Mexico’s outgoing president pushes ahead with plan to fire 1,600 judges

Mexico’s leftist President Andrés Manuel López Obrador is charging ahead with his plan to have 1,600 judges fired and replaced with elected justices, setting up a confrontation with business, foreign investors and the US as he tries to cement his legacy in his final months in office.

The Mexican peso has shed more than 10 per cent of its value against the dollar since voters chose López Obrador’s protégée Claudia Sheinbaum to be president and unexpectedly gave the ruling Morena party and allies a near-supermajority in congress. Investors are also now demanding the highest premium since 2008 to buy Mexico’s benchmark 10-year bonds.

Investors fear damage to the business climate from the constitutional changes Morena plans to implement, especially a plan to fire the Supreme Court and hundreds of appointed federal judges and replace them through elections next year.

Nationalist López Obrador, who is limited to one term, will overlap with the new congress for one month in September and has made clear he will not back down. Sheinbaum said the plan to transform the justice system would be among the first approved.

“They are wrong . . . the people who think that we are going to reverse the reform of the judiciary, which is rotten, which is dominated by corruption, just because there is financial nervousness,” López Obrador, better known by his initials as Amlo, told his morning news conference on Wednesday.

The election of judges is just one of 18 constitutional changes he proposed earlier this year, many of which could violate Mexico’s trade agreement with the United States and Canada (USMCA), according to experts. A senior US official made clear in comments on Wednesday that Washington expected compliance from its number-one trading partner.

“We will continue to insist, whatever the future legal regime is in Mexico, that all the signatories of USMCA respect the protection of foreign investment provisions,” Brian Nichols, assistant secretary of state for western hemisphere affairs, told lawmakers.

A charismatic populist, López Obrador sees his political movement as ushering in a historic “transformation” of the country, on a par with its independence from Spain and its bloody revolution.

He has centralised power in the presidency and this year will leave his successor Sheinbaum with a budget deficit of almost 6 per cent of GDP. Several of his proposed reforms are likely to add pressure to the government’s finances.

Many foreign and local investors see the country’s judicial system as an essential protection mechanism against the president and his party’s most radical proposals. In 2021 judges stopped the implementation of a law designed to favour state energy company CFE in electricity dispatch over private renewables groups.

If López Obrador’s reform led to biased or clearly questionable decisions by judges, it could lead to big conflicts with Mexico’s trade partners, said Kenneth Smith of consulting firm Agon.

He added that Nichols’ comments were “a signal that the Biden administration will look closely at what Amlo tries to do with the reforms”.

Mexico has been the subject of intense investor interest as a result of the US-China trade war, with the Latin American country hoping to lure factories away from Asia. Foreign investment has risen steadily but shown little sign of the boom some hoped for, and López Obrador’s reforms may give companies pause.

Under his plan, members of the Supreme Court and 1,600 other judges would be fired. Voters would choose nine new top justices from a list of 30 candidates proposed by legislators, the president and the judiciary, as well as electing hundreds of new federal judges.

“This would demolish the judiciary,” Ana Laura Magaloni, a legal expert, told local radio. “It would end the certainty that federal justice gives to the world of USMCA and investors.”

Magaloni said the reform focused on dismantling the more professionalised federal system while also ordering states to change their constitutions to directly elect thousands more local judges. The local systems see the vast majority of cases and have been sidelined by the government for decades, she said.

The judicial election campaigns would in theory have no public or private financing, but illegal cash from both the private sector and organised crime is common in Mexican elections, with oversight poor, experts say. More than 30 local candidates were murdered in the campaigns for this year’s presidential, congressional, state and municipal polls, as criminal groups tightened their grip on local politics.

“If there is no money to do campaigns, and there are only debates, public attention on this is going to be basically nil,” said Luis Carlos Ugalde, former head of the electoral authority and director of Integralia Consultores. “Organised crime could place winning candidates to be court judges . . . it's a huge risk that right now doesn’t exist.”

Since her victory, president-elect Sheinbaum has tried to strike a more moderate tone without contradicting the president, promising dialogue to discuss the reform, including with academics and the country’s legal associations.

Mexico’s legal experts are wary that there may be little room to change the proposals.

“This marks a before and after for the judiciary as we know it,” said Juan Jesús Garza Onofre, a researcher at Mexico’s National Autonomous University. “There have been consultations before, there have been forums and, in the end, often they aren’t really taken into account.”