On Sunday, Claudia Sheinbaum was elected president of Mexico . She will take office on Oct. 1. She is a leftist who blames capitalism for the millions of Mexicans who live in poverty .
Sheinbaum has promised an expansion of the welfare state. She proposes to expand government control of other industries in the private sector. She wants the telecommunications industry to be controlled by the government. Importantly, not only did Sheinbaum win in a landslide, but her Morena party also won a decisive victory in the elections for Mexico’s legislature. The Morena party will have the power to change the constitution.
Outgoing President Andres Manuel Lopez Obrador will have the opportunity to oversee changes in the constitution. He does not leave office until Sept. 30. He promises to allow the direct election of judges, and he will eliminate the autonomous election agency. It is now likely that Mexico will become a single-party authoritarian dictatorship. Leftists will control a country that shares a 1,950-mile border with the United States.
Sheinbaum will continue Lopez Obrador’s policy of expanding the power of the Mexican military. The military is directly involved in infrastructure projects and migration to the United States, and the military manages the seaports and airports in Mexico. The military controls 20% of state spending. The military leadership is corrupt. Lopez Obrador has co-opted the military, and Sheinbaum will continue that policy.
On the news that Sheinbaum and her party won a supermajority in the elections, the Mexican peso sold off in financial markets. The global market knows that Mexico is shifting farther left, and Sheinbaum is a statist at best and a socialist at worst. To compound the problems that the U.S. will face in managing relations with Mexico, China, an enemy of the U.S., is pouring foreign direct investment into Mexico. China sees Mexico as the back door into the U.S. China will build electric vehicle and battery factories in Mexico in order to avoid U.S. tariffs against Chinese imports.
The open border between the U.S. and Mexico is now a major transit point for Chinese immigrants who want to emigrate to the U.S. It is logical to assume that among the immigrants are Chinese intelligence agents. China is using Mexico as a tool of espionage and subversion against the U.S. Mexico faces fiscal challenges. The government budget deficit exceeds 6% of gross domestic product . It needs foreign capital. China will use its financial strength to induce Mexico to follow a pro-China and anti-U.S. policy.
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This is not an insignificant concern. The fentanyl epidemic finds its origins in China. The chemicals used to manufacture fentanyl are produced in China. They are exported to Mexico. The Mexican drug cartels synthesize the chemicals to produce fentanyl, which is then smuggled into the U.S. It is arguable not only that Mexico will become a close ally of China, but that Mexico will creep closer toward becoming a de facto narco-state where drug cartels are the true power. The cartels have already infiltrated the police and the armed forces in Mexico. They buy or intimidate politicians into compliance and simply kill off those who are moral and courageous.
The U.S. has been quiescent for too long regarding Mexico. It is time to play hardball with the leaders in Mexico City. If Mexico wants free trade with the U.S., a condition must be its shunning of China and stepping up the efforts against the cartels.
James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes a daily note on the markets, politics, and society.
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