Mexico's AMLO calls for referendum on thorny new airport

Mexican President-elect Andres Manuel Lopez Obrador called Friday for a referendum on a controversial new Mexico City airport, setting up a litmus test of his administrations fraught relations with the business sector.

The anti-establishment leftist, who takes office on December 1, has infuriated business leaders with his attacks on the sleek $15.8-billion airport, which he has threatened to axe.

He says the project is a "bottomless pit" rife with corruption.

But business leaders say the country desperately needs to replace the capital's current airport, which is aging and overstretched.

"The plan is to provide the Mexican people with all the relevant information, truthfully and objectively, so that we can all decide together on this important matter of national interest," Lopez Obrador told a press conference.

He said the referendum would be held the last week in October, and vowed the outcome would be "binding."

That date would be more than a month before he takes office. He said he would formally submit his proposal to outgoing President Enrique Pena Nieto on Monday, "so that he can also take part and allow the referendum to go ahead."

Lopez Obrador, widely known as "AMLO," won a landslide election victory on July 1 -- a resounding rejection of the two establishment parties that have governed Mexico for the past 89 years.

After clashing with the business community during his campaign, he has recently sought to strike a more conciliatory tone.

The airport project, which is already under construction east of the capital, will be an early test of how the incoming administration's relations with the business sector are poised to play out.

Pluses and minuses

Mexico's richest man, the telecoms billionaire Carlos Slim, has said that canceling the project -- in which he has a major stake -- would amount to "canceling the economic growth of the country."

Slim's construction company CICSA was awarded the $4.7 billion contract to build the airport's terminal in consortium with six other companies.

And his son-in-law, Fernando Romero, designed the futuristic terminal building together with British architect Norman Foster.

Lopez Obrador's pick for transportation minister, Javier Jimenez, said there would be just two choices in the referendum: continue the project or cancel it.

There are pluses and minuses on both sides, he said.

The new airport would cause environmental damage to the surrounding area and have a negative impact on the impoverished neighborhoods nearby, he said.

It is also expensive, and set to come in over-budget, he added.

If voters opt to continue the project, the government could decide to use a mix of public and private financing to save taxpayer money, he said.

If they vote to cancel it, the government would continue to use the existing airport and repurpose an old military airbase to serve as a second airport.

That would cost an estimated $3.7 billion, Jimenez said.

Canceling the project would meanwhile hit the country with around $5.2 billion in sunk costs, he said, warning of "a considerable impact on the 2019 federal budget" and a "possible negative impact on the financial markets."

Mexico City's current airport has an official capacity of 32 million passengers per year, but handled 44 million passengers last year.