Mexico’s AMLO Visits White House Amid Tensions, Opportunities in Energy Sector

After recently shunning an invitation to attend the Summit of the Americas in Los Angeles, Mexico’s President Andrés Manuel López Obrador travels this week to the White House for a bilateral meeting with US President Joe Biden.

The meeting on Tuesday (July 12) comes at a time of great opportunity for economic cooperation between the’ countries after the coronavirus and Russia’s attack on Ukraine destabilized global supply chains and energy markets.

There is a realignment around the world “and Biden is gathering his allies,” said the head of the Migration Policy Institute, Andrew Selee, during a webinar on the visit organized by the Wilson Center’s Mexico Institute. Selee added that both Biden and López Obrador, or AMLO, are “old school politicians” who like to sit down and “look each other in the eye.”

The trip is only the third official trip abroad for López Obrador, who rarely leaves Mexico. In June, he boycotted the regional Summit of the Americas in California because the heads of state of Cuba, Nicaragua and Venezuela weren’t invited.

El País columnist Viridiana Ríos said during the webinar that this trip was to “confirm the power” of López Obrador in the Latin American region. “Success looks like López Obrador becoming a regional leader after the Summit of Americas boycott,” she said.

Nearshoring ‘There For The Taking’

During his morning press conference on Monday, the Mexican President said that he would tell President Biden that allowing more migrants into the United States would help fight inflation.

AMLO is pragmatic, Ríos said, and “inflation is one of the top concerns of the US.” AMLO will use inflation to “talk about more visas, more investment in Mexico and less in China.” She said the president would also talk about Mexico’s value in providing cheaper production costs for manufactured goods.

The Chairman of think tank México Evalúa, Luís Rubio, said “nearshoring is there for the taking,” but “it is Mexico that needs to attract investment.” He said unless Mexico “addresses its core problems,” which include a poor investment environment and violence, “it will be a wasted opportunity.”

AMLO is at the stage of his presidency where “everything is about his popularity,” Rubio said. “He has spent months provoking the US government,” he added, and “aims for respect.”

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The Energy Picture

The opportunities for cooperation are vast, but there are sore points in the energy sector that need to be ironed out between the two nations.

Last week, US Trade Representative Katherine Tai met with Mexico’s Secretary of Economy, Tatiana Clouthier in Vancouver, Canada. Ambassador Tai “raised ongoing concerns about the investment climate change in Mexico, including Mexico’s energy policies that continue to threaten US investment and damage Mexico’s efforts to address climate change,” according to the Office of the Trade Representative.

The López Obrador government has canceled energy bid rounds, weakened regulators, and favored state companies Comisión Federal de Electricidad (CFE) and Petróleos Mexicanos (Pemex) over private sector competition.

AMLO is “torn between his idealism and his pragmatism,” said the former Mexico Ambassador to the United States, Martha Bárcena, during the webinar. “This is the case with energy.”

Bárcena said AMLO interpreted the United States-Mexico-Canada-Agreement, or USMCA, as being able to have “free reign to do whatever he wanted in energy.” But now he has realized “that he doesn’t have free reign and that’s why he has been receiving US energy companies in the Palacio Nacional,” or national palace.

In early June, the Mexican administration concluded meetings with 16 US energy companies to discuss “matters of electricity as well as oil and gas,” AMLO told reporters at the time. Among the companies were developers of liquefied natural gas (LNG) export projects.

Planned LNG projects spurred by US companies in Mexico add up to at least 18.35 mmty or about 2.41 Bcf/d of liquefaction capacity. Bárcena said the momentum for these LNG projects stems from Russia’s war on Ukraine and “breaking the control of Russia on the gas markets.”

She said energy security and food security were the two major themes emerging from the war in Ukraine.

“In this visit, AMLO will try to explain to President Biden his ideals and why self sufficiency in energy is good for Mexico,” Bárcena said. But he will also gain an understanding “from the highest levels in the US what are the limits” in the relationship with Mexico. “And he will express to the US government what his red line is.”

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