August 13: Amlo goes too far

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On the weekend Andrés Manuel López Obrador, Mexico’s leftwing presidential candidate, threatened the country’s highest electoral tribunal by promising to escalate his “civil resistance” movement if it did not authorise a full recount of the votes cast in last month’s election.

His threatening tones are a big mistake.

There are many good reasons to argue for a full recount. One is that the country has long had a reputation for staging rigged elections, and that fact has led to a generalised distrust of the democratic process among the population.

Another related reason for a full recount is to bolster the image of the Federal Electoral Institute (IFE), which organises elections and counts the votes. If the IFE and its supporters are right in claiming that it carried out a clean and fair election, a recount – done openly and transparently – is just what they need to prove it.

A third reason is for the benefit of Felipe Calderón of the centre-right National Action Party (PAN), who beat Mr López Obrador last month by the narrowest of margins. Mexico is politically divided and polarised, and if Mr Calderon is confirmed as president-elect, the last thing he needs is to take office with doubts surrounding his victory.

But Mr López Obrador is not helping the cause. By using the power of the mob – last week his supporters took over road tolls on highways and stopped employees of foreign-owned banks from entering their offices in Mexico City – he is distracting attention from real arguments and scaring away the considerable support he commanded among the wider population.

A week or so ago he had the chance to reconsider his tactics in an effort to rescue the respect he once commanded among Mexicans who did not vote for him – and even that of many who did. As things stand, it may now be too late.

And they’re off!

The race to October’s elections in Brazil gathers pace on Tuesday with the start of free saturation campaign broadcasting on television and radio.

As the bombardment approaches, Brazilians have been treated to a series of television interviews with the four main contenders: President Luiz Inácio Lula da Silva of the leftwing PT, Geraldo Alckmin of the centrist PSDB, Heloísa Helena of the far-left P-SOL, and Cristovam Buarque of the centre-left PDT. Mr Lula da Silva was put on the defensive by some aggressive questioning and began blaming everyone in sight – Congress, the state governments, PT members – for corruption and the slow pace of reform during his administration.

He needn’t worry. Hardly anybody in Brazil watches television news – even fewer read newspapers – and most of those who do have already decided how they will vote. More important will be the 30-second slots – 60 of them every day – that mass audiences for TV soap operas and other hit programmes will sit through.

Because of electoral rules, Mr Alckmin has the biggest share of these. The question is whether his campaign managers will grasp the opportunity to make a dent in Mr Lula da Silva’s commanding lead in opinion polls.

Mexican progress on debt

Read almost any newspaper column in Mexico City and you will realise that one of journalists’ favourite sports is criticising Vicente Fox, the country’s outgoing president, for missed opportunities and a general lack of progress during his six years in office.

But last week’s announcement that the government would pay off about $9bn of multilateral debt and a further $3.4bn in bonds serves as a reminder of the huge achievements his economic team have made in improving the country’s debt profile.

The profile has changed in several important ways. First, debt denominated in foreign currency has shrunk to just 25 per cent of the total from about 40 per cent in 2000. That has reduced the risks – and the costs – associated with external shocks.

Second, the average maturity of the debt has more than doubled since 2000 from about 1.5 years to 3.8 years. During Mr Fox’s administration, Mexico for the first time in its history issued a 20-year, fixed-rate peso bond, and by December the finance ministry intends to issue a 30-year bond.

As a result of these changes, the ministry estimates that the cost of servicing the debt in the event of a devaluation of the peso would be about half that if the same devaluation had occurred in 2000. Similarly, the cost of debt servicing in the event of an interest-rate spike would be 49 per cent lower than if the same spike had happened six years ago.

Without these changes, Mexico over the last six years would have had to pay about $32bn – about 4 per cent of gross domestic product – more on debt-servicing than it has had to pay. And that, despite Mexican journalists’ carping, is an achievement worthy of praise.

Petrobras heeds Kirchner’s call

The Argentine government is urging energy companies to boost spending to find and develop reserves in Argentina, otherwise on course to become a net importer of oil and gas within a decade. Petrobras of Brazil has responded and last week signed a deal worth up to $400m to bring two large Patagonian gas fields into production.

Petrobras is teaming up with the provincial energy company in Santa Cruz state, where President Néstor Kirchner was governor before his election in 2003. Petrobras will have 87 percent of a joint venture with Fomento Minero de Santa Cruz Sociedad, or Fomicruz, to develop the Estancia Chiripa and Glencross fields, where reserves are estimated at 26 billion cubic metres.

The fields require unusually deep drilling – 4,200 metres and 3,500 metres respectively – and it will be several years before production begins. They are expected to supply about 6m cubic metres of gas a day, about the same volume as Argentina imports from Bolivia and for which it recently agreed a 50 per cent price increase.

The new fields offer a welcome boost to the Argentine oil and gas industry. Production of oil fell by 4.7 per cent in 2005 and that of gas by 1.3 per cent, while demand for government-subsidised energy continues to rise. Oil companies are pressing the government to liberalise the industry and reduce high taxes, saying present conditions – in which domestic tariffs have been largely frozen since Argentina’s 2001-2002 crisis while export taxes remain high – are strangling their ability to invest. Analysts say as much as $10 billion must be invested over the next four years to keep pace with demand.

An end to cheap energy, of course, would go down badly with voters. With elections approaching next year, Mr Kirchner will tread carefully.

Brazilian companies to list in London?

The news that Brazilian mining group Companhia Vale do Rio Doce has entered the bidding war for Inco, the Canadian nickel miner, is yet more evidence that big Brazilian companies are flexing their muscles overseas.

One indication of their increasing internationalisation is the large number of Brazilian companies listed on the New York Stock Exchange and other foreign markets – with the notable exception of the London Stock Exchange. The London and São Paulo Stock Exchanges recently signed a memorandum of understanding to work on the absence of Brazilian listings in London and a delegation will visit Brazil next month in a bid to stir up interest.

Venezuela gears up…

In Venezuela, campaigning ahead of December’s elections begins in earnest this week with the battle lines drawn between President Hugo Chávez and the latest challenger to his now almost eight-year reign, Manuel Rosales, a regional governor. Mr Chávez, whose government is awash with money from oil exports, enters the race as odds-on favourite and he has dismissed opposition candidates as “tools of the US Empire”.

Venezuela is currently passing through something of a capitalist economic boom and, while vowing that his “revolution” is “socialist”, Mr Chávez is sure to present the consumer feel-good factor as being of his making.

Mr Rosales certainly has his work cut out for him, although at least in the short term he will be basking in the relative success of having been chosen last week as the traditional opposition’s single candidate. He can be expected to capitalise on his track record as a competent regional administrator.

…as Chávez heads to Cuba

Cuba-watchers will monitor any words emerging this week from President Hugo Chávez for clues about the health of infirm President Fidel Castro and, by extension, of Cuba’s communist regime.

If any international leader has any say in how a Cuban “transition” might proceed it is Mr Chávez. As Mr Castro’s closest international ally, Mr Chávez travelled to Cuba on Sunday to deliver an 80th birthday cake and engage in bedside chat.

Judging by the publication on the website of Cuban youth newspaper Juventud Rebelde of what appear to be the first photographs of Mr Castro following delicate stomach surgery, showing him sporting a Cuban tracksuit, Mr Chávez is likely to find his political mentor from Havana in good spirits.

Notes by Jonathan Wheatley, Adam Thomson, Jude Webber and Andy Webb-Vidal.

Contact jonathan.wheatley@ft.com with your comments.

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