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Mexico’s president-elect Claudia Sheinbaum at a press conference in the presidential palace in Mexico City, June 10, 2024. (Photo: Mexican President’s office)
Wednesday, June 12, 2024

Mexico: What to Expect From Sheinbaum

How different will Mexico’s new president be from current president?


To what degree will Claudia Sheinbaum, who assumes Mexico’s presidency on October 1, differ from current president Andres Manuel Lopez Obrador (popularly known as AMLO) in style and policy? Will she implement more pragmatic and investor-friendly policies? How much independence will she have from AMLO? Will the ruling Morena party be able to pass controversial reforms, including having Supreme Court Justices elected by popular vote and scrapping the autonomy of energy regulators CRE and CNH, telecoms regulator IFT and anti-trust agency Cofece?

Latinvex asked two experts: Jose Enrique Sevilla-Macip, country risk analyst, S&P Global Market Intelligence and Pamela Starr, Professor of the Practice of Political Science and International Relations at the University of Southern California in Los Angeles.


Latinvex: To what degree to do you expect Sheinbaum will differ from AMLO in style and policy? 

Sevilla-Macip: Sheinbaum’s style of governing is likely to significantly differ from AMLO. We expect her to adopt a more institutionalized decision-making process, as opposed to the personalized leadership exercised by her predecessor. Sheinbaum has stated she would continue giving regular press conferences, but it is unlikely that she sticks to AMLO’s current dynamic of daily conferences. Based on precedents from her tenure as Mexico City mayor (2018-23), Sheinbaum is likely to brand a more orderly way to advance her policy priorities, which should reduce the likelihood of sudden policy shifts. We also expect her to adopt a less confrontational stance towards critics in opposition parties, civil society or media.

That being said, Sheinbaum shares most of AMLO’s ideological tenets. As such, we expect broad policy continuity. This includes a strong state presence in the energy sector, austerity cuts and significant social spending. Sheinbaum pledged to maintain AMLO’s signature social programmes (particularly cash transfers for students and the elderly); avoid tax increases at least during his first year in office by further reducing government operational costs, and continue favoring government-led infrastructure projects in the southern region of the country. We also expect her to keep the accelerated pace of yearly minimum wage increases – which under AMLO almost doubled in real terms – as well as to push further regulatory and legal changes to expand labor benefits.

Starr: The degree to which a President Sheinbaum’s policies differ from AMLO’s will depend on the amount of autonomy she enjoys as Mexico’s president.

By nature, Claudia Sheinbaum is more technocratic and less populist than her predecessor and thus should bring a significant change in political style to the presidency.  Her writ will be to solve policy problems.  Her core policy objectives, however, are no different from AMLO’s: To transform Mexico from a country of the elite, by the elite, and for the elite to a country in which most Mexicans finally benefit from the country’s social and economic advancement.


Latinvex: In energy specifically, do you expect Sheinbaum to implement more pragmatic and investor-friendly policies?  

Starr: Her personal bias in the energy sector is toward clean energy and carrying out Mexico’s energy transition.  This does not mean she will abandon hydrocarbons, but she aims to couple a nationalist devotion to Pemex with a more realist understanding of modern energy markets.  More to the point, she wants to encourage clean electricity generation as part of a broader strategy to bring nearshoring to Mexico.

Unlike AMLO, President-elect Sheinbaum understands that making available a sufficient supply of low-cost clean electricity, ensuring security, and providing regulatory predictability is essential to attract investment.  She does not favor this pro-investment strategy because she is some sort of secret capitalist—quite to the contrary.  This strategy instead reflects a clear-eyed understanding of what is necessary to sustain the Fourth Transformation over the long term.  To pay for the expensive social programs at its heart, implementing the Fourth Transformation requires revenue.  Since Sheinbaum will inherit a large budget deficit, a Pemex that is a net drain on resources, and a promise not to raise taxes, raising revenue must come from expanding the tax base through growth, and this can come from nearshoring investment.

