On a bright October day, Mexican politician, scientist, and academic Claudia Sheinbaum made history as she stood in front of jubilant crowds. As the newly inaugurated 66th president of the Latin American country, she also became the first woman to head the nation’s administration.
Her words, “It’s time for women. Women have arrived to shape the destiny of our beautiful nation,” echoed a message of change, hope, and ambition.
As Mexico’s first female and Jewish president, Sheinbaum’s ascent to power marks a significant turning point for the nation. It’s not just symbolic, but poised with the potential to chart a new political and economic course for a country long weighed down by its burdens.
Mexico today finds itself at a crossroads. The crumbling United States–China trade relations present an economic opportunity that Mexico is uniquely positioned to seize. But the question remains: Will President Sheinbaum break away from her predecessor’s policies and forge her own path toward prosperity and transformation, or will she stay bound by the political legacy of Andrés Manuel López Obrador (AMLO), whose shadow still looms large over the country? This article explores the critical opportunities and challenges facing Claudia Sheinbaum as she embarks on her six-year term and the pivotal decisions that could shape Mexico’s future.
The legacy Sheinbaum inherits
Before delving into Sheinbaum’s prospective path, it is essential to understand the landscape shaped by AMLO, whose six-year term was characterised by bold social spending, attempts at reform, and glaring failures in security policy.
AMLO had come to power promising a “Fourth Transformation,” a reimagining of the nation on par with the War of Independence, the Reform War, and the Mexican Revolution. His vision was one of ending corruption, reducing violence, growing the economy, and expanding social safety nets.
Some of AMLO’s social initiatives, like cash transfers to low-income families, increases in the minimum wage, and expanded pension benefits, successfully lifted over five million Mexicans out of poverty between 2018 and 2022. These policies allowed his approval ratings to remain relatively high, and he forged a strong connection with the working-class citizens through his frequent public addresses, the three-hour “mañaneras,” which became emblematic of his presidency.
These morning press conferences allowed AMLO to directly communicate with citizens, framing his administration’s narrative and promoting a sense of accessibility and transparency that endeared him to many.
However, there were also notable shortcomings. AMLO’s “hugs, not bullets” policy aimed to reduce violence through a socio-economic approach rather than a militaristic one. It was built on the premise that addressing the root causes of crime—such as poverty, lack of education, and limited economic opportunities—would reduce the appeal of organised crime. The policy sought to prioritise social programmes, create employment opportunities, and expand educational initiatives, with the hope that these measures would offer alternatives to those susceptible to cartel influence.
Despite these good intentions, the policy largely failed to curtail cartel violence, leaving Mexico grappling with an escalating security crisis, with more than 175,000 people murdered and over 43,000 missing during his tenure. While there were some successes, such as increased access to education and cash transfers that helped impoverished communities, these gains were overshadowed by the pervasive violence. The lack of a coordinated law enforcement strategy allowed cartels to strengthen their control over territories.
AMLO’s reluctance to confront cartels head-on was rooted in a belief that addressing socio-economic inequalities would naturally diminish violence, but the lack of tangible results ultimately left the nation more insecure. Economically, his anti-business rhetoric led to stagnation in productivity, low foreign direct investment, and a growing budget deficit.
The budget deficit reached close to 6% of GDP by the end of his term, a level not seen since the 1980s. This, coupled with the underfunding of crucial health services, meant Sheinbaum inherited a nation with significant challenges.
Sheinbaum’s vision for Mexico
Claudia Sheinbaum brings to the office a different background and approach compared to her predecessor. A scientist by training, Sheinbaum has shown a keen interest in clean energy and climate policy, setting her apart from AMLO, who was a staunch supporter of fossil fuels and heavily invested in reviving the state-owned oil giant, Pemex. Sheinbaum earned her PhD in Energy Engineering from the National Autonomous University of Mexico (UNAM), one of the most prestigious institutions in Latin America.
During her academic career, she was known for her research in renewable energy, climate change mitigation, and sustainable urban development. Her work at the Intergovernmental Panel on Climate Change (IPCC) even contributed to the organisation’s Nobel Peace Prize win in 2007, underscoring her expertise and dedication to environmental issues.
Her environmental background indicates that she may pursue policies focusing on green energy and sustainability, marking a departure from AMLO’s focus on energy self-sufficiency through fossil fuels. Sheinbaum’s emphasis on clean energy could represent a transformational shift for Mexico, one that aligns with global trends and opens up new avenues for economic collaboration, especially with countries and corporations keen to invest in renewable initiatives.
Sheinbaum has also demonstrated a different attitude towards the private sector. Unlike AMLO’s business-bashing rhetoric, Sheinbaum has expressed an interest in improving investor confidence and collaborating with private entities, an approach that could help Mexico attract much-needed foreign investment to stimulate its economy.
