Mexico - To the Brink and Back, 1982 88

To the brink and back, 1982-88

When he took office in December 1982, Miguel de la Madrid Hurtado faced domestic conditions arguably more serious than those confronting any postrevolutionary president. The foreign debt had reached new heights, the gross national product was contracting rather than growing, inflation had hit 100 percent annually, and the peso had lost 40 percent of its value. Moreover, and perhaps most critical, the Mexican people had begun to question and criticize the system of one-party rule that had caused this situation. Abroad, commentators (including United States president Ronald W. Reagan) speculated as to the potential for revolutionary upheaval in what had been considered a stable, if not democratic, southern neighbor. Some Mexicans shared this concern. The government and most in the PRI, de la Madrid included, believed that they could continue to hold power by keeping the people well fed and reversing economic trends.

In addition to the economic and political arenas, de la Madrid sought to exert influence in the area of ethics. Early in his administration, the president announced a program of "moral renewal." Despite its high-minded rhetoric, the program never enacted major legislation to discourage corrupt practices. One exception was a new rule that eliminated government subcontracting, a device that union leaders often used to earn kickbacks from contractors. In addition to instituting this new rule, the moral renewal campaign chose to make examples of a handful of corrupt officials, including former Pemex director Jorge D�az Serrano and former Mexico City police chief Arturo Durazo Moreno, both of whom served prison sentences for illegal personal gain.

The sudden reversal of a long trend of steady economic growth in Mexico threw the political system into turmoil, undermined the authority of the PRI, and raised the already high levels of popular skepticism. Economic austerity exacerbated the elitist aspect of the populist authoritarian system that developed after the Revolution. Conditions such as inflation, devaluation, and the withdrawal of subsidies hit the poor hardest. The wealthy found ways to insulate themselves from such developments; as a result, the rich grew richer. This was true both within the private sector and among the bureaucracy. In addition to the schism between the poor and the rich, the crisis and its impact on the PRI's authority sharpened the longstanding dichotomy between central and southern Mexico and the north. The immediate political beneficiary of the crisis was the PAN, a conservative, probusiness party with its roots in the northern border states.

Although weak compared with earlier presidents, de la Madrid still wielded formidable power in both the economic and political arenas. The day of his inauguration, he recognized the nation's "emergency situation" by instituting a sweeping program of economic austerity measures. The ten-point program included federal budget cuts, new taxes, price increases on some previously subsidized items, postponement of many scheduled public works projects, increases in some interest rates, and the relaxation of foreign- exchange controls enacted during the waning days of the L�pez Portillo administration. Aside from its anticipated adverse impact on the standard of living, many Mexicans resented the program for other reasons. Nationalists saw the measures as inspired and all but imposed by the International Monetary Fund (IMF--see Glossary), which reportedly had taken a hard line in debt talks with the government. Others resented the austerity edicts because they believed that the government and the PRI had brought the nation to the brink of ruin, but that the people would have to bear the burden of official incompetence.

To counteract the ferment, the government decided to allow some opening of the political system--enough to provide a safety valve for public discontent--but not enough to threaten the PRI's control, a balance difficult to attain. The first volley in the campaign against the PRI and its policies came with the elections of July 3, 1983. Although the PRI took a large majority of municipal and state legislative races in five northern states, the PAN captured an unprecedented nine mayoralties and registered gains in all five state legislatures.

Hand-picked by L�pez Portillo, de la Madrid inherited the former president's economic mismanagement and that of several of his predecessors. Lack of fiscal restraint, encouraged by a sudden flood of oil wealth, lay at the root of the crisis. Overprinting of the peso cheapened the currency, fed inflation, and exacerbated rather than cured the economic sins that prompted it. And corruption, the traditional parasite of economic vitality in Mexico, made its contribution to the crash.

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