In This Review

Mexico and the Sexenio Curse: Presidential Successions and Economic Crises in Modern Mexico
Mexico and the Sexenio Curse: Presidential Successions and Economic Crises in Modern Mexico
By Jonathan Heath
Center for Strategic and International Studies, 1999, 144 pp.

A succinct, timely primer for Mexico's presidential election this July. After two decades of peso stability, Mexico began suffering from chronic and recurrent currency crises in 1976. As the veteran Mexico watcher Sidney Weintraub points out in the introduction, Mexicans are now used to the currency collapsing at the end of each presidential sexenio, or six-year term of office -- and "they act accordingly" by shedding their peso assets. Heath has now tackled this "curse" in detail while emphasizing the preventive steps Mexico has taken: a prudent fiscal policy, lengthened debt maturities, increased domestic savings, a floating exchange rate. But he also points out the problems, especially the country's weak banks and potentially tense political situation owing to the competitive contests for the presidency and the congress. These worries could provoke capital flight and a balance-of-payments crisis even if good economic fundamentals are in place. Despite Finance Minister Jose Angel Gurría's careful strategy, Heath argues, the government's continuing lack of credibility among the public could push its citizens to buy dollars and sell pesos once again. Given these deeply psychological dangers, only time will tell if the new Mexican president will avoid a 1994-style meltdown that requires another international bailout. And a peso crisis is not a challenge that any new U.S. president will wish to face, either.