Analysis – Mexico’s Sheinbaum honeymoon hit by mentor reform By Reuters

By Cassandra Garrison

MEXICO CITY (Reuters) – Just three months ago, Claudia Sheinbaum was on top, winning the largest number of votes ever secured in Mexico’s history to become the country’s first female president.

The currency has been near a multiyear level, relations with the US are cordial and investors have shared quiet optimism that Sheinbaum could course-correct from the polarizing style of her predecessor and mentor Andres Manuel Lopez Obrador.

The summer months since then have proved turbulent.

This week, senators are likely to pass a controversial reform of Mexico’s judiciary that critics say both threatens the country’s rule of law and risks ruining her honeymoon before she takes office on October 1.

In a self-proclaimed crusade to transform Mexico, Lopez Obrador is using his final days to push through a reform that will require judges — even Supreme Court justices — to be popularly elected. It is also expected to reduce the level of experience required for judicial positions.

A separate reform, expected to pass before Lopez Obrador leaves power, will dismantle several watchdog agencies that, like the courts, have provided an occasional check on his heavy-handed agenda.

The proposals are seen by opponents as putting an alarming concentration of power in the hands of his ruling Morena party.

Both the fallout and the implementation will fall to Sheinbaum. Suddenly, Mexico’s rosy outlook is withering.

A growing deficit and potential hit to investment from judicial reform could pose a threat to the country’s investment-grade debt rating, as well as Sheinbaum’s promised welfare spending, and an overhaul of the North American trade pact USMCA looks increasingly ominous.

“She could have started on a very strong note, the first female president – one with a landslide – a hugely popular party, a growing economy, a strong currency,” said Damian Fraser, chief executive of the consultancy. Miranda Partners of Mexico City. “But this move to reform the judiciary and remove independence from autonomous agencies has made it much more difficult.”

Sheinbaum has publicly supported the selection of judges, but sources close to her say it would not have been an immediate priority early in her term.

Lopez Obrador claims the overhaul will increase accountability and reduce corruption. Indeed, many agree that the current judicial system is deeply flawed.

“Mexican justice is, in most cases, in desperate need of reform. The question is, is this really the right way to reform it?” said Gustavo Flores-Macias, a government and public policy specialist at Cornell University.

WHOSE LANDSLIDE?

One challenge for Sheinbaum is the popularity of Lopez Obrador, which was central to Sheinbaum and Morena’s huge success at the polls.

That success set the stage for a more awkward transition, unexpectedly giving Morena enough votes in the lower house and nearly enough in the Senate to push through constitutional changes.

Sheinbaum carefully walked the tightrope between continuing Lopez Obrador’s most popular policies — like generous welfare payments — and suggesting changes to some of his more controversial ones, like the environment and clean energy.

But judicial reform has revealed the limits of this balancing act. Despite pressure from investors and core trading partners Canada and the US, Sheinbaum was unable or unwilling to publicly distance himself from reform.

The peso has fallen about 17% since June 3. Ratings agency Fitch said Mexico will likely struggle to reduce its deficit to previous levels and its sovereign rating depends on Sheinbaum’s governance reforms and fiscal strategies.

The USMCA is also up for review in 2026, with the US warning that judicial reform could hurt investment and undermine the trade relationship.

Lopez Obrador was quick to attack criticism of the reform by the US and Canadian ambassadors, “severing” relations with both countries’ embassies in Mexico.

The onus will be on Sheinbaum to turn the page with both countries, especially as he prepares to build a relationship with a new US president after November, said Jorge Bravo, a political scientist at the National Autonomous University of Mexico (UNAM).

“The damage is done,” he said. “So how are you going to build bridges so the damage is less severe?”