Created: 9/9/1980

OCR scan of the original document, errors are possible

Dealing With Mexico in

National Intelligence Estimate

i Lie. Copy Please return to TO/NIC




The following inteBigeoce organizations participated in th* preparation of the Estimate:

The Control Intee-gence Agency. Ihetations of the Deportment* of Store. Energy, and Treasury, the Defense Intelligence Agency, and the Not-ono! Security Agancv.

Aho Participating:

The Assistant Chief of Stall for inrelligeoce. Department of the Army The Director of Novol Intelligence, Department ol the Navy The Assistant Chief of Staff, Intelligence, Department of the Air Farce The Director of tnlellioence.arine Corpi






A. Oil and ihc New Trade

R Finance and the Dollarlzation of the Mexican

C Migration and the Blurring of the US-Mexican

D. The Increasing US Stake in Mexican Political

Linkage and

A. Mexican

Policy. Dealing With Mexico

D.The Last



A. Population Growth and

B Oil Puces and the World

The Evolution of the Mexican Economy0

Oil Can and Cannot

and Economic

C The Rural

D. Trade. Inflation, and the Ex.lunge

The Relationship Relsveen Economics and Politics

The Evolution of the Mexican Political System to

A. How the System

II IV Presidential Succession and the

Politics at the

Stagnation and Political

An Instability


Il is iticvilable thai Mexico will absorb an increasing share ol US policy makers' attention infk. This Estimate attempts to set bases of in.cni ili.iis valid for dealing with future Mexicanas with the present administration o( Jose Lopez Portillo. As Mexican political stability is and willajor US concern, the Kslinute also assesses tlie strengths amif tin- Mexican political system and Mexico's economicas it relates to political stability.

The System

Bv many criteria, Mexico ranks as the world's most successful developing nation. Korentury it has had stable governments and orderly and reuulur changes ol government Tins long period of political stability- uniqueajor Third Worldeconomic gmwth lo averageercent since tbe mid-unique achievement. Tbe nation's political and economic success isunction of the Mexican political system.

Tlie system, which was developed largely in the two decadesthe Revolutions highly authoritarian. All important powerincluding lhat of chousing his siicresjor- rests with thelegislative officials, governors and mayors of important cities, though nominally elected, arect designated by the president and their first loyalty is to bini ,nul not to their constituents. Unliketlintitarian systems, however, Mexico's inclusive system sets great store in bringing all Mexicans into the system in at least away. In ibe preelection period tlie presidential candidate engages in several months of vigorous campaigning through even the smallestloond with thence elected, theas well as bis ministers, department beads, governors, andis amazinglylo delegations from all sectors of Mexican society.

Tlie system makes use of. and reinforces, the vertical, patron client structure ol Mexican society. To the despair of Marxists. Mexicanand peasants show little class consciousness; luiri/orital linkages with one's fellows aremuch less effective than vertical linkagesatron in achieving econtiniic or political success. Il is these workers ami peasants as well as the unemployed poor who form the


backbone, of support fur the offtciul party. Members of tin? middle class have more options and their loyalty lo the system is more conditional; thus, Ihey receive most nf trie government's carrots and sticks II is members of this claw who are must likely to find themselves rewarded by good government jobs or thrown into jail

A major strength of the .system is the turnovet ol' power that occurs every six years. Although tbe president has virtual dictatorial power during his term, lie is expected lo fade away and enjoy liis wealth in mix lest seclusion at the end of his presidency His last act i* that of choosing his successor, over whom he will then have no control or influence. (Itharacteristic of the Mexican system that eachlends to be followeduccessor who corrects the exaggerations of tbe outgoing president's own policies and personality. Thus, tin* leftist Cardenas was followed by the ruthtist AvjU Camaclio. the unusually corrupt Alcman was followed by the unusually honest Ruiz Cortines, ihe erratic Echeverria was followed by thei>czhe change of president Is reflectedassive turnover of personnelin government. Thus, many politically ambitious Mexicans feel that they are never more than six years away Irom their goldenthere is no need for revolution

Dangers lo ihe System

Weumber of possible dangers for Mexican political stability in tbe lSSOs:

(Growth of Strxico City. If greater Mexico City, withovermillion people today, were to continue growing at recenl rates, the population would exceedillionuch an outcome is impossible, given water and land constraints, ihe Valley of Mexico can support only someillion people. Even if all migration to Mexico City were to cease this year, natural increase alone would push the city's population close to theillion mark by the end of the HMOs. This means that, by thel tbe latest, the Mexican Government must find some combination of carrots and sticks lo stopto Mexico City and toart of the native-born population to leave the capital.

Size of Ihe middleThe steady growth in both theand ulxsolute size, ol this class Is now being accelerated bv the inflow of oil wealth. Although the middle class profits most from the Mexican political system, it is also the imutwith the hypocrisy inherent in the system and with the severe limitations that the system places on political choice. As the middle class becomes steadily stronger relative to such

sectors of government support as lal>or ami tlte peasantry, the government will be faced with some hard choices. On the one hand, it must make enough reforms to dampen middle, class discontent On the other hand, it must avoid "reforming" itself into the kind of weakness that characterizes many Third World governments.

I'reiidential dcalh or incompetence. As there is no vicein the Mexican system, the legislature has the duty under the constitution toeplacementresident unable to complete his term of office. In practice, this probably would leadevere crisis. The Mexican legislature is used to taking orders, not to making decisions on Its own. Moreover, while certain memlters ol the official parly, the cabinet, theand the labor unions have considerable influence, there arc no "kingmakers" aside from the outgoing president himself

Instability Indicators

On the brighter side, we haveard lookumber of factors identified by oilier observers as containing tbe seeds ofin the rural sector, rising unemployment, and the Oiminunist "menace" from Central America- and have concluded that these offer little threat to the Mexican system inverall, we believe that the chance of regunc-thrcalening political instability during the decade is less than one in ten. We recognize, that, because of ihis low probability, experienced observers will tend lo overlook signs of political instability if they do appear. To guard against thiswe have drawnetailed checklist of instability indicators tailored to the Mexican system It is presented int the end of this Estimate.

The US-Mexican Relationship

During, tbe relationship between Mexico andiledestined to become muchcloser than either country desires Because of oil. Mexico's bilateral trade with tin- I'nited States willurplus for the first time in recent history This event is likely to fuel arguments in this country for restrictions on Mexico's nunoil exports (which are essential to Mexico City's strategy Tor coping withDollarization" ol the Mexican economy will proceed apace, as Mexicans continue the trend of holding funds and doing Iwisiness in dollars rather thanhb will make anmonetary policy extremely difficult if not Impossible for Mexico City


Tlie blurring of tlw US-Mexican bolder will probablylo the consternation of Ixgh countries. The citizens of Mexico's Itorder states are considcrrd dilfercnt by otlier Mexicans, and their lira to the Mexican system are suspecL The minomics of tlie Ixuder cities are more closely linked to that of the United States, than to that of Mexico, andeirnot seeCity as. tlie all-important center ol power, euiteinent. ami opixirtu nity. Thus, the Mexican Government will be faredilemma that will grow sliarpei as the decade progresses At one unlikelyit could seek to reclaim the ulien north by cutting the borders economic links with ihr Uniied Slates. Such action would result in an immediate and sharphe standard ot living of borderami would also anger US owners of Imrder plants and US shopkeeiHTS who depend heavily on cross-border business. On the other band, to accept the increasing "gringoi/alion" ol the border would go very much against the Mexican's feelings of pride and national sovereignty.

