Mexican president ramps up rhetoric, economic intervention as election nears

FILE PHOTO: Mexico's President Obrador speaks during a news conference in Mexico City
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By Dave Graham

MEXICO CITY (Reuters) -Mexican President Andres Manuel Lopez Obrador's increasing attacks on adversaries and interventions in the economy are part of a calculated drive to cement his legacy and consolidate support for his successor in an election next year.

The veteran leftist on Friday spooked investors when he ordered the temporary occupation of a section of privately-held railway line he views as crucial for one of his signature public works aimed at boosting development in Mexico's poorer south.

On Wednesday, it emerged the firm whose rail unit controlled the section - Grupo Mexico - was no longer in the running to buy the Mexico unit of U.S. bank Citigroup, which said it would instead pursue an initial public offering. Some people familiar with talks blamed the railway spat for the collapse of the deal.

It follows attacks by Lopez Obrador on the Mexican Supreme Court, which has struck down government orders to prioritize his flagship public works, and resisted a nationalist energy drive that has fed conflict with the U.S. and other trade allies.

While he has fought regularly with companies that obstruct his economic policies, he has sought to encourage investment more broadly and capitalize on growing interest in relocating business to Mexico from Asia due to U.S.-China trade tensions.

His vilification of the court and other checks on his power has drawn accusations from the opposition that he is recklessly concentrating power ahead of the June 2024 presidential vote, which his party is tipped to win even though Lopez Obrador cannot run because Mexican presidents are limited to one term.

Polimnia Romana Sierra, a former aide to Lopez Obrador, said the president was playing to popular prejudice about a corrupt elite, anti-Americanism and rank inequality - while also deliberately encouraging opposition attacks against himself.

"He's feeding the two main lines of thought, pouring fire on the flames every day," said Sierra, who is now an opposition lawmaker. "People like him talking bad about the rich, calling them thieves. That's why he's still high in the polls."

A spokesperson for Lopez Obrador acknowledged the president was applying economic pressure to deliver key projects, was tailoring his criticism toward his base ahead of the elections, and that the opposition had been lured into debate on his terms.

The president argues that past governments rigged the economy in favor of a wealthy minority, and that he was elected first and foremost to defend the interests of poorer Mexicans.

"I must respect the people," he said this week.

Lopez Obrador's approval ratings have held close to or above 60% for most of his administration, putting a floor under support for the ruling National Regeneration Movement (MORENA) as it seeks to secure a second six-year term next year.

Lopez Obrador has urged his party to continue what he calls the "transformation" of Mexico after he bows out next year. Polls show MORENA is a strong favorite to win in 2024, lifted by Lopez Obrador's personal popularity.

Polling suggests the favorites to succeed Lopez Obrador are Mexico City Mayor Claudia Sheinbaum and Foreign Minister Marcelo Ebrard, both longstanding allies of the president.

'NO SOCIALIST'

Lopez Obrador has devoted more and more time to flagship works, and Sierra said the Grupo Mexico rail spat was a sign not that he was gearing up for wider conflict with business, but that he was determined to finish pet projects.

The track is part of a plan to create a modern rail link between Mexico's Pacific and Gulf coasts, which along with a separate railway under construction in the Yucatan peninsula known as the "Mayan Train" are among his biggest ventures.

"He messes with private enterprise - but only where it's in his way," she said, arguing the president had proved less interventionist in combating checks on his power than she first expected. "He's not the socialist we thought."

Lopez Obrador has repeatedly talked up his stewardship of the economy, the rise in Mexico's main stock index, his aversion to contracting debt and the strengthening of the peso currency on his watch. He has also refused to raise income tax rates.

But during his daily press conferences he has pilloried institutions that interfere with his efforts to fulfill campaign promises, or which provide financial support to his critics.

With the opposition fragmented and divided, the judiciary has become the most visible brake on his ambitions.

This week Lopez Obrador again accused the Supreme Court of being under the control of entrenched interests that had pitched Mexico into "decadence".

Gabriela Cuevas, a former MORENA congresswoman, said while such attacks were alarming, time and again the opposition had let the president frame public debate by seizing on fights over institutions like the court and other bodies that are secondary to many Mexicans more worried about security and poverty.

Because the opposition has failed to loosen Lopez Obrador's hold on the narrative, elite-dominated institutions like the court have become more appealing targets for him, she said.

As the election nears, the divisive rhetoric that voters respond to is likely to continue escalating, Cuevas added.

"He knows what matters to people, what upsets them," she said.

(Reporting by Dave Graham, editing by Deepa Babington)