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(Bloomberg) — Outgoing President Andres Manuel Lopez Obrador is poised to control the only branch of government that still eludes him in Mexico, ensuring the dominance of his Morena party for years to come. Such unchecked power would pose significant political and economic risks to a country that spent most of the 20th century under authoritarian rule. 

The ruling party and its allies need to secure just one more vote in the coming days to completely overhaul Mexico’s judicial system, likely subjugating an institution that has blocked Lopez Obrador’s reforms time and time again. Their success, which started with a landslide victory by the president’s protege Claudia Sheinbaum and continued with their winning of large majorities in both houses of Congress, presents a risk to “good governance,” said Jeffrey Weldon, a professor of political science at Mexico’s Autonomous Institute of Technology. 

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“Mexico had an authoritarian rule with this type of one-party control for decades,” he said. “The economic and social results from those years are not considered good.”

A court that poses no limits on a president threatens the basic tenets of democracy, critics say. It also poses uncertainty for investors after a six-year regime that’s been less than friendly to the business community. The peso tanked within hours of Morena’s landslide win in June, with traders anticipating that the party would seek to take full control of government. It has continued to slide since, hitting the lowest since late 2022 and becoming by far the worst emerging-market currency in the world in the span.

It’s a stark reversal for a currency that had become known as “super peso” in recent years — and analysts say there’s more to come. Marco Oviedo, a strategist at XP Investimentos in Brazil, said the peso would likely blow past 20 per dollar this week, from a current 19.82, if the reform is approved. He expects it to end the year around the 20.50 level. That compares to levels around 17 per dollar just before the election.

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Changing rules for the selection of judges is a strategy often used by leaders seeking to consolidate power. Recent examples include court overhauls in Bolivia, Venezuela and Hungary. But in many ways Mexico’s reform stands to go farther.

The proposal submitted to Congress includes replacing the country’s current Supreme and Federal Court judges with popularly elected ones over the next three years. It’s likely that many if not most of the more than 1,600 judges will be from Morena given that the party has more popular support than ever. 

“This is quite a revolution,” said Oviedo, who previously served as an adviser to former President Felipe Calderon. “It’s a change of regime and nothing stops this now.”

AMLO’s Court Woes

AMLO, as the current president is known, has long had a rocky relationship with Mexico’s courts. 

When he claimed election fraud during his presidential runs in 2006 and 2012, the Electoral Court denied his challenges. During his presidency, the Supreme Court blocked some of his most controversial moves, including a reform of the Electoral Institute and a reorganization that put the National Guard under control of the Defense Ministry.

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One of the biggest blows came early this year, when the Supreme Court blocked AMLO’s nationalist electricity law, which prioritized using power from Mexico’s struggling state utility company over energy produced by private renewable firms. A few days later, he proposed a constitutional reforms package, including the changes to the Supreme Court. 

“Right now, the executive power also controls the legislative branch,” said Judge Juana Fuentes Velazquez, head of JUFED, one of Mexico’s main associations of judicial workers leading nationwide strikes against the reform. “If we elect judges by popular vote, we’ll have a majority of judges from the ruling party, which would become an absolute power.”

AMLO’s main criticism of the judiciary is that its judges are controlled by sectors with economic power, whether businesspeople or even organized crime groups. AMLO recently said Supreme Court head Norma Piña should be impeached for accepting challenges by Mexican billionaire Ricardo Salinas’s Grupo Elektra in an attempt to evade taxes.

Days after his party’s victory in June, AMLO said he would seek to overhaul the courts, something his lawmakers said can happen before his term ends on the last day of September. 

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“We are going to resort to the democratic method, so that it is the people who decide, the sovereign people, so that the judges act as public servants, that they are not at the service of a minority or of an economic-financial consortium,” he said. 

In addition to electing judges by popular vote, AMLO’s proposal would reduce the number of Supreme Court justices from 11 to 9 and cut their term from 15 to 12 years. In his years-long battle against the justices, the president has always complained that they earn more than he does, so he has proposed that their salaries should not be higher than the salary of the president.

He also wants to eliminate the requirement that judges must be at least 35 years old, and halve the years of experience needed in judiciary work from 10 to 5. 

US Ambassador to Mexico Ken Salazar said that loosening the requirements in terms of qualifications and experience could also “make it easier for cartels and other bad actors to take advantage of politically motivated and inexperienced judges.”

Sheinbaum has said the government will act responsibly in the approval of the reform, however, she has emphasized that it will be approved since it’s a popular mandate. 

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“What we want is that in the judiciary there is also democracy,” she said in a in a video posted on X on Thursday. “Of course, the ones who should be selected are those who have a good public reputation, who are honest, and who have the knowledge to be judges.”

Consolidating Power

AMLO’s proposal was inspired in part by Bolivia’s efforts to reform its courts. Other countries had similar experiences: 

Having Supreme Court justices elected by popular vote is a high-stakes gamble, said Gustavo Flores-Macias, a professor of government and public policy at Cornell University. While judges may issue decisions that they perceive as more closely serving the interests of voters, they can also be a lot more vulnerable to political pressure from other branches of government.

“In Bolivia, where Supreme Court justices are also elected, the legislature screens applicants to generate a subset of candidates for voters to elect,” he said. “This step weeds out inexperienced candidates, but it also lends itself to the selection of finalists that political parties approve of.”

Approximately half of Mexico’s federal judges will be elected by popular vote in 2025, including Supreme Court justices, and the rest in 2027, when the Electoral Court judges will be elected, according to the latest version of AMLO’s proposal. 

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The Supreme Court justices would be given the option to resign before the election of new judges or run for their seat. The former would allow them to keep their full retirement pensions, while the latter would not. 

Flores-Macias underlined that neither appointed nor elected judges are a panacea for Mexico’s judiciary, since corruption and the politicization of judicial decisions can be present in both systems. 

“The Mexican justice system is well known for widespread corruption resulting in generalized impunity, so it’s hardly an example for the rest of the world.”

—With assistance from Michael O’Boyle.

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