AMLO Delegates to Politicize Federal Resources for States

By September 2018Mexico

While President-elect Andres Manuel Lopez Obrador (AMLO) has appointed seasoned politicians and longtime friends to key roles in his administration, he has also created new positions to implement his ambitious government program. One such post is general coordinator of social programs for integral development, which will be of great strategic importance for the incoming administration, as the office-holder will closely oversee the flow of federal resources to the country’s 32 state governments. On 21 August, National Regeneration Movement (MORENA) Secretary General of Organization Gabriel Garcia was announced as the general coordinator, drawing on his experience in setting up a network of grassroots movements.

Under the new administration, special presidential envoys to the states will be formally known as “delegates of social development programs.” Tellingly, AMLO has appointed partisan politicians rather than professional public administrators to these positions, even though they will be tasked with managing large amounts of money for social and infrastructure programs. In contrast to the lax oversight of the past, the new delegates will consolidate and control the federal funds that comprise over 80% of state budgets. Such control will give them significant leverage over local decisions while weakening opposition parties in the states. AMLO has reportedly asked the delegates to survey the population directly to get a sense of local priorities at the local level, which will supposedly inform the federal government’s allocation of resources. For IOCs, this move is a red flag. The resulting political competition between delegates and governors will likely lead to conflicting agendas, which in turn will increase uncertainty over policy-making and undermine both governance and infrastructure development at the local level.

Notably, while delegates will control these federal allocations, they will lack the managerial capabilities needed to implement policies. In our assessment, they will utilize local MORENA committees to that end, thus politicizing social programs and creating an alternative government structure at the local level. Meanwhile, governors’ independence to implement their own political agendas will be severely reduced. They will be forced to negotiate over much of the local spending allocations with the delegates, who will have the final say on how federal resources are to be used. This arrangement will not only be a major bottleneck in managerial decision-making, it will also de facto force state governments to follow the federal government’s lead regarding local policies.

Since MORENA now controls the oil-rich states of Veracruz and Tabasco, we expect their local governments to fall in line with AMLO’s agenda. In return, there will be a stable flow of federal resources into their budgets, leading to infrastructure improvements. By contrast, there will likely be increased political conflict in oil-producing states governed by other parties, as in Campeche, Yucatan, Tamaulipas and Nuevo Leon. In our view, it will be fundamental for IOCs to monitor the new delegates as much as the governors. The delegates’ role will be purely political, and their overriding priority will be to consolidate their influence ahead of the next local elections.