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Mexico at the Brink

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Mexico’s famed political stability has not been destroyed by the country’s current economic crisis. But that stability can no longer be taken for granted.

Over the past half-century, the Mexican political system has brought economic development, albeit unjustly distributed, inefficiently planned and plagued with waste and corruption. It has ensured social peace and political continuity, although with recurrent repression and electoral fraud. And it has maintained peaceful relations with the United States, despite asymmetries, irritants and sporadic confrontations. These three pillars of Mexico’s stability, which is unique in Latin America, are not yet crumbling, but all are growing weaker, as is the political system they sustain.

The causes of Mexico’s deepest crisis in modern times are clearly economic; the crisis is rooted in the country’s 1982 financial crash and has been compounded since then by economic stagnation, austerity measures and the devastating earthquakes that hit Mexico in September. But the most immediate and acute expression of the crisis is political. Though the consequences of a breakdown in the political system would be chiefly domestic, there could be grave repercussions for the United States.

President Miguel de la Madrid has encountered many unsolvable problems since he took office in December 1982: a present-day $100-billion foreign debt; a five-percent drop in GNP in 1983 with no prospect of renewed economic growth; rampant corruption at most levels of national life; a country disappointed in itself, questioning its direction. But the principal challenge the president, and Mexico, face today is the total lack of credibility in the political system.

Results from a poll taken last June and published in Excelsior, Mexico’s leading daily, underline this fact. When asked whether government officials lied or told the truth in stating that the country was emerging from its economic crisis, 88 percent of those interviewed replied that the officials were lying. Likewise, when asked if they believed whether the results of the then upcoming elections would be respected, 55 percent said no, and only 13 percent answered in the affirmative.

II

The country’s long-lasting stability comes from a combination of just enough democracy: elections, at least in name; a certain freedom of the press; a degree of tolerance for most forms of opposition; and just enough authoritarianism: electoral fraud; silencing excessive criticism of the government and the president; cooptation, corruption and repression, in that order, of the insufficiently loyal opposition. The Revolutionary Institutional Party (PRI) has been in power for five decades, but no president has succeeded himself. The only one elected to a second term, Alvaro Obregon in 1928, was assassinated. Thus, while the faces and the ways of climbing the political ladder may change (if not the ideas), the so-called political class has maintained its hold on power.

Through the years, the system’s mainstays—the organized labor movement, the peasantry and the federal and local bureaucracies—were kept happy, loyal and politically apathetic by the trickling down of just enough economic growth, job creation, land distribution and social services. Even the new urban middle classes created by this economic growth, which averaged six percent a year from 1940 to 1982, were incorporated into the system. Thanks to a high degree of social mobility and cheap, readily available dollars before 1982, they were assured relatively easy access to a modern, affluent way of life.

The country’s lack of democracy was not perceived to be a problem. True, the PRI had won every presidential, gubernatorial and senatorial election, and 95 percent of all congressional and municipal seats, since 1934. But being unaccustomed to free elections, public debate, a critical press or an accountable government, Mexico’s Babbitts were content with continual improvements in their living standards. Little did they mind the backwardness of a political system increasingly at odds with a rapidly modernizing society.

Thanks to its traditional vote-gathering mechanisms in the countryside, in the poorer southern states, and within certain sectors of the labor movement and federal bureaucracy, the party has won, and generally will continue to win, with no more than its usual doses of electoral fraud. Mexico has long been accustomed to evident but limited amounts of fraud in many places, or to extensive yet discreet ballot-stuffing and polling booth intimidation in a few localized areas. On the whole, voters have accepted a generous amount of this electoral "alchemy," as it is known in Mexico, as a fact of their political life.

The 1968 student movement, quashed by the massacre of more than 400 demonstrators, was an early but largely unheeded warning that Mexican society was changing. Subsequent governments reacted by providing a little more democracy and, for a while, much more economic growth. It should have been the other way around. When, by 1982, in spite of massive oil finds and a superb international credit rating, high levels of economic growth could no longer be sustained, the mistaken ways of previous years caught up with the system.

