Image Source: 24 Horas.
In the aftermath of the most recent Presidential and Federal elections Mexico’s political and economic future has been thrown into uncertainty. The new president Claudia Sheinbaum and her party, Morena, will enjoy unchallenged power at all levels of government. She can either lead Mexico on the road to autocracy, or she can dial back her predecessor’s agenda, employing restraint in the exercise of power and allowing for the gradual restoration of checks and balances to ensure the prevalence of the rule of law.
To understand the breadth and depth of the political change taking place in the country, consider:
- Claudia Sheinbaum, former mayor of Mexico City and a protégé of current president Andres Manuel Lopez Obrador, won the presidency with 62 percent of the national vote, a 32 percent margin over her next competitor, Xochitl Galvez, the candidate supported by a coalition of opposition parties PRI, PAN and PRD.
- Of the 9 governorships that were up for grabs, Morena won 7, and now controls 24 out of 32 states.
- In the chamber of deputies, Morena and its allied parties (PVE and PT) were able to obtain 365 out of 500 seats, or 73 percent of the chamber, giving them supermajority to make constitutional changes. It is worth highlighting that while the Morena coalition obtained only 52 percent of direct votes, a controversial interpretation by the Electoral Authority (INE) of how to treat coalitions in the assignation of additional proportional seats (plurinominales) granted the coalition the extra representation.
- In the Senate, the Morena coalition got 85 seats out of 128. This left the coalition 1 seat short of supermajority.
Morena’s three-prong approach to locking in the economic model
Control by Morena of the executive and legislative powers is the first of a three-prong strategy to replace what AMLO calls “neoliberalism”, in his view a model imposed by the national and international elites over the last 40 years to facilitate the greatest pillage of Mexico since the Colonial times. In its place, AMLO and Morena seek to consolidate and perpetuate a system that, in the name of helping the poor, elevates the economic role of the state and professes a profound distrust of the free markets, the private sector and in general those who aspire to material progress. AMLO has called his ideology “Mexican Humanism”, and his movement “the Fourth Transformation”, or 4T. The first transformation was the independence from Spain, the second the Reform that separated church and State, and the third one the Mexican Revolution.
The second and critical prong to lock in the 4T is to use the supermajority in Congress to enact constitutional reforms to neutralize those autonomous and independent institutions that could become an obstacle, such as auditing agencies, electoral tribunals, and especially the Judicial Power. During the bulk of his administration AMLO lacked enough votes in Congress to go against the Judges. However, in September, his last month in power, the newly elected Congress with supermajority approved a Judicial Reform that represents a major overhaul of the legal system in the country. It will replace in the span of 2 years more than 1,500 judges, federal and local, including those in the Supreme Court. The new judges will be elected by popular vote with relatively loose qualification requirements and from pools preselected by the Morena-controlled congress and executive powers. Furthermore, there will be a Disciplinary Committee, designated also by Congress. There are secondary laws still to be discussed which could dilute some aspects of the judicial reform, but the chief goal of enabling alignment of the Judicial power to the executive has likely been achieved.
Analysts in Mexico and abroad voiced their criticism of the reform. Importantly, both the U.S. and Canadian Governments expresses their fear of potential and lasting damage to the rule of law. In a country where organized crime has gained alarming economic and territorial ground, popular election of judges is a dangerous idea. A disciplinary process controlled by the party in power leaves ample room to ensure that judges behave “appropriately” in the eyes of the administration.
The third prong on the scheme to ensure longevity of the 4T is to ensure that the army is invested in the economic model. To this end, AMLO has granted the armed forces the management and virtual ownership of custom offices, ports, airports, and railroads. It has also promoted a reform, likely to be approved this month, to subordinate the National Guard, an entity focused on domestic security, to the army. AMLO has been explicit in communicating that these changes are intended to prevent future privatization of these assets.
How did Morena become so powerful?
The political success of AMLO and Morena derives from three factors: First, the administration’s ability to maintain a stable macroeconomic environment. While growth averaged only about 1 percent during the 6 years of the administration, the government acted with fiscal prudence (until the last year) even during the pandemic and the Central Bank responded forcefully to keep inflationary pressures at bay. Strong U.S. growth post-Covid fostered exports and remittances grew more than 10 percent per year. Mexico benefited also from the trade hostilities between China and the U.S. and gained share in the U.S. market while attracting nearshoring investment. As AMLO gave his last state of the Union Mexican foreign exchange reserves stood at a historical record high of around $225 billion.