In US eyes, the blurring of the border is seen largely in terms of illegal migration ol Mexican workers to US labor markets. While thend effects ol this migration have been grossly cxastseralrd in the US popular mind, there is no doubt that the flow is large and increasing Moreover it appears to lie changing in nature; whereas the typical Mexican illegal of the pastural lalxuer who spent only four to six months in ihe United States, the typical illegal of the future may well lx* an urban Mexican who will plan on si lending several yearshe border By the end of, the United States may have reason tn welcome an inflow of foreign lalxir despite the social pressures it may create. The US domestic labor force agedhroughage group that includes most Mexican Illegal migrantsUlo growercent during, as compared withercent during. Thus, before the decade is over. US industry and agriculture may In- in dire nerd ol young foreign workers

An additional link between the two countries is created by the increasing US stake in Mexican ixilitical stability. Some US observers now fear that political Instability in Mexico could: tT)assive wave of illegal migrants across tin?eopardize US and world oil supplies;pen the door to Communist penetration. This is having two effects. Ixith bad. On lite one hand, Mexican governments are tempted to use US concern aswhat we want or wellhe other IuikI. US officials are tempted to give Mexico unsolicited advice on "how to solve your serious social problems."

Wilh regard

e Communist menace lrom Cuba and Central America, about which Mexico is insufficiently concerned in the opinion of manyihe situation is much the same. Mexico, alone among Latin American nations, never broke relations with Castro's Cuba, and Mexico Cily has given aid and comfortumber of other radicaland movements in the hemisphere. On ihe other hand, it strictly controls the activities of domestic Communists andthose working out of Communistbrooks no interference in its internal affairs.ense, Mexico City has co-opted foreignmovements in much the same way as it has domestic opposition forces. By and large this strategytin American nation has faced so little Communist-inspired subversion since World

War ii.



Diuinit lln* decade ofc opedi huniio. In the rrlnliim-dtiii Ix-lwren Mexico and the United State* Many ul these chance* have long tw-cn In train and are Urstely outside the influenec of polio. ii. in both rutions.while tbe bawc thruil of the chanaes may be immutable, the evoUine situation will present pulwithto la- seized and dangers lo lie avoided.

his Intimate is divided Into two parts Part One considers the probable evolution of OS-Mexicanover the nolears, assesses Mexican pen-en lions of ihew lindanes, andumber ofallot is lo be held in mind when drulinw with Me>ko The second part bawd <et several years of research nol completed by the Central Intelligencethe probable courseriko'i economy and political systemU. withon the outlook for political liability Many ol the conclusion* of Part One depend upon the analysis in Pari Two



A. Oil ood the Ne- Iroow Picture

hai yeai weery bastehe trade relationship between the United Stain and Mexico Becaiar of oil. Mexico'* hibteial IraoVwith tbe United States willuritlttt fur the first time In recent history Moruover. at the option of the Mexican Government, this surplus can persist ami tcrow as the decide pnniressei AlllwiiKh Mevii in oil sales will dominate the current aocounl, other ele-menu aie likely to shift in ways fa vol able to the United Slates. The rzrowth ot nonoil exports to the United Stales will probably slow, while thai of USto Mexicoance volume oloodi) wdl accelerate The number of Mexican tourists in Ihe Unites! Stales will uxrraie. and lliey will ipend more money than ever before Debt service payments to the United States will remain Wh

he United States has lonu domlnatrd Mexico's Inretun trade Despite strenuous eflnits by Mexico City tu shift Its exports and imports lo other nations,9 the United States dill at counted forercent ofii export* las compared wilh oil imieiitittle overercent ol Mexican imports Ubout the same as. If sxnuioded Roods weree IS share of Mexican import* would rise by several percentage poinei Traditionally. Mexico's

trade deficits withited Staler were

I set in part by surpluses on the Mutism

leaving large butcurrent account deficits, which were, in turn, covered by capital imports from the United Stales.

Mexican Coveniment is allaekuui thedaiiKci in Itvo ways: il) hy socking to diversify lis oil exports;y limilinu the total amount of oil exports method is likely to be totally


in theIn r

mmset itself the goal ol the US share of Mexican oil exportsoercent St tar il has not been suctesolul in thts- -in the first quarterxports to the United Stains (including Puerto Rico) were hit percent of total oil exnoiti This is largely the result of geography Be-Caiise of the transportation differential. Kiiropcan and

espite the apparent benefils. the Mexicanis ti'it entirely happy with the new situation. It lears lhat the United Slates will become overly dependent on Mexican petroleum.'

Japanese buyeis of Mexican oil must pay more than Ami-Hiome at these o> "mines arc willingvrilool suchifference* in ordVi lo assure future access lo Mexican supplies, oilier* are no( tor IU pari, Pemcx (five Mexican stale nil monopoly! hits been unwilling In cul its prices In order lo offsel ihe lijuiprrtathin ddferrntiaL Unlet* ihe Mexicanatratrr priority lo diicrefiraltoii.progress toward reducing the US share of Mexican oil exports will probably hinge on complex baiter-invrsliiient packages -which aie moving verylo ncsotiatc

S Presidentortillo has set an export rrilingillionay. though ihis ceiling almost certainly will ho revised upward before the end of his administration in Decemberonservation of national oil reaejvr* is popuiai with all segments of Mexican society from the far left tu the farNonetheless, in oider to meet olher economic goab {for example,ercent annual growth in gross domesticil exports will almost certainly have to be expandedf not before How much will depend on the world price of od If the of od rise* only as fast as world inflation and Mexicoixed exchange rale,ould have to lie exportedn the other hand, if the ieal price ol oil rises byercent annually (toarrel. exports could be hrld downillion b'd Boe would expect oil export* to continue to expand unless con-stiained by dutiuMtlc requirements and/or teehnleal factors1

1rlatlrdol ihe ei'OiicmS- taetou that "HI brMeitran oil expjit notify tn tbe lBttfO, aw MrtkaTrade-Off* aiuf Oil Eipcu Though im.IH2GA.D!

hus, deapUr the Mexicanil seems inevitable that Ihe Uniied Statesbe importing considerably more Mexican oil as Ihe decade progresses And Mexico will be using theearned lo buy ever greater quanlitics of US goods, including some foodstuffs Mexico City will seetrade ties bothestriction on its freedom of action and as an opportunity for leverage to expand iiiiihiiI exports lo Ilic Unitedxpanding nonoilt considered one of Mexico's low eoml iis-;hillt:r'iu/e| tmi Outth| lata ihr iroou* unrmploymenl problem We expect roost Mexican demands on the United Stales ino concern nonoilo Ihe extern that levnase is successful trade lies betweenouniries will br Increased. Mexican economic freedxan nf action will he furthrf restricted- and the Mexicans paranoia will grow in step with thr success of Us leverage polk les