Mexico’s overriding political problem stems from a simple and unalterable fact: the system, which has been traditionally clumsy in its handling of the middle classes, can no longer deliver the economic growth and prosperity that these classes now expect as a matter of course. At the same time, the political system does not feel it can grant them the additional measure of democracy which might be an acceptable alternative. Political wisdom dictates that one does not open up a political system in the midst of a severe economic crisis. Not, in any case, if one wishes to remain in power.

Surprisingly, President De la Madrid did toy with the idea of political liberalization in 1983, the first year of the drastic economic adjustment. The outcome of municipal elections in the northern border state of Chihuahua, one of the most modern and wealthy, was fully respected. This decision proved a disaster for the ruling party; the conservative, middle-class, pro-U.S. Party of National Action (PAN) swept the seven main city councils, and won the mayoral races in both Chihuahua, the state capital, and Ciudad Juárez, the country’s fourth largest city.

The timid experiment in democracy was nipped in the bud. The following year, the PRI handily won municipal races in Mexicali and Tijuana, large and prosperous border communities; in several cities of Sinaloa, an affluent agricultural state on the Pacific coast; and in the central city of Puebla. Similarly, PRI victories were announced in local elections in the communities of Piedras Negras, Frontera and Monclova in the border state of Coahuila at the end of 1984. But the opposition protested what it saw as massive electoral fraud by the authorities; the protests, as well as local internal divisions within the PRI, led to widespread violence in Piedras Negras and Monclova. Concerned by the implications of riots and civil strife along the U.S. border, President De la Madrid ordered the army into Piedras Negras. The violence was quickly halted, but the solution was possibly more provocative than the problem itself.

The PAN, most of the participating leftist groups and many independent observers felt that, had the election results been respected as in Chihuahua, the PAN would have won most of these races. There are a number of reasons for this assessment. Mexico’s northern region has borne the brunt of the economic crisis, particularly the states of Baja California, Sonora, Chihuahua, Coahuila and Nuevo León. The frequent devaluations of the Mexican peso (from 25 pesos to the dollar in February 1982 to almost 500 pesos as of November 1985) have had a devastating effect on this region, whose economy has more extensive links to the United States than the rest of the country.

In addition, the region’s close contact with the United States leads its inhabitants to compare their living standards and political fate with those of their U.S. neighbors. Such comparisons are delicate, though inevitable; they tend to fuel unrealistic and unfulfillable expectations. Also, since the north is the most affluent part of the country, along with parts of Mexico City, its population is more demanding and critical of the government’s typical corruption, cronyism, waste and general incompetence.

Disaffection in urban areas was evident in national congressional elections held last July 7. Although the official returns showed that the PRI obtained 65 percent of the vote nationally, it polled less than 45 percent in the nation’s five largest cities combined: the capital, Guadalajara, Ciudad Nezahualcoyotl (outside Mexico City), Monterrey and Juárez. The PAN’s share of the vote, again according to the official count, was reported to be 15.6 percent nationwide.

It is difficult to ascertain what the real results of these elections would have been if there had been no fraud. Independent analysts and most opposition parties on both the right and the left have estimated that the nationwide fraud in favor of the PRI hovered around nine percent. If so, the PRI’s true score would be not 65 percent but approximately 56 percent, and that of the PAN about 22-23 percent.

Reliable estimates of fraud at the local level are next to impossible to make. According to most accounts, it was so widespread in the northern states of Nuevo Leon and Sonora that the official election results for those states were meaningless. In seven of the country’s eight most populous and prosperous states (the Federal District, Jalisco, the state of Mexico, Chihuahua, Nuevo León, Baja California and Sonora), which make up 42 percent of the registered voting population, the PRI won less than 55 percent of the vote. This estimate is based on official figures for five of the states and conservative estimates for Sonora and Nuevo León, where the PAN’s support is strongest. An estimate of the PAN’s true score over all seven states would be about 25 percent.

