Mexico election winner Claudia Sheinbaum vows continuity as investors fret
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Ruling party candidate Claudia Sheinbaum will become Mexico’s first female leader after winning a landslide election victory, but the scale of her win unnerved some investors, who sold the peso on fears of radical constitutional change.
Sheinbaum, a leftwing former Mexico City mayor, triumphed by a margin of more than 30 percentage points over her nearest rival, entrepreneur Xóchitl Gálvez of the main centre-right opposition alliance, according to official results with 95 per cent of votes counted on Monday.
A longtime political activist and former climate scientist, Sheinbaum campaigned on a promise to continue the pro-worker policies of her close ally and mentor, President Andrés Manuel López Obrador. But when she takes office on October 1, she faces daunting challenges including high murder rates, stretched public finances and how to follow one of the most charismatic and politically successful leaders in Mexico’s modern history.
After a campaign scarred by election-related violence, Sheinbaum pledged in her initial remarks to govern for all, preserve democracy, respect business freedom and facilitate private investment.
“My government will be honest, without influences or corruption, it will be a government with republican austerity,” she told supporters, in a reference to López Obrador’s much-trumpeted preference for living simply and spending time with ordinary people.
US President Joe Biden congratulated Sheinbaum and said he looked forward to working closely with her “in the spirit of partnership and friendship that reflects the enduring bonds between our two countries”. The White House statement reflected the importance of the US-Mexico relationship for trade, immigration and security in a year with elections on both sides of the border.
Investors fretted that a bigger than expected victory by Sheinbaum’s Morena party, founded a decade ago by López Obrador, and two allied parties in congressional elections also held on Sunday increased the chance of constitutional changes to eliminate some checks and balances on government power.
As Sheinbaum’s supporters celebrated in Mexico City’s historic central square, the Mexican peso slipped 3.3 per cent to 17.62 against the dollar, its lowest level since November, while the IPC stock index was down 4.8 per cent.
“The result opens a scenario of greater political risk and uncertainty for [business],” said political risk firm Integralia. “The threats to Mexico’s system of checks and balances are greater.”
In a signal to markets on Monday afternoon, Sheinbaum published a video thanking finance minister Rogelio Ramírez de la O, a Cambridge-educated economist, for agreeing to stay on in her cabinet.
“He gives certainty of good financial and economic management,” she said, adding that she would act with “dialogue, harmony and be very responsible”.
The opposition had suggested before the vote that it was doing better than polls had indicated, so the scale of its defeat came as a surprise. Gálvez accepted the result but said on Monday she would file complaints over interference by organised crime and the government in the vote because “we can’t allow another election like this one”.
Citi analysts described a “big disconnect between elite narrative and the reality on the ground”, adding: “López Obrador’s successes in reducing poverty and inequality, the extraordinary increase in cash transfers, the increase in real wages, and the domination of the [political] discourse . . . made Morena indomitable in this election.”
Morena won in the Mexico City mayor’s election and will take most of the eight state governorships up for election in the country of almost 130mn people.
The scale of Morena’s victory and its relentless pursuit of power at every level have prompted some critics to compare it with the Institutional Revolutionary party (PRI), where López Obrador cut his political teeth and which governed Mexico uninterrupted for 71 years until 2000.
“The PRI is back,” said Arturo Sarukhán, a Washington-based consultant and former Mexican ambassador to the US. Referring to Morena’s campaign colour, he added: “The only difference now is that the PRI has donned a purple suit.”
Some female supporters concentrated on the historic nature of Sheinbaum’s win in a country with a long tradition of machismo, wearing mock presidential sashes with the slogan “We women got there together”.
Julieta Velazquez, a 33-year-old lawyer, said she was “immensely happy” after hearing the results. “I believe in [Sheinbaum] as a woman and it’s definitely the change Mexico needs.”
The country last year overtook China as the biggest exporter of goods to the US. But the president-elect faces Mexico’s worst budget deficit since the 1980s, a result of López Obrador’s expanded welfare programmes and signature big infrastructure projects, such as a new oil refinery.
Sheinbaum must also tackle a wave of criminal violence, with nearly 220,000 people killed or missing during López Obrador’s presidency, guarantee the rule of law and invest in infrastructure to overcome serious water and electricity shortages.
One polling station in the state of Mexico was set on fire on election day and shots fired at two others. About 175 others were unable to operate because of threats. At least 36 candidates were killed during the campaign, amid increased criminal control of Mexican politics.
Sheinbaum, 61, has promised to hew closely to the policies of López Obrador, a charismatic populist who doubled the minimum wage and boosted social programmes. López Obrador had unveiled in February 20 constitutional changes he wants to make before leaving office. He now has a chance to enact them in September, when the new congress is sworn in, before handing over to Sheinbaum.
López Obrador hailed the result as a “glorious day” for Mexico and dismissed claims that his party only won the election because of big cash handouts.
“I would ask them: ‘Isn’t that the point of a government?’ To try to get money from the budget, which is the people’s money, to everyone, and preferably to the poorest?” he said in his daily news conference.
Sheinbaum also backs López Obrador’s expansion of the military into activities usually performed by civilians, with generals running the National Guard, airports, ports and the customs service.
She supports controversial proposals such as popular elections for supreme court judges and directors of the electoral institute, saying they would expand democracy. These proposals raised alarm among civil rights groups but are now more likely to be enacted, given the congressional results.
López Obrador could not run again because the constitution prohibits re-election. The president has said he will retire to his southern ranch but many Mexicans believe he will remain active in national politics.
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