Mexico: The New Challenges

In 1985, Mexico will commemorate the seventy-fifth anniversary of its revolution. A new political system and social order was founded after 1910, which modernized our nation within a climate of democratic freedom and political stability. Now, toward the end of the century, Mexico faces harsh new challenges. Our economic development has brought structural imbalances which must be corrected, and we face the immediate impacts of external pressures, the international economic situation, and conflicts afflicting the international system in Central America, the Middle East and other regions of the world.

Contrary to predictions made two years ago, at the height of our crisis, when some said Mexico's capacity to maintain political stability and an adequate functioning economy was in doubt, the progress attained in overcoming our most critical difficulties is widely recognized today.

My government and the Mexican people have confronted severe tests of endurance. We have had to respond with drastic economic adjustment measures to resume a sustained recovery. We instituted reforms to strengthen the honesty and efficiency of the government. We are conducting a responsible foreign policy and, most important, we have drawn strength from the exemplary solidarity of our different social groups. Our citizens' participation has been decisive in overcoming the crisis.

Mexico is reaffirming its fundamental values. To the extent that we are able to maintain our nationalism, the commitment to satisfy the basic needs of our population, and our respect for law and democratic freedoms, our society will remain united. The greatest challenge we face at present is to translate these essential principles into new forms of public and social action.

II

Our country's achievements and basic strengths can be understood only through an appreciation of the way our major social movements and unique political institutions developed over time.

After three centuries of colonial domination, Mexico was a predominantly agrarian and mineral-exporting country which had provided the largest single source of income for the Spanish Crown. The first struggle to inspire a broad-based movement of the Mexican people was the War of Independence that started in 1810. The national government was recognized in 1824, but the task of creating a sovereign and united nation persisted.

The governments that followed had to confront semi-autonomous regional centers of power, a traditional church and army, linguistic and cultural differences, and the extreme poverty of more than 90 percent of the population. Internal difficulties and external intervention led to the loss of half of Mexico's territory to the United States in 1847. Over the next two decades, liberal and democratic reforms were taken to overcome the remnants of the colonial order and guarantee the sovereignty of the new nation-state, unifying the Mexican people to victory over the French expeditionary force and its conservative supporters in 1867.

Toward the end of the nineteenth century, the economic infrastructure for development began to take shape. The three decades of General Porfirio Díaz's dictatorship (1876-1910), however, brought extreme concentration of wealth, land and political power, eroding the legitimacy and viability of the regime and its capacity to promote further internal growth. The regime was unable to transfer political power peacefully to a new government. This, combined with adverse internal and international economic conditions, led to social unrest and increased demands for political democracy. It accentuated national outrage over the foreign control of our national resources.

Mexico's revolution started in 1910. It sought to recover the ideals of the nineteenth-century liberal-democratic movement and to carry out land reform, labor rights, and national control of our resources. Over one million lives were lost. Only the establishment of a new social covenant, the 1917 Constitution, ended the violence.

This Constitution governs Mexico today. It is based on nationalism, the nation's will to become a vigorous and independent community. Mexican nationalism implies a deep awareness of our cultural identity, enriched by our own diversity, and the commitment to defend our country from any threat to its independence. In contrast to European nationalism, which was essentially conservative, ours mobilizes the social forces of the country in a common purpose of protecting our democracy—not only in strictly political terms but also as a way of carrying out significant improvements in the social and cultural conditions of our population.

The revolutionary leadership after 1917 set out to resume economic development, and institutionalized the political framework by unifying contending forces in the revolution's political party in 1929. In the 1930s, Mexico achieved peaceful and orderly transfers of power. We also recovered sovereignty over our oil resources, carried out an extensive land reform and furthered the goals of free public education and progressive labor relations. Since then, the labor movement, peasant organizations, the middle class and the private sector have had effective institutional channels to promote their interests; their orderly participation has helped to consolidate the political regime.

