Mexico: Sheinbaum wins
Sheinbaum needs an elegant split from AMLO that keeps the former president happy but allows her to implement her own agenda. Her agenda is not anti-AMLO, but an evolution from it.
Claudia Sheinbaum won the Mexican presidency. She and the Morena party overperformed the polls thanks to strong party infrastructure, support for AMLO's policies that have given money to the country's poor, and an underperformance by Mexico's opposition. Morena dominated the congressional elections, approaching a supermajority that should allow for some constitutional changes. I assume that even if they fall short, they will be able to divide their opponents and pick off enough votes in Congress to reach those changes on a case-by-case basis early in the term. Morena also won many of the state and local elections that were toss-ups.
Speaking about the likely Sheinbaum victory in recent weeks, I've resorted to the three-handed analyst method:
On one hand, Lopez Obrador controls the Morena party and will exercise significant influence over Sheinbaum's agenda for the next few years. AMLO has some clear red lines that he will not permit her to cross. He doesn't accept criticism of his policies and he wants energy nationalism. She can't cross those red lines openly.
On the other hand, Sheinbaum is an incredibly skilled and pragmatic politician who has demonstrated an ability to maneuver the political system and win the presidency. Don't underestimate her. She can figure out how to assuage AMLO's concerns while also implementing a reform agenda that breaks from him on some key issues related to security, economics, and energy.
And on the third hand, just because Sheinbaum successfully avoids AMLO’s control doesn't mean she will implement your preferred policy. Her policy preferences aren’t a clear break from AMLO, but an evolution of his ideology.
I say this because too many people assume there are only two paths forward. There is one path in which Sheinbaum is constrained by AMLO and her predecessor pulls all the strings. There is a second path where she breaks from her predecessor and reverses the policies that you (yes, you the reader) dislike about AMLO. For most, you hope she implements a pro-market, environmentally-friendly, pro-security, pro-democracy agenda.
My expectation at the moment is a third path. Sheinbaum pushes AMLO to the margins where he gets to focus on a few favorite issues but isn't involved in the day-to-day of governing. The Dos Bocas refinery or some other big infrastructure project is renamed after ALMO and his family and allies are protected from investigations. AMLO also holds a veto over a few token agenda items and his control over various local factions of the Morena machine will be clear. But on most policy issues at the national level, Sheinbaum becomes the puppet master, not the puppet. She’ll win over the Congress early in her term, put in her own people at the implementation levels, and won’t need AMLO’s support to push her own agenda nationally (though she will need him at the state levels). There isn't a formal break between the two as occurred in Bolivia or Ecuador or Colombia. Instead, it's a real transition of power to President-elect Sheinbaum as she tries to keep her predecessor in a supportive role.
My take for World Politics Review this week was a somewhat hopeful one, considering the failures of AMLO and asking if Sheinbaum can break from AMLO and deliver the transformation Mexico needs. My take below is a more practical one along the lines of that third path.
Sheinbaum will be pro-business, but pro-Mexico first. During her campaign, her comments to foreign investors were well received. Mexico's new president has an understanding of economics and markets that is far more intelligent and nuanced than her predecessor. She wants a business boom to raise the country's economy and tax revenue that will allow her to implement her social spending plans. However, Mexican businesses will be favored over foreign businesses. Tariffs on foreign goods and an aggressive renegotiation of USMCA to get better conditions for Mexico are likely.
Sheinbaum will work towards a better energy policy. That means more renewable energy, more electricity generation, and less burning money on dirty fuel oil just to prop up Pemex. While foreign investment will be more welcome, particularly in renewables and transmission, on the oil exploration side it will be under terms that are nowhere near as favorable as the industry had around 2016 or so. Where possible, Mexican companies will be favored over foreign contractors. She will directly tackle the Pemex debt issue instead of dodging it the way AMLO did, but perhaps not in the way markets expect.
Sheinbaum's foreign policy will look a lot like AMLO's. This is not because AMLO is controlling things, but because the two of them have similar foreign policy outlooks. She will get along fine with the Biden administration, but would happily engage in transactions with Trump similar to how Lopez Obrador did in the first two years of his term if the US administration changes. Immigration will continue to be used as leverage in US-Mexico negotiations. She will not move on Cuba or Venezuela policy. She is unlikely to be an ally on Ukraine. She will not be anti-Russia or anti-China, even as she prioritizes the relationship with the US because that's Mexico's key economic partner.
Sheinbaum's security policy will be militarized, tactically improved, strategically challenged. AMLO promised to demilitarize, but never did. There are no quick and easy ways for Sheinbaum to reduce the role of the military. The security challenges are immense and the civilian tools to combat the criminals are weakened. Unlike AMLO, Sheinbaum is likely to take on the security challenge with renewed focus and I expect to see some tactical deployments to key states help reduce homicide rates in the worst areas next year. Strategically, there is no easy solution to ending the violence and corrupting influence of the criminal networks. My assessment is that the homicide rate declines and security improves during Sheinbaum's term, but it still remains elevated above the levels ten years ago in 2014. Insecurity remains the top priority for the country's voters.
Sheinbaum will not openly work to further degrade Mexican democracy, but she will work to solidify Morena's control of the country. While AMLO took some level of joy at the forceful undermining of the electoral system and various regulators, Sheinbaum is not going to revel in the dismantling of checks and balances. But she also isn't going to handcuff her own administration by improving independent checks on her power just for fun. She will name regulators she wants. She will work towards a friendly judicial branch (via appointments or elections, depending on how the reforms work out). AMLO's goal was to turn Morena into the new PRI. Sheinbaum will work to successfully consolidate his gains, but will be less noisy about it.
It gets complicated at the mid-terms. Sheinbaum controls national policy. AMLO still controls the local party machines. While the above assumes a successful term, there are ways she can fail. She can lose popular support if the economy or security crash. She can lose the party base if AMLO perceives he has been stabbed in the back. There is a midterm election and a recall vote that the new president faces at the halfway point of her term. This will be the test as to whether Sheinbaum has threaded the needle correctly on all of the above.