The magnitude of fraud does not mean that the PRI would have necessarily lost if free and fair elections had been held. The point is that the opposition, though still a minority, is larger in some areas than the national tally indicates, even when adjusted for fraud. More important, these estimates indicate that the PRI is losing its electoral hold on the urban, middle-income, "modernized" classes in the north and to a lesser extent in the central region.

The political system as a whole has already lost the support of the prosperous, "developed" segments of Mexican society. It is no longer truly representative of key social strata such as lawyers, doctors, accountants, lower-income clerks, shop owners and even some local bureaucrats and industrial workers. They may be equally disenchanted with the existing opposition, but they no longer believe in the government or look to Mexico City for the solution of their region’s problems. In fact, many Mexican observers see increasing signs of a slow awakening in certain northern communities of a dormant streak in Mexican consciousness favoring closer links with the United States.

Losing the votes of these key sectors does not necessarily mean that the PRI will lose power on a national level through electoral defeat, but it does represent a serious weakening of the PRI’s long-standing dominance. This trend calls into question the viability of a one-party monopoly of political power. There is a growing cleavage separating the modern, northern, urban, more affluent Mexico, where the PRI barely receives a plurality or a slight majority of the vote, and the backward, southern, rural and poorer Mexico, where it continues to rack up 80-90 percent of the vote. The PRI rules both Mexicos as if they were one; they are not. Such a situation eventually seems untenable without coercion. And somewhere along the line coercion implies the military; everyone knows how its involvement begins, but no one ever knows how it ends.

In those cases where more than "traditional" fraud is needed to secure a PRI victory, or where voters no longer accept even the usual amount of fraud, the government will increasingly run up against the choice it faced in Piedras Negras: either give in to the opposition, or call in the army. This is a no-win choice.

III

Since the 1930s, the Mexican armed forces have rarely meddled in politics; they have respected civilian rule and have seldom been called upon to repair the system’s malfunctions. Although the army was called on to deal with minor electoral problems during the early 1960s, the last time it intervened because of a serious breakdown was in 1968, when negotiations between the government and the student movement collapsed two weeks before the inauguration of the Olympic Games. In the mid-1970s, the army suppressed a guerrilla uprising in the state of Guerrero, but this incursion into political matters was limited to an isolated region.

There is certainly no immediate risk of greater army involvement in political matters, but there could be in the future. Indeed, the military seems to be suffering less from the system’s general discredit than other sectors. According to a poll taken in mid-1985, when Mexicans were asked to state which elements of society "lie" more to the public, 59 percent gave politicians as their first answer, 26 percent mentioned public officials first, but only two percent of those interviewed considered the military to be more untruthful than other elements. True, the September earthquakes may have damaged the army’s image somewhat, but more because of what it did not do. Troops were called out to patrol the city and prevent looting, but they did not actively participate in relief and rescue operations.

More important, however, there are reasons for believing that, for the first time in years, a serious split has developed within the army and between the military and the government. According to certain sources, many middle-level, relatively young (ages 35 to 45) and well-educated officers are particularly upset about the passive role the government and the higher military echelons obliged the armed forces to play in the immediate aftermath of the quakes. This split could be the most important political trend to emerge from September’s tragedy.

The potential for unrest is much more widespread now than in the 1960s or 1970s. Major incidents were avoided during this year’s elections in potentially explosive states such as Sonora and Nuevo León. Although unrest has not yet reached alarming levels, it easily could. The army’s traditional neutrality could be eroded if the government orders it in with growing frequency to stifle protest and violence arising from true or perceived instances of electoral fraud. Sooner or later, the army would probably insist on intervening before the violence occurs, to preempt it. The army could even feel compelled to intervene before the voting itself if elections habitually result in violence. The cycle of fraud, violence and army intervention was avoided in 1985, but the pressures are there which could trigger this cycle in the gubernatorial elections in the state of Chihuahua in July 1986.

