Director of Central Intelligence
National Intelligence Esiimale
The Outlook for Mexico
W Produclion Oiiicer Nallot^jn^
THE OUTLOOK FOR MEXICO KEY JUDGMENTS
THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS, EXCEPT AS NOTED IN THE TEXT.
The fallowing intelligence organizations participated in the preparation of the Estimate,
lhe Canliol Intrlligerx- Agency, the Detente Intelligence Agamy th* niat-onol Svcurity Agency. ond lh# 'rnHMojencetmw ol Slot*
Tha AitHroM Chief ol Sniff tea IrtleSgenee. Department of the Anrry Tha Director of Noroi. Deportment of the Movy Tha Attlttont Chief of Staff, IrrteligjerKe. Depcrtinenl of the Air Fore* lha Director of InretiowK* Heodqyartert. Marie* Carpi
the mexican political system is under greater stress today than at any time in theears. ultimately, of course, the preservation of mexico's stability will rest on the skill and competence of its leaders and on the strength of its political fabric. wo indite that in the end the mcxi-can political system is likely to remain intact.
In particular, he has worked to distance himself from
When he was inaugurated President iniguel de la Madridrisis more encompassing than any since the. Under conditions of harsh austerity, high unemployment and underemployment, double- or triple-digit inflation, widespread business failures,rippling shortage of capital, tlie economy3 contracted byercent. Virtually ail social and economic groups have had to accept declining standards of living, scale down their expectations, and compete for benefits and opportunitiesegative-sum economic environmenl. IX* la Madrid has struggled to preserve social equilibrium and to restore public confidence in the political
senior olticials ol the previous government. By pursuing an antieorrup-tion campaign that has included the imprisonment of at least one former high official and revelations of abuses by others, and by projecting an image of fairness, competence, and probity, the President so far has provided generally effective and popular leadership.
De la Madrid's most striking success has been inurnaround in Mexico's international economic accounts.ittleear, austerity has brought spending in line with available resources, inflation has begun to decline, and some confidence in the government's policies has been restored. By slashing imports and public-sector expenditures, raising the real costs of most goods, and making other tough adjustments the regime has met most of the stabilizationof the International Monetary Fundnterest is being paid
on the moreillion foreign debt, and by the end3 the current account surplus reached aboutillion. With some flexibility to increase imports of badly needed capital and intermediate goods, Mexico probably will be able to stem the decline in economic activity
and may perhaps recover this year.
IX' In Madrid's impressive performanceias prevented an immediate unraveling of the system, but has not been sufficient to dissipate the long-term threat to Mexico's stability. Although many variabln wtil be Involved, the outlook through this decade and into theil he shaped largely by the interplay of the following factors.
The mott important is probably de la Madrid himself; his outlook, psychology, skills, and leadership qualities.^
Tlie economy and labor wiU also be key. Economic growth almost certainly will lw insufficient to create enough jobs for the burgeoning labor force. Resources probably will nol be adequate to maintain traditional prop.rums that have subsidized working-class groups and helped to keep them quiescent. Labor has suffered under austerity, and indefinite sacrifice is not likely. Tints, the President will Increasingly have lo make difficult trade-offs among economic objectives that will tend to alienate tome politically important sectors while helping others. In the unlikely event tliat economic activity were to continue declining for another four ot five years, tbe prospects for rtneintr-threatening instability would rise signifkantly.
Conservative opposition forces generally will be more assertive. These forces are concentrated in the center-right National Action Partye believe that tin; rise of opposition sentiment in the northern border nrgion reflects the spectacular economic and demographic expansion there over the last decade or so, as well as dissatisfaction with the regime's economic policies and statist philosophy and tampering with election results. These Irends have been paralleled, moreover, by indications of dissidence in Mexico's poor and underdeveloped southern slates where Communist, radical, and other opposition groups are organizing.
Meanwhile, extreme leftist groups are also active. Leaders of lhe Unified Socialist Party of Mexicomimiinist-dominated coalition, reportedly have decided to increase their recruiting and organizational effort! in the southern-tier states closest to Central America. Working through radical peasant, student, and labor groups, the PSUM could generate increasedfor its causes, but it will most likely pose smaller and more containable challenges than ihe rightwing opposition.
Cuba and the Soviet Union maintain contact with and provide funding and other support lo local leftists and revolutionaries from Central America and elsewhere, but with few exceptions they have been reluctant to support committed revolutionaries who would employ violent methods against the Mexican regime. Nonetheless, if levels of instability were to rise in Mexico, we believe It would be more likely that Cuba and the USSR would expand their subversive activities, and it would be easier for them to do so.
As long as relative stability continues, the military would be disinclined lo tnlercene In the political process. Such intervention would violate rules that have governed their behavior since
ny significant increase in instability or external threat, military involvement in the policy process would rise as more areas ofconcern lookecurity dimension.
We are reasonably certain that some transformation of the Mexi-can political system is likely during the period of this Estimate.!
Whatever the true course of events, US political and economic interests will be affected substantially by conditions in Mexico during the period of this Estimate. The security of the US southern border depends on the continued existencetable, united, and peaceful Mexican neighbor. Other core interests-!
e flow ot illegal migrants and
drugs inlo this counlry, Ihe availability of Mexican petroleum, bilateral trade and investment relationships, and Mexico's continued willingness to make payments on its foreignbe affected byuccess in dealing with the challenges facing it.Original document.