Mexico's new President could inherit legal tangle with Alabama company

Mexico is almost certain to elect its first female president in June — both leading candidates are women. Outgoing President Andrés Manuel López Obrador plans to seal a land deal involving an Alabama company that could saddle his replacement with a court battle that could cost the country billions of dollars.

Populist president Lopez Obrador is proposing new, expensive projects in the last months before he leaves office at the end of September. That includes using eminent domain to take property from the Alabama based Vulcan Materials Company. That move is being challenged in court, and Mexico could be on the hook for almost two billion dollars if Vulcan wins. That, plus other moves by Lopez Obrador will probably leave his handpicked successor, former Mexico City mayor Claudia Sheinbaum, with her hands tied for much of her six year term. Even if opposition candidate Xóchitl Gálvez wins, she'll be under a mountain of financial commitment and debts.

APR reported on the land seizure back in July of last year.

Mexico's President López Obrador said, back then, that he has offered to buy the coastal property for about $385 million to end a bitter, years-long dispute. Alabama based Vulcan Materials operated gravel extraction pits at the Yucatan peninsula site before López Obrador's administration closed them. The company said it had not yet received the President's proposal or responded to the idea. In papers filed for a case before an international arbitration panel, Vulcan Materials valued the almost 6,000-acre property, located just south of the resort town of Playa del Carmen, at $1.9 billion. López Obrador said his much lower offer was fair and based on a government assessment. The President is now says he’ll expropriate, or seize, the property before he leaves office. That cost the Mexican government as much as $1.9 billion if the Alabama-based quarry company wins an ongoing international arbitration complaint against Mexico.

Lopez Obrador wants the acreage for a project called the “Maya Train.” While the transportation system would have to run on tracks run by private concessionary operators, since Mexico folded its money-losing state-run railroads in the late 1990s, the government would probably have to buy the trains, fix up stations and set up a ticket-selling scheme.

Whoever takes over for Lopez-Obrador, will have to finish the 950-mile railway meant to run in a rough loop around the Yucatan peninsula to connect beach resorts and archaeological sites. There’s also an oft-delayed, $20 billion oil refinery plagued by cost overruns. There's a similarly priced, López Obrador considers both to be his flagship projects, but the train is far from finished.

The money-losing ideas keep coming. Last December, López Obrador launched a state-owned airline at a time when most countries have decided to shut down or sell off their own. With guaranteed ultra-low ticket prices on flights to little-used, government-run airports, the prospects for hemorrhaging cash are endless. To cap it all off, on Feb. 5 he announced the government would guarantee workers retirement at full pay.