Calderon v Lopez Obrador - heading for a worst-case scenario
Markets are gearing up for the possibility of a cliffhanger
in Mexicos presidential race following a recent poll
which shows Felipe Calderon for the first time overtaking
long-time front-runner Andres Manuel Lopez Obrador.
Uncertainty is mounting in a race which, until now, had
caused barely a stir among investors, despite Lopez
Obradors populist credentials. The polls
show that we dont have a good sense of who the victor
is going to be, said Christian Stracke, emerging
markets research director for CreditSights, an independent
research group. Maybe things are not quite as certain
as they appeared.
A close outcome especially one in which Lopez
Obrador trails by a fraction is considered a worst
case scenario for the July 2 vote since it could result in
prolonged and potentially debilitating protests, especially if
vote tampering is suspected, observers say.
We are closing the gap, we are going to
win, conservative candidate Felipe Calderon told
Emerging Markets in a telephone interview the day after the
poll was released. In the past month, Calderon revamped his
campaign after polls showed support for him stagnating, and
called for more solid backing from his PAN party.
Last weeks GEA-ISA poll suggests Calderon, the
ruling National Action Party (PAN), rose to 36% against 34%
points for Lopez Obrador of the left-wing Democratic Revolution
Party (PRD). The poll indicates that Lopez Obrador lost 7% and
Calderon gained 4% from February to March. Roberto Madrazo,
candidate of the Institutional Revolutionary Party which
governed Mexico for 71 years until its defeat in 2000,
continues to trail in third place with 28 percent.
The GEA-ISA poll, however, is inconsistent with the trend in
other serious polls during the past four months that have shown
Lopez Obrador consistently in the lead, with a generous margin
of between 7% and 10%.
Nevertheless, the recent uncertainty is raising fresh
concerns among analysts. AMLO doesnt seem
to me like the kind of guy who, if he loses by two percent,
will rush to the streets. But if he loses by half a percent and
there are widespread allegations of impropriety, you can expect
something like that and hed be within his rights to
make a big stink, Christian Stracke, emerging markets
research director for Credit Sights, an independent research
group, told Emerging Markets.
The PRD candidate has promised that he will accept whatever
outcome results from the race, the first presidential contest
in Mexico in which a left-wing leader has a real chance of
winning. But he is also known for his ability to mobilize snap
Calderons programme promises a market-friendly
package of policy measures that aim to promote competitiveness
and employment and create a favorable environment for
investment, he told Emerging Markets. We want to be a
government that re-establishes public security, fulfills
contracts, respects [the division of] power and promotes
judicial [processes], he said.
In contrast, Lopez Obrador promises a programme that departs
radically from the policies of the past four Mexican
administrations. A Lopez Obrador trademark is his concern for
the poor. It is not possible to govern effectively
with huge sectors of the population suffering extreme poverty,
unemployment and no hope of change, he told Emerging
Lopez Obrador would stimulate the domestic market by
expanding income support programs, stimulating construction of
housing and infrastructure with public-private investment
schemes, reducing government, simplifying the tax system to
increase tax collection and restructure the energy sector.
We want public investment to become an instrument of
public policy, and we want to use it to mobilize and encourage
private investment, he told Emerging Markets.
Markets have felt not overly concerned about
[Mexican] elections because policy continuity is guaranteed by
Nafta, Peter West, senior economist of Paolim Asset
Management in London, told Emerging Markets.