Mexico Awakes With Joy, Fear, Market Jitters to First Woman Elected President, Claudia Sheinbaum

Hours after declaring victory, Mexico’s newly elected president, the first woman to win the job, faced a market meltdown Monday and a tough path toward reconciling a country deeply divided by outgoing President Andrés Manuel López Obrador.

Claudia Sheinbaum has promised to continue the political course set by her populist predecessor despite widespread discontent with persistent cartel violence, the weakening of democratic institutions and fears among investors that an already hostile environment might become much, much worse.

Mexican economy

In trading hours after the election results were announced, the Mexican peso dropped 3.5% in value to about 17.62 to $1, and the Mexican stock exchange took a dive of over 5%, said Gabriela Siller, director of analysis at Nuevo Leon-based Banco Base.

Supporters of ruling party presidential candidate Claudia Sheinbaum embrace after the polls closed during general elections at the Zocalo, Mexico City's main square, Sunday, June 2, 2024. (AP Photo/Ginnette Riquelme)
Siller noted that Sheinbaum's victory, along with an apparent super-majority in Congress for her Morena party, “opened the possibility of changes in the Constitution, which alters, or better put, deteriorates the risk balance of Mexico, causing capital to leave the country.”

The strong peso — which has gained steadily against the dollar on the back of increased remittances in the last year — was something López Obrador counted as his own achievement. But analysts have suggested for some time the Mexican currency is over-valued.

With words like ‘capital flight’ and ‘black Monday’ flying around financial markets, quick action to calm markets was urgently needed. But Sheinbaum's team's immediate reaction appeared muddled; they announced — and then quickly canceled — plans for her to hold a news conference.

President-elect Claudia Sheinbaum addresses supporters at the Zocalo, Mexico City's main square, after the National Electoral Institute announced she held an irreversible lead in the election, early Monday, June 3, 2024. (AP Photo/Matias Delacroix)

Constitutional changes by outgoing president

López Obrador appeared determined Monday to push through his highly divisive constitutional changes — many of which opponents fear will fatally weaken Mexico’s democracy — before he leaves office on Sept. 30.

The Morena party that López Obrador founded and in which he remains far more personally popular than Sheinbaum, appeared to be on track to win the two-thirds majority needed to change the Constitution. López Obrador has already laid out 20 constitutional changes he plans to submit, including the elimination of independent oversight agencies and stricter limits on private investment.

That worries foreign investors. López Obrador has already cracked down on private and foreign investment in the energy sector, and now wants to ban new industrial sites in any area of Mexico suffering water stress — essentially the whole, economically vibrant north of the country.

But other political provisions also worry and divide Mexicans.

Indigenous women line up to vote during general elections in Zinacantan, Mexico, Sunday, June 2, 2024. (AP Photo/Luis Etzin)
“The climate of political polarization has gotten worse during the current administration,” Moody’s Analytics Director Alfredo Coutiño wrote in a report Monday. “The country is significantly divided and will require the new president’s political leadership to restore national unity.”

Sheinbaum appeared conscious of that, but it was unclear how she might go about it.

“Even though the majority of the people backed our project, our duty will always be to look out for each and every Mexican, without distinctions,” the president-elect said in her victory speech after long-delayed initial vote counts gave her a crushing margin of victory, higher even than the one López Obrador won in 2018.

With about 78% of votes counted, Sheinbaum had some 59% of votes, about twice as many as her nearest competitor Xóchitl Gálvez, who got around 28%.

For the moment, López Obrador struck a note more celebratory than vengeful, though throughout most of his six-year term he has piled far more contempt on journalists and opponents than on the country’s drug cartels, which he has not confronted.

Sheinbaum welcomed

“This is something really historic,” López Obrador said of the election of the first woman to Mexico's presidency. “We are living through exceptional, extraordinary, glorious times.”

U.S. President Joe Biden issued a statement congratulating Sheinbaum on her “historic” election, and saying, “I look forward to working closely with President-elect Sheinbaum in the spirit of partnership and friendship that reflects the enduring bonds between our two countries.”

A man dressed in traditional clothing sings after the close of polls during general elections at the Zocalo, Mexico City's main square where supporters of ruling party presidential candidate Claudia Sheinbaum are gathering, Sunday, June 2, 2024. (AP Photo/Matias Delacroix)
Sheinbaum quickly replied in a statement that "I am convinced that we will continue to collaborate in benefit of our peoples and our countries, as the neighbors, partners and friends that we are, with the respect that our sovereignties deserve.”

The bilateral relationship has been complicated by López Obrador's refusal to acknowledge that Mexican cartels produce the synthetic opioid fentanyl that kills tens of thousands of Americans annually. Under his administration, however, Mexico has proved more than willing to try to prevent migrants from reaching the U.S. border, a valuable contribution for the Biden administration.

It is not clear whether Mexico's anti-drug cooperation — which suffered under López Obrador — will improve under Sheinbaum. López Obrador repeated his pledge Monday to allow Sheinbaum room to govern, without trying to rule from behind the scenes after he leaves office.

He also suggested he might give Sheinbaum some latitude to change his proposals for constitutional reforms — though without promising anything.

“We have to reach an agreement with Claudia on these bills,” he said. “I don't want to impose anything.”

He went on to list the historic names for the times, from the 1500s to the 1930s, when Mexican leaders tried to rule from behind the scenes, saying he didn't want to that.

“I do not aspire to be a ‘moral leader,’ a ‘maximum boss,’ a 'caudillo,' nor much less a ‘cacique,’” he said, using a pre-Hispanic term for a life-long autocratic leader.

Sheinbaum, a climate scientist and former Mexico City mayor, has vowed to continue López Obrador's policies, and in her victory speech Monday gave little sign of how she will make her own mark on the presidency. Her cool temper offers a sharp contrast in style with López Obrador's folksy populism, and a break with Mexico’s male-dominated political culture.

It was an election that guaranteed Mexico would make history. The two leading candidates were women, and Sheinbaum is also the first person from a Jewish background to lead the overwhelmingly Catholic country.

Sara Ríos, 76, a retired literature professor at Mexico’s National Autonomous University, expressed confidence Sheinbaum will reconcile the country.

“The only way that we move forward is by working together,” Ríos said.

“She is going to work to bring peace to the country, and is going to manage to advance, but it is a slow process.”

On Monday, however, López Obrador, showed little appetite for reconciliation with one of his favorite targets for criticism — the middle class — saying that at a polling place in a middle-income neighborhood he had heard “very classist remarks, very angry, let's hope they get over it ... little by little.”

The elections were widely seen as a referendum on López Obrador, who has expanded social programs but largely failed to reduce cartel violence in Mexico. The 61-year-old Sheinbaum is unlikely to enjoy the kind of unquestioning devotion that López Obrador has.

In Mexico City’s main plaza, the Zocalo, Sheinbaum’s lead did not draw the cheering, jubilant crowds that greeted López Obrador’s victory in 2018.

Fernando Fernández, a 28-year-old chef, joined the relatively small gathering hoping for a Sheinbaum victory, but he acknowledged there were problems.

“You vote for Claudia out of conviction, for AMLO,” Fernández said, referring to López Obrador by his initials, as most Mexicans do.

But his highest hope is that Sheinbaum can “improve what AMLO couldn’t do, the price of gasoline, crime and drug trafficking, which he didn’t combat even though he had the power.”

Sheinbaum stressed the long struggle it took for a woman to reach the presidency.

“I do not arrive alone," she said. “We all arrived, with our heroines who gave us our homeland, with our mothers, our daughters and our granddaughters.”

AP reporter Zeke Miller contributed from Washington.