[Global Focus] Crime, Fiscal Deficit, the US... Challenges for Mexico's First Female President

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Claudia Sheinbaum (61), elected as Mexico's first female president in the country's constitutional history, faces a mountain of challenges ahead. Despite breaking the glass ceiling and making new history in Mexico, often called a 'macho country,' the unstable security situation was highlighted again as a sitting female mayor was assassinated shortly after the election. Meanwhile, the stock market plunged amid growing uncertainty in the financial markets. The United States, sharing a border with Mexico, promptly implemented administrative measures to curb illegal immigration. All of these developments clearly illustrate the difficulties Mexico and President-elect Sheinbaum are confronting.

According to Mexico's Presidential Election Management Committee, Sheinbaum, a member of the left-wing ruling party National Regeneration Movement (MORENA), won the election with overwhelming support on the 2nd (local time) and will take office on October 1 to begin a six-year term. This is the first time a woman has been elected president in Mexico since the constitution establishing the federal government was enacted in 1924. Sheinbaum emphasized "governance for all" and declared her intention to be an "investor-friendly president."

The new president's top priority is undoubtedly the war on crime. She must immediately tackle the unstable security situation, where more than 30,000 people are killed annually. Even before this election, violence and bloodshed occurred repeatedly across the country. According to consulting firm Integralia, since the election campaign began in September last year, about 230 people have been murdered, including more than 30 candidates. Since President Andr?s Manuel L?pez Obrador took office over five years ago, official statistics show that the number of murders has exceeded 175,000. The actual number of homicides is estimated to be much higher.

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Like her political mentor President Obrador, Sheinbaum plans to continue the so-called "hug, not bullets" strategy, avoiding direct confrontation with criminal groups such as drug cartels while addressing the root causes of violence. Instead, she aims to reduce crime through some policies that proved effective during her tenure as mayor of Mexico City. To this end, she plans to establish a national crime investigation program to ensure that offenders are actually punished and to strengthen the federal police and the National Guard. Immediately after her election, she emphasized, "I will focus on solving the causes of (crime and violence) and ensuring that perpetrators are punished."

However, questions remain about the specific implementation plans and their effectiveness. CNN noted that Sheinbaum's policies as Mexico City mayor, which improved police working conditions and enhanced intelligence gathering, had an impact on reducing city crime rates but questioned, "Can this be replicated nationwide across Mexico's 31 states with a population of over 126 million, where criminal groups are expanding their influence?" According to think tank Evalua, over 98% of crimes committed annually in Mexico go unpunished or unresolved. The Wilson Center warned, "In the worst case, it could mean replicating President Obrador's failed security strategy."

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Relations with the neighboring United States are also a major issue to be addressed. Carlos P?rez Ricard, a professor at Mexico's Public Research Center, emphasized, "The most important election for Mexico will be held on November 5 (U.S. election day)." The outcome will inevitably affect Mexico's policies.

Especially with the U.S. presidential election approaching, pressure is mounting on issues such as illegal immigration and drug trafficking, which are among voters' top concerns. President Joe Biden announced a de facto border closure measure that refuses asylum to illegal entrants crossing the Mexico border shortly after Mexico's election, reflecting this situation.

Moreover, Mexico faces renegotiations of the USMCA trilateral trade agreement with the U.S. and Canada in 2026. Sheinbaum will need to begin preparations for this by the end of this year after taking office. Earlier, in an interview with The New York Times (NYT), she said, "I am ready to cooperate on issues such as illegal immigration with whoever wins the U.S. election this year."

Economically, the fiscal deficit is a key challenge to be resolved. According to market research firm Statista and others, Mexico's fiscal deficit as a percentage of GDP is estimated to reach 5.9% this year. Mexico has been running a fiscal deficit since 2008. This year's deficit ratio is expected to be the highest in 24 years. With next year's growth rate expected to remain in the 1% range, the deficit of Mexico's flagship state-owned oil company, Pemex, is also placing a burden on national finances.

Amid this, Sheinbaum intends to increase national tax revenues through crackdowns on tax evasion rather than raising taxes. However, doubts abound about whether expanding welfare programs, promised without additional taxation, is feasible. Isidro Morales, an expert on Mexico's economy and international relations, said, "Fiscal reform is necessary," and warned that if reforms are not implemented amid declining oil revenues, "Sheinbaum's hands will be tied."

Sheinbaum must also break free from the shadow of her predecessor, President Obrador, who still maintains a 60% approval rating near the end of his term. Obrador is both a political mentor and supporter who helped Sheinbaum enter politics and rise as a presidential candidate. His support was considered a significant factor in this election.

As a result, major foreign media have reported that "opposition experts view Sheinbaum as a puppet," and "Obrador will effectively remain the party's political strategist." The Associated Press (AP) highlighted that although Obrador said, "I do not want to be a moral leader or the top boss. After my term, I will talk to trees and live with birds," he announced shortly after the election that he would keep the current finance minister in the next administration amid stock market fluctuations.

Political risk consulting firm EMPRA predicted, "Obrador will maintain strong influence over the government at least during the first half of Sheinbaum's term." Earlier, Sheinbaum told the NYT that she would pursue policies similar to her mentor Obrador's but said, "We have different priorities."

Some also express concerns that with the ruling party securing enough seats in the concurrent general election to amend the constitution, Mexico might revert to a one-party dictatorship similar to the Institutional Revolutionary Party (PRI) in the 20th century. Obrador's proposed constitutional amendments included direct election of judges, reduction of the legislature, and dismantling of the independent election management body.

The Washington Post (WP), in an opinion piece titled "Mexico's Democracy Threatened After Sheinbaum's Election," pointed out, "The president has been granted the power to change the national constitution. This raises legitimate concerns about Mexico's future." AQ warned, "The risk is democratic backsliding." ABC News analyzed, "Despite widespread anxiety over violent cartels, weakening democratic institutions, and investor concerns, Sheinbaum is expected to continue the populist policies of her predecessor (Obrador). The possibility of constitutional amendments is weakening Mexico's risk balance and causing fears of capital flight." Following the election, Mexico experienced a "Black Monday" market session on the 3rd, with stocks plunging over 6% and the peso weakening.

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