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In the early hours of 3 June 2024, Mexico's electoral authority confirmed the election of Claudia Sheinbaum to the Mexican presidency: the first woman to ever occupy the role and the second president in a row from the leftist Morena party. Sheinbaum, who until recently was the Mayor of Mexico City, has been a close associate of outgoing president Andres Manuel Lopez Obrador for decades, and she campaigned on a platform of giving continuity to his policies, which together they refer to as the 'fourth transformation' of Mexico (with the first three 'transformations' being Mexico's independence in 1821, the liberal reforms of the 1850s, and the Mexican Revolution in the 1910s). Her electoral victory was a landslide: she won between 58.3% and 60.7% of the popular vote, and her party is likely to have a majority in Congress, therefore providing her with the possibility of amending Mexico’s Constitution and evidencing the degree of support that Morena continues to enjoy in Mexico.

Sheinbaum's key proposals include increasing the minimum wage by 11% per year in the coming years, expanding a number of social welfare programs (including universal pensions for the elderly, benefits for people with disabilities and for working mothers, and an increase in the number of scholarships for university students), large-scale housebuilding (with the target being to build 500,000 houses in the next six years), promoting investment in renewable energy, expanding passenger railway services (including new routes such as Mexico City-Monterrey and Mexico City-Puebla-Veracruz), and large-scale highway construction. While some of these proposals will be of interest to private sector investors (particularly in the infrastructure sector), others will be a source of concern, namely her commitment to banning new permits for open pit mining and her pledge to reform the way in which private sector concessions in the water sector currently operate.

Although many of these proposals (in particular the social programmes and the focus on large-scale infrastructure projects) were part of Mr Lopez Obrador's agenda and evidence her campaign promise of giving continuity to his political project, Sheinbaum's focus on renewable energy and environmental protection appear to represent a shift from her predecessor's approach. Likewise, whether Sheinbaum will continue her predecessor's criticism of (and attempt to control) independent institutions such as the Supreme Court or the electoral authority remains to be seen.

Continuity but with a technocratic flavour

In many ways, Sheinbaum's background differs significantly from that of her political mentor: whereas Lopez Obrador hails from the rural southeastern state of Tabasco and has spent the majority of his life in politics (starting in the once-dominant PRI party and then becoming an early deserter to the leftist PRD party, which was formed in opposition to the PRI's shift towards liberal economics in the late 1980s), Sheinbaum was born and raised in Mexico City to a family of left-wing academics and spent most of her life as an environmental scientist and professor at Mexico's national university (UNAM). Although she was involved in activism earlier in her life, she formally entered politics in 2000 when Mr Lopez Obrador became Mayor of Mexico City and chose her to be the city's Environment Minister. From that role (and following a stint back in academia), Ms Sheinbaum went on to become the head of Mexico City's Tlalpan municipality and then the Mayor of Mexico City.

Throughout her presidential campaign, Sheinbaum has emphasised her background as a scientist, and has sought to project an image of technocratic competence but with markedly socialist ideas. Therefore, while her stated political views are very similar to Mr Lopez Obrador's, her executive style is likely to be very different. While Ms Sheinbaum will be the one in power, the extent to which Mr Lopez Obrador will cede the leadership of the Morena party to her remains to be seen, and this could have a significant impact on her ability to ensure that Morena's representatives in Congress and the party's rank-and-file membership will rally behind her to the extent that any of her policies represent a break from Lopez Obrador.

Increased focus on renewable energy and climate change

A criticism that was often levied against Mr Lopez Obrador (including by some of his own supporters) was his reluctance to embrace renewable energy and his continued investment in fossil fuels. The construction of the Dos Bocas refinery, for example, was criticised by many environmentalists in Mexico, and so was the destruction of significant sections of the Mexican jungle in order to facilitate the construction of the new 'Mayan Train'.  

Ms Sheinbaum may take a different approach than Mr. Lopez Obrador regarding Mexico’s investments in fossil fuels.  For instance, while she declared that she will not cut oil production, she noted that she has no plans to increase it, and therefore that any increases in demand for energy in Mexico should be met through renewable energy. For both Mexican and international investors, this may represent a welcome invitation to invest in this growing sector in Latin America's second largest economy. Nonetheless, many investors may still be reluctant given Morena's previous record of pushing for the nationalisation of private electricity generation companies in order to strengthen CFE (the state-owned electricity company).

Social spending pledges against a complicated fiscal reality

Like her predecessor, Ms Sheinbaum is a strong believer in redistributive policies aiming to alleviate poverty and reduce inequality in Mexico. In addition to extensive pledges in relation to direct social spending by her government (many of them a continuation and/or extension of programmes launched by her predecessor), she has also set out plans to increase the national wage in Mexico by 11% (in nominal terms) during each year of her presidency. Although this represents a significant increase, Mexican labour is expected to remain competitive against a global backdrop of US-China geopolitical tensions where 'nearshoring' manufacturing to Mexico has become increasingly popular.

Although Ms Sheinbaum's social policies will likely be welcomed by many, a key challenge for her will be balance this with Mexico's increasingly complicated fiscal reality: indeed, the budget deficit is currently at its highest levels in years, and Mexico's nearshoring boom may experience significant challenges if Donald Trump wins the US presidential election later this year. Although Mr Lopez Obrador developed a cordial working relationship with Mr Trump, it remains to be seen whether Sheinbaum will be able to replicate this.

Despite her preferred focus in on social policy and infrastructure, Ms Sheinbaum will not be able to ignore the markets: indeed, the Mexican Stock Exchange fell by 6% the day after her election, and the Mexican Peso fell by 4.3%. Her approach thus far has been to reassure the markets and investors by promising to respect the independence of the central bank and to re-appoint Mexico's current finance minister, Rogelio Ramirez de la O, in order to pursue economic stability during the transition.

Security and rule of law challenges

An additional challenge for Ms Sheinbaum will be to bring under control the high levels of criminality that exist in Mexico, where criminal groups (cartels) control large parts of the territory. Indeed, US intelligence agencies have speculated at various points that between 20% and 35% of Mexico's territory is under the control of cartels, and last year there were (at least) 30,000 murders in the country. Thus far, Ms Sheinbaum's proposals for dealing with the problem have closely mirrored those of his predecessor: to invest in poverty alleviation and the social sector in order to reduce criminality. However, according to her critics (including Xochitl Galvez, the runner-up in the presidential election), while this approach may be helpful in the long term, more needs to be done in order to reduce crime levels in the country and reassert the state's control over the territory.

A key uncertainty of Ms Sheinbaum's presidency relates to how much she will respect the independence of the judiciary and of key institutions such as the electoral authority, the national statistics agency, and the central bank. Her predecessor has been openly critical of these institutions and has attempted to undermine their autonomy through budget cuts and the imposition of his allies in key leadership positions. It remains to be seen whether Ms Sheinbaum will continue with his approach or whether she will govern with greater deference to institutions and to the separation of powers. The consequences of this will not only be important for Mexican democracy and good governance, but also for the investment climate in the country.

Main takeaways

For a president-elect whose main campaign message was that she would continue the policies of her predecessor, plenty of uncertainty and anticipation remains in relation to how Claudia Sheinbaum will govern Mexico. While many in the opposition believe that she will indeed be a continuity president who will not break with her predecessor, many others expect that, once in power, she will adopt a different approach in a number of key areas, such as renewable energy and climate change, women's rights, media relations, and respect for the country's independent institutions.

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The authors would like to thank Giselle Vega for her contribution to this post.

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