WEEKLY REPORT 7.6.24

June 1–7, 2024

HOT TOPICS:

Election Results: Mexico Chooses

DEPUTIES:

As of now, Morena and its allies, PVEM and PT, sum up 372 seats in the chamber, thus achieving a qualified majority, which is achieved with 2/3 of the chamber (336 seats) This means they will be able to approve AMLO’s constitutional reforms. Nevertheless, it is probable that there is an overrepresentation of Morena in the chamber This will be determined by the Electoral Institute (INE) and if so Morena will lose 5 seats from proportional representation The seats must be distributed to other parties

AMLO’s priority reforms are his initiatives to change the Supreme Court and to eliminate the autonomous agencies However, all his 20 initiatives were left pending in the Chamber of Deputies, ready to be presented to the Board of Directors, and members from Morena have announced that the reforms will be discussed in September, with a high probability of being approved

On Sunday, Mexico chose its first female President: Claudia Sheinbaum. This is no surprise, as most, if not all, polls placed Sheinbaum above Xochitl Gálvez by a large margin. Claudia’s administration represents the “second floor” of the Fourth Transformation, which is AMLO’s political movement It is expected she will continue with AMLO’s policies, both in the legislative and in the executive agenda She will take office on October 1st , while the Congress will start on September 1st

As of now, Morena and its allies have in total 83 seats, which is 3 seats short of the 86 that they would need to pass constitutional reforms However, negotiating with those other 3 senators to get their votes may not be so hard Additionally, they possess an absolute majority in both chambers, so any reforms to secondary laws will be possible without having to negotiate with the opposition

As the ordinary period starts in September 1st , AMLO will have one month with the newly appointed Congress He could take advantage and pass all his reforms However, that first month will be a busy one because the Congress must appoint the Board of Directors and the presidents of each commission, as well as its members, in both chambers The first commissions that are set up are the Finance and Budget Commissions, because the public budget for 2025 must be presented and approved between October 15th and December 31st

(Morena-PT-PVEM)

Claudia Sheinbaum (PRI-PAN-PRD)

Xóchitl Gálvez

(Movimiento Ciudadano)

Jorge Álvarez Máynez

Market Reactions to Elections HOT TOPICS:

After the elections, Sheinbaum’s victory had a negative effect in the market The Mexican peso depreciated, as it closed with a loss of 4 3% (about 74 cents) against the dollar, and the stock market fell 6%. According to Mariana Campos from Mexico Evalua, this reaction shows how worried the private sector is with Sheinbaum’s administration, especially regarding the implementation of AMLO’s reforms (his Plan C) and the elimination of checks and balances in the government.

As a response to this reaction, Sheinbaum had to publish a message confirming Rogelio Ramírez de la O as the next Finance Minister at 1:00 pm on June 3 Ramírez de la O shared a statement in which he stated that he will reduce public debt, communicate with investors and rating agencies, respect the autonomy of Mexico’s central brank, and that the government’s priorities are macroeconomic stability and financial discipline However, university professor José Ignacio Martínez Cortes emphasized that Sheinbaum’s late response also contributed to investors’ concerns and thus the volatility in the market

Source: Animal Político

ELECTION RESULTS: DISTRICT COMPUTATION OF VOTES

On June 5, the district computation of votes began, which is the final count that determines the official results of the election However, based on the estimations by the fast-counting (a statistical exercise) and the preliminary results (PREP), there are not expected changes. Additionally, the Electoral Institute will conduct a recount of votes in at least 60% of polling stations, as is mandated by law All this is a normal part of the election process Nevertheless, Xóchitl Gálvez, the second place in the presidential race, and her party, the PAN, have additionally asked for a recount of votes Morena also asked for a recount in Jalisco, where their candidate lost by a small margin

Source: INE, and Regeneración

BIDEN’S EXECUTIVE ORDER TO STOP MIGRATION

President Biden issued an executive order on Tuesday to prevent migrants from seeking asylum at the U.S.-Mexico border during surges in crossings. This measure, intended to ease pressure on the immigration system and address voter concerns in an election year, is the most restrictive border policy by Biden or any modern Democrat. It mirrors a 2018 attempt by President Trump to limit migration, which was blocked in court Biden cited Republican obstruction of bipartisan border security legislation as the reason for his executive action, emphasizing the need to secure the border to maintain the U S as a welcoming nation for immigrants

