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Latin American Advisor: Featured Q&A with Diane Davis on Mexico City Airport

In what has become a highly political decision, the cancellation of the partly built NAIM airport in Texcoco comes with many implications; especially tensions in the relationship between the incoming government and the financial and business sector but also it provides us with a benchmark for what to expect regarding upcoming consultations for several high profile projects.

The issues brought up in this Q&A ,which was published before the cancellation of the airport, remain relevant for the upcoming public consultations being held on November 24th and 25th regarding the Tren Maya, refineries, Isthmus Plan, and social programs .

Originally published on Friday October 19, 2018.


Mexico Referendum Cancels Partly Built $13 Billion Airport. Photo : La Razón de Mexico Archive


Q Mexican President-elect Andrés Manuel López Obrador said Oct. 8 that his incoming government would not provide the $4.66 billion needed to complete the construction of the new international airport for Mexico City, suggesting a group of business leaders led by multi-billionaire Carlos Slim could finance it instead. A binding national vote, in which Mexicans will decide either to continue to build the airport or keep the current airport and combine its operations with a military air base nearby, is scheduled for the last week of October. How likely is it that voters will approve the project? Will Slim and other Mexican business finance the new airport’s construction? What other obstacles stand in the way of the project’s completion?

A Diane E. Davis, chair of the Department of Urban Planning and Design and coordinator of the Mexican Cities Initiative at Harvard University Graduate School of Design:

“López Obrador’s statements about the airport are quite consistent with his longstanding views. When he was Mexico City’s mayor, he opposed the Fox administration’s plans to build an airport in San Salvador Atenco. He criticized the top-down, authoritative manner of project decision-making and the sense that the PRI and the real estate developers and construction firms would be the real winners. AMLO also saw the project as challenging Mexico City’s centrality and as having negative outcomes for farmers and other local residents. The current pronouncement also aligns with AMLO’s priorities for development, which include a commitment to de centralization and a focus on infrastructure needs and opportunities in historically bypassed regions. Moreover, there are limited funds to develop infrastructure in both the country’s center and its regions.The call for Carlos Slim and others to foot the bill has raised eyebrows, given that when AMLO was mayor he collaborated with Slim in ways that benefited them both. This is probably why AMLO called for a national referendum. Letting the people decide is not merely a way to strengthen the administration’s democratic credentials and to allow citizens in all regions to registertheir views. It also allows AMLO to sidestep confrontation with Slim and the projects’ promoters, including bureaucratic forces that have been streamlining the prep work, which argue that cancellation would be fiscally wasteful and hurt Mexico’s reputation. Both airport sites have pros and cons, and their advantages aren’t necessarily clear—either to voters in other regions or to residents of Mexico City, who are divided. One should expect a very close vote. The private sector has already invested a large amount of capital and is unlikely to pull out even if voters prefer the old site. If most voters do favor the new site, giving private investors a mandate to continue, the government will still be able to encourage them to bankroll the project themselves. Either way, the clear winner will be López Obrador.”

A Lorena Becerra, political analyst and head of polling at Grupo Reforma:

“The democratic consultation to be held between Oct. 25 and Oct. 28 is not a binding process because it does not fulfill any of the requirements that the Constitution establishes for a legal national vote. However, López Obrador has declared that the result of this exercise will determine his course of action. Given the selection of municipalities where the voting booths will be placed, we can conclude that the president-elect is catering to his stronger voting bases, which lie in the center and south of the country. This implies that the mobilization of these voters should be strong in favor of an option that seems to be the one López Obrador is leaning toward: the cancellation of the new airport. Viewing this decision from his standpoint, it seems congruent given the amount of public funds it would require, the fact that it suffers from serious delays regarding the completion date and the potential corrupt negotiations that may lie in the background. However, we could also conclude that he wants to assert a credible threat that he will cancel the construction in order to force businessmen who would be at a loss in this scenario to finance it. Whatever the result, the president-elect is covering his own back and will likely minimize his political costs with the public, even though he risks alienating certain groups of investors.”

A Gabriel Díaz Montemayor, assistant professor of landscape architecture at The University of Texas at Austin:

“More than a national binding vote, what will happen later this month is a national survey coordinated by a science foundation working with other non-governmental organizations, instigated by the incoming federal administration, which takes office on Dec. 1. Nonetheless, this may be a binding vote because of the political motivations the president-elect’s political group has. Legally—constitutionally—what we will see is not a binding national vote. Available opinion surveys on deciding between the under-construction airport option or the joint operation of an air force base and the current airport (separated from one another by 22 miles) significantly favor the former. But, in any case, in the current political reality of Mexico, this feels like a coin toss. In case the current under-construction project wins the national survey, all other obstacles remain. A positive outcome of this national dilemma in Mexico could be an improved version of the project under construction.Large-scale projects like this one often get transformed during construction and during operation. While still under construction, the project can incorporate social and environmental processes to make it better. Socially, it can effectively incorporate the opinions of the urban communities, mostly to the west of it, and the rural communities, to the east of it. The airport’s neighbors should become part of the project.Environmentally, it can rethink how the airport can be the catalyst for the ecological recovery of the remnant areas of the Lago de Texcoco.”

A Jose Francisco Albarrán, president of Academia de Ingeniería de México:

“Several professional and business associations have expressed, after a thorough analysis of published documentation, that the new international airport project currently underway should continue. Nevertheless, a public consultation, in which less than 1 percent of the population is expected to vote, will decide whether that project will continue or a new, very ‘green’ alternative should be implemented instead. The president-elect’s team has been rooting for the latter, and the result of the public consultation could therefore be in favor of that alternative, as a vote of confidence in the new administration and not based on a well thought out analysis. Private investors like Carlos Slim have been silent about their participation, maybe because this issue has become highly political rather than technical and economic. If the public consultation’s results are in favor of the current project, the government will look to private investment to finance it. However, a PPP agreement is likely to take several months, during which time the rate of the project’s advancement will probably decrease substantially. If the alternative is selected, then several studies and designs would be required, which would take between 12 and 24 months, before actual construction work could be executed. Thus, it would be fully functional in 2024 or later. Financing of the alternative option would be very difficult and at a higher interest rate than the current project.”