The Future: Who Will Manage It?
IN 1982 MEXICO'S ECONOMY CEASED TO grow for the first time since the 1930s, shattering the promise of a second economic miracle based on oil. Political stability in Mexico has always depended...
...29 Repeated statements by Reagan Administration officials on drugs, corruption and instability in Mexico climaxed in mid-1986 with the Senate hearings held by Sen...
...El Cotidiano, (February-March 1985...
...companies in the American Chamber of Commerce of Mexico...
...Inside the Company: CIA Diary (New York: Bantam, 1979), p. 538...
...Financial deficit-U.S...
...Proceso (April 28, 1986...
...Authentic Party of the Mexican Revolution (PARM): Founded in 1954 by military men identified with Venus- tiano Carranza, Mexico's first post-revolutionary presi- dent, it has, up to now, remained insignificant, with a minor role as loyal opposition to the PRI...
...La Jornada, March 14, 1987...
...The PAN staged ' ' Any sociologist who has studied Chicago in 1928 could offer you the logics of political participation of the Mexican elite-a solidarity among those who divide up the booty...
...50% of industrial chemicals...
...The architects of this program are de la Madrid's new managers, economic technicians who have replaced traditional career politicians in key government " From now until next year's elections will be an extremely important time for Mexican citizenry, because it is very clear that we are before what I call a citizens' revolution...
...trading partner...
...3 7 In Mexican political and intellectual circles these themes are more than theoretical discussions...
...Mass support during elections is encouraged by reminding each voter of the PRI's beneficence...
...But the majority are outraged by the economic crisis...
...Reflecting this new interest, financier Felix Rohatyn recently proposed a private investment-led economic recovery: "We are Mexico's biggest trading partner, primary recipient of its huge capital flight, and haven for millions of its destitute Passing the presidential mantle: de la Madrid, right, and his protege, Carlos Salinas de Gortari citizens...
...government...
...Given this, if the party cannot lead the way toward fulfilling economic demands, it should open the way for increased electoral participation and greater political participation...
...The elites wrangle with words, papers, programs...
...Department of State, Embassy Wires...
...FBIS Latin America, November 29, 1986...
...Sylvia Maxfield & Ricardo Anzalddia Montoya, eds...
...decentralization of government...
...2 Monetary speculation and capital flight intensified during 1981 and 1982, while the peso went from 25 to the dollar at the beginning of 1982 to 150 at year's end...
...U *Latin America Monitor, October 1987...
...How each actor in the struggle attempts to promote and/or manage the resulting changes depends on his/ her location in the system and ability to influence it...
...It is more or less the same when we talk about democracy with the United States, when we explain it hasn't always existed...
...Servicing the interSEPTEMBER/DECEMBER23 23 SEPTEMBER/DECEMBERMexico est at about 8% per year without reducing the principal, and assuming the total principal remains the same Mexico will owe over $80 billion in interest alone in 10 years...
...At the core of this long-term growth strategy is the expansion of the non-oil export sector, the promotion of new foreign investments and a commitment to service Mexico's foreign debt...
...The moment poses a fundamental question: Can the system renovate itself, regain social consensus and proceed toward a muchneeded process of democratization that is defined by the majority of Mexicans...
...3 0 The business sector has gained considerably under de la Madrid, who this year began selling back onethird of all bank shares at extremely low prices...
...Paco Ignacio Taibo II, writer noisy demonstrations at U.S...
...the minimum wage in real terms equaled 65% of 1981 levels and 51.6% of the 1976 level...
...and the growing fiscal deficit impaired the state's ability to blunt the social effects of these disparities...
...See Ceskreo Morales & Gloria Abella, "M6xico ante la nueva politica industrial norteamericana," in Informe: Relaciones Mixico-Estados Unidos, No...
...Wall Street Journal, December 15, 1986...
...Between the end of 1982 and May 1987, investment houses increased their intake of deposits 35.6 times, compared to 10.2 times for the nation's banks...
...Federal Reserve Board Paul Volcker with the prestigious Order of the Aztec Eagle...
...When oil came on line in 1976, L6pez Portillo promised Mexico would become a First World country...
...76% of rubber...
...After an average growth rate between 1940 and 1982 of 6.3%, the economy is expected to register, at best, .4% growth in the 1982-1988 period.' Seemingly overnight, the economy was at a standstill, despite four years of rapid growth in total investment...
...New York: Monthly Review, 1983), p. 157...
...Voting against the party could make getting benefits from PRI-run local governments, agencies and organizations difficult...
...The discovery of new oil deposits in 1976 was heralded as the saviour of the economy-the solution to capital scarcity, debt and unemployment in the short term, the path out of underdevelopment in the long term...
...The sector has grown dramatically, from some 454 plants in 1975 to over 800 in 1986, employing some 250,000 workers (one out of ten industrial workers), and displacing tourism as the second largest official source of foreign exchange.' The maquila workforce, predominantly female, receives less per hour than do Far East laborers (among the lowest paid in the world) while transportation costs are vastly reduced by the proximity to the U.S...
...Cesireo Morales, philosopher offices...
