What next in Mexico?

National Review, June 29, 1984 by George Byram Lake

THAT LARGE SEGMENT of the Mexican public which automatically rejoices at news of a Mexican president telling off one or more eminent Norteamericanos was disappointed in the recent meeting of Miguel de la Madrid and Ronald Reagan. There weren't any official fireworks (although there was an excess of unofficial pyrotechnics, as the Mexican press furiously denounced the Washington Post and Jack Anderson for a column "exposing" vast corruption at the top of the Mexican government). True, during his visit President de la Madrid defended his government's financial and political support of Communist governments and guerrillas, specifically those in Central America, a policy that many highly articulate Mexicans denounce as unwise, immoral, and dangerous. But nobody in Washington made a sharp public issue of it, and the other major topics--illegal immigration, trade, and high interest rates--were explored and abandoned as currently insoluble.

Any hope the Mexican government may have had that the meeting would divert the attention of the citizens from their acute domestic problems was disappointed too. The signs of Mexican recovery cheerfully discerned by distant bankers are not visible to Juan Fulano, the Mexican John Doe. The problems of statecraft hold scant interest for people who wonder, as growing numbers of Mexicans are doing, where their next meal is coming from. Juan is both hungry and bitter.

Evidence is emerging daily that corruption in the Mexican government attained, between 1976 and 1982, a degree of virulence without parallel, and was largely responsible for plunging the nation into the worst financial crisis in its history.

The dimensions of the crisis are clear. Oil export sales totaling $45 billion, together with foreign borrowings to finance a vast, helter-skelter development program, funneled an extra $130 billion into the federal treasury during the six years of Jose Lopez Portillo's presidency. Those billions are gone now, and the country is staggering under a foreign debt of $85 billion, the second largest in the world. Interest payments on that debt are soaking up most of the $13 billion in estimated income from petroleum sales abroad this year. Meanwhile, Finance Ministr Jesus Silva Herzog, while facing another huge domestic budget deficit, is scouring the world for additional billions of dollars in loans to avert bankruptcy.

The public, recently euphoric over promises of prosperity, is appalled and resentful. Demands that those responsible for the debacle be brought to justice grow louder as living standards drop under the weight of high taxes, skyrocketing charges for public services, and inflation now running close to last year's rate of 80.8 per cent.

A drop of $4 per barrel from the peak price of oil reached in 1981 is officially blamed for the crash, but critics cite as primarily responsible pervasive fraud, waste caused by poor central planning, and the rush by the left-leaning bureaucracy to extend its control to all remaining free sectors of Mexico's economy. The government, which expropriated the entire banking system in 1982, now runs between 70 and 80 per cent of Mexican business and industry as well, and seems hungry for more. The ranks of privileged federal employees swelled in the six years under Lopez Portillo from 998,600 to 1,583,800, and are still growing.

Miguel de la Madrid promised "moral renewal" in government, just as his predecessor did, but the conviction is widespread that the ancient, airtight grip on all levels of government by the Partido Revolucionario Institucional (PRI) must be relaxed if the party and the system of government it embodies are to be saved. While confidence in de la Madrid's good intentions remains high, impatience is growing. After 18 months in office, his clean-up job has barely begun. Most of the powerful suspects are still free, some of them as high-living fugitives abroad, and while the properties of some have been sequestered, no cash has been recovered. Meantime, the PRI, after the loss of some important municipal elections to opposition parties, has resumed its use of "electoral alchemy"--that is, multiple voting and ballot-box stuffing--to win elections.

"Since the vote is not respected," said La Nacion, organ of the largest minority party, Accion Nacional, after recent vote scandals, "the alternative is grim: revolution or a golpe de estado." Neither seems a current probability, but who knows?

De la Madrid has only slightly diminished early doubts about his willingness to go after suspect members of Lopez Portillo's inner circle. Last summer he authorized the indictment of Jorge Diaz Serrano, ex-chief of PEMEX (Petroleos Mexicanos, the government oil monopoly) and an intimate friend of the former president, on charges of a $34-million fraud in the purchase of two tankers.

Instead of freeing like the others, Diaz Serrano denied the charge and has spent a year in jail awaiting trial. He was the first of the "peces gordos" to be arrested, and he is a very fat fish indeed: former ambassador to Russia, former federal senator, former presidential prospect, and that rarest of strange fish in a government run exclusively by professional politicians, a highly successful businessman.