Sevilla-Macip: Sheinbaum’s campaign platform and public statements suggests that she will maintain most of AMLO’s energy policy features in place, i.e., expansion of Pemex’s refining capacity, permanence of the Federal Electricity Commission (Comisión Federal de Electricidad [CFE]) as the main stakeholder in power generation, and the government’s commitment to financial and regulatory support for state-owned energy firms.

However, Sheinbaum has indicated that she is willing to put more emphasis in the development of renewable energy infrastructure, in which she would be likely to adopt a slightly more pragmatic approach towards private investors. Partnerships with private companies for the development of gas pipelines, particularly in southern Mexico, are also likely under Sheinbaum, albeit always under state-leadership.


Latinvex: How much independence will Sheinbaum have from AMLO? 

Sevilla-Macip: The margin of her electoral victory in the June 2 elections indicate that Sheinbaum has been able to amass a supporter base herself. Still, AMLO remains the most popular political leader in Mexico. As such, he is likely to remain the only figure capable of maintaining unity and discipline from all the different factions that coexist within MORENA, at least in the one-year outlook. The main indicator to watch regarding the Sheinbaum-AMLO relationship will be the fate of the constitutional reform agenda announced by the current president in February 2024. Although Sheinbaum endorsed the agenda during the campaign, there appears to be a disagreement with AMLO regarding the timing for the approval of these proposals. Whereas AMLO has stated that he expects them to be approved between the inauguration of the new legislature (September 1, 2024) and Sheinbaum’s oath of office (October 1), her approach has been more moderate, claiming that she favors a wide dialogue with stakeholders before their vote in Congress.

Starr: The question is will AMLO allow Claudia to be Claudia and cement the foundations of the Fourth Transformation in Mexico through a more practical, technocratic approach to governing.  In his heart, he appears to be of two minds.  He selected Sheinbaum to be his successor because he trusts her complete loyalty to him and his vision for Mexico, and because her scientific bias tends lead her to the most effective method for achieving this shared vision.  He wants her to succeed.  At the same time, he is a political animal who will find it difficult to stay out of politics.  Even more important, he understands that Sheinbaum will need the support of the radical wing of the Morena party to have a successful presidency, and they are demanding red meat.  In this case, the meat is the series of constitutional reforms AMLO proposed last February.


Latinvex: The ruling Morena party did not secure enough votes for a supermajority in the Senate, although it will have that in the new Chamber of Deputies. To what degree can Morena secure enough votes in the Senate for its controversial constitutional reforms? 

Sevilla-Macip:According to official election results, MORENA and its allies -the Labor Party (Partido del Trabajo [PT]) and the Green Party (Partido Verde Ecologista de México [PVEM]) – will have 365 out of 500 seats in the Chamber of Deputies, enough to pass constitutional amendments without bargaining with the opposition. The ruling coalition fell two seats short of such a majority in the 128-seat Senate (it got 83 of the required 85). Based on precedents from the past two congressional elections, in which several opposition deputies subsequently switched sides to MORENA’s coalition, the government is likely to be able to obtain backing from two further lawmakers to also achieve a two-thirds majority in the Senate.

Starr: Thanks to Sheinbaum’s landslide electoral victory, her three-party coalition is just two Senate votes short of the qualified majority needed to change the constitution at will.  Since the new congress takes office on September 1 but the President is not inaugurated until October 1, AMLO will have a month in which he can fast-track these reforms through Congress.  This includes abolishing judicial independence, gutting the National Electoral Institute, and eliminating the energy regulators, telecoms regulator, competition commission, and transparency commission.

If AMLO were to implement all these reforms, it would satisfy the radicals, but it would also risk the long-term survival of the Fourth Transformation.  It would obviate Sheinbaum’s capacity to create a more investor-friendly setting in Mexico: energy companies will not invest without an independent Energy Regulatory Commission (CRE), manufacturers will be more hesitant to invest without the protection of the anti-trust law, and all investors will think twice about a country lacking the judicial independence needed to protect the sanctity of contracts.  And without investment and growth, sustaining Mexico’s social welfare programs is an actuarial impossibility.   This situation suggests that a negotiated middle ground is most likely, but in politics the most reasonable solution does not always carry the day.

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