There is no realistic short-term solution to the political crisis. Opening up the political system and giving the northern middle classes an equivalent of democratic "self-rule," instead of the economic growth they previously enjoyed or the major reforms the country needs but cannot have overnight, is a desirable but not entirely viable alternative. Centrifugal forces in the north, traditional Mexican fears of U.S.-inspired division of the country, and the real and perceived risk of losing control over an unprecedented process of political liberalization make this option a nonstarter. It would take a daring, imaginative government to forestall long-term collapse at the risk of short-term political fallout; the Mexican political system does not seem up to the challenge today.

There are, however, some hopeful signs of change from the bottom up. The outpouring of solidarity, civic responsibility and participation by Mexican society that followed the September earthquakes could contribute to an initial democratization of Mexico’s political institutions. For the moment, this hypothesis remains highly speculative, though it has been advanced by some of Mexico’s most perceptive analysts, particularly by Carlos Monsivais, the outstanding chronicler of Mexico City’s devastation. In the aftermath of the quake, some forms of grassroots organization and left-wing-sponsored mobilization have emerged among the most severely affected by the tremors, such as the homeless and relatives of the dead. These embryonic signs of political consciousness could eventually evolve into new, left-leaning political organizations that would be truly independent of the government.

While Mexicans and foreigners score debating points by criticizing the weaknesses of a political system apparently incapable of living with a strong opposition, this criticism is, in a sense, less important given the current economic situation. Concessions are easier when cushioned by prosperity; the country’s rulers will not loosen their grip on power unless they can make the process relatively painless through economic growth. Yet, if such growth were possible, the need for political change would not be so acute.

The scattered and relative democratic advances which the Mexican political system has known over the past 50 years have come about under extreme pressure (the Great Depression, the 1968 student movement) or in the midst of spectacular economic growth (the 1978-1981 oil boom). Under the present and vastly different conditions, such pressure could be explosively dangerous because the political system is much weaker now, and such growth is nowhere in sight. There are consequently few signs of gradual political change; nor is a scenario foreseeable for a significant political transformation.

IV

Liberalization of the political system can only come about if the country’s economic difficulties are first addressed in an adequate, lasting manner. Despite a slight and short-lived recovery in late 1984 and early 1985, the Mexican economy has remained stagnant since 1982, when it suffered zero growth for the first time in years. In 1983 the economy worsened: GNP declined by 5.3 percent, and per capita income dropped nearly eight percent. 1984 brought 3.5 percent growth, but at a high cost: a new recession in 1985, with the economy barely growing one percent over the entire year. Although the cost of reconstruction after the earthquakes has not yet been determined, simply rebuilding housing for the homeless, repairing Mexico City’s severely damaged drinking-water system and replacing destroyed telecommunications and medical facilities will run into the billions of dollars.

The economic adjustment program implemented by President De la Madrid—in accord with the International Monetary Fund—has allowed the country to pay the interest on its foreign debt, but at the cost of foregoing economic growth indefinitely. Unfortunately, the price of this trade-off may soon become too high, even for Mexico.

The country has made enormous efforts, and achieved some spectacular results, in its endeavor to put its financial house in order. Deficit spending as a percentage of GNP shrank from 18 percent in 1982 to six percent in 1984. The economy’s traditional trade deficit was inverted: in 1983 Mexico enjoyed its first trade surplus in memory, totaling nearly $14 billion. This was repeated in 1984. Inflation, the government’s and the IMF’s chief concern, dropped from a runaway level of 100 percent in 1982 to a more manageable 80 percent in 1983 and 59 percent in 1984. Thanks to the system’s long-standing control of the labor movement, this was achieved, remarkably, without major social unrest; there were few strikes and no urban riots or land seizures in the countryside.