B. Finance and ihe Devitalization of the Max icon Economy

uring the next decade IS imesxrorrt in andwill be limitedby what the Mrxican Government choose* lo accept As the oil-dependent "miracle economies'* of Ihr IfthOs andAt I, South Korea. Taiwanbegin to lose Some of their lusicr In an enorgy-ooti-sliaincd world. US investors will find Mexico InCVOM inch attractive Indeed, if IS investors have iheir way, Mexico will pas* Brazil lo heroine the foremost sate for US kxarn and duect investment in the Third World (hi the other hand, (he Mexican Cnvernnimt will probably use its oil earning* to stabilizei [mixing needs. (Wc believe lhat the Mexican Cuv-ernmnnt will accent annual current account deficit* on the oidcr of t& billion; it could, of course, increase exports and thereby eliminate Ihe need for foreign lateiowingl Wiih retard lo direct investment, the internment may well oWidrengthen nr moie rigidly enforce Mexfcanlzation ot other laws that discriminate agaiml loieign insr-stmcnt in the domes-lie rnmoinv- On balance, we wouldoderate Increase In US investment in Mexico

ny increase in the flow of foreign bind* Into thethose dollars used lo pay for oil -ill Increaseiuds extensive d. iLuuatmr. of Ihr Mexican economy The dollar hasrn unit in Mexico bothtore of valueedium of exchange. The Mexican peso is freely convertible, savings and checking accounts in Mexican bank* may be deia led in dollars, and many Mexican Uisl-ihsiiihii conduct purely domestic business through US bank*6 devaluation of the peso (and tbe rumor* thai led up lo Mlowerful incentive to dollartulion Mexico had noiesaliutionnd during thoseears Mexicans hud come to legard their currency as reasonably secure. When rising inflalion and ihe erratic economicof former President Fchcverria put Ihe luluie ofeso inaixtvr flow out of peso* into dollars made the devaluation inesitable At present thefftriaHi "floating'* but urafftetanyexicans remain wars and prefer to keep their

to make theirn dollars rather than risk getting burnedew change in (lie value of the pesoong pelind of stable exchange rates (bucked up hy low inflation rates) i* likely to lessen the Mexican preference for hold ton dollars.

lmost any conceivable economic growthfor Mexico involves inflation rales in excess of those in the United States and other trading partners. Thcrcfore an rt-rnlual drvaluation will rrtnatn highlv mobable. and dollarl/ation wilt continue andalls accrlerjir Thu im-jm thai an important part ol the Mexican mooes supply will remain outside the control of lheseinment Monetary policy and the stimulation of certain sectors of the economy through allocation of credit will become km effective-Many Mexicans, seeing the Iran of monetary control over their own ecnnoiny through dollar!ration, will(incorrectly) thai the Untied Slates has somehow gained control

C. Migration and the Blurring of tha US-Moxkan Border

exicans fiom other parts ol tbe country have never fell comfortable with the northern border area In prchtspanic limes. Mexico thai it to say, the high Indian iton*ncoded north of the present state of Sinaloa on liar west aid central Tamaulipai on the cast Beyond lhat was the "Greatbe home of lhe savace larluruns who perirxhcally rakled mlo the cisihzed south Centuries later it was Ihr home of the violent re^idutionane* who look lhe nation by storm and.arge extent, created modernf the maior figures in the Revolutionith lhe exception of Zapata, were from bolder slates) As [evolutionary violence slowly gave way to order, the politicians of the south took over from lhe gem-tab of the north and thenever again let go. Oner nunc, tin' conquering Chiehimecs had been oveieome by the civilizing center.

he Mexican authoritarian governmentalprobably lhe most successful in the Third World,ery high value onthe border area has in many respects slipped out ol Mexico City's control. Many thousands of Mexican "commuters" live in Mexico and work across tlie border Oiliersvork In US-owned "border industry plants" which, though located in Mexico, use US raw materials lo produce goods for the US market. Accordingecent survey, more lhan SO percent of bordercross into the Uniied Stales In do their shopping. Border residents, alone among their countrymen, do not see Mexico City as the all-important center of power, excitement, and opportunity They arc often less concerned with Mexican politics than with those of Use United Slates, and they are less Inclined tothe official parly than arc other Mexicans. It is no coincidence that the "Monterrey Group" of pow-erlul private Inisinessrs, tlie only imporianl group in Mexican society largely outside of government control, arose in lhe north. Such an autonomous group could never have grown up in Mexico City or even Guadalajara.

hus. Mexicos facedilemma svhich will grow sharper as lhe decade progresses. On the one hand, il could seek to reclaim

north At an cxlieme. this would involve snui-ringhe Border Industry Program, closing the border to Mexican commuier-workers andexican shoppers, and attempting to tie the border economy to (lie center (Fx-Presidenl KciVverria at limes seemed lempted to take suchuch action would result in an immediate and massive reduction in the standard ol living of the border residents- At the same time, II would anger the US owners of border plants and devastate those shopkeepers fromto Texas who depend almost entirely on Mexican customers

holder. This Is what most administration* have done-somewhatfat. lhe only major efforts to stem the lide have been the subsidization of suiter-markets on the Mexican side of the border (In wean the Mexican shopper away from US merchants) awl the establishment of some cultural and patrioticThe continuation of this course, while it would avoid political problems with northern Mexicans and with the United States, would bo very much against the Mexican's leeliugs of pride ami nationalPerhaps even more important in the eyes of Mexican loaders, il could undermine the complexof vertical patron-client relationships that lies the government lo the people and holds Mexican society togellier.

n non-Mexican eyes, the blurring of ihe border is seen largely in terms of illegal migration of Mexican workers lo US lalx>rthough theis notorder phenomenon Must illegal migrants have noi been from Ihe herder states but from rutal areas in central Mexico While the size and effects of this migration have been grossly exaggerated in the US popularere i' no dmilx that tlx: flow is large and increasing. (Wa estimateexicans enter ihe United States illegally each normal year. In tlx* drought90 the numbers may prove considerably higher. However, at least two-thirds and perhaps as much asercent nf these migrants return lo Mexico alterexvigrants generally makeip* to Ihe Uniied Slates in order to maintain an adequate standard of living for themselves and their families in (heir home tillages. These migianb do not come from the poorest areas of Mexico, nor are they among the poorest in the areas from which they do come. Nonellxdess, their migration (and Ihe money they send back) helps reduce Mexican under-employmenl and therebyolitical awl social "safety valve" for the Mexican Government.

uring Ihc lOSOs wc expert tolow change in the natuie. and possibly the size, of lhe il-

legal flow. More urbauites will come, they will beeducated and mote ambitious, and ihey will be planning lo stay in tlie United Slates lor several years rather than several months. Many will be "targettaying as long as necessary to earn the amount ol money required tousiness (in manyaxicab) orome back in Mexicowill simply he canons money* to raise livingof tbe extended families lo which they lielong in their native cities. Although these urban workers, like their counterparts from rural Mexico, will initially be willing to take jobs that few US workers want, they will soon develop both the skills and the desire tofor better paying, less arduous work. Many mote than at present will hrine their families. While the pool from which illegal migrants are drawn will grow substantially dnrira; the next decade, ihe actual flow-will be greater or less, depending on developments inhe establishmentew legal migration agreement between the United States and Mexico could also change the size and character of the illegal flow, depending on the exact nature ol the agreement.

