June 6, 2018 / 9:58 PM / 2 months ago

UPDATE 2-Mexican election favorite is 'really not leftist,' adviser tells investors

(Adds BlackRock statement about meeting)

By Jean Yoon and Paritosh Bansal

MEXICO CITY, June 6 (Reuters) - The favorite to win Mexico’s presidential election has been briefing investors, including BlackRock Inc chief Larry Fink, that he is not a radical left-winger and will fight to preserve the NAFTA trade deal with the United States.

Presidential front-runner Andres Manuel Lopez Obrador has personally attended some of the meetings, with others led by Carlos Urzua, the man he says will run the finance ministry if he wins the July 1 election.

“We are really not leftist, we are center-left,” Urzua told Reuters in an interview late on Tuesday.

Urzua said he had conveyed that message in meetings with about 65 investment funds, telling them Lopez Obrador was committed to central bank independence, a free floating currency, free trade and keeping a lid on spending.

He singled out the meetings with Fink, chief executive of BlackRock, the world’s largest asset manager, and Justin Leverenz, OppenheimerFunds’ director of emerging market equities, as two examples of encounters that had gone well.

When asked shortly after the May 7 meeting, BlackRock declined to comment on the content of the meeting. The fund engages with governments “irrespective of party affiliations,” the company said in a statement at the time.

OppenheimerFunds did not immediately respond to a request for comment for this story.

The organized outreach is aimed to calm nerves in markets that Lopez Obrador, who has a double-digit lead in most opinion polls, would put Mexico on a sharply different economic course after almost a quarter century of financial stability.

In recent days Mexico’s peso has tumbled to its weakest level against the dollar in more than 15 months, pressured by disputes with U.S. President Donald Trump over trade and the looming election, as well as the strong U.S. currency.

Urzua, who described a Lopez Obrador government as being to the right of the administration of former Brazilian leftist leader Luiz Inacio ‘Lula’ da Silva, said he did not believe Trump would scrap the North American Free Trade Agreement, because such a move would be “disastrous” for Mexico, Canada and the United States.

“It would be crazy,” he said in the interview conducted in English. “It would be remembered as the last step for the economic empire to collapse. You cannot isolate yourself.”

The team is ready to “take the baton” on renegotiating NAFTA, Urzua said, noting that a deal was unlikely before Dec. 1, when a new government will take office.

Lopez Obrador’s trade negotiators, due to be led by former World Trade Organization Deputy Director-General Jesus Seade, mostly share the current Mexican government’s view of the country’s interests in the talks, Urzua said.

Urzua said he had met with U.S. Treasury Department and National Security Council officials in Washington recent weeks. He said Graciela Marquez, who Lopez Obrador says would be his economy minister overseeing trade talks, had also met officials.

A 62-year-old economist, Urzua is an old friend of the former Mexico City mayor, and served as his finance minister in the capital. He teaches a course on economic growth at the Tecnologico de Monterrey University.

In government, they would target growth of around 5 percent by the end of the six-year term, led by public and private investment in trains, ports and roads. Last year, Mexico’s economy grew 2 percent.

To keep a cap on promised social spending, they plan to clamp down on waste and corruption in government procurement.

If they do not find the money to fund their social spending plans, they will make cuts instead, Urzua said.

“Once you take (into account) interest payments and amortization, we would never have a deficit,” he said.

He said Lopez Obrador was committed to running a primary budget surplus of 0.5 to 1 percent.

“I’m less fiscally conservative than Lopez Obrador. And I’m a little bit conservative. But he’s extremely careful,” Urzua said, describing himself as “center-right” on debt.

The same was not true of Lopez Obrador’s views on the oil industry, Urzua said. His government would put the brakes on foreign investment in the sector spurred under a reform passed by the government of outgoing President Enrique Pena Nieto.

Obrador would freeze auctions of oilfields in the Gulf of Mexico until he was sure no corruption had been involved in issuing contracts to oil companies, Urzua said.

“Then he will decide whether he will continue with the auction process ... or not,” he said.

But there was no reason to believe there was anything wrong with how they were issued, in a process widely viewed as transparent, he said. Existing contracts would be respected, he added. ( Reporting by Jean Yoon, Paritosh Bansal, Daniel FLynn, Dave Graham and Frank Jack Daniel; Writing by Frank Jack Daniel; Editing by Richard Chang)

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