López Obrador’s response was that there wouldn’t be a closure of the border He highlighted his call with President Biden and mentioned they discussed the measures being taken regarding asylum, as well as the issuance of presidential permits to construct three border bridges: the expansion of the World Trade International Bridge in Nuevo Laredo III-IV between Tamaulipas and Texas; a new multimodal crossing "Puerto Verde" between Piedras Negras, Coahuila and Eagle Pass, Texas; and a new crossing "Flor de Mayo" between Matamoros and Brownsville, Texas

CURRENT CONFIGURATION OF STATES AND MUNICIPALITIES

Morena has won the presidency, the Congress, and most governorships Of the 9 states that held elections, Morena took seven, while the PAN won in Guanajuato and Movimiento Ciudadano (MC) in Jalisco This deepens Morena’s dominance over the political landscape Regarding municipalities, in Baja California, Morena won all mayorships that were up for election In Nuevo León, the PRI-PAN-PRD coalition won in Monterrey, while the PRI and PRD won in Apodaca In Coahuila, the PRI-PRD-UDC coalition won most of the municipalities, including Ramos Arizpe and Saltillo. Guadalajara and Zapopan, in Jalisco, elected MC

Source: State Electoral Insitutes

SHEINBAUM CHOOSES HER TRANSITION TEAM LEADER

The elect president, Claudia Sheinbaum, has chosen Juan Ramón de la Fuente, who served as AMLO’s permanent Ambassador to the United Nations, to coordinate her transition team He was in charge of coordinating her Transformation Dialogues, which had the intention of drafting a government plan As of today, the only confirmed member of Sheinbaum’s cabinet is Rogelio Ramírez de la O

Source: Forbes

Source: The New York Times

AMLO’S Constitutional Reforms: HOT TOPICS:

# Reform Purpose

1 Indigenous People

2 Wellness Social Programs

To legally recognize indigenous and Afro-Mexican communities, enhance the national public health system from an intercultural standpoint, improve communication networks for these groups, while also ensuring consultation on significant measures, specialized access to justice, and the promotion of indigenous languages to uphold Mexico's cultural diversity

The state, both the Federation and the federal entities, will ensure the provision of a non-contributory pension to permanently disabled individuals under the age of sixty-five

The State will guarantee support to farmers and fishermen through a secure, fair, and permanent wage for farmers, providing annual direct support and free fertilizers to small-scale procedures and offering annual direct support to small-scale fishermen. Additionally, price guarantees will be maintained for the sale of maize, beans, milk, rice, and wheat flour, ensuring economic stability for agricultural producers

3 Scholarships

4 Free Universal Medical Care

5 Housing

6 Animal Abuse

Offer a month's financial aid equivalent to the minimum wage to unemployed youth aged 18 to 29, fostering their training for up to 12 months in businesses, companies, workshops, stores, and other economic units to integrate them into the workforce and prevent unemployment

To provide comprehensive public health services to the uninsured, emphasizing prevention and timely treatment, enhancing efficiency and quality in the National Health System, increasing healthcare personnel and infrastructure, and implementing informative strategies for health promotion and improved epidemiological tracking

Modernize INFONAVIT operations, granting rental access after a year of contributions and ownership rights after ten years of rent payments, while prioritizing long-standing contributors without homes

Ensure the protection and welfare of animals through specific laws that prevent abuse in their breeding and use for human consumption

Proposes to ban granting concessions and conducting activities related to open-pit mining, as well as sanctions for those engaging in such activities Additionally, it prohibits the issuance of contracts or administrative measures allowing the extraction of liquid and gaseous hydrocarbons via fracking, with penalties for individuals involved in any related activities

7 Fracking and Water Scarcity

8 Vaping

9 Preventive Detention

10 Minimum Wage

It aims to recognize corn as a staple food and national identity symbol, advocating for its freedom from genetic modifications like transgenics, while also ensuring access to clean water for personal consumption and domestic use, restricting concessions to private entities in areas with limited water availability, and authorizing allocations only to public entities for personal consumption and domestic water use

