Mexican election winner Claudia Sheinbaum promises continuity as investors fret

Ruling party candidate Claudia Sheinbaum is set to become Mexico’s first female leader after a landslide election victory, but the scale of her victory unnerved some investors, who sold the peso on fears of radical constitutional changes.

Sheinbaum, the left-wing former mayor of Mexico City, won by more than 30 percentage points over her nearest rival, businessman Xóchitl Gálvez of the main center-right opposition alliance, according to official results with more than 84 percent of the vote counted. Monday.

A longtime political activist and former climate scientist, Sheinbaum campaigned on a promise to continue the pro-business policies of her close ally and mentor, President Andrés Manuel López Obrador. But when he takes office on Oct. 1, he faces daunting challenges including a high homicide rate, strained public finances and how to follow one of the most charismatic and politically successful leaders in Mexico’s modern history.

After a campaign marred by election-related violence, Sheinbaum pledged in her opening remarks to govern for all, preserve democracy, respect free enterprise and facilitate private investment.

“My government will be honest, without influence and corruption, it will be a government with republican austerity,” she told supporters, alluding 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 ties between our two countries.” The White House statement reflected the importance of U.S.-Mexico relations to trade, immigration and security in a year with elections on both sides of the border.

Investors worried that a bigger-than-expected victory for Sheinbaum’s Moreno party, founded a decade ago by López Obrador, and two allied parties in congressional elections also held on Sunday raised the chance of constitutional changes to remove some checks and balances on government power .

As Sheinbaum’s supporters celebrated in Mexico City’s historic central square, the Mexican peso fell 3.3 percent to 17.62 against the dollar, its lowest level since November, while the IPC stock index fell 4.8 percent.

“The result opens up a scenario of greater political risk and uncertainty [business]” said the political risk company Integralia. “The threats to Mexico’s system of checks and balances are greater.”

The opposition claimed before the vote that it was doing better than polls suggested, so the scale of its defeat came as a surprise.

Citi analysts described “a major disconnect between the elite narrative and the reality on the ground”, adding: “López Obrador’s achievements in reducing poverty and inequality, extraordinary growth in cash transfers, rising real wages and dominance [political] discourse. . . made Morena indomitable in this election.”

Early results also showed Morena winning the Mexico City mayoral election, and a majority of the state’s eight governors in the country of nearly 130 million.

The scale of Morena’s victory and her relentless pursuit of power at all levels have prompted some critics to compare her to the Institutional Revolutionary Party (PRI), where López Obrador cut his political teeth and which ruled Mexico without interruption for 71 years until 2000.

“PR is back,” said Arturo Sarukhán, a Washington-based consultant and former Mexican ambassador to the US. Referring to the color of the Moreny campaign, he added: “The only difference now is that the PRI has put on a purple suit.”

Some supporters focused on the historic nature of Sheinbaum’s victory in a country with a long tradition machismowearing fake presidential sashes with the slogan “We Women Got There Together”.

Julieta Velazquez, a 33-year-old lawyer, said she was “overjoyed” when she heard the results. “I believe in [Sheinbaum] as a woman and it’s definitely the change that Mexico needs.”

The country overtook China as the largest exporter of goods to the US last year. But the president-elect faces Mexico’s worst budget deficit since the 1980s, a result of López Obrador’s expanded social programs and the signing of major infrastructure projects such as a new oil refinery.

Sheinbaum must also deal with a wave of criminal violence that has left nearly 220,000 people dead or missing during López Obrador’s presidency, guarantee the rule of law and invest in infrastructure to overcome severe water and electricity shortages.

One polling station in the state of Mexico was set on fire and two others were shot at on election day. About 175 others were unable to operate due to threats. At least 36 candidates have been killed during the campaign, amid increased criminal scrutiny of Mexican politics.

Sheinbaum, 61, has vowed to stick closely to the policies of López Obrador, a charismatic populist who has doubled the minimum wage and boosted social programs. On February 20, López Obrador revealed the constitutional changes he wants to make before leaving office. He now has a chance to enact them in September, when a new Congress is sworn in before handing them over to Sheinbaum.

López Obrador hailed the result as a “glorious day” for Mexico and rejected claims that his party won the election only because of large cash handouts.

“I would ask them, ‘Isn’t that what government is all about?’ To try to get money from the budget, which is people’s money, to everyone, and preferably to the poorest?” he said at his daily press conference.

Sheinbaum also supports the expansion of López Obrador’s military into activities normally performed by civilians, with generals running the National Guard, airports, ports and customs.

He supports controversial proposals such as popular election of Supreme Court justices and directors of the Electoral Institute, saying they would expand democracy. The proposals raised alarm among human rights groups, but given the results in Congress, they are now more likely to be enacted.

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.