y Ihe end of the Mods, the Unites! States may have reason tolow of Mexican workers (beyond the already existing substantial US interest in helping assure Mexican political stability through the safety-valve effect of illegal migration! Aofiwdins: to projections by the US Bureau of Labor Statistics, the US labor loree agedhrough the age group that Includes most Mexican illegal migrants- -will growercent during, as comparedercent during. The labor force agedhich expanded by II) percent ins. will contract byercent in. Thus, In-tan- ihever. US industry andmay be in dire need o! young foreignSome US intoiesl* may well be pressingew braccro program orroaderorker migration plan along the lines of West Kuropean guesl-worker programs.

inal note on border linkages, it .should be remembered that economic events and decisions incountiv can have more pronounced effects along the border than in the lieartlauds US recessions, for example, often devaslate Mexican border cities byhe demand for commuterhe demand for the out mil ol US-owned liornW industries in Mexico,S tourism along the border. On tlte otherenu an devaluation (like thatmakes US goods much more expensive toand can ml Mexican dmpping in thealmost lo zero Moreover, (lie devaluation ofwith the generally poor condition ofeconomy durum (lie lasl days ofincreasedand may have led to a

doubling ol the flow of lllrcal migrantsWc estimate that tire illesnl flow7 ma* have gone as highillion uenons, or two to three htnes theow I

D. Tha Increasing US SlcrXe in Me>kon Political Stability

ot too long ago the prevailing view in the United Stales was lhat Mexican political and social- hugely Mexico's ownlong as no US lives or property were threatened. Thisis rapidly changing. US opinion now fears that political instability in Mexico could il)assive wave ol Illegal migiaiilti across theeopardize US and world oil supplies;pen Ihe door to Communist penetration. Mexican* have been quick lo recognize the new US concern. Indeed, one Mexican commented withexaggeration that tho United States has more to lose from Mexican instability than sloes the average Mexican citlren.

n Part Two ofestimate we examine to depth the uwestHm nf puklKal and social stability in Mexico in tbe IHSOs Mere, wr would only pouit out lhat the increasing IN stale ia Mexican stability blink between Ihe two tounlrtes We expect it lotwo ef feet* Pint. Mexicanwil be tempted to use US craicern aswhat we want or we'llSecond. US officials will be tempted to give Mexico luvsrJicited advice on how to solve its "serious social problems" Il will be another unwanted lieeali'i ten-Ion

Linkosje and Lever oge A. Mexican Fears


Policy Issues

Beyond saying thai most of the issues that will arise between the United States and Mexico during lhe lOSOs will concern Mexico's nonoil exports, it is

to predict the changing content of these Issues with any confidence. Their significance will ile-pend largely upon the pcrsonalilie* and priorities of the leaders of both nations. The state of the world economy and events in the Middle East will, of course, influence Mexican needs lor US markets and US needs

for Mexican ml. Purely chancereplav of thelowout, an auti-Chlcano Hot in California, well-publicized mistreatmentS citizenexicanovershadow other Issueseriod of month* It is safe to nay, however, thatsil and aa* exports, waler staring, narcotics, border pollution, Mexican agriculturaland Mexico'* positions no international issues will continue toconcern*.

hether ot not Mexico continue* to expand its role in international affair* will depend largely on the priocities of Lopez Portillo* susirsam Mexkaahave Uadittonally shown httle interest inaffair* beyond relation* with the United States. (Mexico* support of Castro* Cuba through four very different administration* based bothutual affinity engendered by what manv Mexicans consider tohared experience oftin American sovereignty against Is pressures andesire to mollilv domestic leftists It is not based on an urge toroad role tn Latin Americanf Both Hche-verria mid Lopez Portillo each for different reasons have changed this tradition to some extent. Although lhe president who comes lo power2 is unlikely lonpletely to lhe obitradition (because of tin- importance of Nfexican oil on the world scene, if lor no othere may choose to lie less artlve titan Lopez PcaliTlo The Mexicaneneral does not identify with the Third World and hat little interest in foreign affair* that do not InvolveS-Mexican rrlatiote ship

o lhe extent lhat future Mexican ptesidenU do concern themselves with broad inter national issues, the United Stales Is likely to lose mote than itx-cially in the contextoniextic lurn to the right, any Mexican administration would be tempted to lake radical stands in international foiumseans of mollifying domestic lei list* Domestic advantage can ubvays be gained by taking an opportunity tothai Mexico i>S import On the other band. Mexican diplomat* have often been helpful tn US interests in private dealing* with Thiol WorldWe would expect this to continue

Dealing With Mexico


rale ol unemployment andthai some authorities helteve approacheshe Mexican Government has consistentlycapital-intensive rather than lahnr-inlensive development. To many foreign economists, this smacks of idiocy- Why then does die government pursueourse? One reason is to keep Mexican industry near the lorefront of modernecond, more important, reason is that most labor-intensive jobs are very low paying ami, despite ihe unemployment rate, there is Utile demand for low-paying factory jobs in Mexico. Mexico already has many,some food processing- but most ofoor record in attracting workers. (The US-owned assembly industries along Ihe border, which pay well by Mexican standards and hire mostly women, arehe average unskilledusually finds that he can make as much money through casual jobs In construction nr Ihe service sector asabor-intensive factory And the work is more pleasant and less regimented.

hird reason lor Ihe Mexican Government's preference for capital-intensive industry is directly political. From the point of view of political stability, it Is much more important to provide suitable jobs for Mexico's ever increasing number of high sehoo! ami university gradualet (who are pulilicallv very active) than for the masses of unskilled workers (who arein the government's pocket! One of the virtues of capital-intensive industry is precisely that it can provide large numbers of good jobs for educateilAs Ions: as Ihe unemployment rale lor educated Mexicans (including skilled workers) is virtuallyitgovernment feels thaielsewhere in the economy is politically manageable. The reverse would not lie line.

ivil Serviceery six years, with the change .if presidents, therereat reshuffling of the government bureaucracy One consequence of the wlnilesale changeover is that bureaucrats, despite often broad experience in government, do not have die time to develop (rue expertise and there is little continuity in government policy. Many people have concluded fiom thisonpolitical civil service should be

apital- Yeruuapidly crowing labor force and it

Although ihe Mexican Government may be going in this direction- forced by the increasing comtitexiiy of governmentrealizes that it is treading on dangerous ground and is proceeding very slowly The choice is helwern increasing eflicieniy and safeguarding opportunity

erhaps more than over any other issue, the Revolution0 was fought overtendencyresident and his cronies lo stay in office forever and not give anyonehance l'or thb reason, the Mexican prcsidcnl (who has almostdictatorial power during his six-year term, including lite power to seleol his successor) is expected to disappear at the end of his administration and take his friends and clients with him. The new president, asix-year Caesar, can and docs makechanstes In policy and personnel. These changes reverberate through the entire government structure Because of this system, the hopeful and politically ambitious Mexican is never more lhan ti* years away from his golden opportunity: there is no need for revolution. Indeed, tbe estalylishnientrulycivil service in Mexico might turn out to be revolutionary in more ways lhan one.