The basic institutions and rules of the political system were established with the founding of the party of the revolution, now the Revolutionary Institutional Party (PRI), and have been strengthened since: a strong one-term presidency; guarantee of democratic freedoms for all citizens; respect and loyalty of the armed forces for the Constitution and the political system; mechanisms for reaching policy agreements by negotiation; and a permanent process of strengthening social rights through legal reforms and increasing the social benefits of public education, health and municipal services.

We have not achieved all we set out to do. The political system is still developing. We have made significant progress in implementing democratic reforms. The social changes created by industrialization, education, urbanization, a growing middle class and media coverage are being translated into political life, in the form of a more active congressional and judicial role, a greater pluralism of public opinion, and new political parties which represent diverse minority groups.

Our political system is increasingly competitive. During the 1982 presidential elections seven different parties took part fully, contributing to a significant increase in electoral participation. With a 70 percent turnout, in which the majority party obtained more than two-thirds of the votes, the new government received a clear and strong mandate for orderly change.

At the start of my administration, I sent several measures to Congress which, enriched and approved, have led to important reforms in our economic and political organization. We strengthened the mixed nature of our economy by specifying the responsibilities of the state in guiding development and guaranteeing the security and freedom of the private and social sectors, which are responsible for 80 percent of domestic output.

My reforms were inspired by and depend on public participation. We are establishing new mechanisms to assure a widespread participation in governmental decisions and have increased the role and resources of local governments so as to enlarge their responsibility in regional development and facilitate community involvement.

In order to overcome serious problems of inefficiency and corruption, we have undertaken measures for a moral renewal. Legislation has been passed to ensure the honest conduct of public officials, to improve the efficiency of our judicial system and the professionalism of the police forces, and to establish precise rules in contracting and carrying out public works. Despite the economic crisis, these strong measures and structural changes have helped to reduce the climate of tension and uncertainty that existed at the beginning of my presidential term.

Maintaining social peace in a difficult process of economic reordering requires that every sector be informed honestly about the country's situation; it requires constant national and regional political negotiations, a consistent follow-up on the guidelines set during the campaign, and perseverance in carrying out our initial strategy. Thus, the system has worked out the essential agreements for undertaking our economic reordering program.

III

During these last few years, not only Mexico's political institutions, but its social fabric as well, have had to face new challenges. The urgent task has been to meet the basic needs of a population which has grown from 20 to 76 million in scarcely four decades. Mexico is now the eleventh largest nation in the world. Once an agrarian society, we now have two-thirds of our population living in urban areas. Rapid economic growth and urbanization have generated additional demands and created new problems.

Mexico stands as one of the world's most successful cases of economic growth. Over four decades it maintained an annual growth rate of more than six percent. Its productive capacity is now the ninth largest in the world, excluding the East European socialist countries. Its natural resources are diverse and abundant; its hydrocarbon reserves are the fourth largest in the world, and it is one of the main producers of metallic and non-metallic minerals. Its agriculture is diversified and its industry bigger than that of some developed countries, such as Sweden, Belgium, Denmark, Norway and Spain, and developing countries such as South Korea and India. We have built an extensive and modern transport infrastructure, and our tourist and commercial services can compete with the best in the world. The quality of our human resources has also been significantly improved through the creation of important research centers and extensive higher education and technical facilities. Overall, the gains made in production, employment and basic services are significant.

Improvements in health care made us one of the fastest growing populations in the world. The population of Mexico City and the metropolitan zone is equal to that of all Central America. A way had to be found to reduce this growth without infringing upon individual rights. The solution was to promote family planning, which allowed us to reduce the annual rate of growth from an average of 3.2 percent during the decade 1970-80 to 2.4 percent in 1984.

Despite the population increase in the last decade, the number of people having access to higher education and training facilities tripled and over 70 percent of all housing now has water and electricity. Illiteracy has dropped from 26 percent of the population to 17 percent. Every child is now guaranteed access to elementary school. Education is clearly the key to the major changes that have taken place in Mexico over the past 50 years.

