Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
At dawn one Friday in May 2023, armed Mexican marines filed into a rural railway station in the state of Veracruz and seized a portion of privately run train line. In a separate move this month, militarised National Guard officers walked into a seaside golf course in Oaxaca state and took over. The moves were a show of government force against Mexico’s second and third richest men.
Mexico’s President Andrés Manuel López Obrador’s time in office has been surprisingly smooth for much the country’s billionaire class — at least publicly. He hasn’t raised taxes, has handed out large public work contracts and has defunded and tried to eliminate regulators.
But the leftist’s rhetoric and actions have become more strident throughout his six-year term, and his public confrontation with the country’s third-richest man, Ricardo Salinas Pliego, has become particularly antagonistic.
The combative billionaire owns a bank, a retailer and a TV station and he has had multiple run-ins with regulators, including settling a case with the US Securities Exchange Commission in 2006. He has increasingly built a social media following where he sharply critiques government policy, posts photos of his mega-yacht and insults ruling party lawmakers and journalists.
The fight with López Obrador has erupted less than three months before the country’s presidential elections, which the ruling party is expected to win. The government is now trying to get his companies to pay what it says is some 63bn pesos ($3.8bn) in unpaid taxes. Amid the escalating clash, the government declared Salinas Pliego’s golf course a national protected area.
A spokesman for Salinas Pliego said his companies had paid lots of tax and that there was a government campaign to smear him. In a recent video that went viral, the billionaire said the president was surrounded by dishonest people and the government was extorting the private sector. “The best example of how, because of tantrum, they act in a factious and arbitrary way, is what happened with the golf course,” he added. López Obrador said if Salinas Pliego had evidence of corruption he should present it.
The Mexican government has also been at odds with the country’s second-richest man Germán Larrea. Within days of seizing the railway from Larrea’s Grupo México, the billionaire’s negotiations to buy Citigroup’s Mexico unit collapsed just after the president suggested the government might want to buy it. On the railway, Grupo México later struck a deal with the government over compensation for the seizure.
The president says there is nothing personal in his government’s dealings with the billionaires. He regularly talks about “separating” economic and political power and his government has increased Mexico’s meagre tax take by strong-arming big companies, with some success.
“It’s a modus operandi, were seeing it very openly because of the Salinas Pliego issue, but it’s been constant,” said Carlos Ramírez, a consultant at Integralia Consultores. “Its clearly greater political risk in the sense of more discretion on the part of the government.”
Many in the private sector reached the conclusion that if they didn’t directly oppose López Obrador, they would mostly be left alone or even do well. They see no benefit from a confrontation with the president, who has approval ratings of around 55 per cent and uses his daily news conference to attack those who challenge him.
Some critics of the dominance the country’s billionaires might welcome action against them now but some analysts would prefer a more institutional approach to scrutiny of the private sector.
“I understand there is the perception of abuse, but on the other hand the response is profoundly authoritarian,” said Edna Jaime, founder, and director of think-tank México Evalúa. “We need to strengthen the Mexican state not the president.”
Onlookers are divided on who the fight between the billionaire and the leftist head of state will damage more. Some think Salinas Pliego will ride out the storm. López Obrador has just six months left of his term — he is barred from re-election — and as his successor is likely to be less popular, they will want to avoid starting their rule with a conflict. Others believe the government could become more powerful in the next term, particularly as it can nominate four new judges to the 11-member Supreme Court. Either way, the two men do not seem willing to back down. “This is a fight between two egos,” Ramírez said. “The ‘blink’ should have happened earlier, now it’s too late.”