ommunism. To many I'S observers, the(lOvermnciit seems dancerously uneiciled about Cuba. Central America, and the Communist menace

In generalT" other slop in ils eo-nptation. In9 elections (the first thai the PCM has been allowed loCM-led coalition of lour leftist partiesittle moreercent of the vote. Although we have noto believe lhat this was not an aceuralc count the Cnrnmuntsls know lhal. at the whim of iheihey could have gottenercent or zero percent. Theirhcir nineart of their funding, their ability lo buy newsprint for ihelr nil hi ical inns all depend on the oovernmcnt. and tin; PCM will not be allowed to forgel lliose (acts. Like other "opposition" partiec. the PCM will he allowed to rant against the United Slates and even against some Mexican Government policies, but It will be reunitedupport the government or at least keep quiet on ihe handful of issues lhat (lie government deem-tal impotlain-e.

he Mexican Government (teats Couiiiuirrist and Mlivt governments much as it treats the PCM. As long as they toe the line with regard to majorinlerests within Mexico, there is no problem. Their embassies (like others) can be spy nests, Imi only so long as their activities are directed against IhirdIf thev step over the line, the Mexican response can Ik: swtfl and haish. The Soviets found this out during the lime of the great railroad strike in ihehe Northarned the same lesson when theyexican rural guerrilla group. The Cubans, having received valuable diplomaticfrom Mexico City, have scrupulously avoided messing in Mexican affairs. I

/The Mexican Government feels no obligation lo keep the world safe fromso long as it can avoid any Communist Ihreal to itself. By and lance this strategy hasotlter Latin American country has faced so hidesubversion since World War II.

O. The Lost Word

uring the decade ofc in previous decades, the overriding goal of the Mexicanwill he (he preservation of ihe Mexican political system, il will subordinate all other interests, including foreign and economic policy, to this end. To the extent that il sees political or economic reform asthe system, it will opt for reform. To die extent that is sees reform as dangerous, il will avoid it.Mexican foreign policy will veer to the left or right for purely domestic reasons The average Mcxi-


ia* roughly thr jumrovernment iven if he in too young to icmrmlxr theof the revolutionary decades (when, according to tomeillion Mexicans lost llieire hai only to look elsewhere- in Latin America In apprrt-ute lhe stability, opcutuniu and retailer lack of govetnmenl oppression that the Meaxanoffers

exican presidents, though their record Is ex-ivllenl. are fallible During the nexlhey may mivrend (he situation, overlook developingtake Ihe wrong actions at the svtong limes. If they do, US as well as Mexican interests will suffer. Nonollielesa, even ifarticular case US policy niakeix do know what is best for Mexico, they should recognize that ad sice from north of lhe Rio Bravo it not and never will he acceptable Vieileans will keep their own housr in orderUSnot at all However,S pi evident has one or two specific requests lo makeexican president (In private) for the US good, tlie Mexican president will listen with respect ami looUdcralion. The Uniied Stales is an important part of lhe Mexican environment, ami no Mexican president will foiget



A. Peculation Growth and Urrscartl ration

Par the next decade, lhe course of population growth and uibaruiatioa will be lhe moat important esernent In lhe Mexicanis lo say. in that complex of fas-tots not under lhe direct ronlrol of thevernment During the nasi Iwo or three years, the Mexican family planning program has had remarkable success In reducing tho population growthone of theercent If Ihls reduction in lhe growth ralerend, and most indications are lha! il dors, then the eooutry will probably follow ralbri closely lhetotfMtionur Mexicanstudy' Total population, nowiO probobfy reachilhon by IW andmillion bybelow ihe SI million andillion of our high-growth protection

hWause most of the Mexicans who will join the labor force inere already born before the trend Inward lower population gruwlh began, the beneficial effect on em ployill lie slight Indeed, lhe labor forceaboutilium) will number onlyess inhan II would have under our high population growth prosretion In cither case,dUoc new jobs must< iralid each year duringf lhe uia-mpkivmml rate is to remain constant.o way thai ihls can liehe only question is how much worse the unemployment tale will get.

mbaii explosion promises lo be afor ihr Mexican Government in lhethr gtowlh of uopulation and (he laliorbecause of the substantial wagerural and urban areas, which has led tourtun migration. Mexico's urban populationmuch more rapidly than lhe pi-pulationcountryhole. Most of this growth nMexico City II grealer Mexico City, wiihII million people today, were lo continueat rrrcnl rales, lhe population woulduch an outcome is impossible;ami land constraints, the Valley of Mexicoonly someillion people liven IIto greater Mexico Oty were lo ceasenatural increase alone would push thrclear lo lheullion mark by lhelhe decade This means lhat bv lhe earlythe latest, ihr Mexican Government most find some

ii .of carrots and sticks not only to slop migration lo Mexico Oty but also toari of the nalive-hom population out

n-dircetion of nalional rural-urhaiicomlwncd with substantial intcfmhanI nan Mexico Cilv, would place aadditional butden on services we wouldpopulation of lhe eight rruuor tnxmdaii titlesby Iwo-lhlroS over the nexlean UnletaenaiKi. these eight irrondaiybase to growercent- And lheWiirsen rapidlyhus, even tfis sin ce.ssf ul. it will have spread lullier thanproblems nf uHiariiv.ation

il Price* and tbe WorW Economy

To cope wilh tbe problem* ol population nnd unemployment in, the Mexican Governmentake the best possible use of its oil revenuesevelop strong export industries. (Fffecllve domestic demand is far from being strong enough to absorb the output of Mexican industry on tin* scale requited to reduce unemployment. Thus, some production must be soldexico City's suotest iu these efforts will dependarge extent on factors outside of itsworld price, ofhe economic health of its major trading partners. These two factors will probably work against each other.

Despite occasional iieriods of slack, oil supplies will probably remain tight through the period. Thus, oil prices will rise at least in line with world inflation and probably somewhat more rapidly. How much more rapidly will make considerable difference to the Mexican economy. For example, il the lealof oil rises at an average annual rateercentingle foieign saleillion barrels of oil in that year would earnillion more lhan if the price ol oil only kept pace withIf. on the other hand, the real price ol oil risespercent annual raleheillion-barrel sale wouldillion mote. When we consider that Mexico could beosition lo export as muchillionayhe difference in earnings between zero real growih In oil pricesndercent in real growth wouldillionillion, respectively, in that year.he price will increaseAs world oil prices can be neither controlled nor predicted by Mexico City, the Mexican Government will need to revise its economic development strategyear'to year ifonth-to-month basis.

5S. High and rapidly ruing oil prices will both hurt and help tlie Mexican economy. On the one hand, high prices will enable the country to avoid the foreignconstraint to developmentelatively low cost in terms of resource depletion. On the other hand, the continuing rise in oil prices will limit economic growth in the United States and other markets for Mexico's nonoil exports Although Mexico will not need such exports to balance its trade account, it will need them for the jobs they provide If the USgrows by lessercent annually for thocenario that some economists believevalue of Mexico's nonoil exports could would lie tempted to link oil and nonoilmove thai would he strongly resisted by industrialized importers of Mexican oil.)