Yet, extreme social inequalities persist and the country has had to overcome an acute economic crisis. Our economy was not structured to withstand external shocks. The heavy reliance on internal industrial growth had not been accompanied by commercial modernization and increases in agricultural productivity. Internal financing was insufficient to meet the demographic pressures as they were translated into growing social demands for public expenditure and investment. An overvalued exchange rate inhibited industrial integration and competitiveness and made capital exports and foreign purchases very profitable. High oil prices and corresponding credit availability allowed us to survive such imbalances, but when the price of oil fell, expectations were modified, our disequilibriums became apparent and a chain of reactions occurred which deepened the crisis.

During 1982 the gross domestic product fell for the first time since the Great Crash of 1929. Inflation, which was 30 percent during the first months of 1982, soared to 150 percent by year-end. The peso was devalued 600 percent, the public sector's deficit reached almost 18 percent of the gross domestic product (GDP), and the foreign debt stood at $77 billion.

By December 1982 our economy was in a state of emergency. Upon taking office, I proposed a ten-point economic program establishing basic guidelines and actions to reduce inflation, resume growth, restore sound public finances, strengthen our external sector, and at the same time maintain employment levels.

It was our responsibility to provide a realistic solution that would create the basis for continued development. We preferred the risks of basic change and reform to those of defensive actions, which would have left us incapable of facing the problems to come. We could have opted for a more gradual adjustment. That would have required indexing salaries and prices and would have prolonged the crisis and its increased social costs, as demonstrated by the experiences of other countries. We considered that Mexico could not be exposed to prolonged risks.

Our people have understood that there was no choice but austerity. They supported the government's economic reordering program. Through concerted efforts, economic activity has been renewed. Despite the sacrifices imposed by the crisis, an open and frank dialogue has been maintained between the government and the society. The clearest proof of this is that we have been able to face our difficulties and solve our differences without social unrest. With the strength of this domestic consensus, the economic program was implanted immediately, thus reducing the time of the adjustment and correcting the most serious structural imbalances.

Despite a five-percent fall in the GDP in 1983, the programs for maintaining basic social services, protecting jobs and the nation's productive plant helped avoid a greater deterioration of the situation. Our manufacturing industries have already shown positive signs of recovery. These measures—combined with a good agricultural year in which output increased four percent, with the emergency employment programs which generated 400,000 jobs in 1983, and with the additional absorption capacity of the informal sectors of the economy—avoided increases in the levels of unemployment.

The stabilization policy permitted a reduction of the public sector's deficit as a percentage of GDP from 18 to 8.7 percent in 1983. This was accomplished by clearly defining priorities while maintaining basic social expenditures and labor-intensive programs, reducing waste and eliminating subsidies, increasing revenue and ensuring the efficient and honest execution of the government's programs. Previous investment projects are being reevaluated according to present costs and priorities. We are limiting the growth of public spending and increasing its efficiency.

The stabilization of the economy is being accomplished without a drastic fall in productive capacity. A hyperinflationary process was avoided by reducing the rate of inflation, which in the period December 1981-December 1982 reached 99 percent, to a yearly average of 80 percent by 1983. At the same time, in our foreign sector the balance of payments achieved an unprecedented surplus, allowing us to replenish the central bank's international reserves. Our international debt obligations were met. Along with all this, we were able to restore essential imports and are starting to increase our non-oil exports.

The efforts we have made to adjust our internal imbalances have prepared us to face worldwide uncertainty and the insecurity of the mid-1980s from a stronger position than many other nations with similar problems.

These achievements are certainly promising, but there has been a fall in our population's standard of living as a result of the crisis. We are deeply concerned with the additional social costs imposed by the rise in U.S. interest rates and by trade restrictions. These reduce foreign exchange, limit the resources available for development and make recovery all the more difficult. In no way has Mexico become complacent.

