ZEE Economic Zones face chop under AMLO

Rictus, El Financiero, March 28, 2019

So far we’ve been resisting the urge to complain about the new government, and for the moment we’re going to stick with that policy until more time has passed to evaluate the direction things are taking.  But we will say this: the rise to power of a leftist political party with a near-monopoly over the institutions of government raised a lot of questions about what would happen to the center-right programs and reforms of the two previous administrations. President Andrés Manuel López Obrador (AMLO), in office for four months now, has demonstrated from the start that he is willing to cancel previous governments’ initiatives regardless of their scale.  The best example of this is the partially-built new Mexico City airport, which now is a 4,430-hectare empty lot, but parts of the energy and education reforms could be thrown in as well.  Every pharaoh has his pyramid, though, and no sooner did AMLO scrap previous president Enrique Peña’s US$13 billion airport than he set to work on his Tren Maya tourist train, projected to begin trampling virgin Yucatan jungle by 2022 to the relatively thrifty tune of US$8 billion. 

With this as a backdrop, the head of the Special Economic Zones (ZEE) project under AMLO’s Finance Ministry announced this week that the ZEE project was under review, intimating that the affair may well be scrapped.  As context, we should mention that the ZEE project was an odd bird from the start.  Sort of shoehorned into the very last months of the Peña administration (2012 – 2018), the multi-billion dollar development initiative received relatively little public promotion by the government and minimal media attention.  This struck us as peculiar, considering that the hype machine was blowing gaskets over the energy reform and the glitzy new airport for the capital.  The ZEE would have provided the beleaguered Peña with another major accomplishment, not to mention demonstrating his tireless dedication to alleviating the plight of the country’s long neglected south, or something along those lines.

Maybe Mr. Peña was so desperate to bolt that he just gave up on the whole thing, or perhaps he saw the handwriting on the wall as work on the airport ground to a halt late last year.  Whatever the reason, despite having implemented the full legal framework and obtained letters of intent for an estimated US$8 billion in initial private investment from international and domestic companies, the previous government magnanimously held back the launch of the ZEE, turning the project over to the new government.

Something’s funny here.  This is like selling your house without mentioning that a monster lives in the basement, or something like that.  In any case, maybe the whole thing was a sham to begin with and neither Peña nor AMLO intended the ZEE to come to fruition, but from the perspective of sound public policy, this is just no way to run a country.  What about all the investors who reportedly had committed billions to construct infrastructure for gas, steel, chemicals, food processing and tech innovation projects?  Were these just cardboard cutouts for the original announcement?  It’s a mystery and to be fair we don’t yet know the actual dénouement but considering El Peje’s zeal for his Tren Maya, we’re not counting on a second wind for the ZEE.

If you just can’t get enough of the previous administration’s ill-fated ZEE development initiative, help yourself to some leftover official hooey here.

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