A final vote count released over the weekend suggests Mexico’s leftist ruling party and its allies would win large majorities in Congress, potentially allowing the coalition to pass sweeping changes to the Constitution.
The official count of last week’s elections showed that the Morena party and its partners appeared on track to achieve a two-thirds supermajority in the lower house of Congress.
In the Senate, it looked like the coalition would fall short of a supermajority, but by a small number of seats, analysts said, meaning it would likely need to attract the support of only a few opposition lawmakers to alter the Constitution. Building these alliances “is relatively easy to achieve,” party president Mario Delgado said in an interview.
“Now we are a dominant force,” Delgado added, “by decision of the people.”
The final composition of the legislature is still unclear because a portion of the seats in the Mexican Congress are appointed through a proportional representation system in August. Legal challenges could also affect how seats are allocated.
But Morena has come close enough to total dominance to provoke a strong reaction from a sector the party cannot ignore: the financial markets.
In the volatile days after the election, investor alarm has been on display, with Mexican stocks battered and the peso suffering its worst week since the pandemic.
Concern centered on the possibility that Morena would use his broad mandate to enact constitutional changes that critics warn could destroy existing checks on presidential authority, financial analysts said.
The proposals were first put forward by Andrés Manuel López Obrador and include plans to eliminate independent regulators and appoint judges and electoral officials through popular vote, which critics warn could make them more susceptible to political pressure. Among other concerns, investors fear that changing the judiciary could make it less certain that they will get a fair hearing in disputes.
“The market feeling is that under the Morena party and with this plan on the table, a radical change could come,” said Janneth Quiroz Zamora, director of economic research at the Monex brokerage. “The biggest fear is the possible elimination of controls on the executive branch.”
In what appeared to be an attempt to calm the market, incoming President Claudia Sheinbaum, a López Obrador protégé, announced last Monday that current Finance Minister Rogelio Ramírez de la O, who is seen as a stabilizing force, would remain. in the position.
“He is a great public servant who provides certainty of good financial and economic management,” he stated.
Sheinbaum won the presidency with the highest share of votes in decades and Morena also claimed the majority of the governorships on offer.
His initial comments encouraged investors to say that “the government was sensitive to their concerns,” said Blanca Heredia, a Mexico City-based political analyst. That was “mainly due to the speed of the reaction,” Heredia said, noting that the new president “needs and wants economic growth.”
But then on Thursday, Morena’s leader in the lower house of Congress, Ignacio Mier, appeared to announce that the party would seek to approve the constitutional changes in September, before López Obrador resigns and Sheinbaum takes office.
The weight fell again. Hours later, Mier retracted her statement in a radio appearance in which he suggested the changes would not be rushed.
Sheinbaum later told reporters that the measures would be subject to extensive dialogue. He also posted a photo of her meeting with an executive at investment firm BlackRock. “They are committed and enthusiastic about increasing investment projects in Mexico,” she said on social networks.
Delgado, the party president, said López Obrador and Sheinbaum would have to agree on how to move forward with the plans.
“These are reforms that will have to be discussed and their scope, their final version, will be given in Congress, and the pace of their approval will be decided by the president,” he said, referring to Sheinbaum.
The result, analysts said, is that in a political system where one party has so much control, the market could emerge as a moderating force.
“I think this adverse market reaction is going to cause a very profound rethinking of what they are going to approve and how they are going to approve it in September,” said Joan Domene, senior economist for Latin America based in Mexico City. America at Oxford Economics, an economic consulting firm.
López Obrador, however, did not seem fazed. At his usual Friday morning press conference, the president reiterated his commitment to the changes and appeared to downplay the peso’s declines, saying that “justice is above the markets.”
The mixed messages showed, analysts said, that investors’ influence will depend on whether the people who run Morena, including López Obrador, really listen to them.
“Markets are a straitjacket for politics,” he said. “But not for everyone equally.”
Emiliano Rodríguez Mega and Miriam Castillo contributed reporting.