IV

Just as Mexico's nationalism guides the country's internal development, it is also the core of our foreign policy. Our nationalism has been shaped by the defense of our sovereignty in the face of foreign interventions. The principles of self-determination and nonintervention in the affairs of other countries are of deep significance to Mexico. They are a product of our own historical experience-one that led us to place a high value on principles, the force of reason, political negotiation and compliance with international law. This philosophy defines Mexico's foreign policy.

We coexist with the richest nation in the world along our northern border. Our proximity to the United States provides important opportunities for economic development, and at the same time, poses possible dislocations. Beyond our southern border, we share the ideals and interests of Latin America, from large nations such as Brazil and Argentina to smaller countries like Cuba, with whom we have a relationship based on the mutual respect of internal sovereignty. We also face, in Central America, one of the most contentious regions in the world—a region whose internal dynamics are being placed in the context of East-West rivalry.

We have increased our communication, enriched our exchanges and strengthened our solidarity with Latin America. The severity of our crisis makes it imperative that we coordinate political actions and search for new forms of economic and cultural cooperation. South America's newly strengthened democracies have made that dialogue and cooperation easier.

In our relations with the United States and with other developed economies, the crucial issue is to increase the competitiveness of our non-oil exports and to reestablish net capital flows that will accelerate the recovery of the Mexican economy. Long-term economic development which benefits both Mexico and the United States is the best way of maintaining a friendly, respectful and open relationship along one of the world's most important borders. Hard lines and fortress walls are not feasible alternatives. Movements in these directions could create conflicts which would affect the well-being of both of our countries and oppose the fundamental principles of our democracies.

Mexico recognizes the progress the United States has achieved in the sciences, in research, in agriculture and in technology. We respect the internal values of its federal system, the freedom of its press and the diversity which immigrants have brought to its national fabric.

In a similar vein, for decades now, distinguished United States leaders and the American people have learned to respect Mexico's sovereign interests; its determination to reduce social inequality while maintaining freedom; its capacity to transform an agrarian economy into a modern and increasingly diversified organization; its unique and flexible political system and its complex social reality; as well as its firm and independent foreign policy. This is a well-grounded basis from which to continue building a respectful, long-term mutually beneficial relationship between Mexico and the United States.

While our bilateral relations are basically sound, differences remain in trade, finance and foreign policy which can be solved through negotiation and which should never lead to short-term power politics that would endanger creative and long-term relationships. In bilateral trade, the growing protectionist measures adopted by the United States have limited the possibilities for increasing our exports. This has hurt agricultural and manufacturing sectors of our economy in which a great many workers and peasants labor. At the same time, it has cut our earnings which are necessary to cover our foreign debts abroad and to stimulate our recovery. On the other hand, the reduction of Mexican imports from the United States has had its effects on the levels of U.S. employment and economic activity. In order to maintain adequate levels of exchange between both nations and for us to remain the fourth largest purchaser of U.S. products, we must continue increasing our exports of goods and services.

Labor relations are also a matter of concern. The situation of Mexican migrant workers in the United States has been, and continues to be, of special interest. We have reiterated our support for the rights and interests of Mexican nationals abroad. We have no intention of meddling in the legislative processes of the United States. But we express our concern over measures such as the Simpson-Mazzoli bill which could affect the social, labor and human rights of numerous Mexicans, whose daily work and efforts represent considerable benefit to the U.S. economy.

In our relations with Central America, Mexico will always strive to coexist peacefully and fruitfully with its neighbors. This means respecting them and aiding them in those efforts that contribute to their development and integration. For us to ignore the conflict in Central America or neglect efforts to solve the conflict would mean abandoning Mexico's historic responsibility and tacitly renouncing the defense of our own national interests and security.