The Evolution of the Mexican Economy0 A. What Oil Con and Cannot Do

Mexicans realize that oil is notbe the deuS ex maehiua that solves all thesocial and economic problems.ajority) fear tliat the oilmay turn out tourse disguised as aVenezuela and Iran are often mentioned asof the evils of oil in Mexico Citythe Mexico) view. Venezuela isne-crop" economy thai will rapidlythe oil runs out. Iran is an example of tliechaos that ensues when wealth acts out olMexicans are not sure that it could not happen


economic dangers of the oil bonanzafollows First, the inflow of oil earnings couldpressure on the peso, thereby pricingexports out of the international marketearnings will increase the money supplywhich is almost impossible because ofol the Mexican economy) andrise to inflation. Third, if imports are greatlymove that would help reduceas well as eliminate upward pressure ondomestic industries would bethe flood of cheaper foreign goods In any ofjob creation would falter andincrease.

stagnate in real leans (In this ease, Mexico City


(he economic ami political dangers IK so great, why* noi leave, the cursed stuff In the ground? This is. inuylor thread In Mexican oil policy. The presold administration litis gone on record as wanting to produce only lhe Uur amount needed to finance tlie fureign-excluuicr rosl* ol development. In-deed. Ihe government appear* conlenl lo allow current account deficits on the order ofear, believing that there are fewer dangers in continued foreign borrowing thaneadlong drisr to produce and export vast amountsetroleum

The od honanra will not produce miracle* but properly used, it willercent annualgrowth throughsing ourmodel iA lhe Mexican rconomy. we have examined oil economic growth inflation balance of payments trade-offs in Mexicoe concluded that, under any reasonable assumptions aboul world oil prices. Mexico can achievecTcrnt economic growth0 H5 with oil exports ofI million.epending upon thr pace of Mexican exploration ami development. Mexico could have the reserve base and lhe facilities lo export ennxldeiably more thanaximum that wo project Exports will also be influenced by ihe growth of domestic consumption.rrrciit economic giowth ami no increase in isirueivalion. Ihe countryf od fur domestic use5 By die mablOWh. if noi tooncr. however, we expect lhe MrxM*an Gsisrrnmenl In Introduce more realistic pi Ming lor ml product! sold on the domestic marlrl as well at other nwsuures lo cut consumption growth Such actions should allow snrne rrpatuior In exportsn thelull of llae decade, if necessary Un adequate ceo ikrowth

mployment and Ecorsonsic Mobility

does ft percent economic growthemployment New jobs will be crruled atear duringittle0 new positionsthe same period Ihe labor forceillion workers annually. Thus,eople will he added In tlie armyThe unemployment rate,ndercent, will rise lo nearercent

'Sue Meifo* JcoitfiouC'i/rwia*. Mare* I'l'ltiT TlllMniu^ilinderemployment, though difficult, to define and quantify, could alio Im- exacerbated. (We expect underemployment to decline In rural areas; it may. however, expand in the service sector.)

he high levels of unemployment lhat wefor liteo not necessarily mean an equivalent increase in human misery Most of tbeand umfrrrmiMined will In? idle for only brief Dcriods |for example, between crops in rural areas or between const ruction prod -in urban areas) The real wage rale should steadily iiscrease during lhe period, allowing employed relatiirs and spouses tolo sonu- degree lhe living standards ol lheManylunras unemployed or underemployed will br earning decent livings in quasi-legal tminulachirlug ami commercial ventures. Others will be living well on their earningsesv months' illegal Lalmr in the United States.

IKi Kven with the increase in overallthe demand for skilled lalmr will remain strung. The upshot willoi ease in Mexico'sinequality, as the earnings of rlertricianv. brick-layers,tenil>lv-lluc workers pull steadily away from those of streetmall farmers, andconafiuctton workiT* Mexico however,not like Europe and thr Untied Stain, where unions and apprentice system* lest rut ctifry Into the (killed labor force, the lines brlween skilled and unskilled labor arc blurred in Mexico The ambitions and talented urban Mexican youth can olien work himselfkilled job (especially in construct if in) with little more than quick wils. keen observation,illingness to lie about his qualilicatiom until those qualificationsreal. It is much more difficult lor lhe rurallhebieak into the skilled ranks.

n an*uch as that of Mexico where there is not enough wrahh (rven after oil) lo give everyone the (nod llle. economic and rocial mobility extremely imporiant In post-Revolaltooary Mexico, difference* oface, and even education impose few limit* on persnnal achievement An ex-milkman can hrmine one of lhe country* mostpolitical figure* An Indian eemstruction worker canultimillionaire contralto* These are. of course, exceptional people. The average Mexican, while his ambitions and abilities will not lake him so far. doeseasonable expectation of bettering himself. This is especially true of the high school or university graduate. The Mexican Government,

ariety ol means including spurring the development ol capital-intensive industry, has been careful to astute that opportunities are plrntrfal for (he always prarntially dancerinas educated eble

C The Rurd Sactor

exico Is noural nation ami the main problemsates are no longer nu.ilad lhat seems to have escaped most foreign observers and even some Mexican officials Inched. Meiicon man* important le^ie-'s -jmibr lo Ihe I'ni'ed States between Ibe two worid wart, tire rural seeleelinirut rapidly in importance while prospects for agriculture remain good The agricultural labor force has fallen frompercent ol the total0 toercent at present, while the amount of developed cropland has Increased byercent The share ol agriculture in the gtots domestic product lias fallen fromercentercent, while Ihe value ofoutput a. cons!ml pe-uM' fun risent percent. In, we expect Memo lo continue its evolutionatioii ol many poor subsist cine farmersalion of relatively lew prosperous commercial burners.

Explaining Ihe Mexican rural sector isrocess of breaking downythone: Mexico cannot feed Itselfimply not truegricultural balance of trade hasurplus iu every recent year4 Although Mexico imports alioutercent of its liasie foods, it expoils enough coffee, cotton, and vegetables lo more than ofltel Its imports of corn, wheal, and oilseeds. So, It Isuestion of using oil earnings to pay tor lood imports; agricultural exports not only pay for food import* hut generallyalf billion dollars or so in additional foreign exchange As the Mexican peasant urrruadci hb operation 'throughme*at ion. orn- typically shifts out of corn into more valuable nop* Thus, as this process accelerates, Mexicomport more basicxport mora high-value farm) increase farm incomes;dd variety to the Mexican diet

Myth number two-o pent in land and water that agricultural output cannot be death expanded intore Extensive undeveloped arable lands remain, and (here are also untapped water re-

