Mexico Business Community Concerned About Canceling $13.6 Billion Airport Project

Some see move by President-elect Lopez Obrador to put the issue to referendum as indication he won't be friendly to business
By Simon Schatzberg, Special to The Epoch Times
October 31, 2018 Updated: October 31, 2018

MEXICO CITY—For Mexico’s business community, the decision by voters to abandon Mexico City’s new airport is being seen as an indication that President-elect Andres Manuel Lopez Obrador, who asked for a referendum on the issue, will not be friendly to business when he takes office Dec. 1.

The Mexican peso began tumbling against the dollar in futures markets immediately after the announcement that the $13.6 billion project will be canceled. In a press conference on Oct. 28, Gustavo de Hoyos Walther, president of the Coparmex chamber of commerce, blasted the outcome and blamed Lopez Obrador for subjecting the fate of the airport to what he called an “illegitimate” referendum.

“For every percent our stocks go down in the market, for every cent we lose in the exchange rate, we know who’s responsible, and that’s the president-elect,” he said.

Hundreds marched against the construction of the new airport in Mexico City.
Hundreds march against the construction of the new airport in Mexico City on Oct. 25, 2018. (Simon Schatzberg/Special to The Epoch Times)

Construction on the now-abandoned project was more than 30 percent complete, and about 75 percent of the work was already contracted out to private companies. Some of those contracts could be transferred to other infrastructure projects, but the government will likely be on the hook for up to 60 billion pesos ($3 billion) in compensation for the contracts that will have to be canceled.

“The companies affected are in the right to ask for payment from the government,” said de Hoyos Walther. “But if the Mexican government irrationally invests public resources in paying contractual obligations in such an illogical way, it would be the biggest misuse of public resources in this country.”

The government will save billions of dollars from canceling the new airport, which was being built just outside of Mexico City in Texcoco to replace the saturated Benito Juarez International Airport.

As a candidate, Lopez Obrador had initially promised to unilaterally cancel work on the Texcoco airport, which was highly controversial because of its hefty price tag and potential negative environmental effects. But after becoming president-elect he put the issue to a referendum, which took place from Oct. 25 through 28.

An artist's rendering of the airport as it would have been built in Texcoco.
An artist’s rendering of the airport as it would have been built in Texcoco, near Mexico City. (Courtesy of the Government of Mexico)

Around 70 percent of voters opted to abandon the Texcoco project. The referendum was carried out by a nonprofit foundation and is not legally binding, but Lopez Obrador has promised that he will respect the results.

As a cheaper alternative to the Texcoco airport, two runways for commercial flights will be built at the Santa Lucía Air Force base about 30 miles outside the city, and the airport in the nearby City of Toluca will be remodeled to supplement the Benito Juarez Airport.

José Luis Castillo, a Mexico City tour guide, voted for the Texcoco project to continue because he is worried that canceling the new airport will discourage international travel to Mexico.

“People coming from all over the world might get sent to Santa Lucía or Toluca, and it could take them hours to get into the city,” he told The Epoch Times. “If they know that, they might decide just not to come to Mexico.”

Although Castillo, who voted for Lopez Obrador in July, is disappointed that the airport will be canceled, he is glad the decision was put to a referendum.

“I’ve lived through the old governments and they didn’t ask us, they just made decisions,” he said. “So I think it’s a good thing that they are asking us.”

Controversy

The airport project was first proposed in 2001 by then-President Vicente Fox. As traffic at the Benito Juarez Airport, the largest in Latin America, was growing beyond its capacity, Fox announced the project to replace it with a new, larger airport outside the city in Texcoco.

However, the plan became controversial as the government expropriated parcels of land from nearby farms. Disruptive protests by the farmers and the resulting conflict led to the airport being canceled in 2002. But the problem of saturation at Benito Juarez was left unresolved, and the Texcoco project was revived in 2014 by then-President Enrique Peña Nieto.

The new project avoided the parcels of land that were controversial in the original project, but farmers and residents in the vicinity of the new airport still worried that they could be negatively affected. The project would also have necessitated cementing over much of one of the only remaining wetlands in the Mexico City area, which environmentalists worried could worsen flooding and air pollution.

Antonio Lara, director of the Zeferino Ladrillero Human Rights Center, told The Epoch Times that he is relieved by the result of the referendum and expects most of the environmental damage will be reversible.

“We’re happy it’s been made clear that the Texcoco airport didn’t have the support of the people,” he said. “And it’s a good time to stop the project, because at this point most of the damage can still be reversed.”

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