With Mexico now officially the United States’ top trading partner, replacing China amidst escalating US-China tensions, Sheinbaum’s willingness to court private sector investment could position the country as a major beneficiary of nearshoring trends. This could help generate more employment opportunities, boost industrial output, and improve economic diversification, which are essential components for sustained national growth.
But Sheinbaum’s leadership is not without its dilemmas. While her progressive views on climate and business are clear, her support of AMLO’s controversial judicial reforms, which have raised international concerns regarding the erosion of democratic institutions, suggests that she may continue to follow her mentor’s political agenda, at least in part.
The reforms, which propose electing judges directly and cutting the number of lawmakers, have drawn criticism for threatening judicial independence and the checks and balances of the democratic system. Whether Sheinbaum will eventually diverge from these policies in the face of mounting criticism and investor unease remains to be seen.
The outcome of this decision will not only affect domestic politics but could also have significant implications for Mexico’s international reputation, particularly concerning democratic governance and the rule of law.
Nearshoring and trade
Mexico’s economic potential is undeniable. With a population of over 130 million and proximity to the United States, the nation is well-positioned to become a powerhouse of manufacturing and industry, especially in the context of US-China tensions.
Nearshoring, the relocation of production facilities closer to target markets, has gained traction. Mexico, with its extensive trade ties to the United States, stands as a prime beneficiary. Nearshoring offers Mexico a unique opportunity to become an industrial hub not just for North America but potentially for global markets, as businesses look for reliable, geographically strategic locations to build supply chain resilience.
In 2023, Mexico surpassed China to become the United States’ top trading partner, with nearly $800 billion worth of goods traded between the two nations. Major companies such as Amazon Web Services and Volkswagen have announced billions of dollars in new investments, reflecting increasing confidence in Mexico as an industrial and technological hub.
These opportunities present an unprecedented economic potential for Mexico, offering a path to greater growth and development. This surge in foreign investment also has the potential to transform communities, create high-quality jobs, and reduce regional inequalities that have plagued the country for decades.
However, realising this potential is not without challenges. For years, Mexico’s inadequate infrastructure for water and electricity, compounded by security concerns, has hindered its ability to attract large-scale foreign investment. Under AMLO, underinvestment in infrastructure was a critical impediment. Sheinbaum must urgently address these gaps if Mexico is to fully capitalise on the nearshoring trend.
By improving infrastructure and reducing crime, she could create an environment conducive to attracting multinational corporations, diversifying the economy, and facilitating growth. Additionally, targeted investment in digital infrastructure could help integrate Mexico into the modern digital economy, boosting sectors like information technology, services, and advanced manufacturing.
Moving beyond ‘hugs, not bullets’
Perhaps the most pressing challenge facing President Sheinbaum is Mexico’s dire security situation. The country has been gripped by a wave of gang violence, with over 30,000 people murdered annually in recent years, making it one of the deadliest non-war zones in the world.
AMLO’s “hugs, not bullets” strategy, which relied on social programmes and avoided confrontation with cartels, ultimately failed to reduce the levels of violence, leaving Sheinbaum with the difficult task of rethinking security policy. A strategy that combines social outreach to communities at risk of cartel influence and decisive law enforcement may offer a more balanced approach.
During her tenure as the mayor of Mexico City, Sheinbaum demonstrated a pragmatic and multifaceted approach to crime reduction. She worked closely with US law enforcement agencies, increased police surveillance in high-crime areas, and implemented targeted strategies to reduce crime, leading to a 50% reduction in the city’s homicide rate.
This track record suggests that she may adopt a more assertive approach to combating cartel violence on a national level. Her experience suggests that she understands the complexity of crime, not only as a law enforcement issue but also as a socio-economic one, requiring forceful action against violent elements and targeted measures to improve education, employment, and opportunities for youth.
Sheinbaum has already announced a new national security strategy that emphasises intelligence sharing, strengthening collaboration between law enforcement agencies, and creating an enhanced national intelligence agency.
By adopting a strategy that balances aggressive law enforcement with targeted social interventions, she has the opportunity to not only curb violence but also restore investor confidence, a critical factor in stimulating economic growth.
The significance of reducing crime extends beyond national stability. It is also crucial for maintaining a positive international image, encouraging tourism, and enabling greater foreign investment in sectors like manufacturing and services.
The challenge of social spending
One of the biggest hurdles for Sheinbaum will be Mexico’s fragile fiscal position. AMLO’s expansion of social spending, while popular, has placed significant strain on government finances, leading to a budget deficit of 6% of GDP.
Moreover, Mexico’s large informal economy, which employs nearly 60% of the workforce, has hampered the government’s ability to collect taxes, with tax revenues amounting to just 17% of GDP, far below the OECD average of 34%. The informal economy also perpetuates inequality, as workers outside formal sectors lack access to benefits like health care and pensions.
