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Mexico and the Future

by Dr. Donald E. Schulz.

September 25, 1995

45 Pages

Brief Synopsis

One of the more serious dangers to peace and security in Latin America is the territorial dispute between Ecuador and Peru, which broke out into warfare in February-March 1995. In this monograph, Dr. Gabriel Marcella explores the critical historical and strategic dimensions of the conflict. He argues that unless this age-old dispute is settled amicably and soon, it could very well generate a more disastrous war in the future. Dr. Marcella proposes a basis for settlement and provides specific policy recommendations for the United States and the inter-American community.

Summary

This study examines Mexico’s prospects for democracy, socioeconomic development, political stability, relations with the United States, and the implications for the national security of both countries. The main findings are as follows:

On Democratization.

~ While considerable progress has been made, the process remains incomplete and the gains are by no means irreversible. Democratization poses serious risks and costs for both the governing party (Partido Revolucionario Institutional, or PRI) and President Zedillo. It will likely lead to the further erosion of the PRI’s political dominance and could weaken the current administration’s ability to govern. There is also a possibility that the regime could lose control and that Mexico could descend into political immobilism or chaos. For these reasons, there may be a temptation to limit, halt, or even reverse the reforms.

~ If the economy continues to decline, social discontent will grow, making governability even more problematic. If this occurs in conjunction with an upsurge in political violence, the prospects for an authoritarian restoration will significantly increase.

~ The most likely outlook is for a long, drawn-out process of democratization that will take years—and probably decades—to complete. This process is unlikely to be unilinear. There will be setbacks as well as successes. While there will hopefully be more of the latter than the former, one cannot dismiss the possibility of an authoritarian restoration.

On Economic Recovery.

~ The prospects are mixed. While currently most of the macroeconomic indicators are favorable, at the micro level the situation is grim and will probably get worse in the second half of this year. Economic recovery remains fragile and highly dependent on forces beyond Mexican control. Similarly, political/ social stability is tenuous. If the conflict in Chiapas resumes and spreads to other states, if there are more political assassinations, scandals, and other forms of turmoil, then the crucial psychological preconditions for recovery may not be established. Investors tend to avoid risky, unstable environments.

~ Both the economic crisis and government policies meant to deal with it are severely aggravating the country’s social crisis, making it unlikely that social turmoil will diminish. This in turn will make it more difficult to generate economic recovery

~ A major challenge will be to attract enough long-term, fixed investments (plants and equipment) to offset losses of the short-term, highly liquid portfolio investments that played such a large role in bringing on the crisis. While portfolio investments will be needed also, Mexico must avoid becoming overly dependent on them.

~ While the Mexican Government is forecasting a rapid recovery, it seems more likely that the economy will sputter along in a recession/meager growth pattern for another year or two. At the micro level, moreover, the recovery will be much slower than at the macro level. Equally possible, however, is the prospect that social and political instability and external forces beyond Mexican control will continue to undermine a recovery. If this occurs, then the most likely outcome is a lengthy period of recession/stagnation or, in the worst case, a resumption of a descending economic spiral. If U.S./international support for Mexico should falter, the latter would become the most probable scenario.

On Social Development.

~ The beneficiaries of Mexico’s structural adjustment have been mainly the upper class, especially the super rich.

~ The combination of the Mexican Government’s neoliberal economic policies and a decade-and-a-half- long economic crisis has had a particularly severe impact in the countryside, increasing poverty and encouraging rural-to-urban migration, as well as emigration to the United States.

On Political Stability.

~ Political and social turmoil will continue. Labor unrest, rural violence, and terrorism are likely to get worse. Middle-class protest movements will grow. Elections will increasingly be disputed. Already the threat of narcotrafficking may be entering a new stage, with the cartels targeting political leaders for assassination. An emerging alliance between the narcos and reactionary elements in the PRI will probably lead to more violence if President Zedillo continues to accelerate the reform process. So serious are these prospects that one can no longer dismiss the possibility of a wholesale breakdown of the political system.

~ The United States, both through its actions and inactions, could further destabilize the situation. A denial of more loans and guarantees, should they be needed, would plunge Mexico into an even deeper socio- economic crisis and might shake the political system to its foundations. At the same time, a successful U.S. immigration- reduction program might bottle up socioeconomic pressures at precisely the moment when those tensions are dangerously on the rise.