...Cockroft, Mexico, p. 158...
...inflation reached almost 100...
...Its monopoly over state power has made it almost indistinguishable from the government, leading many to refer to them as one: el PRI-gobierno...
...Mexican Workers' Party (PMT): Founded in 1974 by some of the best-known progressive leaders, including railroad workers' leader Demetrio Vallejo and the current PMS presidential candidate, Heberto Castillo, the PMT concentrated primarily on working jointly with students, peasants and labor to develop a nationalist Left platform...
...Explaining its creation, one organizer stated: "We have ceded the power that corresponds to us-given our economic weight-and we have not participated as a sector in the political and economic decisions of our nation...
...In March of this year, five organizations merged to form the Mexican Socialist Party (PMS), which now claims 250,000 members (see box...
...Devaluation will now not only restrict dollar purchases but fuel the staggering inflation rate, which set off the market popularity in the first place...
...intelligence mission in the hemisphere, according to Philip Agee...
...Government and Private Sector in Contemporary Mexico...
...Very active in the conservative National Action Party (PAN), Mexico's second largest political party, members of this faction have now taken over its leadership (see box...
...According to Philip Agee, writing in the late 1960s: "Because of the strategic importance of Mexico to the U.S., its size and proximity, and the abundance of enemy activities, the Mexico City station is the largest in the hemisphere...
...Bank of Mexico data, La Jornada, April 9, 1987...
...According to BMV president Manuel Somoza, most investments are now handled by professional brokers, "implying more professional management of stocks and avoidance of the mistakes that plagued small investors in 1978 and 1979...
...Comercio Exterior (Mexico City), March 1987, p. 190 & 186...
...Left challenges to that debate find echo in the popular movements while middle-class voices become more clamorous...
...For a long time the left parties considered him the ideal person to unite diverse tendencies behind a single candidate...
...The citizen is emerging as an actor who wants to participate...
...The Future: Who Will Manage It...
...What is being proposed," declared Cuauhtemoc Cirdenas, exgovernor of Michoacan and son of Mexico's most popular president, Lazaro Cdrdenas, "is the recuperation of the constitutional project of the revolution, returning to its real concepts...
...5. Ibid...
...REPORT ON THE AMERICAS 22Table I Mexico: Economic Indicators 1981-1987 1981 1982 1983 1984 1985 1 986 1987* GDP ( c growth rate) 8.0 -0.5 -5.3 3.7 2.7 -3.8 2.0 Inflation (e% change 28.7 98.8 80.8 59.2 63.7 105.7 130.0 in retail price) Government Financial 14.7 17.6 8.9 7.4 9.9 16.0 13.8 Deficit (C% of GDP) Exports (US $billion) 19.4 21.2 21.4 24.2 2 1.9 15.8 21 Imports 23.9 14.4 7.7 11.3 13.5 11.4 14 Balance -4.5 6.8 13.7 12.9 8.4 4.4 7 Unemployment: 1982- 4.7% 1 million people 1987- 17.6 4.5 million people "*estimated Sources: GDP growth & inflation Report of Economic Cabinet data cited in La Jornada, April 20, 1987...
...Luis Ortiz Monasterio, PRI party official tion in Juchitin, Oaxaca, resulted in municipal election triumph and a brief tenure in office (see "Atin Tiembla-It Still Trembles...
...The campaign has paid off...
...The north, Mexico's old industrial heart built on the wealth of breweries and SEPTEMBER/DECEMBER Tti c E E 4 : 25RMexior Ac Mexico Fine Tuning on the Stock Exchange On October 19, "Black Monday," when stock markets worldwide crashed from their historic highs, Mexico's Bolsa de Valores (BMV) plunged 38% during the course of the week...
...Their vigorous support for the PAN has given that party a new dimension...
...But the left parties can claim only limited support from popular movements, although they have played a role, in some cases a major one, in specific labor and peasant struggles-including the 1976 university workers strike-and in the progressive nuclear and electrical workers' unions...
...their relevance is also pragmatic...
...Financiers, northern industrialists, traditional Catholics and middle-class con- servatives form its base of support...
...The results by 1987 have been less than successful (see table...
...Letter to the editor, New York Times, January 26, 1987...
...Haven for Spanish Civil War refugees and political exiles from Latin America's dictatorships, active promoter of diplomatic initiatives ranging from disarmament to the Contadora peace initiative, Mexico has often been at loggerheads with its neighbor over foreign policy...
...W HEN MIGUEL DE LA MADRID ASSUMED the presidency in December 1982, he immediately declared that the situation was "intolerable" and put forth a two-stage program to resolve it: (1) immediate measures to contain the short-term problems and (2) a National Plan for Development 1983-1988 for the long-term...
...These three, publicly identified with what is termed the Corriente Democrdtica (Democratic Current), are among the most articulate and politically savvy members of the PRI leadership...
...aid to the PRI-controlled government, and at northern border crossings...
...Department of Commerce, International Trade Administration, Foreign Economic Trends...
...Others, who realize the system cannot survive without fundamental redistribution of wealth and power, face a choice: to stay with the PRI and its Democratic Current, join a Left party or throw their lot in with the popular movements...
