Judicial reform a blow to Mexican economy

EL PASO, Texas (Border Report) – Mexico’s recently approved judicial reform and its president-elect’s declared intent to seek closer relations with China and Russia are bringing economic uncertainty to America’s top trade partner.

The consensus forecast for gross domestic product has shrunk to 1.5 percent, consumption growth has been axed to 1.9 percent and total investment growth is down to 2.8 percent, according to the University of Texas at El Paso’s Border Modeling Project forecast released on Monday.

Further, the inflation forecast for this quarter is now 4.7 percent and the value of the peso is expected to drop to 20.46 per U.S. dollar, the research shows.

“Economic uncertainty has rarely reached the levels currently observed in Mexico. Judicial branch independence may be on the verge of at least partially disappearing,” economic researchers Thomas M. Fullerton, Jr., and Steven L. Fullerton of UTEP wrote. “Against that backdrop, the consensus outlook for both 2024 and 2025 has turned decidedly more pessimistic.”

The Mexican Senate led by President Andres Manuel Lopez Obrador’s MORENA Party last week approved a constitutional amendment that, among other things, calls for some 7,000 federal judges to be elected, not appointed and subsequently vetted anymore. The required 17 of 32 state legislatures ratified the amendment within hours. Lopez Obrador signed it into law on Sunday , prior to Mexican Independence Day celebrations.

Mexican business leaders and political analysts fear the amendment and accompanying legislation will weaken future lawsuits against executive orders, expropriations and appeals to government economic decisions.

“President-elect (Claudia) Sheinbaum Pardo has also indicated her administration will seek closer relations with both Moscow and Beijing, raising trade agreement concerns in both Washington and Ottawa,” the UTEP researchers wrote, referring to the U.S.-Mexico-Canada Agreement.

The treaty, also known as USMCA, is up for review on July 1, 2026. That’s when the three parties must confirm in writing whether to continue the agreement, according to the Brookings Institution.

Lopez Obrador, the populist-nationalist architect of the controversial judicial reform, leaves office at the end of the month after six years in power. But according to the UTEP researchers, “event after (Sheinbaum) takes office on Oct. 1, episodic financial market upheavals are likely to continue.”

Electing judges won’t address roots of corruption

Lopez Obrador pitched judicial reform as a way to further democracy and prevent judges from being bribed. However, at least some U.S. intelligence analysts suggest the opposite will happen.

“Any time you have individuals for positions that are elected, you need to have a campaign and campaigns require money,” said Michael Ballard, director of intelligence for Virginia-based Global Guardian . “You could see cartel leaders donate heavily to a particular candidate and they would basically be in their pocket and make favorable rulings or dismiss cases.”

If Lopez Obrador is saying his judges are bribed after being appointed, electing them only changes the order of the payoff. The root issues of corruption in Mexico are weak institutions; examples of public officials in Mexico that later became targets of criminal indictment in the United States are numerous.

“You have the former governor of Tamaulipas become a fugitive from justice, the former Defense minister accused of taking millions from the Sinaloa federation . The corruption and bribery is all the way from the highest levels way down to your local police officer. In some towns, you have entire police forces being dismissed because they had family ties to organized crime or were on the payroll of those entities,” Ballard told Border Report.

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