Thursday, January 05, 2017

For Mexican Leaders, a Turbulent Start to the New Year

MEXICO CITY — Six days into the new year, Mexico already has little to be happy about.
This week a jump in gasoline prices unleashed widespread protests that spiraled into looting. The country received an ominous warning that President-elect Donald J. Trump’s protectionist rhetoric could have concrete effects when Ford Motor canceled a $1.6 billion investment. The peso fell to its lowest level ever.
The new turmoil promises to make this year even more difficult for President Enrique Peña Nieto, whose approval ratings have already plunged below 25 percent.
He returned from a golf vacation on Wednesday and appealed for unity as images ricocheted across social media of people carting away televisions from Walmarts and stealing snack foods from stalled delivery trucks.
Protests continued on Thursday, as demonstrators blocked highways and gas stations. Scattered looting continued, and marches are planned for this weekend to demand a reversal of the price increases. The president’s explanation that the gasoline increase of almost 20 percent was necessary to maintain economic stability did nothing to calm the outrage. “Even in good times, it is a problematic decision” to raise gasoline prices, Vidal Romero, a political analyst at the Autonomous Technological Institute of Mexico, said. “And this is a very bad moment.”
Uncertainty has roiled Mexico as the government waits to see how far Mr. Trump will go to keep his campaign promises to renegotiate or tear up the North American Free Trade Agreement, deport Mexican migrants and build a border wall.
On Tuesday, Ford announced that it was canceling its planned investment to build a small-car plant in the state of San Luis Potosí. Although falling sales of small cars may have had more to do with Ford’s decision than Mr. Trump’s criticism on Twitter, the president-elect promised that the Ford episode was just “the beginning.”
He followed up with a broadside at General Motors for building the Chevrolet Cruze hatchback in Mexico, although only 4,500 of them were exported to the United States last year. On Thursday, he trained his Twitter fire on Toyota, saying “No Way” to the company’s plan to build a Corolla factory in Mexico and warned: “Build plant in U.S. or pay big border tax.”
In response to the Ford announcement, the peso sank to a record low, prompting the central bank to intervene in markets on Thursday. The peso’s recovery proved short-lived after Mr. Trump took aim at Toyota. According to Toyota, the new plant — in the central state of Guanajuato, not Baja California as Mr. Trump asserted — would shift Corolla production from a Canadian factory, which would then switch to producing midsize cars.
Since last summer, the Mexican government has struggled to respond to Mr. Trump’s rise. It even hosted him for a visit, prompting a furious response from across Mexico’s political spectrum. Luis Videgaray — Mr. Peña Nieto’s finance minister at the time, who championed the visit — resigned. But on Wednesday, the president brought Mr. Videgaray back into the cabinet as foreign minister in the hope that his presence would smooth relations with the incoming Trump administration.
At the brief ceremony to announce Mr. Videgaray’s return, Mr. Peña Nieto seemed to address the upheaval caused by the gas prices as an afterthought. “I repeat, it hasn’t been easy to take this measure,” Mr. Peña Nieto said. “But it is with a sense of responsibility to safeguard the stability of our economy.”
Talk of economic sobriety sits poorly with Mexicans, disgusted by a series of political scandals. “This is a government with a terrible record of corruption,” Mr. Romero said. “State, federal — everything smells of corruption.”
The gas-price increase was approved last year by Congress as part of an austerity budget designed to insulate Mexico from the market uncertainties of Mr. Trump’s rise. The government plans to let prices — which have long been controlled and subsidized — float by the end of the year. This should lead to competition, and eventually lower prices. “The incredible thing is that the government didn’t expect the reaction,” said Ignacio Marván, a political analyst at CIDE, a Mexico City university.
Truck and taxi drivers have blocked highways since Sunday. Outbreaks of looting escalated into a wave on Wednesday. A Mexico City police officer was killed as he tried to stop looters.
“They didn’t take the measure of people’s anger,” said Graco Ramírez, the governor of the central state of Morelos and a member of the left-wing opposition. “Everything is going to be more expensive.”

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