An all-out war in Central America, moreover, would have adverse effects inside Mexico, even though our sound principles, institutions and level of development would together strengthen our nationalism and guarantee our internal peace. Our main concern, however, is that such a process would have serious consequences for the continent—an arms build-up, the disruption of international trade, greater foreign intervention, and a stagnation of economic and social development in the region. Mexico cannot remain indifferent to a human drama with such vast economic, social and political consequences.

We shall remain steadfast in our principle of nonintervention in other countries' internal affairs. And we shall promote a peaceful solution of the conflict on the basis of freedom of choice and self-determination by the governments and people of Central America.

Nonintervention is a fundamental principle of our foreign policy. It took shape over the last century and during our revolution, when foreign nations sought to interfere in our internal conflicts and impose political or economic systems that were alien to us. In every case, the battles were bloody and costly but they brought about national unification in the face of an external threat and in the end resulted in the downfall of the groups supported from abroad. Indeed, the internal differences and battles of Latin American nations have never been resolved by the direct interference of other nations; on the contrary, we believe that foreign interference has always complicated the conflicts it intended to solve.

Unilateral actions, based on short-run strategies, do not coincide with the principles and interests of Mexico or of the nations of Central America. Simplistic analyses lead to cold-war visions and strategies, and end up placing the region's conflicts in the context of a confrontation between the superpowers. This stereotyping ignores the reality of complex social and political processes in the area, national and internal differences, the variety of political programs and ideologies of different groups and the unique situation of each country. To avoid turning regional conflicts into arenas of a new cold war is the responsibility of the Central American nations, of each Latin American country, and certainly of the superpowers themselves. It is a challenge to each of our capacities to negotiate in accordance with our principles and with the wishes for peaceful coexistence of the great majority of our populations. We do not agree to or support any intervention in Central America, whatever the origin, be it American, Soviet, Cuban or any other.

These are the reasons why Mexico, Venezuela, Colombia and Panama—the Contadora group—have proposed a program which provides, in addition to strict observance of the essential principles that govern all international relations, a series of agreements and political commitments that will, on a regional basis, control the arms race; eliminate foreign military advisers; create demilitarized zones; avoid the use of any nation's territories to undertake political or military actions to destabilize other nations; eliminate arms traffic; and prohibit any other means of aggression or intervention in the internal affairs of any country in the area.

The negotiations stimulated by Contadora reject war and violence. To accept the use of force would allow a policy of intervention in the internal affairs of the people of Central America and ignore the true causes of social tension. Force would cancel out the efforts being made to pacify the region, to support democracy, and to overcome the region's social inequalities.

Contadora has received broad support in the international community, not only among Latin American nations, which look upon the group's actions with a natural sympathy (Latin Americans trying to solve Latin American problems), but also in the United Nations, the Organization of American States, the European Economic Community, the U.S. Congress and the socialist bloc countries. Recently, we have managed to set up negotiations between Nicaragua and Costa Rica to deal with their border conflicts. The Contadora group was called on by both nations, a dialogue was established, and an agreement was reached for the reciprocal supervision of their common borders.

Only by allowing the Central American nations to reach secure and dignified agreements, based on a full respect for national sovereignty and on a concern for social justice, will the United States be able to avoid an escalation of the conflict. The alternative is a protracted and violent involvement.

Only by establishing legitimate institutions based on national forces that will lead to social changes can the conditions be created for lasting regional stability. Imposing force from outside, and the consequent internal reactions, will only lead to a predominance of militaristic and highly radicalized factions. The solution to the Central American conflict calls for peaceful negotiations, economic development and a gradual strengthening of institutions that reflect sovereign interest and thus guarantee a lasting peace.

During my visit to Washington in May 1984, President Reagan and I talked, among other things, about the conflicts in Central America. I insisted then upon the need to start negotiations between the United States and Nicaragua that could contribute to a peaceful outcome in Central America. With Nicaragua we expressed the same concern. Despite the existent difficulties to reach a rapprochement, Secretary of State George P. Shultz' subsequent visit to Managua and the talks that have been carried out between the representatives of the U.S. and Nicaraguan governments in the city of Manzanillo, Mexico, may represent a significant step toward reducing the climate of tensions in the area.