But President De la Madrid has run out of time to cure the Mexican economy. Even without the earthquake, inflation in 1985 would have been roughly equivalent to that in 1984; because of the earthquake, it will probably be higher. Orthodox adjustment policies necessarily have their limits, and more daring measures have not been implemented. The severe austerity program has slashed most people’s standard of living. Real wages have fallen nearly 50 percent in three years. Imports, mainly intermediate and capital goods, on which the economy depends for growth, are down from 1981 levels by nearly 65 percent. Although the government and the business sector have avoided massive layoffs, the 800,000 new jobs needed each year just to keep up with the growth in the labor force are not being created.

The economy’s chief bottleneck remains the foreign debt. At $85 billion when President De la Madrid took office and $100 billion today, its service, despite some improvements in the terms of repayment, has become an intolerable burden for Mexico.

True, the international financial community has accepted multiyear reschedulings, enabling Mexico to reprogram principal payments of half its debt for 14 years. But these widely heralded agreements affect only capital; interest payments are left untouched. Latin American finance officials and bankers have known for some time that very few nations are likely to pay back all that they owe. The region’s debt problem actually concerns interest payments—which may or may not continue to be honored.

In this respect, Mexico has been helped by the recent drop in interest rates: every one-point decline in the prime rate saves the country approximately $800 million a year. But real interest rates are still at unprecedented levels, and the service of Mexico’s debt totaled nearly $14 billion in 1984, with a similar sum being disbursed in 1985. This amounts to between 55 and 60 percent of Mexican exports; there is simply not enough cash left over for the imports needed to renew sustained economic growth.

Nor will Mexico obtain sufficient funds on the international credit markets, and what it can obtain will simply compound its debt service dilemma. Indeed, even the new U.S. world debt strategy outlined by Secretary of the Treasury James Baker in October, calling for greater lending by commercial banks and the World Bank, does not address the key issue: the service on Mexico’s debt eats up too much of the country’s hard currency earnings. New lending, were it possible, simply postpones the problem, but does not solve it. Nor does it solve another bottom-line issue: capital flight. With well over $50 billion being held by Mexicans in American financial instruments, it seems clear that any long-term solution to Mexico’s woes must address this matter. No country can sustain a constant drain on its assets like the one Mexico has faced in recent years.

Recent drops in the price of oil, which accounts for 75 percent of Mexico’s foreign revenues, are making a bad situation worse. A collapse in petroleum prices—a distinct possibility—would undoubtedly induce national bankruptcy. And the other possible way to compensate for the country’s traditionally low domestic savings rate, investment from abroad, involves a series of wrenching decisions. Although President De la Madrid has identified the choices, he has not yet made them. A number of economic liberalization and modernization measures were announced in mid-1985, but they are only small steps in this direction.

Whether for businessmen or progressive economic planners, the Mexican economy has been turned into a nightmare by 40 years of protectionism, inefficiency, massive subsidization of both consumer staples and industrial inputs, and technological backwardness. It is hamstrung by excessive red tape involving everything from foreign investment to import permits, and from export taxes to land tenure. There is wide agreement in Mexico today on the problems, and on the economic necessity of addressing them. But there is a glaring lack of consensus on when, how, and in what order reforms should be implemented.

V

The most fundamental obstacles to reform are political. The government clearly does not have the broad-based political support to carry out the structural changes which, in the short term, would entail hardship and privation for many sectors of Mexican society. In addition, President De la Madrid’s left flank is not sufficiently well covered for him to carry out changes widely viewed as conservative and pro-American without incurring serious political damage.

The government, most of the business sector, many foreign bankers and investors, and a number of independent Mexican analysts have concluded that the only way to modernize the economy is through major reforms, which go against the grain of the country’s recent history and economic policy. Thus, significant cuts in subsidies to consumers (chiefly public transportation and basic food staples) and to industry (chiefly inputs such as energy, imported raw materials, land and water) have become unavoidable as the money to continue financing them is no longer available.