...much remains rhetoric and too transparent to convince a skeptical citizenry...
...Trade-Interamerican Development Bank: Department of State...
...This judgment on the nature of Mexico's political system inevitably provoked energetic protests by the de la Madrid government...
...It now insists that government's proper function is to create "the conditions that will allow us to generate the wealth" of the nation, as the former director of Mexico's largest bank expressed it...
...banks had an average of 47% of their own capital at risk in Mexican loans...
...O NE MORNING DURING THE 1982 PRESIdential campaign in Cuernavaca, city buses disappeared...
...We want, through a genuine public conPopular Socialist Party (PPS): Founded in 1948, under leadership of Marxist/nationalist Vicente Lombardo To- ledano, a principal organizer of the labor movement dur- ing the Cirdenas presidency, the PPS split in 1960, and since then has played the role of loyal opposition to the PRI...
...direct foreign investment was $9.6 billion out of a total of $14.6 billion...
...A vigorous promotion campaign encourages people to invest through this parallel market...
...Cornelius, Political Economy, pp...
...Then came the crash...
...Open debate on candidates, the Corriente argues, will revive the party's vanguard role, as the forum in which differing social interests are expressed, evaluated, negotiated and incorporated into government policy...
...The struggle revolves around two basic approaches...
...Jesse Helms...
...Holly Sklar, ed...
...But they are no longer certain or united...
...With no viable alternative on a national level, the PRI still retains control over most organized sectors of the population and the forces of co-optation and coercion inherent in the power of the state...
...Of the top 500 U.S...
...Bank of Mexico data...
...The traditional sectors insist on maintaining the facade of unity, calling for increased democracy and dialogue with few concrete concessions...
...The Left sees the new ticket as a setback in its efforts to forge an electoral front, regarding the PARM as "a party of dinosaurs...
...In addition, many companies faced severe financial difficulties, forcing them to close or be absorbed by others...
...The PMS has nominated party leader Heberto Castillo but as his fellow leader Arnoldo Martinez Verdugo insists, "the Left must present itself united with all its forces" to defeat the PRI and the continuation of austerity policies...
...Thus, they do not call for a laissez-faire economy, instead recommending a revision of the social pact to protect their export position while allowing them a free hand in determining such things as wages and prices...
...National Action Party (PAN): Founded on the premises of a major private bank in 1939, it is the second most im- portant electoral force in Mexico...
...4 In addition to debt payments, Mexicans sent over $55 billion in assets to the United States between 1975 and 1985, much of it going into high-interest accounts or real estate, according to the U.S...
...some call even more loudly for the implementation of the constitution and the institution of a balance of powers, finding political expression of these demands in the PAN...
...New York Times, June 11, 1986...
...as educated professionals, they expected they would be its leaders-and now they cannot even afford a Volkswagen...
...I think of my children, who simply can't believe that television or telephones didn't always exist...
...El Cotidiano,(January-February 1986...
...R EPRESENTING A LEGITIMATE (STATErecognized) platform of dissent are the left parties, comprised largely of progressive middle-class professionals, students and intellectuals...
...4. Nora Lustig, "Balance de Sombras," Nexos (Mexico City) October 1986...
...And public opinion is among the most important factors at this political moment in Mexico.'' -- Hector Aguilar Camin, editor tion of presidential candidates, opening the views and positions of potential candidates to public scrutiny...
...160 billion in 20...
...La Jornada, March 14, 1987...
...Mexico remains loyal to its debt commitments, praising without joining other Latin American efforts (such as those of Peru and Brazil) to force new rules for the debt game...
...Mexicans lost all the way around on Black Monday...
...Mexico: CEESTEM...
...This position-known as the radical faction-also calls for a total change in the political structure, eliminating the one-party system in favor of a multiparty model, along the lines of the United States, and replacing the social pact with a system of competing "interest groups...
...Based on the 1982 International Monetary Fund (IMF) agreements, the new strategy sought to reduce the public deficit, the foreign deficit, and inflation...
...Should the economic ministers continue to direct national policy, the Corriente leaders fear that in their zeal to impose their recovery program regardless of social cost, they will allow the PRI's bases of support to disintegrate...
...Journal of Commerce, November 3, 1986...
...official unemployment almost doubled during 1982 and combined unemployment and underemployment affected an estimated 50% of the labor force...
...The middle class, whose expectations soared with the new oil discovery, was particularly stunned...
...3 8 The political and economic elite in Mexico, the government, the PRI, private enterprise, the urban middle class and, externally, the United States, still direct Mexico's transition process-they retain the instruments of power and social domination...
...the erosion of national sovereignty through increased economic dependence...
...Under de la Madrid, however, the composition of the government has shifted from career politicians, earning passage through PRI channels, to technocrats-many who owe no favors and have no vested allegiance to party bosses...
...media and government officials suddenly discovered the traditional nature of Mexican elections, as the PRI moved to block opposition victories in key northern locations...
...San Diego: University of California, Center for U.S.-Mexican Studies, 1986), p. 3. 8. Cornelius, Political Economy, p. 25...
