How Mexico's Leftist President Quietly Warmed to Business, Pipelines

(Reuters) – Barely a day goes by without Mexican President Andres Manuel Lopez Obrador berating business and political elites, whom he blames for fuelling the country's poverty and corruption.

But behind the scenes, the leftist is proving more accommodating to Mexico's top tycoons during his first year in office than his language often suggests.

Meeting regularly with Lopez Obrador, corporate bosses have steered him toward more business-friendly policies, according to more than two dozen senior executives and government officials who spoke to Reuters. Quietly, they have also urged the president to soften some of his rhetoric.

Turning Point: Pipelines

What some business heavyweights describe as an improving relationship yielded fruit in August, when Lopez Obrador backed off a threat to tear up several government contracts awarded to private companies to build and operate natural gas pipelines. The president said the deals ripped off taxpayers. But business leaders warned him the cancellations would spook foreign investors and could disrupt ongoing trade negotiations with the United States, the executives and officials said.

They also told him the infrastructure would help deliver cheap energy to his top priority: Mexico's poorest.

"We used all means of persuasion," said Carlos Salazar, head of Mexico's top private sector association, the Business Coordinating Council (CCE), and one of the main mediators on the pipeline dispute.

Elected in July 2018 as Mexico's first left-wing president in over three decades, Lopez Obrador has promised to transform the country by putting the neediest first and slashing inequality.

A firm believer in the reforming power of government, Lopez Obrador has pledged to strengthen Mexico's leading state-run enterprises - oil firm Petroleos Mexicanos (Pemex) and power utility the Comision Federal de Electricidad (CFE).

His clashes with institutions that check presidential power, from market regulators to the Supreme Court, have unsettled investors. So has his often incendiary rhetoric. He has described money as the "mother or father of the Devil" and pilloried "neo-liberal" free market economics as the source of Mexico's woes hundreds of times.

Still, he has acknowledged publicly that he cannot create jobs, spread wealth and realize his goal of 4% annual economic growth without private capital. Since his term began in December 2018, domestic investment has sagged and the economy has stalled.

The private sector has been largely supportive in public, for fear of antagonizing the 66-year-old president. But in private, many leading executives are still wary of his economic stewardship, said Andres Rozental, a business consultant and former deputy foreign minister.

Lopez Obrador says his approach will take time to deliver results. Responding to a question from Reuters, he described his relationship with Mexico's business leaders as "very good," but said some differences of opinion were inevitable.

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