To finance her ambitious social policies, Sheinbaum will need to boost tax collections. This will involve not only reforming tax policy but also tackling the informal economy, a daunting task considering the lack of compliance and distrust in the government among many informal sector workers.
Without significantly improving tax revenue, Sheinbaum will struggle to maintain the level of social investment needed to reduce poverty and provide essential services like healthcare and education. To achieve this, Sheinbaum may need to consider incentives to formalise businesses, such as simplifying tax processes, offering micro-loans, and ensuring legal protections for small enterprises.
Addressing the crisis in Mexico’s health system must be a priority for Sheinbaum. The closure of Seguro Popular, a health insurance programme that covered millions, under AMLO, left over 50 million Mexicans without access to health services by 2022. Sheinbaum has promised to reverse this trend, emphasising in her inaugural speech that healthcare is a right, not a privilege.
This commitment, however, will require substantial funding, which means reforming Mexico’s tax system and improving tax compliance must be at the forefront of her agenda. Health reform, if effectively implemented, could also serve as a model of success to help bolster public confidence in her administration and garner further support for other social initiatives.
To bail out or let go?
Another economic challenge that looms large for Sheinbaum is Pemex, the state-owned oil company that has become a financial black hole for Mexico. With over $100 billion in debt, Pemex is the world’s most indebted oil company. Under AMLO, it received significant government bailouts to keep it afloat.
The strategy of propping up Pemex, including building the costly Dos Bocas refinery, was aimed at making Mexico energy self-sufficient, but it came at a high price for the nation’s finances and its progress towards clean energy. These measures, while politically popular, have drained resources from other critical sectors, including healthcare, education, and infrastructure development.
Sheinbaum’s environmental background suggests that she may prefer a greener energy approach, but her stance on Pemex remains complex. She has publicly supported ramping up oil production, which seems in conflict with her climate-conscious identity.
However, Sheinbaum’s hands may be tied. Pemex is so deeply intertwined with Mexico’s economic stability that its collapse could have disastrous consequences. Increasing oil production could help Pemex generate more revenue, reducing its dependence on government support, but this approach risks delaying Mexico’s transition to renewable energy. Sheinbaum must navigate between the political need to stabilise Pemex and the necessity of advancing Mexico’s renewable energy capabilities.
Sheinbaum’s challenge will be to strike a balance between ensuring Pemex’s financial stability and pursuing green energy initiatives. She has promised to invest $14 billion in renewable energy, but without substantial changes to Pemex’s operating model, Mexico’s clean energy ambitions may remain out of reach. Perhaps a gradual shift, where Pemex becomes a hybrid entity focusing on fossil fuel extraction and investing in renewable projects, could allow Mexico to transition without economic shock.
A new hope for Mexico?
Claudia Sheinbaum’s presidency also represents a significant step forward for women in leadership in Mexico. Her inauguration marked a turning point in a country where politics has long been a male-dominated domain. The statement that “It’s time for women” signifies not only a break from the past but also an opportunity for Mexico to benefit from diverse leadership perspectives. Her leadership could inspire women across the country, especially in rural and marginalised communities, to engage more actively in politics and pursue leadership roles.
Sheinbaum’s approach to governance, which draws on her scientific background and emphasises data-driven decision-making, could introduce a new era of leadership style that prioritises evidence over rhetoric.
Her election also paves the way for other women in Mexico to aspire to political leadership, breaking down barriers in a society still grappling with significant gender inequality. Furthermore, Sheinbaum’s visibility as a female leader has a powerful cultural impact, challenging traditional gender norms and reshaping the political landscape to be more inclusive.
She has inherited a country full of contradictions: a nation with vast economic potential, yet hamstrung by organised crime and corruption; a society with a rapidly growing middle class, yet still plagued by inequality; and a country rich in natural resources, yet failing to capitalise on green energy opportunities. As the world watches, Sheinbaum has the chance to set Mexico on a new path of prosperity, security, and justice.
But success will depend on her ability to make difficult choices. Breaking from AMLO’s legacy on issues like judicial reform, Pemex, and the clean energy transition could open new possibilities for the country, but it would require standing up against entrenched political structures and risking her current popularity. The task before her is monumental: balancing the books while expanding social services, reducing cartel violence while stimulating economic growth, and championing a clean energy future while stabilising Pemex. Each of these challenges requires not only strategic planning but also political courage and the ability to inspire a nation to embrace change.
Mexico’s new leader must navigate complex relationships with her predecessor’s political influence, with her country’s security apparatus, and with international investors and neighbours. If she manages to strike the right balance, Sheinbaum could well be remembered as the president who led Mexico into a new era, one defined by opportunity, progress, and unity.
For now, the world watches and waits as Sheinbaum begins her journey to reshape Mexico’s destiny. A successful presidency could turn Mexico into a model for sustainable development, equitable social policy, and inclusive leadership, potentially setting a precedent for other nations facing similar challenges in an increasingly turbulent world.