...Both imply a further erosion of national autonomy in matters concerning the economy.24 HE REAGAN ADMINISTRATION IS BLAtant in its attempts to influence Mexico's foreign policy, particularly with regard to Central America...
...But within days of the PRI's nomination of Salinas as its presidential candidate, Cirdenas, in a surprise move, declared his intention to run with the Authentic Party of the Revolution (PARM), a minor loyal opposition party...
...33...
...counterparts' salaries in 1984...
...2 3 There are 2,100 U.S...
...persistent requirements for foreign capital and technology created a constant balance of payments deficit...
...4, 1984...
...Economists argue that by maintaining an overvalued peso the government actually subsidized capital flight...
...The only country in Latin America that did not join the U.S.-sponsored OAS action to oust REPORT ON THE AMERICAS 24Cuba in 1962 and sever relations in 1964, Mexico has the third lowest coincidence with the United States in United Nations votes (after Nicaragua and Cuba) of any Latin American country...
...Thus efforts to find a unified position continue...
...But its loss of power and questionable ability to confront the political challenges that arise from a much more demanding and less tolerant electorate create a new, less certain, environment...
...Cornelius, Political Economy, p. 14...
...But Mexico's 550 creditor banks and the IMF insisted that the government would have to squeeze harder before getting relief...
...Not only did the new austerity policies fail to generate sustained economic growth, but the crisis worsened in 1986 as inflation reached 105%, the budget deficit remained constant and new debt accumulated...
...William Bywater of the International Union of Electronic Workers sums up the obvious: The maquiladora program has not fostered prosperity for Mexican workers...
...6 " The maquiladora sector, the leading edge of Mexico's economic integration into the U.S...
...The Mexican government's faith in its financial policies, however, remains unshaken...
...F OR THE MEXICAN PRIVATE ENTERPRISE sector, the crisis has provoked a new level of political involvement...
...8 A crucial aspect of this long-term growth strategy is the in-bond assembly plant (maquila) program...
...As articulated by organizations such as the Trilateral Commission, corporate strategy for Mexico focuses on the role an industrialized developing nation is to play in the world economy today...
...This politically diverse sector, though vocal and articulate in its criticism, is no longer confident of a solution...
...investments-at the end of the year accumulated U.S...
...Revolutionary Workers Party (PRT): With roots in a party founded in 1959 as the Mexican section of the Fourth International, the PRT was established in 1976...
...San Diego: University of California, Center for U.S.-Mexican Studies, 1987), especially see chapter by Matilde Luna, Ricardo Tirado & Francisco Valdds, "Businessmen and Politics in Mexico, 1982-1986...
...Felix G. Rohatyn & Roger Altman, "Confront the Mexican Problem," Wall Street Journal, November 26, 1986...
...Mexico: Siglo Veintiuno, 1986, Vol...
...The contending position--put forward somewhat differently by opposition parties (both conservative and progressive) and independent popular movements-insists on the priority of satisfying domestic needs...
...2), pp.399-400...
...Several large firms reneged on their foreign debt, including the ALFA industrial group (then the most powerful private sector entity...
...Yet different factions put forward different proposals for change: one group, representing the oldest sector of private capital (including banks), traditionally based in Monterrey, calls for the replacement of the "obsolete" model of economic growth inaugurated in the 1940s with a neoliberal model based on privatization and led by a dynamic export sector...
...The debt accumulated under Echeverria ($4.5 billion in 1971 to $19.6 billion by 1976) increased fourfold (over $80 billion) by the end of L6pez Portillo's presidency in 1982...
...While the IMF austerity program has seriously hurt the PRI's mass base, particularly workers and peasants, it also threatens the politicians that derive their influence from that base...
...In 1982, in an effort to win back the confidence of the bankers, incoming president de la Madrid promised not only to sell off one-third of the nationalized banks, but to offer state-owned properties as well--part of a far-reaching privatization program-and all at very low prices...
...Bernardo Batiz, secretary general of the party, sounded an ominous note: "The party line is one of a search for peaceful change...
...Each participant had been issued a color-coded card which, on the return trip, was exchanged for one of a different color as proof of attendance...
...The costs of this failed strategy were enormous: unemployment almost doubled from 1982 to 15% in 1985...
...in 1986 it rose 321%, compared to the 24% shown by the New York Stock Exchange...
...That year, the first signs of an international oil "glut" also appeared...
...Both options assume a Mexican economy that is primarily directed to serve transnational, particularly U.S., economic interests...
...The people may bypass party actions...
...close to 675,000 lost jobs over the last four years while no new jobs were created for the estimated 3 million who joined the labor force during that period.' Between 1982 and mid-1986 the minimum salary increased by 363%, while the price for tortillas increased 416%, bread 1,800%, beans 776%, and eggs 582...
...Most wore cardboard hats emblazoned with the initials of one of the ruling party's three mass organizations (CTM, CNC, CNOP...
...2 2 U.S.-based transnationals controlled 57% of the auto industry, 49% of petrochemicals and coke...
...names and brands...
...business community also views Mexico with increasing concern...