Mexican AjfrkaiW MirfAW fitahlo. EllTil TTTnliources,difficulty Is llsat the distribution iiatterns of these resources do not always coincide, and much of the north remains vulnerable tohniix much of this land and water would require extensive capital investments, which neither the Meiiean Gov-eriiment nor private inlorrat* are likely lo make until prolilalde markets for the Increased output can be foundexico or abroad. As these markets are found, thb land will be put into use Wilhcapital and technical inputs and moreutilization of watergricultural production should be able lo expand significantly through. although droughts will continue to rcxttamiu some years

yth number three the Mexican ruralocial and political powder leg. NotVliboush the number of landless ircount* has doubled toillion personsual uiircul hasThe peasant's strong desire to own his own land either directly or as one plotlate-owned farmpotent factoree hoed marledlshlle random ruralexist* at it arwayst appears to hate little ideoWical content Nowadays, the dissalisitieilfinds, il more rewarding Io head fur Mexico Oily (permanently) or to Californiaew mimlle) than to agitate for revolutionary change. 'The landduinai the latter day* of the Echeverriaapparentls were untiaatcd b> etetnents in ihc federal government for pot iteasons and tbui did nol reflect widespread ruial discontent. The present admitilnlnitlon was able to cut them off virtuallyIn. Labor uuieit by farm woikeis in prosperous areas ol theris thanunrcl in poorer area* ol the nation Neither is likely to be politically threatening

D. Troda, InHotion, end tha Exchange Rote

s we indicated earlier, Mexico's strategy for erratum employment lunne* upon the expansion of nonoil exports, both industrial and agricultural Sacli an expansion willrove diflicultolenergy problem, the developed nalmns will be growing very slowly and Iheiefoieimited market for Mexican exports Even this limited market may be further restricted by protect KMiist measure* On the domestic side. Mexico may allow it*to become umornpetittve in price ilnwilling oro control Inflation or to compensate for tt Ihmugh cuirency devalualiou.

hus. Mexico City will be faced with mine hard political clmices because ol large increase* in ihe money supply (due to the inflow of oilfforts to curb inflation will piobably hinge onestrictions on the growth of realeduced governmentrke cemtregt,ncreased importv Rath ol these rnrthods aotk* acalnst tbecjttlcaui impoctaig elements in Mexican society On the other hand, any attempt to "live with" inflalion. -uueut exchange rate adjustments (perhaps combined with llra/ilian-stylr indexation) would also becostly. No economic statistic Is more politically sensitive than the peso-dollar exchange rule To your average Mexican cynic, statistics on inflation,and cronornic growth are only ai trustworthy as the goveiiiiuent tliat publishes ihein. the exrlnuute rate. however, can be verified by the man on lhe street Thus, in popular opinion. Ihe economicof an administration is often judged by Us ability to maintain the value of the peso

u With its oil earnings, Mexico CH> will have the option of maintaining an 'unrealistic" exchange rate almost Indefinitely To lhe extent that it dors so. il will be templed to maintain employment either by subsidizing Its nonoil exports or in some way hiding ihem with its oilicultural production and on peasant living standards were secondary. The same sori of politicalprevailed in other economic acts ol Mexican governments such as the nationalization of oil, the establishment of pioht sharing, and lhe creation nf lhe Binder Industry Program.

economicthein lhe Third World, if the entiretheo the presenlource of legitimacy for lhe Mexicansystem. For this reason alone, lhe Mexicanmust always appear lo be on top of lheBeyond the direct political effects ofilk such as unemployment or inflation ispolitical effect thai these ills have onof presidential competence. In thecase, it is al least arguable that lhe indirectof greater importance lor political stability Ihaneffects.

The Evolution of the Mexican Political System0

A. How Ihe SystemWhy

How of authority in Mexico is theIextbook democracy- All import anthat ol choosinsr histbe president. Legislative officials, governors,of important cities, though nominallyin fuel designated by the president and theiris to him arid not to llseir constituents.knowing in advance who will be electedimportant cool est. usually lurn out Into demonstrate their loyalty to the system

d to the chosen candidates. (Indeed, some writers have described voting in Mexico as more akin tolheaii to makinghe voters know lhat the benefits they receive from the system are al least roughly proportional lothe manner in which Ihcy support the chosen candidates.

"s. If ihe flow of authority is downward from the president, lhe How of "legitimacy is upward liom theilike exclusive authoritarian systems. Mexico's inclusive system sets great store in bringing all Mexicans inlo lhe system in atymliolic way. In lhe preeleclion period the presidential candidate engages in several months of vigorous campaigning through even ihe smallest villages loond with thence elected, lhe pnsideiit. as well as his ministers, department heads, governors, and

mayors, is amazingly acccssibk' Ium all sectors of Mexican societyarge number of cases, action is taken in response lo such "petitions (rom loyal Mexicans."

Paradoxically, one of ihc sticngths of the system lies in ihe fael lhat resources aie limited and not all demands can beelegation from.quatter settlement in the Federal District asking loi piped water knows that if their group receives the benefit some other settlement must wait.the delegation knows that troublemakers who demand rather than request, who do not tiuu Out to march and vote lor Ihe official party, who are less than completely cooperative are likely to go to Ihe bottom of the list. The system, which permeatessociety, breeds gratitude on the part of the winnersetermination to "do things right nexl lime" on the part of the losers As it is based on interlocking vertical patrou'client relalinuships, Ihe system also effectively discourages potentially dangerouslinkages between members ol the same class.

In those rare eases when the iudlciousof favors Is nol enough to assure polilical control, the ruthless side of the Mexican system comes into play-eader who cannot lie boughtombination of benefits to himself and to ihe group he represents) flrslind of nonperson on the Mexican scene; his followers go to ihe last of every line and soon he has no followers. If this is not sufficient In bring forth his cooperation, he is Jailed, killed, or exiled. Once the government decides to act, it almost always errs on the side ofreasoningounded man (or group) Is dangerousead man {or thoroughly cowed group) is nol. This Spirit ol no compromisefor the bloody persecution of Catholics during llie Calles period (which effectively destroyed tlie Churcholiticalhe breaking of the northern landholders In the Cardenas period, and, more recently, the student massacres under Presidents Duty. Ordaz and Fcheverria. The thinking of those who call the shots for the Brigade Blanca, the Halcomjs. and oilier government-oonlrolled thugs seems to be:ozen dead students would be martyrs, while several hundred dead students willa decade of peace on the youth front."

B. The Presidentlol Succession and the PRI

Devolution0 was fought not sodictatorship as against conlinKtinio, theunending ruleingle man Thus,ew false starts in the Obrcgon and Caltes periods, the revolutionary slogan of "no reelection"ornerstone of the political system. The Mexicanis irivc'ti dictatorialmostbelieve are necessary fureriod of six years At the end of his term, after "appointing" his successor, the outgoing president Is expected to fade away and eniov his wealth in modest seclusion. The amazing thing is that this is just wlial happens; no president since Calics (innd early lQ30s) has attempted to influence the policies ol the man he chose to .succeed him

econd pumliarily nf the Mexiian syslem is that each president tends lo be followeduccessor who eorrecls the exaggerations of the outgoingpolicies and personality Thus, the leftistwas followed by the rightist Avlla Camacho. the unusually corrupl Alcmaii was followed bv thehonest Huiz Cortines, the erratic Fehcvcrrial lowed by the steady lopez Poitlllo. Thisis summed up bv th" common metaphor thai "the Revolution walks wilhight footeft foot"

residents are chosen from among the members of the official parti', the I'anido Reivtucioiwria Imlltuclonai or PHI. The PB1 is something like the US Democratic and Republican parties combined; il covers the full spectrum of tendencies and leaders from llie extreme left to the extreme right. Tlie only-route to power for any serioushrough the PRI; older paities exist, hut they (much like minor parties in the United States) attract only those who are more interested intatement than in achieving power. Although the outgoing president may choose as hisechnocrat who has not been greally active in PRI affairs It would befor him not toarty member

he Mexican nnlilicalmore tluin its detraclors wouldbased solidly in the masse* of peasants, workers, andcause these groups arc the most susceptiblend controls Voting patterns and the surveys of sociologists and anthropologists consistently indicate that die government's strongest support comes fiom the poorest urban anil rural areas. The PRI. tvhich in uoiielection years is more of abureaucracyarty, lias three tra-

