09/03/2024 | Press release | Distributed by Public on 09/03/2024 14:53
Photo: YURI CORTEZ/AFP via Getty Images
Commentary by Ryan C. Berg
Published September 3, 2024
Mexico's president, Andrés Manuel López Obrador (AMLO), is a history guy. He reveres presidents in the Mexican pantheon such as Benito Juárez and Lázaro Cárdenas, who played a transformative role in Mexico's history. But he is also concerned with his own place in history-which in his mind is alongside his idols. As AMLO begins his final month in office, he has started a farewell tour of the country and launched his last crusade to cement his legacy. Driven by a mélange of revenge and a sense of unfinished business, the president has pushed a series of constitutional reforms introduced in early 2024 as a sweeping package referred to as "Plan C." (Plans A and B failed to pass in Mexico's Congress or were ruled unconstitutional by the courts.) Among other things at stake are the independence of Mexico's regulatory bodies, Mexico's electoral agency (which serves as an exemplar in Latin America), and the independence of Mexico's judicial branch. Thus, it is not hyperbole to say that Mexico's ability to continue playing a starring role as a strategic partner in economic security initiatives and nearshoring could evaporate in the wake of Plan C's passage.
Perhaps most worryingly, AMLO, a consummate political operator, has pushed a judicial overhaul to summarily remove Mexico's thousands of judges and elect them by popular vote. The reform would affect municipal judges and supreme court judges alike. Moreover, the reform features a "supervisory" body meant to "discipline" judges that AMLO accuses of corruption. Critics rightly worry this body would be politicized to discipline judges who rule against the ruling Morena party. Past CSIS research has cataloged the various ways in which AMLO has presided over democratic backsliding in Mexico, and his final proposal is no different. Justifiably, the mega-proposal has spooked investors, especially under a presidency where the judiciary has already suffered many blows to its ability to operate free from political interference.
Owing to a quirk in Mexico's inauguration schedule, the new, Morena-dominated Congress was seated on September 1, while the inauguration of AMLO's successor, Claudia Sheinbaum, will take place on October 1. Nearly daily, legislators elected under the Green Party and the Workers' Party banners have shed their party affiliations to join Morena. Through these machinations, state capture of institutions, and the complexities of Mexico's representational system, Morena will control 73 percent of the lower house, despite winning just shy of 60 percent of the vote. With a supermajority in the lower house and one vote shy of a supermajority in the Senate, AMLO, the history guy, has possibly become the most powerful lame-duck president in the world.
Beyond the judicial branch, the reforms could abet the dissolution of independent regulatory bodies like the Energy Regulatory Commission, the Federal Telecommunications Institute, the National Institute for Transparency, and the Federal Economic Competition Commission. Either dissolving these institutions or folding them into the presidency would not only violate myriad provisions of the United States-Mexico-Canada Agreement (USMCA) but also paralyze key economic sectors in a moment of deep uncertainty. This would be highly prejudicial to Mexico's ability to remain a strategic partner in the nearshoring and supply chain security goals of the United States. In the worst-case scenario, it could prompt a reconsideration of Mexico's role in the North American bloc, forcing U.S. policymakers to consider Costa Rica, the Dominican Republic, and Panama as geographically proximate alternatives in Latin America with greater democratic bona fides.
AMLO has been sowing the seeds of this reform for years, haranguing the judiciary throughout his presidency as an out-of-touch elite that no longer serves the public-an oligarchic class set against the people and many of his signature proposals. His remedy is to usher in an age of "penal populism": the popular election of judges at all levels between 2025 and 2027. AMLO has argued that such a measure is necessary to bring the judiciary "closer" to the people. However, AMLO's top allies cheerleading the reform have been less subtle. Some have argued that judicial reform is necessary because of insufficient "collaboration" between the judicial and executive branches. To speak less euphemistically, Mexico's checks and balances risk being weakened to the point of practical elimination.
It is easy to see how this judicial reform would lead to greater politicization of the judiciary. Mexico's Congress will play a role in approving judicial candidates. With the dominant Morena party's ability to control and approve candidates for judicial elections, voters would know who is backed by Morena and who is not. Further, judicial candidates would likely align themselves with parties as part of an electoral strategy. Given the burgeoning role of organized crime in Mexico's elections, there are also justified fears that judges could be beholden to cartels. The Mexican judiciary, which is by no means unblemished, is nevertheless a professional class oriented around a series of merit-based exams. In response to Plan C, the union representing judicial branch workers called for an indefinite, nationwide strike to protest the reforms and the lack of standards to run for judgeships.
