Dr. Danielle Zanzalari, an assistant professor of economics at Seton Hall University, has expressed concerns over Mexico’s recent judicial reforms, which she argues have dismantled investor protections and undermined market confidence. Her remarks were made in an opinion column in The Washington Times.
“In less than a year, Mexico has dismantled one of the pillars that made it a top destination for foreign investment: an independent judiciary,” said Zanzalari. “The reform effectively ended judicial independence and opened the door for incompetence, political capture and cartel influence over court decisions. Money flows where the rules can be trusted; today, Mexico is no longer that place. Citigroup might be using Mexico’s increasingly politicized courts to protect itself.”
On September 11, 2024, Mexico’s Congress approved a significant constitutional amendment requiring nearly all federal and state judges, including Supreme Court justices, to be elected by popular vote. This unprecedented move has raised concerns about the independence of the judiciary. Critics argue that politicized judicial elections could weaken checks and balances and expose the judiciary to political and criminal influence. Investors and business groups, such as the American Chamber of Commerce and analysts like Goldman Sachs, warn that this could undermine contract enforcement and deter foreign investment, potentially violating provisions in trade agreements like the United States-Mexico-Canada Agreement (USMCA).
According to Zanzalari, the reform has dismantled the impartial court system by mandating the election of over 7,000 judges and lowering qualification standards. She warns that this opens the judiciary to political capture and cartel influence. Zanzalari also notes that Mexico’s politicized courts now threaten its international arbitration obligations. She cites a 23% collapse in the peso during 2024 and rising instances of companies like Citigroup attempting to overturn arbitral awards in domestic courts as evidence of eroding investor protections.
While Mexico reported a record US $36.9 billion in foreign direct investment (FDI) for 2024, Zanzalari points out that this figure masks deeper issues: new investments fell by 34% that year, indicating reduced investor confidence. Most reported FDI consisted of reinvestments and intra-company transfers rather than fresh capital inflows. By late 2024, quarterly FDI flows had dropped significantly from US $6.35 billion in Q3 to just US $1.79 billion in Q4 amid political uncertainty.
Zanzalari is an assistant professor at Seton Hall University with expertise in banking regulation, inequality in financial access, and public policy. Her previous roles include Vice President of Credit and Portfolio Risk at Citigroup and Financial Economist at the Federal Reserve Bank of Boston.
