FROM EIR DAILY ALERT
López Obrador Presents Tehuantepec Isthmus Project
Dec. 24 (EIRNS)—On Dec. 23, Mexican President Andrés Manuel López Obrador (AMLO) travelled to the Pacific port of Salina Cruz, in the state of Oaxaca, to announce to a public meeting that his government would be investing some $400 million in 2019 to begin work on the development of rail, port, and other infrastructure in the Isthmus of Tehuantepec. This great project dates back to the second half of the 19th century; it was strongly revived under the López Portillo government (1976-82); but it has never been implemented. Today, it is one of China’s priority Belt and Road projects for the Americas, given its role in facilitating Atlantic-Pacific trade.
AMLO stated that about $150 million would go to modernizing the ports of Salina Cruz (on the Pacific) and Coatzacoalcos (on the Gulf of Mexico); $50 million to overhaul and renovate the existing 300 km rail line across the Isthmus which connects the two ports; and additional funds to build a gas pipeline along the same right of way, improve the highway across the Isthmus, and to overhaul the oil refineries in Salina Cruz and Minatitlan, near Coatzacoalcos.
AMLO also said that he expected these basic infrastructure projects to be completed in two years’ time, after which the entire corridor would be opened up as a Free Trade Zone with half the value added and income taxes prevailing in the rest of the country—to encourage both public and private investment in the region. Interestingly, the Mexican President stated that in this area, unlike other parts of the country, foreign investment would not be permitted: Only national investment would be accepted. He explained that this is one of the key projects to provide productive employment in Mexico, so that emigration becomes optional for Mexicans, and not obligatory.
Much more will be needed to complete the critical Isthmus project. This is related to the fact that AMLO continues to insist that financing for all of the projects he has announced—as well as increases in the minimum wage, old-age pensions, student scholarships, and the like—will come from money saved by ending corruption and reducing government waste, and not from increased taxes or new public debt. Such Keynesian redistributionism—as distinct from Hamiltonian credit-creating policies—will necessarily founder under the current conditions of collapse of the bankrupt international financial system. To succeed, the approach will have to be modified along the way, and, of course, be linked to the Belt and Road Initiative.