To safeguard public health by banning the production, distribution, and sale of electronic cigarettes, vaping devices, and illicit substances, including fentanyl, while also prohibiting engagement in related professions or industries

Advocates for mandatory pretrial detention in cases involving serious offenses such as extortion, drug trafficking, fiscal fraud, and the distribution of synthetic drugs like fentanyl, aiming to address organized crime and uphold public safety

The proposal stipulates that the annual setting or revision of general or professional minimum wages will never fall below the observed inflation rate during their validity period It also ensures that full-time elementary school teachers, police officers, national guards, permanent armed forces members, as well as doctors and nurses, will receive a monthly salary not lower than the average wage recorded in the IMSS

11 Pensions

12 Railway Transportation

To advocate towards ensuring that workers aged 65 and above, who began contributing after July 1, 1997, receive a retirement pension equivalent to their last salary, up to the average wage recorded in the IMSS, if their pension under the law falls short of this average, while also maintaining the entitlement to a guaranteed pension for workers aged 60 and above Additionally, it proposes the establishment of a Welfare Pension Fund funded by government contributions

The proposal seeks to modernize passenger railway services in Mexico, ensuring accessibility and national interests It aims for safe, efficient, and sustainable transportation, especially for remote areas, fostering economic growth Fair competition with private firms is emphasized to improve service quality It advocates for infrastructure development, particularly in the southern and central regions, and grants authority to allocate assignments or concessions to public or private entities, building on existing freight rail concessions

HOT TOPICS:

AMLO’S Constitutional Reforms:

Electrical Reform

The proposal suggests significant reforms to Mexico's electoral system, including cutting public funding for political parties and campaign spending, implementing popular voting for key judicial and electoral positions, and streamlining electoral administration by replacing the National Electoral Institute with a new body It also aims to reduce the number of legislators and lower the threshold for citizen-initiated referendums while emphasizing improved communication between parties and the public

To reform the judicial system to involve citizens in the selection of key judicial figures, creating new independent judicial bodies, modernizing the judiciary to combat corruption and nepotism, and reducing the number of Supreme Court justices It suggests popular voting for the appointment of justices and proposes a reduction in their terms The process would involve nominations from the Executive and Legislative branches, as well as the Supreme Court, with the decree awaiting further legislative review before implementation

It aims to reform the national electrical system to prioritize energy security, self-sufficiency, and affordable electricity for the people through a State Public Enterprise It also includes incorporating Internet as a strategic area of the State, eliminating the concept of State Productive Enterprise, ensuring exclusive national planning and control of the electrical system, and providing guidelines for private sector participation in alignment with social justice principles

It seeks to solidify the Guardia Nacional as a permanent military force dedicated to supporting public security, with oversight from both the Congress and the Senate for high-ranking appointments It allows the President to deploy the Guardia Nacional for national defense and internal security if necessary

17 Autonomous Agencies

18 Austerity

19 Administrative simplification (Not constitutional)

20 Reform to the ISSSTE Law: secondary reform associated with the reform to pensions (Not constitutional)

t proposes to streamline government spending by eliminating various autonomous bodies, including COFECE, IFT, CONEVAL, INAI, CNH, CRE, and the National System for Continuous Improvement of Education It seeks to reincorporate its functions into the federal administration to avoid duplication and achieve budget savings without compromising their roles

Align the remuneration of members of the Judiciary with the maximum limit allowed for the President and prohibit duplication of functions and unnecessary expenses, such as special retirement schemes and private insurance, both at the federal and local levels It also establishes that the President's remuneration will be determined annually in the Federal Budget and sets guidelines for clear identification of fixed and variable elements in remuneration structures across public institutions

This proposal suggests the merger, integration, or extinction of 16 decentralized bodies, decentralized organizations, or administrative units, with their functions being transferred to State Secretariats The objectives include promoting austerity in the use of public resources and enhancing efficiency, transparency, and honesty in organizational structures

Allow the ISSSTE to reduce updates and surcharges on outstanding debts for unpaid contributions within the current fiscal year This reduction would apply to all debts except those related to retirement, old age, and seniority benefits for workers