The President of Mexico, Andrés Manuel López Obrador, shows a chart showing the level of inflation in different countries and regions. Galo Canas Rodríguez
Andrés Manuel López Obrador wants to lead a common front against inflation in Latin America. This was announced by the Mexican President on Thursday, one day after telephone conversations with Luiz Inácio Lula da Silva from Brazil, Gustavo Petro from Colombia, Alberto Fernández from Argentina and Miguel Díaz-Canel from Cuba. The aim is to promote trade exchanges and eliminate tariffs in order to fight shortages and lower the prices of important goods in the countries of the region. “We will carry out an anti-inflation plan of mutual aid for growth, for economic and commercial exchanges,” the President announced in his morning press conference. The message was delivered in economic terms, but has a strong political and diplomatic component. Mexico wants to show the strength of its continental leadership, backed by its key allies and the new government of Brazil, Latin America’s largest economic giant.
López Obrador’s announcement came as he puffed up his management of the economy. The Mexican peso has been gaining ground against the US currency for several weeks and broke a new record on Wednesday at 18.08 units per dollar, its best since 2018. However, inflation remains one of the biggest challenges in the country, touching 8% in the first months of this year. The increase in price level was 7.76% in the first half of February, according to official data, a slight recovery compared to that in the first quarter of 2023. “We will look for exchanges in food exports and imports and other goods to share the high cost of living,” the president said, without giving further details.
Three hours after the end of his press conference, López Obrador uploaded a video on his social networks in which he spoke to his counterparts from Brazil, Colombia, Argentina and Cuba. “We agree to meet via video conference to address inflation and help each other,” the publication reads. Mexico’s president spent much of Wednesday drafting the new plan. “We agreed with Lula why we don’t have some kind of virtual meeting on April 5 at 10 a.m. Mexico time to exchange viewpoints, unite, help each other and confront the inflation problem,” López Obrador said one of your interlocutors.
The spokesman for the Brazilian Presidency has confirmed that the Mexican President raised the matter (a regional anti-inflation plan) with the Brazilian President in the meeting the two had on Wednesday afternoon. And he added that he has instructed his economy ministers to contact their Mexican counterparts to analyze the details of the initiative. Lula shared a short message on social networks, explaining that he had spoken with López Obrador about economic cooperation and the possibility of visiting Mexico, “which we will do as soon as possible”. The invitation was mutual: López Obrador was also invited to travel to Brazil.
The Mexican government has chosen to give a second life to regional mechanisms such as the Community of Latin American and Caribbean States (Celac) and the Pacific Alliance to face challenges such as the outbreak of the pandemic and the economic crisis, but also to build a common alliance in enter the political arena. The great absentee had been Brazil. First, because of the government of far-right Jair Bolsonaro, who left Celac in 2020. Then because of the tense political scene in the South American country and threats of a coup against Lula, who was protesting on January 1st. Other episodes, such as Pedro Castillo’s so-called self-coup in Peru, forced a pause.
Lula announced hours later that Brazil would return to the regional groups relegated by Bolsonaro. “We will work to strengthen Latin America, Celac and Unasur [la Unión de Naciones Suramericanas]’ the Brazilian President wrote. “We will reflect on what we can do to unite more closely with our neighboring countries and what holds us together,” he added.
López Obrador wants Gabriel Boric in Chile and Luis Arce in Bolivia to join the initiative. The Mexican President said he asked Alberto Fernández to be in touch with them, as well as his foreign, economy and trade ministers. “We continue to work together to solve the problems of this complex time,” Fernández wrote on Twitter, underlining the importance of the proposal to merge the economies that concentrate most of the GDP in the region. The Mexican President also assured that he would be looking for the President of Honduras, Xiomara Castro. All parties involved, despite their most obvious nuances and differences, are nominally leftist governments.
Only these countries were named and the absences cover the entire ideological spectrum: from the Peruvian President Dina Boluarte to Guillermo Lasso in Ecuador to Nicolás Maduro in Venezuela or the Nicaraguan Daniel Ortega. As a result of the political crisis in Peru, Boluarte and López Obrador had several clashes and considered breaking off diplomatic relations. Castillo’s family is in exile in Mexico as the former president’s trial in the Andean country continues.
The blow to the pockets of Latin Americans also had an impact on the political arena. Inflation closed 2022 in Brazil at 5.79% and interest rates are at 13.75%, a level that has drawn bitter complaints from Lula and a harsh attack on the central bank governor. The International Monetary Fund (IMF) forecast that inflation in Latin America will end this year at 7.1%, the agency published last October. Argentina ranked fourth in the world with an inflation rate of nearly 95% in 2022, while Colombia suffered the highest price hike in the past two decades, breaking the 11% hurdle, the IMF reported.
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