...Colgate-Palmolive, Coca Cola, Twinky (Tuinky in Mexico), Ford, General Electric, Kelloggs, Woolworths, IBM and recently McDonalds, among hundreds of others, are so prominent in Mexico that they no longer are perceived as U.S...
...Well-educated generations, raised during a period of growing economic opportunities and briefly blessed by oil wealth, came down to earth with a thud in 1982...
...By 1981, Mexico's economy was "petrolized"' '--dependent on oil for close to 75% of its export revenues...
...Reformers meanPorfirio Mufioz Ledo and Cuauhtemoc Cardenas, leaders of the Democratic Current SEPTEMBER/DECEMBER while insist that the party must reconsolidate its base of popular support through promoting renewed local organizing, increased participation at the base level and ' 'We believe that the economic crisis is here to stay for a long stretch...
...market...
...Lustig, "Balance...
...The PRI candidate is coming to give a speech," people explained...
...and the bleeding of the nation due to the huge national debt...
...With the onset of the crisis the private sector has revealed the depth of its corruption, through the evasion of taxes, perpetual violation of labor laws, rampant inefficiency and export of capital...
...security-something Horton's analysis did not support...
...Although most political analysts agree that the PAN does not have a viable national program, their visibly growing political importance is of increasing concern to the PRI-especially after the volatile episodes of the 1986 elections...
...This scene is repeated in every town and city in the republic during a presidential election campaign...
...T HE GOVERNMENT JUSTIFIES THIS BUR- den as a necessary interim measure to promote new growth without inflationary side-effects...
...Quite suddenly, the main square filled with peasants, workers and government bureaucrats...
...In 1984, then-CIA Director William Casey pressured his Latin America analyst, John Horton, to revise an intelligence estimate so as to portray Mexico's financial crisis as a threat to U.S...
...By 1985, real wages had dropped to mid-1960s levels...
...PAN's pro-business positions have been welcomed by the Reagan Administration...
...El Cotidiano (Mexico City), January-February 1986, p. 18...
...71 of the top 100 had Mexican investments...
...Employment-La Jornlada, March 10, 1987...
...They are the ones who believed in de la Madrid's promises: the "moral renovation of society" to wipe out corruption...
...Resentful of the centralized control radiated from Mexico City, its leaders have developed strong bonds with the United States...
...Treasury Department...
...Like the PPS, the PST has indicated it will support Cuauhtemoc Cdrdenas in 1988...
...Some still do: they argue the economic model simply needs fine-tuning...
...economist Ifigenia Martinez, former ambassador and congresswoman...
...some Mexican children are surprised to find such "Mexican" brands as Coca-Cola and Colgate being sold here when they visit...
...Foreign investment is especially sought in the export sector (primarily foreign-controlled): petrochemicals, electronics and automobile industries...
...2 6 In both 1983 and 1984 the National Security Council proposed a covert program-to include trade sanctions and financial support for opposition groups-designed to persuade the Mexican government to change its Central America policy...
...During the 1970s and especially after L6pez Portillo nationalized the banks, as a parting gesture in 1982, business grew increasingly unhappy with the traditional state-business-labor alliance...
...In the fall of 1986, a surprising new group emerged from the PRI to demand democratization...
...Most notably, the alliance between a left coalition and a regional peasant-student organiza' 'Mexicans are descendents of three autocratic traditions: indigenous, Spanish and Catholic...
...Mexico is the third largest U.S...
...The traditional selection process remains a secret, although it is clear that each president ultimately chooses his successor...
...The middle class, which claims it has most to lose in the crisis, symbolizes this change...
...After endorsing the last three PRI presidential candi- dates, it will support Cuauhtemoc CIrdenas on the PARM ticket in 1988...
...As Mexico's economic difficulties intensify, so does the political dispute over which course to take to the future...
...James Cockroft, Mexico...
...The ultimate irony is that according to one estimate, if one measures the general flows of capital, Mexicans may have more assets deposited in U.S...
...All of this is sold and bought on the stock exchange, which operates as a parallel financial system to the banks...
...Party representatives attended the 1984 Republican National Convention and its members have been linked to the private network to fund the Nicaraguan contras via Carl "Spitz" Channel (while admitting they met with Channel, the party denies support for the contras...
...Transcending its narrow base of student support, the party gained influence in the telephone, electrical and nuclear workers' unions...
...The question is whether Mexico should become a base for traditional heavy industry (steel and auto, for example) while the United States shifts to high-technology and service industries, or whether Mexico should pursue the maquila route, becoming a national assembly shop in the international production process...
...ALTHOUGH THE ECONOMY GREW BY ALmost 8.5% between 1978 and 1981, in 1982 it registered negative growth of .5...
...To attract investors, the government has repealed a number of laws and regulations that established limits on the role of foreign capital (especially a 49% limit on foreign ownership of Mexican enterprise), and had added to the package devaluation of the currency on an almost daily basis...
...they accepted the need for sacrifice, but not forever...
...Another faction, made up primarily of industrialists and merchants in central Mexico, particularly around Mexico City, joins in the criticism of the old social order but proposes solutions within the existing structure-to "modernize" the system...