A major cutback in the state-owned sector of the economy also appears economically necessary. Over the years, it has become a disguised and highly expensive welfare and unemployment insurance system, cushioning the impact of economic realities through takeovers of firms in financial trouble, featherbedding in healthy or strategic public-sector companies, and bureaucratic inertia. If these practices were openly recognized as a welfare system, they might be sustainable. Since they are not generally recognized as such, there is no rationale to sustain them in the face of their present economic unfeasibility.

The same argument applies to Mexico’s 40-year tradition of protectionism. A complicated system of advance import permits, red tape, and tariff and non-tariff barriers have kept Mexican industry well insulated from foreign competition. Without a doubt, this contributed greatly to import substitution and the development of Mexico’s modern industrial plant. But it also created a national industry which generally produces poor-quality and high-priced goods, which is totally unprepared for export-oriented growth, and which has developed a yawning technological lag. The country cannot continue subsidizing, through inflation and lack of competition, an inefficient industrial sector that has proved incapable of generating export revenues, reducing domestic costs and supplying acceptable products for the internal market.

Similarly, the country’s system of land tenure needs to be overhauled. Since the revolution, the ejido, or system of individual possession and use without ownership, sale or inheritance rights, has played a key role in maintaining social peace in the traditionally violent Mexican countryside. The economic cost, though, has been high; with the exception of cash crops in a few northern and central states, Mexican agriculture and investment in rural areas have remained stagnant for years. This, in turn, has led to a skyrocketing food import bill. From a strictly economic point of view, the obvious solution would be to eliminate the ejido, thereby creating a freer market for land, investment and labor in Mexican agriculture. But the political and social costs of uprooting much of the rural population would be astronomical; no government has dared even to tinker with the ejido. President De la Madrid’s term is probably too advanced for him to have the time for such a major undertaking.

Finally, Mexico’s foreign investment laws, which usually require 51 percent ownership by Mexican nationals, will have to be modified if the nation wants to replace foreign credit with foreign equity participation. Since the 1940s, Mexico has been a haven for many multinational firms because it offers a large domestic market, cheap skilled labor, a developed infrastructure and proximity to the United States. But potential investors have been put off by unfavorable changes in what are euphemistically called "the rules of the game" in the 1970s, the unexpected nationalization of private banks by then President José López Portillo in September 1982, and the general uncertainty over the health of the Mexican economy.

Problems with direct investment are complicated because Mexico is now trying to attract a different type of foreign investor: small and medium firms, with high potential for export or transfer of technology, instead of the large firms that have traditionally dominated the local investment scene. The incentives that drew large companies in the past are insufficient for their smaller counterparts in these troubled times. Mexico wishes to obtain well over $2 billion a year in net currency inflows through foreign investment, but this will apparently only come with major changes in the investment laws. In a July agreement to allow IBM to build a computer plant in Mexico, the government demonstrated flexibility in applying existing legislation by allowing IBM to retain full ownership. Such flexibility, however, will probably not be sufficient to stimulate the desired investment.

All of these reforms, then, have the same drawbacks: they are politically costly, economically destabilizing in the short run, require long lead times, and would tarnish the government’s nationalistic, progressive image. The Mexican political system is accustomed to implementing exactly the opposite type of change: politically expedient, economically painless, profitable in the short term, and in accordance with the government’s traditional rhetoric. The political cost of each reform is high; the price to pay for all of them could be prohibitive.

The wily Mexican bureaucracy will fight tooth and nail against reforms that would diminish its perks and privileges, as many of them would. Furthermore, the economic modernization entails a social modernization as well. The Mexican labor movement will have to change, and with it labor-management relations. For example, if the corrupt state-run unions are shaken up, the union bosses will no longer be able to guarantee labor peace in the oilfields. Likewise, drastic cuts in the purchasing power of wages, like those imposed since 1982, will probably not be as submissively accepted in the future. No wonder then that the De la Madrid administration has barely begun to move in this necessary but politically uncomfortable direction.

