This week, Vice President Kamala Harris visited Guatemala and Mexico in her first trip abroad. The diplomatic visit came on the heels of Mexico’s largest election in history, widely seen as a referendum of the first half of López Obrador’s six-year term, even though the president himself wasn’t on the ballot.
On Sunday, Mexicans turned out to the polls to vote for almost half of the 32 governorships, the entire lower chamber of Congress, and over 20,000 local seats. I’ll give you my take on the results in a few moments.
Less than 24 hours ago, Harris met with Mexican President Andrés Manuel López Obrador in Mexico City to discuss continued collaboration to curb Central American migration to the U.S. southern border. Harris spent Monday in Guatemala where she announced initiatives to address human trafficking and corruption, and told migrants not to make the trek to the U.S.
During their first in-person meeting, Harris told López Obrador that the two countries are “embarking on a new era”, striving to set a positive tone amid rising tensions on issues including security, economic reforms, and trade. The Vice President also announced high-level dialogues to strengthen economic and security collaboration, and U.S. funding for labor protections and investment in southern Mexico.
Last weekend, Mexico’s historic midterm elections saw high voter turnout and over 52 percent of registered voters went to the polls across the country. The results were fairly typical for a midterm, with the governing party experiencing some losses at the ballot box.
Most notably, López Obrador’s coalition lost seats in the lower house of Congress, falling short of the two-thirds supermajority, a pre-requisite to amend the constitution.
As a result, López Obrador will have to negotiate with the opposition parties to enact his reform agenda during the second half of his mandate, likely prompting the president to use his executive powers more aggressively. Yet, the market responded positivelyto the news that the executive branch will face greater checks and balances.
Facing setbacks related to the economy, pandemic, and security, López Obrador’s coalition fared relatively well and maintained its dominant position in Mexico’s Congress. His Morena party swept races in the states, securing many local legislature seats and at least 11 of the 15 governorships. There were several exceptions, such as Mexico City and several industrial states, where Morena did poorly.
The state-level results show that Morena, a political party founded by López Obrador in 2014, is strengthening its presence across the country. This support nationwide positions Morena to put forth a competitive contender for the 2024 presidential elections and cement López Obrador’s political project beyond his single six-year term.
This campaign cycle was among the most violent to date, marked by the assassination of 35 candidates and 54 other politicians. According to recent polling, voters viewed insecurity as the country’s top problem. Mexico’s homicide rate remained remarkably high in 2020 and increased during the first five months of 2021.
However, according to analysts, Sunday’s elections were largely transparent and smoothly-run, due to the National Electoral Institute’s careful planning and execution across 32 states. The midterms also signaled strides towards greater gender parity in Mexican politics. Female candidates won six governor races and numerous other seats.
A top issue influencing voters at the ballot box was the economy, as Mexico continues to recover from the pandemic-induced recession of 2020. The U.S. economic recovery has powered Mexico’s higher-than-expected rebound through record levels of exports north and a record level of remittances from the U.S. that has driven domestic consumption. The latest forecasts estimate the Mexican economy will recover by over 6 percent this year.
Despite these positive signs for the economy, Mexico faces several hurdles to fully bounce back from the recession. López Obrador has refused to ramp up spending for households and businesses, which could lead to long lasting losses in income. His continued attempts to reverse the 2013 energy reform during the rest of his term will likely dampen growth and result in a leveling off in foreign direct investment.
After experiencing one of the highest COVID-19 fatality rates in the world, Mexico is starting to see a steep drop in cases and deaths. A number of factors have contributed, including warmer weather and proximity to the U.S. Roughly 19 percent of Mexicans have received one dose in-country, and others have flown to the U.S. to get vaccinated.
With rising vaccination rates in Mexico’s northern states, the Biden administration plans to form an expert working group to determine the best way to reopen the U.S. southern border to non-essential land travel. The travel restrictions in place since March 2020 have strained the economy, creating uncertainty and frustration on both sides of the border.
This week in the U.S., the Biden administration wrapped up its 100-day review of supply chains and is planning to implement measures to ensure the production and delivery of pharmaceuticals and critical materials. And today, President Biden embarks on his first foreign trip to attend the G7 and NATO summits and meet face-to-face with world leaders.
At White & Case Mexico City, I’ll be tracking the evolving issues alongside my colleagues to reduce our clients’ risks and identify potential opportunities. I would encourage you to follow our client alerts and insights here for the latest on issues as varied as hydrocarbons, outsourcing, and electricity.
As always, I look forward to hearing your thoughts and hope you will connect with me via Facebook, Twitter, or LinkedIn.
Sincerely,