...La Jornada, April 23, 1987...
...banks than the amount their country owes the United States.'" A Morgan Guaranty Trust Co...
...The proponents of a new public dialogue include, besides Cirdenas, Porfirio Mufioz Ledo, former UN ambassador and president of the PRI under Luis Echeverria andRMexico te Amicas Mexico Opposition Parties in Mexico Mexican Socialist Party (PMS): Founded in 1987 when the Unified Socialist Party of Mexico (PSUM) joined the Mexican Workers Party (PMT), the new party represents an attempt to broaden the Left's national presence, particularly in terms of the 1988 elections...
...Human rights activist and Nobel Peace Prize nominee Rosario Ibarra de Piedra was the PRT's presidential candidate in 1982 and is expected to run for a second time in 1988...
...Wall Street Journal, December 15, 1986...
...private capital is 67.5% of all direct foreign investment in Mexico...
...T HIS CRISIS WITHIN A CRISIS HAS created renewed debate within the party itself...
...6 To complete this miserable picture, 54% of the economically active population were estimated in the early 1980s to earn less than minimum wages...
...7. Barry Carr, "The Mexican Left, The Popular Movements and the Politics of Austerity," in Barry Carr & Ricardo Anazald6a Montoya, The Mexican Left, the Popular Movements and the Politics of Austerity...
...Each night, popular television personality Jacobo Zabludovsky announces the daily stock returns...
...Workers Socialist Party (PST): Founded in 1975 with the support of President Luis Echeverria, the PST seeks to work through an alliance with the progressive sectors of the PRI...
...Proceso,(November 10, 1986...
...George Grayson, "Symbolism and Substance in U.S.Mexican Relations," Christian Science Monitor, January 21, 1987...
...They share the primary concerns of international financial and investment interests: "stabilize" Mexico, that is, manage the crisis toward creating favorable investment and debt payment conditions for the future...
...without it, the entire system was thrown into crisis...
...The sharp drop in the price of oil in mid-1981 through 1982 and the deteriorating world market for other exports joined the internal factors that assaulted the Mexican economy during the same period...
...Proceso (October 19, 1987...
...2 1 In 1986, transnationals remitted $442 million to their parent companies, and reinvested only $185.4 million in Mexico...
...When the ruling party announced its inevitable victory, business leader and PAN presidential candidate, Manuel Clouthier, threatened a hunger strike and roared: "My final objective will be to destabilize this government, fruit of fraud, that has no right to govern us...
...Tracing its ideological roots to President Francisco I. Madero in 1910, until the 1980s the PAN limited its political role to one of loyal op- position...
...Recently, major transnational corporations such as Ford Motor Company, IBM and Nissan, among others, have responded with large new investments, many of them in production for export only...
...establishment of new watchdog agencies...
...But instead of rescuing the economy, it merely hastened its collapse...
...86% of chemicals and pharmaceuticals...
...at about 100% annual interest, the banks do not keep pace with the annual inflation rate of 140...
...In 1986, U.S...
...While critics argue that dismantling the separate political tendencies will impoverish political debate-merely to play the game of PRI-controlled electoral politics-PMS leaders insist on the need to reach out to mass movements in order to fashion a national alternative...
...the popular sector with strikes, demonstrations, protests-mostly separate, usually defeated, but slowly joining forces in a new movement...
...Putting the Mexican economy through the 'export development' wringer offers no ray of hope to Mexican or American workers...
...The unusual media attention to these themes lead Mexican analysts to conclude that the United States intends to undermine Mexico's moral stance in Central America by delegitimizing its government...
...their suppliers and center of agribusiness, has developed separate concerns from the less-developed southern half...
...For many, the end of growth was a sudden crash...
...Unified Socialist Party of Mexico (PSUM): Founded in 1981 as a result of a merger of several Left parties, including the 62-year-old Communist Party of Mexico, the PSUM was a first attempt to consolidate the forces of the major Left parties...
...Pamela Falk, Cuban Foreign Policy (Lexington, MA: Lexington Books, 1986), pp...
...Quoted in Washington Post, September 1, 1986...
...As a critic within the PRI, Cuauhtemoc Cardenas strengthened progressive voices both within and outside the party...
...Our banking system is hostage to its external debt, and our own security at risk along an increasingly unstable 2,000 mile border...
...Bob Woodward, Veil: The Secret Wars of the CIA 19811987 (New York: Simon and Schuster, 1987), pp...
...The contradictions inherent in Mexico's spectacular growth, most of them rooted in the industrialization model of the 1950s, began to tear the system apart in the 1970s: the ever-shrinking buying power of the majority of people limited the domestic market and ultimately production...
...SEPTEMBER/DECEMBER 21Mexico Moreover, rising interest rates multiplied the payments on the foreign debt, both private and public...
...In a time of crisis that has weakened the progressive movement and in which the Right has gained strength, the Corriente recognizes that the PRI urgently needs to reformulate its relationship with its popular base...
...Semana Latinoamericana, (May 18, 1987...