It appears that President De la Madrid will be able to face the political storms arising from these economic reforms only if he also advances on the other economic front: Mexico’s foreign debt. If he is to take the measures that in effect will open Mexico up to the world, the government must also show that it can stand up to foreign bankers, the IMF and the United States. Without such a quid pro quo, Mexicans are unlikely to accept the risks of economic restructuring. And only by drastically reducing the interest payments on its debt will the government be able to finance the growth Mexico needs to make economic reform politically feasible.

Mexico’s leaders must perform a delicate balancing act. They must bring debt service down from the current 55-60 percent of export earnings to roughly 25 percent for a fixed and substantial period of time. At the same time, they must not acquire new liabilities (as implied by an interest cap, for example) or destroy the possibilities for fresh foreign credit. Moreover, this must be accomplished with the full support of the international financial powers and without a unilateral cessation of payments, which would force Mexico into autarky and provoke a confrontation with the United States. This dual necessity of both paying less and receiving more will be difficult, perhaps impossible, but certainly no more so than any of the challenges on the domestic front. A lasting solution to the debt problem is an indispensable, though not sufficient, condition for economic and political change in Mexico.

VI

Another obstacle to be overcome is the current state of Mexican-U.S. relations. Traditionally this has not been an item on Mexico’s agenda of critical, unsolved problems. Relations have varied over time, depending on the governments and the issues in question. But aside from the endemic asymmetry between the two neighbors, relations have not been a major headache for either country. This has changed radically in recent times.

Today, the problems caused by the Reagan Administration’s constant, highly publicized (in Mexico, in any case) and often abrasive insistence on the need for major changes in Mexico’s domestic and foreign policies have become one of President De la Madrid’s most pressing concerns. Likewise, Mexico’s continuing economic crisis and growing political and social difficulties are increasingly at the center of U.S. international preoccupations. Both sides have a point; neither can abandon its stance without risking at least minor damage to its national interests, but one side is more dramatically affected than the other. Obviously, that side is Mexico.

Both sides can readily identify the problems, whether they involve illegal immigration into the United States, drug traffic in Mexico, safety for U.S. tourists, foreign investment laws, trade subsidies or even more abstract questions such as "democracy in Mexico." Many sectors of Mexican society have reached the same conclusions as many Americans regarding the changes needed. But, to a man, government officials, businessmen, intellectuals and journalists in Mexico believe that American pressure—regardless of its immediate effects—not only does not contribute to bringing those changes about but, insofar as it becomes a problem itself, represents an obstacle to significant reform. Very little can be achieved in Mexico without U.S. support, but even less can be done if that support is too obtrusive.

One case in point is the counterproductivity of U.S. efforts to have Mexico abandon its support of Central American and Caribbean revolutionaries. On the one hand, they have brought results: Mexico no longer espouses the cause of revolution in the Caribbean basin, and its once close relations with Nicaragua’s Sandinistas have soured. But to the extent that President De la Madrid is no longer viewed in Mexico as the progressive and nationalistic statesman that Mexican presidents are expected to be, he is encountering greater difficulties in making concessions to the United States in other areas, and in implementing domestic and economic policies perceived as conservative and/or pro-U.S.

U.S. pressures are often seen as insensitive or hypocritical. This is because the issues, timing and intensity of American pressure are usually impervious to Mexican political winds and customs. Thus, earlier this year, at a time when Mexico was facing other serious problems, the United States provoked a major confrontation over the murder of a U.S. Drug Enforcement Agency official operating in Mexico. The United States felt that the Mexican government’s zeal in pursuing the case was insufficient. Mexico considered Enrique Camarena’s death regrettable, but no more so than that of the more than 300 Mexican drug enforcement officials who have lost their lives in the war on drug trafficking.

