“I am the one who is going to govern,” declared Claudia Sheinbaum, the newly inaugurated president of Mexico, shortly before her June electoral victory. Less than a week after his inauguration, The question remains how he will govern and how he can distinguish himself from the talisman of former president Andrés Manuel López Obrador (Amlo). A key first test for her will be the secondary regulations of the judicial reform approved in September, which will soon be discussed and begin to be implemented this year.
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Given her background as an energy and environmental scientist, Sheinbaum is often described as a technocrat. Many of his policy proposals reflect this, and it appears that his government will be more pragmatic and less populist than Amlo’s. But, at the same time, his close relationship with Amlo and his permanent support for some of his most problematic policies, such as the judicial reform itself, They suggest that his administration will take the form of a mixture that could be described as “technopopulism.”
What does that mean exactly? This hybrid style of government will attempt to maintain the popular social programs and chauvinist postures that characterized Amlo’s government. To fund continued spending on welfare and infrastructure, Sheinbaum will withdraw from the management of Amlo’s economy, betting on a renewed relationship with the private sector to boost growth.
That is, while Amlo promoted more State and less market, Sheinbaum is likely to promote both: more State and more market. That’s not as contradictory as it may initially seem.
For example, science and technology sectors that were neglected under Amlo’s government will feel this change almost immediately. Sheinbaum plans to create a Ministry of Science, Humanities, Technology and Innovation and put a high-level scientist at its head. For his part, Amlo dismantled the National Council of Humanities, Sciences and Technologies (Conahcyt), an institution similar to the one the president wants to create.
Regarding the energy issue, Sheinbaum seems determined to manage the sector differently. Amlo invested almost $70 billion in the state oil giant Pemex and limited the development of renewable energy, while Sheinbaum plans to use a form of public-private partnerships (PPPs), probably under a different name, to boost green technology. In April, it unveiled a $13.6 billion investment proposal for solar, wind and hydroelectric projects and power grid expansion.
Sheinbaum is also looking to use partnerships with the private sector to digitize key areas of government, including customs, taxes and healthcare. The plan to implement single digital medical records and online medical appointments for patients, for example, demonstrates confidence in an efficiency-focused approach. In general, it is a proposal that can generate opportunities for both large companies operating in Mexico and smaller ones.
Amlo left office extremely popular, with more than 70 percent approval, and casting a long shadow.
However, It is unclear whether these types of measures will compensate for his party, Morena,’s tendency to seize power in an undemocratic manner and the years Amlo spent undermining institutions. independent, the basic checks and balances that guarantee the rule of law.
Amlo left office extremely popular, with more than 70 percent approval, and casting a long shadow. And Sheinbaum will most likely inherit expanded presidential powers, as well as a new supermajority in both chambers of the legislature, not to mention an unprecedented influence on the justice system as a result of the massive reform of this branchwhich was Amlo’s last effort to reinforce his party’s control over each branch of the State with the support of Claudia Sheinbaum.
The next steps
How far and how quickly he hopes to execute his agenda will become clearer when the 2025 budget is presented on November 15. Despite the broad powers that Sheinbaum will have, will be limited by the results of the fiscal decisions of his predecessor. Amlo increased the deficit from 2.1 percent in 2018 to an estimated 5.9 percent by the end of 2024, the highest level in more than 30 years.
Between 2018 and 2024, Amlo increased cash aid from $8 billion to $30 billion (It is no coincidence that this record occurred during an election year). He also increased the minimum wage by 150 percent by presidential decree instead of making productivity improvements, and poured billions of dollars into the Dos Bocas refinery, which cost more than double original estimates, and the Tren Maya, which has had a cost overrun of more than 200 percent of the initial budget.
On the other hand, as expected, growth is slowing. The Bank of Mexico reduced its forecast for 2024 to 1.5 percent and next year’s forecast to 1.2 percent. Sheinbaum knows he can spend on welfare and infrastructure if it grows the economy, especially when he has apparently ruled out raising taxes.
On the positive side, Mexico’s debt-to-GDP ratio, which is 50 percent, is, for now, relatively sustainable. AND Sheinbaum could alleviate some of the fiscal pressure with a much-needed turnaround at Pemex. If it is forced to focus on profitability and reducing the government largesse flowing to the company, this could give it some wiggle room.
To make significant progress, Sheinbaum will have to repair the Government’s relationship with the private sector and encourage private growth and investment.
To make significant progress, Sheinbaum will have to repair the Government’s relationship with the private sector and encourage private growth and investment. And you’ll have to do it sooner rather than later. For this should try to calm concerns about the recently approved judicial reform, which has scared national and international investors who seek stability and certainty and feel uncomfortable with a judiciary full of government supporters.
As always, the devil is in the implementation details. The enormous and justified concern could diminish somewhat if Morena manages to implement the reform gradually and carefully, particularly in relation to aspects such as independence, careers and the selection of judges. Anyway, The possible long-term consequences of the reform will loom over the credit ratings of its sovereign debt and the renegotiation in 2026 of Mexico’s T-MEC trade agreement with the United States and Canada, which will likely harm Mexico’s position.
Sheinbaum’s six-year term will not be completely populist nor completely technocratic. Instead, his hybrid “technopopulism” probably means much more State, more market and more technology at the same time. Its goal is to expand social programs, finance infrastructure and maintain Morena’s popularity, driving economic growth, improving private sector confidence and making the Government more efficient.
Sheinbaum has ample room to make the new administration more technocratic and more efficient, but even if those improvements materialize, It is not clear whether they will be able to overcome the weight of a State lacking significant checks and balances and a new framework for the rule of law that is severely questioned.
VANESSA RUBIO
AMERICAS QUARTERLY
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