THE CRISIS IN MEXICO



I. INTRODUCTION

A. STATEMENT OF ALVIN TOFFLER--'FUTURIST' in 1986:

"The Mexican government has no money. The drop in oil prices has destroyed their Federal budget, because it was (based) 50 percent on oil. So it has a $97 billion debt, with people hungry, with earthquakes, and corruption. We're living with a volcano next door. If that volcano starts spreading lava, it could easily spread over to Texas, Arizona, and California. It already is, in the form of immigration."

B. STATEMENT IS ACCURATE, BUT UNDERSTATES DIMENSION OF PROBLEMS CONFRONTING MEXICO IN 1980S--PROBLEMS NOT SIMPLY ECONOMIC, BUT ALSO POLITICAL AND SOCIAL IN NATURE

II. ECONOMIC CRISIS

A. ECONOMIC DOWNTURN, BEGAN IN EARLY 1970S, WORSENED IN 1980S

1965-70: PC/GDP = 3.7% ann.

1970-72: PC/GNP = 2.0% ann.

1976: PC/GNP = -2.0% ann.

1983-88: PC/GNP = LT 1.0% ann.

B. AGRICULTURAL SETBACKS: NOT ENOUGH FOOD PRODUCTION

1. 1960-64: 3.9% ann.

2. 1970-72: 0.9% ann.

3. 1976+: NEGATIVE GROWTH (24% shortfall in corn/19% shortfall in wheat) failure of expensive national programs to correct agri-deficiencies (SAM)

4. 20% decline in P/C caloric intake 1981-89; 60% rural malnourished

5. reduced govt. support for farm sector: 19% federal budget (1980) 5% federal budget (1989)

C. PETROLEUM BOOM & BUST

1. Mexico becomes 4th largest oil exporting nation in 1981 (2.3 billion brls.)

2. Unfounded optimism of late 1970s, worsens relative perception of problems in 1980s

3. Heavy borrowing to bring oil production on line in late 1970s; early 1980s--additional borrowing to improve other sectors of Mexican economy with expectation that loans could easily be repaid with future oil exports at high prices ($30+ PER BARREL)

4. Collapse of oil prices/demand after 1981: MEXICO'S future mortgaged--no way to repay staggering debt

5. SURGE IN OIL PRICES IN 2000 has revived Mexican Economy: 4% eco. Growth in 1999-2000

III. THE ECONOMIC CRISIS

A. SYMPTOMS OF THE ECONOMIC CRISIS

1. sharply declining standard of living: fall in income

2. chronic balance of payments deficits: income from oil, tourism, exports cannot cover costs of debt service & imports after 1976

B. INFLATION

1. Indication of gross inflationary spiral

2. Dollars & Pesos:

(Aug76) 1:12.5

(Sep76) 1:20.5

(Jan80) 1:23.5

(Aug82) 1:100.0

(Jan85) 1:200.0

(Oct85) 1:450.0

(Oct86) 1:1600.0

(Oct88) 1:2290.0

(Dec89) 1:2655

(Jan92) 1:2655

(Dec92) 1:5000

(Jan93) 1:5 (Peso Nuevo)

(1996) 1:6

(2000) 1:10

C. FOREIGN DEBT

1. 1976 = $28 BILLION

2. 1988 = $100 BILLION +

3. DEFAULT CERTAIN, UNLESS "ADJUSTED": Fall 1989 $5 billion "written off"/ $1 billion "deferred"

4. 1999 = $155 BILLION

D. UNEMPLOYMENT

1. 50% SINCE MID-1970S

2. 800,000 NEW PERSONS ENTER LABOR MARKET ANNUALLY BY EARLY 1980S, BUT NO JOBS

E. INCOME DISPARITY

1. WITHIN MEXICO: lower 50% receive declining share of national income (from 18.3% in 1968 to 16.0% by 1979 to LT 15% in mid-1980s); accelerated income disparity post-1988; 1999 PC/GDP $8,500

2. WITH OTHER NATIONS:

a. US Farmworkers earned 9X Mexican farm workers in 1970s; gap wider today

b. Los Angeles SMSA GDP for 10 million pop. in 1975 was $81 billion; Mexico GDP for 57 million pop. in 1975 was $71 billion

c. present income disparity with US about 8-10X+

IV. POLITICAL CRISIS

A. LEGITIMACY

1. Gap between rhetoric of PRI & reality

2. economic reverses undermine PRI ability to satisfy client requirements of constituent groups or provide means for cooptation as alternative to coercion to maintain control

