gotten worse during his term and 74% perceive a very corrupt government. And that just doesn't really square with his approval rating. But he, yeah, he's a very good politician, I would say. All right, well, Andrea Navarro, fascinating reporting. Everybody should go read your article on the Bloomberg terminal or on bloomberg.com.

Joe Wiesenthal
Excellent investigative work and sort of looking at what's going on with the budget and with the national security situation. Thank you so much for coming on and hopefully the first of many episodes that we do on Mexico and the region. This is a great start for it. So really appreciate your taking the time. Thank you.

Andrea Navarro
Thank you for having me.

Joe Wiesenthal
Tracy. I feel like such a stereotype of an american because the things that she said that I had some, like, sort of personal frame of reference towards was having flown to the Cancun airport, having taken that very congested highway down to Tulum, from there, having gone swimming in one of the cenotes, which you could see how difficult that would be to build a train line above that geological structure. So the things that I knew are like, the most cliche things to know. I am very, very jealous that you've been to Mexico. I think maybe when I was a kid, I went to one of the border towns.

Bloomberg Audio Studios
Cause we were in Texas, but I've never really spent much time there. I feel like I should, especially after this episode, to get a sense of it. One thing that struck me that hadn't realized was the division between north and south economically. And the idea that the north, I mean, this seems obvious in retrospect, but the north and its proximity to the US means that there has been more investment, more capital pouring into there, more development versus the south. And I hadn't realized the extent to which AmLO was targeting the south in terms of economic programs and infrastructure projects there.

Joe Wiesenthal
It sort of reminded me of, like, in the UK, and they're always like, oh, we're going to rebuild the northern power house, you know, and, like, derive money away from London. And it never, never really seems to work. But, you know, I'm also, and I mentioned this during the conversation. I'm struck by, like, some of the parallels to the Egypt conversation we really have of how doing things through the military feels like in many countries the path of least resistance for industrial development that you have this military. And so if you want to build highways, if you want to build rail, if you want to build equine reproduction centers, if you want to build a new airlines, that the military is the vehicle that becomes the easiest to do this from.

And I'm sure there's a lot of parallels to that in us history. And you think about how the Hoover dam. Yeah, the west, and the crucial role that the army corps of engineers, which, of course, still exists, but the crucial role that the army corps of engineers had in sort of turning the west into a habitable part of the country. It just seems to be a pattern across history and country. It really does.

Bloomberg Audio Studios
And it's funny how it has come up multiple times recently, particularly in that episode that we did on Egypt. I think Andrea gave a very good answer about the sort of tension between austerity in certain government spending programs and then expansion of the military budget and the tension there. But I feel good about this conversation. I feel like it was a good starting point to certainly understand Mexico and also use it to expand our knowledge of the latin american region completely. And now I feel like I'll have something to sort of pay attention to in the June 2 election.

Joe Wiesenthal
You asked, like, I think, like, the key question that's on many people's mind, assuming that Steinbaum, the successor, does win the election. Like, the analogy that everyone wonders is like the Medvedev years in Russia, when Medvedev was nominally the president, but everyone sort of knew that Putin was still the leader of the country, and then he came back eventually, obviously. And so this question of, like, okay, can the successor actually have her own agenda, as Andrea mentioned that she took a different approach in Mexico City and relying on the police for security instead of the military. And so it'll be interesting to see whether, assuming she wins, does she have that discretion to take a different national security approach than her predecessor? Amlo?

Bloomberg Audio Studios
Absolutely. Although I gotta say, retiring to a ranch sounds kind of nice. Sounds great. There have been multiple presidents in various countries that always seem to be retiring to ranches. George W.

Joe Wiesenthal
Bush. Yeah, exactly. Crawford. I think that's what I would do. Okay, shall we leave it there?

Let's leave it there. This has been another episode of the odd thoughts podcast. I'm Tracy Alloway. You can follow me at Tracyalloway. And I'm Jill wiesenthal.

You can follow me at the stalwart. Follow our guest, Andrea Navarro. She's Andrea Navarro. R. And be sure to check out her big take on the terminal and bloomberg.com.

Now for a fascinating look at the economy and the budget of the Amlo administration, follow our producers Carmen Rodriguez, Armen Armon, Dash O. Bennett at Dashbot and Kelbrooks hell Brooks. Thank you to our producer, Moses Andam. For more oddlots content, go to bloomberg.com oddlots, where we have transcripts, a blog and a weekly newsletter. And you can chat 24/7 with fellow listeners in the Discord Discord GG oddlots.

Bloomberg Audio Studios
And if you enjoy odd lots, if you want us to have more conversations about Latin America, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is connect your Bloomberg subscription to Apple Podcasts. Thanks for listening.

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What AMLO's Legacy Means For Mexico's Upcoming Election

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1. Introduction to Mexico's Political Landscape

2. AMLO's Economic Policies and Their Impact

3. Security and Cartel Influence

4. Election Predictions and Potential Outcomes

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