...3 6 The Corriente political leaders outline their principal worries: the dismantling of industrial plant and equipment and decapitalization of the economy...
...Latin America Economic Report, October 31, 1985 and July 31, 1987...
...U.S...
...Far from generating financial resources for produc- tive investment, the BMV today mostly profits from speculation: a lot of money chasing only 50 million shares, of only 75 companies on a daily average...
...3 ' Private business is united in calling for concrete political rules that are not subject to presidential power...
...3 4 PAN has expanded rapidly over the last year and its new leadership prom26 REPORT ON THE AMERICAS D) 26 REPORT ON THE AMERICASises increased militancy...
...Annual servicing of the debt is over $8 billion...
...Did you attend the rally, did you vote for the candidate of the revolution...
...Concerned that the stock market plunges in the developed world would mean a reduction in demand for Mexican exports, the Central Bank on November 18 let the value of the peso drop by 59...
...capital and Mexican recovery...
...13-16...
...economy, is over 90% U.S.-owned.'" In 1982, the 10 largest U.S...
...2. Carlos Tello, "Crisis in 1985: Saldos y Opciones," in Pablo GonzAlez Casanova & Hector Aguilar Camin, eds., Mixico ante la crisis...
...In 1987, one faction split off to join the PMS...
...Its creation is intended to strengthen the Left's organizational presence and offer it a platform for the 1988 presidential elections...
...Maquiladoras are organized in duty-free zones...
...Political stability in Mexico has always depended on sustained economic growth...
...La Jornada, February 19 and 18, 1987...
...1986 statistics, New York Times, June 23, 1987...
...557-559...
...House of cards that it is, the stock market offers some hedge...
...study estimated that between 1976 and 1982, $36 billion of private capital went abroad, more than half the $60 billion that Mexico borrowed in that period...
...a falta de pan, la democracia.' ' -Luis Ortiz Monasterio, PRI party official greater independence from government...
...The 1986 local and state elections in Chihuahua and Henry Kissinger on unofficial visit Sinaloa were hotly contested as the PAN demonstrated its new political strength...
...3 By August, the Bank of Mexico had no foreign reserves and payments on the $80 billion foreign debt were suspended...
...Although Mexicans were not surprised by this longstanding practice, the United States chose to make it an international issue...
...The study concludes that if capital flight had not occurred, Mexico would have had to borrow only $12 billion instead of the $100 billion it now owes to foreign lenders.'" E CONOMICALLY, THE UNITED STATES REPresents Mexico's most important market, accounting for 62% of all Mexican exports and about 70% of its imports...
...Virtually every sector of society-and one powerful neighbor to the north-is battling over its resolution...
...3. Ibid., p. 401...
...The international banking community is thus eager to avoid any unilateral actions, such as a moratorium...
...Mexico Ante La Crisis,Vol...
...Many held bags with a sandwich and soda handed out on the buses that transported them from all corners to the rally...
...Foreign Broadcasting Information Service (FBIS), Latin America, November 24, 1986...
...72% of copper and aluminum...
...Proceso (October 6, 1986...
...This had dropped to 30.6% (Citicorp reduced its own from 62% to 25%) by the end of 1985, as banks moved to lessen their exposure...
...1, p. 405...
...But no one argues that this represents a solution-rather, it prolongs the problem: "We have become your slaves," said a Mexican worker...
...We should recognize there is a linkage between U.S...
...Our president is going up there and getting more and more addicted, asking for more and more dollars...
...To develop the oil industry and convert it into the pivot for a new (though brief) era of unparalleled prosperity, Mexico required vast new loans, and international bankers were most obliging...
...Some 65% of the 1985 authorization were for U.S...
...There are few illusions about the PRI's weakening power, yet both conservatives and progressives confront a transition from a party with monopoly power over national politics to a majority party facing unprecedented opposition forces...
...After the 1985 earthquakes, interagency discord resulted in the project's abandonment...
...consular offices, calling for a halt in U.S...
...There have been great and grave retreats and deviations with equal consequences for Mexico that must be corrected...
...2 8 The U.S...
...The number of investors has multiplied six times over the last two years, to 300,000...
...9. Ibid., p. 25...
...industrial corporations (by sales), 277 had Mexican operations in 1977...
...2 7 In fact, Mexico has not been a "team player" on U.S...
...REPORT ON THE AMERICAS 28HE EROSION OF POPULAR SUPPORT AND the loss of legitimacy do not, however, indicate the imminent end of the PRI...
...2 MEXICO HAS THE DUBIOUS DISTINCTION of ranking as the developing world's second largest debtor (after Brazil), owing close to $100 billion at the end of 1986 with an additional loan of close to $12 billion more scheduled for this year...
...The BMV, established in 1894, became a key compo- nent of the nation's financial system in 1975 when it con- solidated operations and came under government regula- tion...
...In fact, his family owns one of the major investment firms...
...Last month, just before Latin American debtors met in Acapulco, it honored former chairman of the U.S...
...A democratic presidentialism," proposes Mufioz Ledo...
...But every sector has been hard hit...
...54% of mining and metals...