~ Notwithstanding these dangers, the odds are against a massive political/social explosion. The foundation of the Mexican system, though seriously eroded, is still largely intact. The regime retains a considerable capacity to co-opt, contain or repress its enemies and potential enemies. The military is still loyal; the corporate controls, while weakened, are still formidable. At the same time, the legal opposition remains badly divided, and those revolutionary movements that exist (with the partial exception of the Zapatistas) are small and lack the resources and leadership necessary to make them a major threat.

On U.S.-Mexican Relations.

~ The United States has few foreign policy concerns more consequential for its national interests than the welfare and stability of Mexico. Because the two countries’ economies and citizens have become so intertwined, Mexico’s problems are increasingly becoming U.S. problems.

~ U.S. and Mexican leaders oversold NAFTA. While many of the agreement’s anticipated benefits may still accrue, others will not. In some cases, social problems will grow worse because of NAFTA and the larger economic strategy associated with it.

~ The United States and Mexico have entered into a new era of much closer, more intense relations. But closeness does not necessarily mean harmony. In a complex relationship, marked by serious conflicts of national interest and along history of suspicion and resentment, intensity could as easily lead to greater hostility as amity. The potential for a serious backlash exists on both sides. The issue of illegal immigration has already started such a process. The question is whether it will gain momentum from other resentments.

On U.S. and Mexican National Security: Conclusions and Recommendations.

~ There is a need for an expanded, largely nonmilitary conception of U.S. national security as it relates to Mexico; moreover, there is a growing link between U.S. and Mexican security. Mexico’s socioeconomic and political crises impact on the United States both directly and indirectly, affecting U.S. trade and investment flows as well as the movement of narcotics and illegal immigrants. In turn, this affects socioeconomic conditions in the United States, especially near the Mexican border and in inner cities. In addition, the rise of a narco-state or the installation of a hostile government in Mexico City would greatly complicate U.S. security and defense policies.

~ One of the sources of the Mexican crisis has been the government’s neoliberal economic policies. While neoliberalism provides important insights and prescriptions that must be part of the solutions to the economic challenges facing Mexico, it is not a panacea. The strategy has too often been uncritically embraced, without sufficient understanding of its destructive and potentially destabilizing side effects. One consequence has been the undermining of Mexican national security.

~ The challenge is to devise a strategy that is capable of combining economic and social development, so that the wealth created benefits the entire society rather than a relatively small sector. With this in mind, it is time to reopen the debate on agrarian reform and agricultural protectionism/ subsidies and to channel more assistance to small and medium peasants to enable them to raise productivity and make the transition to a modern, more diversified economy without unacceptably high and potentially destabilizing levels of social pain.

~ More international aid will be needed to achieve these aims and to provide a social safety net to help Mexico through the crisis. At the same time, it will be necessary to create better mechanisms of accountability. Funds must be monitored; more (and more reliable) information must be supplied by the Mexican Government.

~ Democratization must continue. Public expectations have been raised, and to frustrate them now would be potentially explosive. To minimize the risk, a concerted effort should be made to bring the political opposition in from the cold. This means not only fair elections, but a considerable broadening of the governing coalition. ~ Mexico’s corrupt judicial and police establishments must be cleansed.

~ A new special prosecutor should be appointed to get the investigations of the Posadas, Colosio and Ruiz Massieu assassinations back on track.

~ The war against narcotrafficking should be escalated. Though the risks are considerable, the dangers of doing nothing are even greater. Already the cartels have become a major threat to Mexico’s national security and the whole process of reform. Accordingly, U.S.-Mexican cooperation should be increased. At the same time, the United States must step up efforts to reduce its domestic demand for drugs.

~ Enhanced enforcement of U.S. immigration laws must be accompanied by increased sensitivity to the human rights of illegal aliens in order to avoid a proliferation of abuses.

~ The U.S. Army should be wary of proposals to “militarize” the border area or otherwise prominently involve it in operations that might be perceived as being aimed at the Mexican people or as threatening Mexican sovereignty.

~ U.S.-Mexican security cooperation might be enhanced by holding trilateral “North American summits” with Canada. The three armies could also engage in various “confidence building” measures, such as unit visits, personnel exchanges and noncontroversial exercises.

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