The second factor was the establishment of a wide net of social transfers including universal pensions for the elderly, scholarships to attend school, plant trees, and others. Also, the minimum wage was increased by over 40 percent. And while the health system was dismantled and rendered less efficient than it already was, poverty in the country declined meaningfully during the administration.
The third and final factor was the exceptional time and effort that the president devoted to communicating with the electorate. Central to this were his daily 3-hour TV press conferences – the mañaneras – where the president repeatedly exalted his achievements, promoted his allies, and attacked his critics. Though some critical reporters were occasionally allowed, the attending press was filtered to ensure a favorable ideological balance. There has been a total of 1,076 mañaneras during the 6 years of AMLO’s administration. The mañaneras were divisive and the president’s recount of how he was transforming Mexico was often manufactured by repeating falsities, but they kept AMLO in the public eye and created a sense of connection with the people.
It would be naïve to ignore the role played by the weakness of the opposition parties in Morena’s rise to power. Xochilt Galvez, the candidate of the alliance made by the PRI, the PAN and the PRD was not able to detach herself from the historical record of corruption and mismanagement of these parties. It did not help either that a new opposition party, Movimiento Ciudadano, chose to go it alone with its own presidential candidate, further dividing the opposition.
The application of the rule of law in Mexico is a strategic interest for North America
Mexico is a $1.8 trillion economy and the U.S.’s second largest trading partner, with exports of $660 billion in 2023. The country is also a gateway to large immigration flows, drugs and weapons. Mexico is also an integral element in the North American manufacturing chain which allows the U.S. to better compete globally. It is for this reason that upholding the rule of law in Mexico is a strategic interest for the U.S. and Canada. If it were to fail in a big way, the consequences would be felt in the entire Continent.
Claudia Sheinbaum so far has embraced the architecture of the 4T and promised to ensure its continuity. In the short term, she will have to address the challenge of lowering the budget deficit which in the last year of AMLO was brought to 6 percent of GDP. Mexico’s debt to GDP of 56 percent is low by emerging market and international standards. However, reining on the budget would be a good first step to build market confidence in the new government. This challenge will be exacerbated by a deceleration in both the U.S. and Mexican economies and the constraints imposed on spending by the social programs she vowed to defend during her campaign.
Longer term, she will have to find a way to reduce the power of organized crime in close coordination with the U.S. and help manage the migrant crisis at the U.S. border. Undoubtedly, this is likely to be more difficult with an eventual Trump administration. On the domestic front she will have to hold steady to the pressures from the Morena rank and file to resist any deviation from AMLO’s agenda.
During her tenure as mayor of Mexico City, she proved to be more pragmatic than ideological. Her cabinet appointments thus far have emphasized skills and experience over loyalty – a welcome break from the practice of her predecessor.
Claudia Sheinbaum takes the presidency with an enormous amount of power. She can chart the future path for Mexico towards autocracy or ensure that it remains democratic. Mexico cannot be turned into Venezuela given that the Mexican government does not have an independent source of revenue. To survive and execute on its agenda, the Mexican government depends heavily on the wellbeing of its large and sophisticated private sector. Attempts in the past to take the state-centered economic model too far resulted in severe economic and financial crises that ultimately forced a change in leadership.
The financial and foreign exchange markets have already voiced their distrust for the judicial reform in September – a warning Sheinbaum should heed. Let us hope that Sheinbaum has studied enough Mexican economic history so as not to repeat it. And that as a good pragmatic engineer, she realizes that a lawful Mexico is in the long-term interest of her legacy and that of Morena.
Jorge Mariscal is a member of Global Americans’ International Advisory Council and a lecturer at the School of International and Public Affairs of Columbia University.
Global Americans takes pride in serving as a platform that offers in-depth analyses on various political, economic, environmental, and foreign affairs issues in the Western Hemisphere. The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views of Global Americans or anyone associated with it, and publication by Global Americans does not constitute an endorsement of all or any part of the views expressed.
