Claudia Sheinbaum’s mandate is huge but so are her challenges

The secret of Claudia Sheinbaum’s landslide victory in Mexico’s presidential election on Sunday can be summed up in one word: redistribution.

Poorer Mexicans have been the big winners under president Andrés Manuel López Obrador, who more than doubled the minimum wage and expanded welfare programmes, even though the economy has barely grown on a per capita basis since he took office in 2018.

Voters looked past alarming levels of violent crime and worries about the erosion of democratic institutions. Instead they rewarded Sheinbaum, a close ally of the leftwing nationalist president, for promises to continue and deepen his crusade for social justice in a country beset by high levels of poverty and inequality. 

After three decades of free trade with the US and Canada, northern Mexico has prospered but too little of the wealth has trickled down to people in the centre and south of the country, or to lower income groups.  

“This is a very important reality check for many people who have to understand better that Mexico needs change in its prevailing culture of privilege,” said Vanessa Rubio, associate dean at the London School of Economics and a former deputy minister in Mexico. “Many sectors of the population felt they have lost out in the past few decades, having been on the margins while others felt the benefits of positive economic results.”

The scale of Sheinbaum’s victory — around 30 percentage points over the nearest challenger, Xóchitl Gálvez of the centre-right, according to partial official returns — gives her a powerful personal mandate. It increases the likelihood that the main opposition alliance, composed of three largely discredited parties, will splinter as it contemplates a prolonged period in the political wilderness.

“The opposition coalition has been a total failure,” says Antonio Ocaranza, director of consulting firm Oca Reputación. “The party leaders have lost their legitimacy and they don’t have other figures of stature around whom they can build . . . it is more likely they will continue sliding towards extinction than that they will recover.”

Sheinbaum’s Morena party and its two main allies, the PT and the PVEM, also appear to have secured a big majority in Congress, where they are on track to win the two-thirds majority needed for constitutional change. The congressional arithmetic matters because López Obrador has tabled 20 constitutional reforms he wants approved before leaving power in September. These include direct elections for Supreme Court justices and directors of the independent electoral institute, the elimination of some independent institutions, guaranteed annual inflation rises in the minimum wage and changes to bolster state pensions.

“It’s very likely that they will press ahead quickly with the constitutional reforms, as Sheinbaum supported them in her campaign,” says Alejandro Werner, director of the Georgetown Americas Institute in Washington. 

“Investors are not very concerned about a deterioration in institutions. Their interpretation will be that the big victory gives [Sheinbaum] more instruments to govern, if the economy were to deteriorate, while the contamination of the economy from institutional deterioration will happen only in the medium term.”

Mexico has other serious problems. Nearly 220,000 people have been murdered or gone missing during López Obrador’s term in power and criminal gangs have extended control over swaths of territory and lucrative chunks of the economy.

Money will be short. López Obrador dropped a commitment to fiscal discipline in his final year in power, instead spending big on his pet infrastructure projects and pumping more cash into welfare programmes. Sheinbaum will need to close a hole of nearly 6 percentage points of GDP in the budget, while honouring pledges to expand spending on health, education and welfare. And although the former climate scientist is promising to boost renewable power, she has also made clear that the state will maintain its control over the energy sector and its costly support for the ailing government-owned oil company Pemex.

The complex and sensitive relationship with the US will loom large, particularly in the event of a Trump victory. The Republican former president has pledged to raise tariffs and clamp down on illegal migration if he wins in November.

Sheinbaum comes to the presidency with a more academic and international background than López Obrador, and the backing of a formidable popular vote. But the challenges she faces are greater, the money is tighter and she has a tough act to follow: Amlo, as he is known, has been arguably the country’s most popular and politically successful president since revolutionary leader Lázaro Cárdenas in 1934-1940.

With the easier wealth redistribution already completed, Sheinbaum will have to turn to more contentious areas such as raising taxes to fund expanded public services. At the same time, she has to reassure foreign investors that their money is safe in a country pursuing radical constitutional change, which some fear could open the door to the one-party rule of Mexico’s past.

It promises to be a tricky balancing act.

michael.stott@ft.com