Regarding Cuba, there is a long history of conflicts and differences between this nation and the United States. But we must also remember that in other international situations that appeared to have no possibilities of agreement whatsoever, rapprochement that was beneficial for both sides was achieved through creative diplomacy, as occurred with the establishment of relations between the People's Republic of China and the United States. Since Mexico has friendly relations with both the United States and Cuba, we would be sympathetic with those decisions that could contribute to a relaxation of tensions and to the eventual establishment of relations based on respect and moderation between the two countries' foreign policies. This is a real possibility that would require complex decisions, but one that, if carried out, could have great political potential.

Our concerns for creating a lasting peace extend beyond our hemisphere. We are multiplying our ties with Europe, Canada, Japan and East Asia. We are also firm in our desire to maintain friendly relationships with socialist nations and to extend cooperative exchanges with Asia and Africa.

Our main concern in a global context is peace. I do not believe that the superpowers want a war of extinction. Mexico will continue urging nuclear powers to reach serious agreements to reduce the risk of nuclear war, establish commitments to slow the arms race and, further on, reach a general arms control agreement.

V

The international economic situation strongly influences the problems of Mexico and Latin America. Our countries are suffering from an unprecedented financial and economic crisis. The rise in interest rates, the contraction of international trade and the protectionist measures adopted by industrialized nations constitute obstacles to our recovery. These factors also aggravate the social inequalities in the region and threaten the political stability of several Latin American nations.

In the face of such conditions, it is increasingly recognized that unilateral decisions in developed countries, which fail to take into account the real possibilities for placing the economies of developing nations on a sound footing, are counterproductive. The costs are too high to be carried by one side alone. Further delays in Latin America's and Europe's recoveries would bring about global economic stagnation.

It is Mexico's conviction, more and more generalized throughout the world, that in order to overcome the international crisis, the present framework of international economic relations must be modified toward a more cooperative structure in which national economic policies will be in tune with a global need to expand trade and reduce interest rates.

For Mexico and the other Latin American countries, the rise of interest rates severely restricts spending on essential social programs, reduces new investments in the private sector, drastically increases the cost of internal credit and upsets the balance of payments. This situation, together with the international trade restrictions, has exerted extreme pressure on our ability to repay foreign debts and threatens to perpetuate the situation by making financing of economic development practically inaccessible.

Now more than ever, increased exports from developing countries mean not only added capacity to import goods and to service the foreign debt, but also higher levels of economic activity and employment in developed nations. Simultaneously, net flows of resources to developing nations must be reestablished in order to secure the partial economic recovery begun in 1983.

Unilateral increases in interest rates nullify a large part of the difficult adjustment process that has been implemented at a high social cost in many Latin American nations. For this reason, there is a growing consensus on the need for debtors to participate on an equal basis with creditors in the process of reordering the international economy and promoting the new operative mechanisms necessary to permit debtor countries to restructure their debts under conditions that allow a lasting recovery.

The current crisis should alert the international community to the need for joint action based on regional cooperation and respect for the interests of both debtors and creditors. Efforts should be directed toward strengthening the international economic recovery as well as the capacity of individual developing countries to meet their obligations. Otherwise, the accumulation of unilateral increases in interest rates could lead to unilateral reactions which would abruptly cut off any possibility for less costly solutions for either the nations involved or the international economy as a whole.

For Mexico, the affairs of war or peace in Central America and the course of our economic and financial relations with the United States are necessarily defined by the perspective of our relationship with Latin America. Because of historical identity, cultural unity and common economic interests, our destiny is intimately linked to that of all Latin American countries.

Worsening economic pressures on the debt and international trade, together with the political tensions existing in Central America, have strengthened, more than ever, our conviction that only by fully cooperating with other Latin American nations, Canada and the United States can a better future be built for Mexico and the continent.

