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How AMLO strong-armed a US gravel company in the name of the Mayan Train

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President Andrés Manuel López Obrador delivered an economics speech in Mexico City, Tuesday, April 12, 2022. AMLO, as he is known, strong-armed a U.S. gravel company into agreeing to operate a tourist resort and cruise ship dock at rock quarries it owns on the Caribbean coast. AP Photo / Marco Ugarte

President Andrés Manuel López Obrador has pressured a US-owned gravel company into agreeing to operate a tourist resort and cruise ship dock at a quarry it owns outside Parque Xcaret on the Quintana Roo coast.

Not that Vulcan Materials of Birmingham, Alabama, knows anything about running a resort or dealing with cruise ships. They will have to learn fast. The park and dock will have big competition.

The transaction is in service of the Mayan Train, or Tren Maya, AMLO’s massive infrastructure project on the Yucatán Peninsula.

On Monday, Vulcan Materials said it told Mexican officials “of its openness to supply construction materials needed for the construction of the Mayan Train and other infrastructure projects and to make port capacity available for transfer of train-related construction materials.”

The company said it also told the government it was open to developing “a large-scale ecotourism project — suggested by the Government of Mexico — on land owned by the Company, as long as the Company can continue supplying its customers.”

Vulcan added that it is “also prepared to explore an expansion of the Punta Venado maritime terminal to receive passenger, freight and naval vessels in the coming years.”

A person privy to disputes with private firms during this administration told a US wire service that López Obrador often seeks to pile rhetorical pressure on companies, but doesn’t really appear to step over the line.

“You get the rhetoric, but you don’t get the strongarm,” the insider told The Associated Press. “It’s a lot more bark than bite.”

“One company was asked to do something they didn’t want to do, and they started getting calls from government agencies, saying we’ve been asked to review every contract we have with you … but nothing was canceled,” he said. “Is that pressure? Sure, but is it illegal?”

Vulcan wound up with a series of crushed-limestone quarries in Playa del Carmen in the 1990s, when the area wasn’t as popular as it is now.

Vulcan would like to keep exporting gravel, but its export permits have been blocked since late 2018, leading the company to file a trade dispute arbitration case under NAFTA, which has yet to be resolved.

The quarries are near Xcaret, a lagoon that private investors turned into a high-end theme park. One of Vulcan’s gravel quarries, meanwhile, was dug out below the water table, and it filled with turquoise water. López Obrador wants to turn it into an artificial swimming and snorkeling lagoon.

His other pet project in the area is the Mayan Train, a 950-mile / 1,500- kilometer rail line that will run in a rough loop around the Yucatán Peninsula, connecting Caribbean coast resorts with remote inland archaeological sites.

Controversially, and with no environmental studies, the president decided to cut down a swath of low jungle between Cancún and Tulum, near the quarries, to build the train line.

The project needs huge amounts of gravel spread between rail ties to stabilize them, and it needs a seaport to get rails, cars, and other train-building materials into the jungle.

Vulcan Materials has crushed limestone and its deep-water port is used to export shiploads of gravel to Florida for road projects. López Obrador also wants Vulcan to operate a cruise ship dock just across from Cozumel — the world’s busiest port of call for cruise ships.

So the president offered “a deal” to the company — run a water park and a cruise ship dock, or the government will shut down the quarries. And he threatened further action.

“I am waiting for an answer to the offer we made to them, because otherwise, we will take legal action,” Lopez Obrador said on April 19. The deal was announced on Monday.

López Obrador has used pressure and threats in a bid to get private and foreign companies to shore up his infrastructure plans and pet projects — state-run ports, terminals and rail lines that could become white elephants unless the private sector boosts them with real traffic.

For a leader depicted as a leftist, López Obrador is in fact more of a populist and nationalist and is conservative on social issues. And he and former US President Donald Trump share an essentially transactional view of politics: two old-style bosses who like making deals, the AP concluded.

On Monday, López Obrador became one of the few foreign leaders to say he genuinely liked Trump.

“We understood each other, and it was good for both countries,” López Obrador said.

Another example of López Obrador’s art of the deal: In 2020, AMLO stopped a partly built, $1.5 billion U.S.-owned brewery in the border city of Mexicali. The project had its permits in order but residents complained that it would use too much water.

The Victor, N.Y.-based Constellation Brands, which brews Corona beer, wanted to be on the border to export the brand to the U.S. market.

But López Obrador has a long-range goal of promoting investment in southern Mexico, where he grew up, where poverty is greater and water is more plentiful. So he moved the project to Veracruz instead.

Some say the president may be scaring off foreign investment with such heavy-handed tactics.

“The critics and the pundits are complaining … because he chases away investments. He doesn’t give a damn,” said Federico Estevez, a political science professor at the Autonomous Technological Institute of Mexico. “That’s what they haven’t understood. He’s not after growth. He’s not after investment. He’s not a normal politician.”

In March, López Obrador issued an ultimatum to the U.S. energy company Sempra saying it had one month to sign an agreement to build a liquified natural gas export terminal in the Pacific coast port of Salina Cruz. Industry insiders say the project isn’t attractive to foreign investors, since it involves building pipelines to the port.

López Obrador has renovated the port as part of a plan to revive a 150-year-old dream of a rail line linking ports on the Pacific to the Gulf over Mexico’s narrow Isthmus of Tehuantepec, and he desperately needs commercial customers for the ports. Sempra hasn’t yet responded to the demand.

With information from The Associated Press

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