There is little precedent for such a radical reform anywhere in the world, but what has been tried is not promising. Under President Evo Morales, Bolivia pursued judicial reform to elect judges to the highest courts, including the country's supreme court. According to the New York Times, "The experiment in Bolivia has drawn widespread criticism both at home and abroad. Political leaders were able to get judges sympathetic to their views elected to such powerful positions in the judiciary, then used the courts to go after their opponents." Seen by political parties as yet another battleground, judicial elections have even been delayed in Bolivia. Lastly, after Morales was able to reengineer the country's supreme court to align with his party, Movement Toward Socialism (MAS), he challenged Bolivia's term limits on the presidency. The court agreed, arguing that term limits were a violation of his human rights. In Mexico, AMLO proposes to submit all judges to the popular will, not only those of the highest courts.
From a policy perspective, AMLO's judicial overhaul is highly unlikely to solve what it sets out to remedy-lowering corruption and impunity levels-and carries a significant risk of altering the country's democratic institutions. Research suggests that the best way to solve impunity is to give prosecutors more power and capacity, but AMLO is not interested in that. Analysts fear that AMLO's judicial reforms will prejudice foreign investments by undermining dispute settlement resolutions. Given that Morena is a party oriented around economic nationalism, these reforms will likely benefit Mexican companies over others. The potential for judicial reform to benefit the Morena party and harm political opponents may further reduce the quality of Mexico's judicial system, undermining bilateral efforts to improve security as well.
Beyond Mexico's role as a strategic economic partner, U.S. taxpayers have invested billions in an overhaul of Mexico's judiciary as part of the bipartisan, decade-and-a-half-long Merida Initiative, which aimed to improve the country's security. Summarizing the concerns of investors, Bloomberg columnist Juan Pablo Spinetto wrote that Mexico "can't be both an integral part of North America's trade bloc and a nationalist fortress where the rule of law depends on your political allegiance or passport." With a deteriorating business climate, Mexico may experience a shift in investment patterns.
As investors talk of fleeing Mexico and ratings agencies warn of downgrades, AMLO has stood firm and accused his opponents of hyperbole. The president and his allies have advanced the idea that investors care only about their return on investment, not about the security of their investments. However, in a world where capital and investment have an orientation and some worth is attached to political and values alignment, it is not difficult to imagine how AMLO's reforms could drive away further investment from democratic countries and invite greater investment from autocratic or authoritarian countries.
China, for instance, is well accustomed to doing business in environments with highly politicized judiciaries and less certain rule of law. Previous CSIS Americas Program research documents the danger this poses to kickstarting a self-reinforcing cycle-in Latin America, capital from authoritarian countries can drive out capital from more democratic countries, which in turn reinforces domestic trends that augur well for further investment of authoritarian capital. Other studies have captured the corrosive, nontransparent nature of investment by authoritarian powers in Latin America. Right on cue, amid the consternation over Mexico's judicial reform, Chinese officials met with AMLO and reassured him that Chinese investment would continue apace in the wake of judicial reform. China also criticized the U.S. discussion of Plan C and accused the United States of "interventionism" in Latin America's internal affairs.
This panorama sheds light on a difficult dilemma. Under Morena, Mexico's economic convergence with the United States and the push to nearshore critical supply chains has given way to significant ideological divergence. To be sure, Mexico did not fully align itself with the United States during the unipolar moment either. However, just as it became apparent that the world was entering a phase of (re)alignment, and that Mexico would have much to gain by more firmly committing to the United States and the North American bloc, the country became more open to U.S. strategic rivals. Mexico's invitation for Russian president Vladimir Putin to attend Claudia Sheinbaum's inauguration is the latest in a series of concerning moves. While the changing business climate heralded by Plan C matters immensely, just as important is the signaling mechanism for U.S. strategic rivals, which have already taken a keen interest in Mexico. In 2023, Mexico was the third largest recipient of Chinese foreign direct investment (FDI) in Latin America, with $12.6 billion in new investments announced, and was only surpassed by the United States. The United States should expect to see these trends continue, perhaps at an accelerated pace, if Plan C upends Mexico's business climate and deters U.S. and European investors.