We are realistically facing the necessary internal reordering of our economies. What is required is that industrialized nations carry out coherent economic policies that avoid the transfer of the costs of recovery to developing nations, and which set the basis for a more equal world economic order.

VI

Mexico faces its challenges in a world undergoing complex changes. The nature of international relations has been modified because of the development and high standards of living reached by the Europeans and Japanese, the strength of the Soviet Union, the vitality of the United States, together with the social transformation taking place in developing countries. The role of large corporations, the organizational structuring of modern armies, the impact of mass communications, the abuse in the exploitation of nonrenewable resources and the great social needs still to be fulfilled all create an international setting with new opportunities as well as difficulties.

Latin America has multiple needs, vast resources and little time. It is ensnared between the harsh requirements of modernization and the essential need to strengthen its identity. Neither the U.S. nor the European experience of national development can be repeated in our countries. Ours will necessarily be a path of our own. It cannot be any other way.

Many Latin American countries have suffered from rapid industrialization policies heavily dependent on imports without the ability to generate sufficient exports, the mismanagement and lavish spending of populist governments, the lack of respect for human rights and the inefficiency of social processes conducted by dictatorships. We have both won and lost in our external economic relations, and we have been witnesses to world confrontations in our own territories. Latin America has achieved important progress in economic growth but enormous social needs still persist.

Today, Latin America's economic relationship with the world is going through one of its darkest moments. In Mexico we have a clear idea of what we face and where we are going. We have a national project based on a strong nationalism which is committed to furthering social justice and to perfecting our democracy. We have an institutional setting that has shown its capacity to carry out reforms, to adapt to new circumstances and promote national development.

Faced with the enormous social needs and difficult internal and external economic conditions, the values around which Mexico's consensus has been created and maintained help us define the strategic decisions we are taking in this uncertain world.

To defend our sovereignty effectively we will continue strengthening our economy, the democratic basis of our political regime, the autonomy of our foreign policy and our commitment to increasing social equality while protecting individual rights. We have no alternative but that of an efficient conduct of our economy in order to satisfy the most urgent needs of our population, instead of wasting the scarce resources that we will have in this decade on non-viable projects, scattered investments or superfluous expenditures. We will continue reordering our productive structures and processes in order to be able to compete in the international economy instead of locking ourselves inside structures that are, if not archaic, poorly adapted to the changes in international trade. We must maintain our freedom and perfect democratic practices that are the product of our historical experience. To promote social justice we will maintain the social priorities of our budget while continuing to reduce inflation, increase our productive investment in the rural areas, guarantee collective bargaining rights, keep expanding public infrastructure and urban services, and carry out extensive conservation efforts to protect the supply of water and nonrenewable resources.

I believe there is no other way to secure and preserve our national and Latin American identities than by acting in correspondence with the best of each of our histories; by negotiating our differences in order to unite our efforts and strategies; by reducing excessive waste and luxuries so as to enlarge and strengthen the middle class and better protect workers; by respecting all ideologies and beliefs without losing our national consensus; and, certainly, by recognizing our deficiencies and acting to remedy those in areas which are crucial for our development.

The world is undergoing a process of transition, and no one can anticipate the results yet. Grand interpretations have been replaced by reality, while dogmas have been overturned by pragmatism. In this process, so inclined to power politics and intransigent attitudes, our transitional relations must be reconstructed with realism as well as with sound principles, with audacity and imagination, but also with responsibility and, most important, through the combined contributions of all nations. There is no longer a country, no matter how small, that cannot endanger international order; nor is there a country, no matter how powerful, which does not depend significantly on its relations with other nations.

There is a wide potential for development in Mexico. With work, perseverance and adherence to our principles, we are better prepared to carry out the necessary changes. In these times of uncertainty, Mexico is meeting its new challenges.