...Over the last two years a series of negotiations finally resulted in slightly more flexible terms for debt payments and the new $12 billion loan...
...Today, this group is shrinking as a coherent bloc...
...47% of food and beverages...
...Open letter, published in La Jornada, February 27, 1987...
...After lending over $22 billion in 1981, by mid 1982 foreign commercial banks suspended new credits...
...Only Americanbased multinationals and a few Mexican elites have prospered...
...Yet without new loans, Mexico cannot continue to service its obligation-and these banks must either sell off their less-than-attractive debt or lend more.2 0 Mexico's rate of return on investment, 18.3%, remains the highest in the hemisphere...
...The best performers posted fantasy-like figures: 947%, 764%, 500...
...Its growth has been powered by the search for rapid profits by the rich...
...For 57 years, the PRI has never lost a presidential, gubernatorial or senatorial election...
...In November the PAN chose northern mil- lionaire Manuel Clouthier as its candidate in 1988...
...2 " Mexico hosts the largest U.S...
...And we must gradually create this very imperfect democracy: it is not learned from the outside...
...Its rise had also been meteoric: in the first eight months of 1987 the value of shares increased by 420...
...May 1987...
...But it is a fundamental element of public opinion...
...Proceso (Mexico City), January 5, 1987...
...1. La Jornada (Mexico City), January, 17, 1987, citing American Chamber of Commerce in Mexico projections...
...In 1986, the foreign debt to GDP ratio was over 60% and its service was consuming almost three quarters of the export income...
...While new foreign investment authorizations increased by over 100% between 1982 and 1985 (as compared with the first three years of the preceeding Administration), actual investment has remained far below the amounts approved...
...La crisis unraveled the social, political and economic strands that have bound the system together for over 50 years...
...The government insists this is the only viable solution to Mexico's problems-a position hailed by international bankers and the U.S...
...Japanese firms are very interested in Mexico as a major export base to the United States...
...Most contentious is the Corriente's proposal that the party membership have a voice in the mysterious selec" I don't think the Corriente has organized political forces behind it...
...6. Wayne Cornelius, The Political Economy of Mexico Under de la Madrid: The Crisis Deepens, 1985-1986.(San Diego: University of California, Center for U.S.-Mexican Studies, 1986), p. 32...
...it argues for a democratization of the economic and political structure by guaranteeing the participation of the majority in deciding the future course of the nation...
...One, represented by the government and large business interests and supported by the United States, proposes a revitalized modernization model based on private capital investment-both national and foreign-and production for export...
...43-45...
...materials are exported to Mexico, assembled and re-exported back to the United States, with tax paid only on the value added...
...They are fascinated with econometrics and obsessed with "efficiency...
...Trilateralism (Boston: South End Press, 1980), especially pp...
...The 26 brokerage firms increased their offices from 90 five years ago to 204 in 1987...
...In the mass media and citizen coalitions, they are demanding a system of liberal democracy, without electoral irregularities, without corruption...
...Between 1981 and 1983 infant mortality, already at 50 deaths per 1,000 births, increased to 55/ 1000.5 Malnourishment has increased accordingly and now affects the majority of the population-and generations to come...
...Promoters of this scheme insist on the mutual benefits: jobs and foreign revenue for Mexico, and cheap labor plus a decline in the flow of immigrants for the United States...
...La Jornada, June 6, 1987...
...The fiscal deficit more than doubled its size, to 18% of GDP, severely affecting the financial resources of many state-owned enterprises...
...Runaway shops," transformed into maquiladoras, paid Mexican workers 8% of their U.S...
...The affirmation of change can provoke actions that are beyond the party line...
...U sultation, the restoration of presidentialism, but not authoritarianism...
...Underscoring these positions is a growing concern about the subjugation of national politics to the economic requirements of austerity programs...
...More doubtful than the northern capitalists about their ability to compete on the world market, this group proposes a less rapid pace in the "opening" of the economy...
...If "we" do not move soon, Rohatyn envisions a major social disruption followed by a "Chilean-style crackdown," transforming the country into "a boiling cauldron just made for Soviet adventurism...
...The president-to-be acknowledged this "mass support" as he waved from the governor's palace overlooking the square...
...policy...
...but it is also seen, especially by the middle class, as a way to counter inflation...
...In an effort to consolidate a national political opposition these parties have attempted to put forth an effective critique of government policies during the five years of the crisis...
...An incapacitated PRI would face growing social and political problems and become increasingly less viable as a political force, trapped in its own past with no convincting vision for the future...
...Nevertheless, in February business leaders organized an Enterprise Solidarity Front to "influence government decisions...
...Politically, this group prefers to negotiate better terms for itself within the state-party system than to attempt to form a new alliance.32 The crisis has accentuated this difference between northern and southern business interests, expressed not only economically but politically...
...340-342...
...Mexico's diplomatic initiatives have led to increased tensions with the United States-specifically on Central America...
...Bank of Mexico...
...On the national political scene, the crisis has limited the party's capacity to dissuade and control opposition through negotiation, political favors, threats and other forms of co-optation...
Vol. 21 • September 1987 • No. 5
