A year after election triumph, Mexican president faces flak from business groups

MEXICO CITY (Reuters) - Mexico’s president drew sharp rebukes about his performance from major business lobbies on Monday, the one-year anniversary of his landslide election that ousted a long-ruling party and shook investor nerves over the leftist’s anti-establishment approach.

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President Andres Manuel Lopez Obrador took office in December, vowing to fix years of sluggish economic growth and win the confidence of the business community.

But a number of his administration’s decisions have rattled the sector, according to statements from Mexican business group Coparmex and the U.S. Chamber of Commerce.

“Uncertainty reigns across the country,” Coparmex said in a statement, expressing concern over the economy’s 0.2% contraction in the first quarter and Lopez Obrador’s plans for three controversial infrastructure projects, as well as his strategies to tackle violence and migration.

In particular, Coparmex described Lopez Obrador’s decision to cancel a $13 billion partly built airport as one of the most “questionable” of his administration, involving 692 canceled contracts that it said would result in penalties of 100 billion pesos ($5.24 billion).

The move shocked markets and sparked a major sell-off in Mexican financial assets.

Coparmex also said a proposed new oil refinery faces concern over viability and cost, while plans for a “Mayan Train” looping around the Yucatan peninsula has drawn warnings for its potential environmental and social impact.

Coparmex added that a plan to expand the airport at the Santa Lucia military base north of Mexico City still lacks permits and is facing nearly 150 legal proceedings against it.

Work on the site will begin this month after delays due to opponents, Lopez Obrador said at a celebration in the capital commemorating his win a year ago, in front of a cheering crowd of at least several thousand people.

“Our adversaries wanted to hold it back with a shower of legal proceedings,” he said.

The government was carefully working on an environmental impact study so that no one could use it as a pretext for “judicial sabotage,” he added.

The U.S. Chamber of Commerce said separately that it was concerned over the state-owned power utility CFE’s filing to begin arbitration with several infrastructure companies over pipeline contracts, saying the move could undermine investor confidence.

“This action risks sending a negative signal to U.S. and other international investors about the business and investment climate in Mexico,” the chamber said, calling on Mexico’s government to honor “the sanctity of existing contracts”.

Lopez Obrador had defended the decision, saying the original terms of the agreements were “abusive” toward the state.

Reporting by Daina Beth Solomon; Editing by Rosalba O’Brien and Christopher Cushing