Mexico is not accustomed to being a center of attention. It has great difficulty in coping with other countries’ interest in its own affairs, regardless of the reasons for that interest. Undoubtedly, present U.S. concern, whether expressed at the government level or through the press, is something Mexico will have to adjust to, but this will take time. The extensive and perhaps exaggerated coverage, for example, of the July 7 congressional and gubernatorial elections was totally unprecedented. Never had Mexico’s peculiar electoral ways been subjected to such close scrutiny. In the long term, this is certainly good for the country; for the moment, it rubs most of its decision- and opinion-makers the wrong way.

In the last analysis, the United States has an extremely delicate—and in some ways paradoxical—role to play in the unfolding Mexican drama. It must understand, on the one hand, the importance of Mexico to U.S. interests, but on the other hand, that it can do very little to influence positively the course of political events.

There is no longer any question that Mexico is in trouble: its political system is exceedingly tired, if not exhausted; its economic situation will deteriorate further before it gets any better; and relations with the United States will remain tense and complex. The United States would be the first to feel the change if things should get out of hand. Frequently mentioned scenarios of leftward drift, subversion or Central American contagion are all totally irrelevant to the present Mexican situation and strictly a figment of U.S. arch-conservative imagination. The danger is rather one of a breakdown in Mexico’s traditional forms of social peace, political stability and economic progress; it could be gradual or precipitous, but there would be no simple antidote.

The United States has significant stakes that would be affected by instability in Mexico. Among the likely repercussions for the United States were such a breakdown to occur are massive inflows of illegal immigrants, fleeing not only depressed economic conditions but political chaos; the endangering of U.S. assets in Mexico, from investment and trade to consulates and other government agencies; and difficulties for the 275,000 U.S. citizens presently residing in Mexico.

Despite these stakes, any American involvement, no matter how disinterested or well intentioned, cannot fail to complicate matters further. If the United States hedges its bets by exploring possible alternatives to the present political system, or peaceful transitions to a new one, it will weaken current Mexican authorities. This will in turn make more likely a breakdown in the system. Granted, standing by passively if the Mexican situation continues to deteriorate also carries risks. In addition to the political cost of such passivity, the United States might well ask itself later in hindsight what would have happened had it acted differently. Nevertheless, there is no U.S. role that would carry more benefits than costs.

There is one exception: on the debt issue, the United States should be ready to help if and when help is requested; American economic aid and support will most certainly be needed in this matter. On issues Mexico regards as primarily domestic, however, the United States should maintain a discreet distance and a policy of strict noninterference in Mexico’s political life—however high the stakes, however strong the temptation to advise, suggest or impose.

The bottom line is that Mexico will pull through its present crisis if, and only if, four equally important conditions are met more or less simultaneously. First, Mexico’s economic modernization of trade, foreign investment, the state-owned sector, subsidies and land tenure must come about quickly and forcefully. Second, substantial and lasting relief on the debt front must be achieved soon, probably during 1986. Debt service must be limited to around 25 percent of export earnings, in a way that will not irreparably damage the country’s future creditworthiness. Third, although Mexico is not a dictatorship, it is certainly not as democratic a nation as its inhabitants want it to be. A profound democratization of Mexico’s political institutions and of its social structures is perhaps the demand that most Mexicans want fulfilled. Finally, Mexico must return—and the United States must not impede its return—to a highly nationalistic, progressive foreign policy in Central America and the Caribbean. Mexico has national interests in the area and they must be furthered. By pursuing such a regional policy, Mexico will be strengthened, and thus better able to tackle the other three crucial conditions.

The country that will emerge from its current travail will not be the same as the one most Americans, and all Mexicans, knew before. But it will probably be a better country for all concerned. Before this happens, though, there will be many close calls, instances where appearances and perceptions indicate breakdown and even anarchy. The United States, its government, its press and all those concerned by events south of the border, will need a great deal of calm and steady nerves. But Mexico has found itself at the brink of disaster before, and has always succeeded in stepping back. It can do so once again.

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