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Mexico in Crisis

by Dr. Donald E. Schulz.

May 31, 1995

67 Pages

Brief Synopsis

This is the first of a two-part report on the causes and nature of the crisis in Mexico, the prospects for the future, and the implications for the United States. In this initial study, the author analyzes the crisis as it has developed over the past decade-and-a-half, with the primary focus being on the 6-year term of President Carlos Salinas de Gortari and the first few months of his successor, President Ernesto Zedillo Ponce de Leon. Contrasting the euphoric hopes generated by the North American Free Trade Agreement (NAFTA) with the explosive events of 1994 and early 1995, he explains how a country with such seemingly bright prospects went so wrong. He argues that the United States has few foreign policy concerns more profoundly consequential for its national interests including its security interests than the political stability and general welfare of Mexico. For that reason, it is especially important that we understand what has happened and why. Dr. Schulz s preliminary findings are sobering. Despite some promising moves by the new administration with regard to judicial and police reform and a more cooperative approach to the political opposition, he questions President Zedillo's willingness to challenge the Partido Revolucionario Institutional (PRI) elite and the narcotraffickers. The fundamental problem, he suggests, is that Mexico s political economy is dominated by an oligarchy that has grown accustomed to borrowing from foreigners to enrich itself. If he is correct, then there is likely to be trouble ahead, for the current bailout will only perpetuate the system, virtually assuring that there will be another crisis down the road.

Summary

This study examines the development of the crisis in Mexico, with the primary focus on the 6-year term of President Carlos Salinas de Gortari and the first few months of his successor, President Ernesto Zedillo Ponce de León. It poses the question of how a country with such seemingly bright prospects as Mexico in the wake of the North American Free Trade Agreement (NAFTA) approval by the U.S. Congress could so quickly plunge into crisis. The answer is that these problems had been festering for some time. By 1994, a combination of factors–including recurrent economic crises, a failure to introduce meaningful political reforms, the social devastation wrought by neoliberal economic policies, continuing corruption and mismanagement by Mexican political and economic elites, human rights violations, and the growing power of narcotraffickers–was sufficient to destabilize what had long been considered one of the most stable countries in Latin America.

The prospects for the future are mixed, at best. While some substantive political, judicial and police reforms have been belatedly made, serious doubts remain as to how far President Zedillo will be willing/able to go in challenging the power and perquisites of the traditional government/Partido Revolucionario Institucional (PRI) elite and the narcotraffickers. A major threat to these elements would probably in itself be destabilizing; it could also be personally dangerous for Zedillo at a time when political assassinations are becoming increasingly commonplace. Moreover, corruption and inefficiency are so ingrained in the political institutions and practices at all levels of Mexican society that nothing short of a wholesale cultural revolution seems likely to solve the basic problem. Such fundamental changes in values are notoriously difficult to carry out and would take years, indeed decades, to accomplish. Thus, while the economy may pick up in a year or two and significant advances in democratization may occur, political violence and social turmoil will continue, at least in the short-to-medium run. In turn, this will pose serious problems for the United States, especially in the areas of illegal immigration, narcotrafficking, and all the costs and dangers they pose for American society.

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