All of this brings us to the mandated 2026 review of USMCA. Passage of Plan C, and in particular the judicial reform, will be a game changer for Mexico in the review process. Whereas Mexico could previously count on the support of Canada in pushing back against unilateral leverage by the United States, the passage of judicial review and the Plan C package assures Mexico that Canada will side with the United States in a bare-knuckle battle that will more closely resemble a renegotiation than a review. If this transpires, Mexico will have chosen the path that catalyzes these shifting alliances. The United States will see the review as the best time-and the point of maximum leverage-to course correct and rebalance the playing field in favor of the U.S. private sector in Mexico. Members of the U.S. House Committee on Foreign Affairs have already hinted at this possibility. For instance, the United States could pursue a tightened interpretation of the "rules of origin" provisions on the automotive sector, and there would be little Mexico could do to resist such pressure.
Numerous business chambers and professional associations have weighed in on Plan C. AMLO has rejected such efforts as undue influence in Mexico's internal matters. Ken Salazar, U.S. ambassador to Mexico, has also weighed in, with a letter stating his concerns about the rule of law and his interest in seeing Mexico take full advantage of the nearshoring boom. AMLO responded by fulminating against the U.S. ambassador and "pausing" relations with the United States and Mexico, although it seems only his communication with the U.S. and Canadian embassies has been suspended. (Months earlier, when Salazar spoke in favor of judicial reform, AMLO was happy to see the U.S. ambassador opine on Plan C.)
More broadly, Salazar stands accused of a recurring pattern of currying favor with AMLO and failing to protect U.S. interests. Allegedly, in an attempt to grow closer to the Mexican president, he has even told AMLO that the United States is willing to reopen conversations about the winner of Mexico's 2006 presidential election, in which AMLO cried fraud but lost by a narrow margin to Felipe Calderón. The 2006 election has long been considered a closed case in U.S. policy circles.
More broadly, the Biden administration has positioned itself as a defender of democracy in Latin America, working behind the scenes to avert derailed transitions in Brazil and Guatemala. Administration officials repeatedly cite these incidents among their greatest accomplishments in the region. The threat Plan C represents to Mexico's political institutions and judicial independence, however, is at least as grave, if not worse, than that attempted in Guatemala in late 2023 when conservative factions converged to block the accession of Bernardo Arévalo as president. The advance of Plan C has forced some uncomfortable truths to the forefront: the United States has long ignored Mexico's democratic decay under AMLO, mostly in exchange for Mexico's uneven assistance in managing migration at the U.S. southern border. But Plan C risks exacerbating democratic decay and contributing to increased migration if Mexico's FDI slows as a result.
AMLO is a man in a hurry, pushing his legacy project across the finish line before the end of September-and likely much sooner. One highly symbolic date is the middle of September, around Mexico's Independence Day. Regardless of when Plan C passes both chambers of the legislature, a preview of Mexico's politicized judiciary has already been on display in the wake of Mexico's elections. In the election for one of the mayorships of a Mexico City district, opposition candidate Alessandra Rojo de la Vega had her election victory "annulled" on the basis of "gender violence" against her opponent, pointing out that she is the daughter of powerful Morena politician and former senate majority leader Ricardo Monreal. The magistrate in the case is close friends with Monreal, who ruled in favor of his daughter.
The Mexico that emerges after AMLO leaves office and the dust settles from Plan C will likely not be the same. As CSIS has documented in many reports, Mexico will likely be less secure, less transparent, more militarized, with a more politicized judiciary, and more noncompliant with the USMCA. The United States thus faces major questions as to how it will relate to post-Plan C Mexico, especially after cases of inevitable judicial mistreatment and bias emerge against the U.S. private sector. Washington may feel the need to exert itself and find a way to act as a "counterweight" against biased and politicized judicial decisions. This heralds a potential negative spiral for North America.
The mad dash to pass Plan C shows that AMLO wants his mandate to end with a bang. But it could well be Mexican democratic institutions that end with a whimper. President-elect Claudia Sheinbaum will be left to deal with the wide-ranging fallout of a dysfunctional and politicized judiciary.
Ryan C. Berg is director of the Americas Program and head of the Future of Venezuela Initiative at the Center for Strategic and International Studies in Washington, D.C.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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