3. changing political culture: modernization/mobilization -- pop. wants more from regime that has fewer & fewer resources at its disposal

4. corruption: (traditional medium for party unity)

a. burden on strained economy (career paths)

b. internal stresses in PRI as rivals fight for fewer spoils (role in PRI schism R. v. L.)

c. external pressures from foreign bankers may aggravate crisis: questionable usefulness of anti-corruption campaigns given functional role of corruption)

5. failure of late 1970s political reforms to stem growing political ineffectiveness of PRI; growing power of real, not token, opposition to official party

B. EROSION OF HEGEMONY

1. Internal divisions: left wing of PRI BROKE AWAY, BECAME PRD, challenged PRI presidential nominee CARLOS SALINAS DE GORTARI in July 1988 elections

2. Challenge from right: PAN

a. growing strength & appeal as economy declines

b. covert US support in early 1980s to pressure PRI to abandon opposition to Reagan Central Am. policies

c. electoral fraud in municipal & state elections in 1980s to avoid PRI defeats

3. Challenge from left: PSM/ETC.

a. growing popular/working class discontent with falling standard of living: poor pay greatest costs of eco. dislocations: weakening links between CTM-CNC & PRI hierarchy

b. united Mexican left in Presidential election: own candidate for Presidency withdrew to support PRD Cuahtemoc Cardenas & left-wing PRI-defectors electoral challenge to official candidate

c. probable that Salinas did not get required 51% majority: PRI majority in Congress validated fraudulent returns in September 1988; dissidents walked out in De la Madrid farewell address; murder of Cuahtemoc supporter during election & stolen Presidential election makes violence in post-1988 Mexico very probable: parallels with 1910 Revolution

V. SOCIAL CRISIS

A. POPULATION CRUNCH

1. Present pop. trend (SLOWLY DECLINING BIRTH RATES), if continue means Mexico pop. will stabilize in 2075 with 254 million

2. IF pop. rates do not decline, if continue at present levels (about 3.0% ann.), then pop. in 2075 would be 1 billion

3. average Mexican woman has 5-6 children: must decrease to 2.3 children per family for "Zero Pop. Growth"

4. Each decade of 20th century has brought geometric increase in Mexican population: 1960s +13 million; 1970s +20 million

5. Historic Growth of Mexican population:

1900 -- 12 million

1945 -- 22 million

1980 -- 67 million

1984 -- 73 million

1992 - 88 million

2000 -- 100 million

6. Complicating Factor: 1980s median age = 15 yrs./ Population aging slightly by 2000

B. SOCIAL & POLITICAL CONSEQUENCES OF RAPID POP. GROWTH

1. no resources or opportunities to match pop. increase

2. Mexico increasingly un-egalitarian

3. deepening class divisions as upper-middle classes monopolize limited opportunities: hopeless plight of those at bottom

4. would require revolution to give those at bottom a chance: but outlook grim that any type of regime could solve growing imbalance between resources & pop.

C. URBANIZATION

1. Explosive growth of cities:

Mexico City -- 24 million (largest in world by 2000)

Guadalajara -- 4 million

Monterrey -- 3 million

Puebla -- 2 million

2. Aggravates existing political, economic, pop. problems:

a. questionable capacity of state to cope with urban demands/deteriorating quality of life as urban services overwhelmed

b. nature of urbanized populations: more needs, more political awareness, demands increase political load carried by state

3. Next Mexican Revolution, unlike those of 1810 & 1910, likely to be urban insurrection, not rural insurgency

D. UNDOCUMENTED MEXICAN IMMIGRATION

1. Manifestation of social, political, economic crisis that is overwhelming contemporary Mexico

2. Not direct threat to US (net eco. benefits for US), but symptom of crisis now all but out of control

3. Political/Economic Safety Valve for Mexico

VI. U.S. POLICY AND THE MEXICAN CRISIS

A. US policy-makers respond to crisis, not to pending crisis--no policy to deal with problems, stabilize situation

B. When system collapses, US will have virtually no means to deal with consequences: US anxiety about political situation in Central America in 1980s will be child's play in comparison