The Sheinbaum moment and Mexico’s opportunity

Claudia Sheinbaum won a historic victory, becoming not only the first female president of Mexico but also one whose party, MORENA, now controls both houses of Congress and the majority of governorships and state legislatures. She will assume office October, 1, and achieved this success because she is an intelligent politician. Yes, current President Andrés Manuel López Obrador (AMLO) supported her, but not because he believed she would be his puppet. AMLO has known Sheinbaum the politician since he selected her to be his environment minister when he was mayor of Mexico City (2000-2006), supported her for Mayor of a borough of Mexico City (2015-2017) and then as Mayor of the City itself (2018-2024).

Sheinbaum believes in AMLO’s project of a Fourth Transformation for Mexico not out of loyalty but rather because of Mexico’s extreme inequality and corruption that accelerated since the 1990s — the collapse of Mexico’s three party system and the new hegemony of MORENA demonstrate the lack of legitimacy of the old system in the eyes of most Mexicans. Sheinbaum the scientist (she holds a PhD in energy engineering and was a member of the United Nations panel of climate scientists that received the 2007 Nobel Peace Prize), wore a mask and promoted public health policies during COVID despite AMLO’s insistence that the virus demanded no special precautions, promoted a strengthening of civilian police to fight crime even as AMLO was giving the military a greater role, and did not turn City infrastructure projects over to the Ministry of Defense as AMLO has at the national level.

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So what will Sheinbaum do with the extraordinary political power (on paper at least) that she achieved on June 2? How will she seek to continue the Fourth Transformation while restraining some misguided policies favored by AMLO (e.g., promoting oil production at the expense of green energy, ignoring violent crime, etc.), avoiding the fiscal precipice to which an overextension of social programs has brought the country, and consolidate political reforms without further undermining democracy?

The answers will depend on her ability to navigate domestic politics but foreign affairs will be an important factor in her response. The relationship with the U.S. has become more, not less, important because of the popular success of the Fourth Transformation to date, its structural financial weaknesses and the impunity with which organized crime operates. A global order in transition also provides opportunities that if Mexico navigates well could support Sheinbaum’s next stage of the Fourth Transformation.

Relations with the U.S. will continue to be the most important foreign relationship for Sheinbaum as it always is for any Mexican president. She will have a limited ability to take the initiative but can react in ways that meet her needs – as AMLO did with his relationship with President Donald Trump (e.g., using the USMCA labor clauses to promote rising wages for Mexican workers in industries exporting to the U.S.) and President Joseph Biden’s push for nearshoring to counter China’s role in globalized value chains, as well as the increased remittances from Mexicans working in the U.S. which helped sustain a strong peso.

Unfortunately for Mexico, the dominant issue for U.S. politics and society is undocumented immigration, for which there are no easy or politically costless solutions, and the dominant strategy will continue to be to physically and legally block entry at the U.S.-Mexican border. Even if Harris wins the election in November 2024 the domestic pressure he will face to significantly reduce undocumented migration flows will continue and if Trump is re-elected he will promote extreme measures to increase the effectiveness of those barriers.

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Mexico has its own concerns about undocumented migration. This growing vulnerability of Mexico to the globalization of the flows of labor and displaced people provides the basis for cooperation with the U.S. and other international actors in addressing the “root causes” of migration. But the flows will only decline significantly because of improved economic, social and political conditions in the countries from which these people originate. Mexico can contribute few economic resources, however, and Sheinbaum is unlikely to abandon Mexico’s traditional “no-intervention” foreign policy in favor of pressuring governments to develop the social and political reforms that could lower outmigration flows. US-Mexico relations around undocumented migration are thus likely to continue to fluctuate from bad to worse, depending upon short term calculations regarding how migration politics affects U.S. domestic policy.

Nearshoring – The U.S. government’s interest in bringing global value chains closer to home and located in countries friendlier to the U.S. than to its geopolitical rivals provides Mexico with an enormous opportunity to attract foreign investment, create jobs, increase tax revenue and reduce the pressure on government’s social welfare budgets. Of course, it also increases fears about rising “dependence” on the U.S. and a stunting of Mexican development opportunities. Sheinbaum, as a nationalist and with leftist views, will be interested in attracting Chinese capital to support Mexican development, especially in manufacturing and infrastructure.

USMCA will be up for review in 2026. AMLO supported the agreement despite Trump’s unilateral demands for increased benefits to the U.S. because he wanted foreign investment and jobs. Ultimately, Sheinbaum would likely capitulate to U.S. pressure against Chinese investment rather than undermine U.S. support for USMCA in the face of strident Mexican criticism. Mexican nationalists were loath to criticize AMLO for capitulating, but Sheinbaum would be more vulnerable to criticisms if the review process becomes heavily politicized, which is likely in a Trump administration, less so if Biden is reelected.

Citizen Security is a major underlying issue for Mexico. Security is not just an issue about organized crime, but also about violence against women. Although homicide rates inched down in AMLO’s last years, the absolute number of murders, as well as of disappearances reached historic highs for non-civil war periods. Violence against women was virtually a non-issue in the AMLO administration. Mexicans did not accept this situation but were willing to excuse it to pursue the social and political benefits of the Fourth Transformation. Sheinbaum will not have that political cover and must address the issue with some effectiveness.

Sheinbaum believes in professional civilian police, intelligence and investigative capabilities, and social policy as a crime-fighting strategy; she cut the homicide rate in half during her tenure as head of Mexico City.  But with an entrenched and diversified organized crime and a militarized public security response crafted by AMLO, she will need help to make progress. China and Cuba could provide training and technology but both geopolitics and domestic politics suggest that the political risks entailed in moving in that direction render it unlikely. The EU provides funds and training, but at levels that are not likely to make a significant impact. That leaves the U.S., which favors such security reforms not only with funds and training programs, but also equipment. Sheinbaum is likely to re-open this security relationship, but the terms of negotiation will be dramatically different depending on whether Biden or Trump is in the White House. A Biden administration could find common ground around enhancing transparency and accountability while promoting civilian security forces, while Trump would seek to provide Mexican military forces (including the National Guard) with enhanced methods, secrecy, and immunity to pursue crime.

Under Sheinbaum’s leadership Mexico will re-engage globally on climate issues and likely become a strong voice for prioritizing the importance of environmental and social justice as the world becomes more focused on mitigating climate change and dealing with its consequences.

Foreign investment in Mexico’s energy transition runs the gamut from solar, wind and geothermal production, electricity transmission, electromobility, and development of the country’s lithium deposits. Mexico’s goal is to become more integrated at higher levels of the global EV value chain and the country is well-placed for it, particularly due to the sophisticated and cost-competitive auto sector and the expansion of high quality engineering and technology education and innovation driven by the export opportunities under NAFTA, now USMCA. These advantages will attract attention in Europe and Asia.

A cautionary note: Sheinbaum assumes office October 1 with great possibilities for using foreign policy to consolidate a pragmatic and forward looking Fourth Transformation. Unfortunately, domestic politics always matters for foreign policy. The new MORENA dominated Congress assumed office September 1 and AMLO will be President until October 1. In that period AMLO may push for the adoption of the 18 Constitutional Amendments and 2 reform laws he proposed in February 2024 and which would dramatically alter the economics and politics of Mexico to a degree that would render Sheinbaum’s foreign policy strategy stillborn.