'Thr unerarJoyed Jnd underemployed In whan .in)um and In miianer seUlrruenls arr usually dericnJled as "mintuuls.'

ditlnnal leas: the agrarian sector, the labor sector, and the "popular" sector which includes professionals, shopkeepers, government workers, and marginalsin urban smarter setllemenls. All of these groups are highly organized in the typical vertical patron-client fashion

The middle class, although technically part of the "popular" sector, is much less dependent on the government than are the poorer classes, and its loyalty is therefore more conditional. It is from this cbss that Ihe greatest threats lo the system have come, and it is to this class that live government distributes most of Its caiTOts and sticks. This class, which is rapidly growing in both absolute and relative sl/e, is receiving an ever greater share of the national income at the expense of both the poor and Ihe veiy rich. It is the members of thbjournalists, stu dents, unionare most likely to lie found in good government jobs oril

Big business, ihoughart of the I'BIof its nonrevolutionary origins, is linked to lire system i" much the same way as the other sectors. The government lias, and lias used, the power to greatly help or to destroy individual firms, hut it also depends on this sector to carry out much ol iispolicy, especially in the area of job creation. Although big business generally toes the government line, itower base of its own and has on rare occasions been ahle to fight the governmenttandstill on certain issues Some observer* believe that this power will increase over the next decade.

uringnd, tbe political influence of the Mexican military wascries of revolutionary generat. who, as presidents, feared the power of their comrades in arms.hen Mexico's first civilian president in over three decades took power, the military had largely ceased to he tt threat and had become an important support of the ruling party. The majorof the military is to protect the Syslem from Its internal enemies; the Army has been used to put down peasant revolts and student riots as well as in hunt guerrillas, smuaelcrs. and bandits and to intimidate opposition political parties. Army ollicers command the Brigada Blanca and simllai croups of government thugs. The mililary alsoivic acliuri function, doing everything Irian building bridges to running hospitals in many of tbe less accessible areas of the country Moreover, in many states the zoneserves as an alternative lo the governor for convoying the desires of local interest groups to the president

s compared with the establishments of other Latin American nations, Ihe Mexican military is smallen in all threell equipped (tlte Air Force, for example, has onlyets, all of which arcrid underfinanced (traditionally receiving onlyercent of the federalt is well disciplined, apparently completely lovfllhe system, and has almost none of the institutional egotism of most South American mililaryHigh-ranking officers are encouraged to seek wealth rather than political influence or power.

o9 Recently there have been some indications that Ihe military is beginning toew role for itself Many military men do not share the nonchalance of other government officials toward events in Centra) America. They feel that co-oplation may not always do the trick and that they may be called upon to do-fend the nation's southern border against strongforces Moreover, these military men see the oil bonanza bothesource thatigh level of military protection ami as the means of paying for that protection. The Lopez Porlillo administration is responding to these new military concerns with amodernization program that envisions buyingsmall ships, and other equipment from the United Stales ami other loreign countries. If thisis thw;uted. it could leadomewhat greater activism of the armed loroesressure group.

C. ThePolitics at the Fringe

In ihe past, all of the serious threats to thehave come from inside tlie "Revolutionaryn Ihe elections ofG.mportant PHI leaders, angry at being passed over in the presidential succession, left the PHI and formed their own personalist parties Each of these ex-Pltl candidates knew thai the PRI would noton-Pltl candidate to win; what they hoped to do was to use the election lo spill the PRI and ihen settle the presidency by force of arms (Two ol these candidates happened to lieiven tlie steady erosion of the strength and political power of the Army, this type of threat is nol likely to reoccur In.

The non personalist opposition parties differ only as to the extent to which Ihey have beenThe Cartldo Action SaciOnal, or FAN, is Ihe oldest, strongest, and mosl independent of theparties. Although generally considered conserv-

alive, it is not reactionary and has occasionallyPRI policieseflisl lWTspective. The PAN ishristian Ucmocralic party with the religious elements greatly downplayed because of Mexican law. It is the recipient of most anti-PRIvotes ami has often showed considerable stremjth in the northern slates. In an absolutely free election, the PAN mightovernorship; il could not win the presidency.

he Communist Parlys wc discussed in Part One. is more co-opted Ihan the PAN bul less than most ol the other parties of lhe left PCMoccasionally challenge government policy in lite legislature ami occasionally arc allowed lo carry lhe day on minor issues. Since legalization, the PCM has been weakened by divisions in the leadership and by an influx of hard-to-pleasc new members who liave never he-aid of Democratic Ccrilralism. The otherwell as the I'AllM on thebasedixture of personallsm and ideology Some have provocative ideas and attractive leaders; none are of any importance on the broad Mexican political

the realm of elective, politics, theirnumber of small guerrilla or "social bandit"the great tradition of Pancho Villa am) otherIbe Revolutionhe most importantat present, Isd of SeptemberThis urban guerrilla group, which hastoew banks,ewew children of the powerful,hurt bv recent actions of tbe authoritieshas no more than SO memberscountry. Rural guerrilla groups (led byand Lucto Cabanas inndlhe slate of Guerrero, and by Ruben Jararuilloon fromntil he was killed inMorelos) are one ol the constants of Mexicanhave little importance in modern, urbanis an interesting comment on the Mexicanthat many Mexicans believe lhat mostof these armed opposition groups, winch inwe know lo be genuine, are controlled by

D. PoKricot Starvation and Political Reform

the coming decade the mostlhat the Mexican Government laces is thatthe proper degree of political refonn.leaders are xveM aware that, while theand peasants ain relatively satislied with Mexican political institutions ami processes, the educatedclass is Isrtominn increasingly icslive Moreover, these leaders cannot have forgotten lhat thwartedclass demands for limited political toiicessions from the Diaz dirtatordup constituted the initial spark of the Revolutionhe situation may wellmore dancer out at tla- ilerade progresses and the lebtive ami abvdutr size of the middle dasS grows

The meat impoftairt attempt at political reform sinceook place early in the presidency of IXaiV nalional president of the PRI. Carlos Madrazn.ampaign to create local parly iwimaries in place of the usual system of having delegates and eandidatm Imposed from above Although lhe ieform had obviously Isrcn cleared wiih Diaz- Ordaz. the I'icsldcnl did not publicly associate himself wiih il. When the initiative drew little support from ihc publicreat deal of condemnation from parly members. Diaz Orda* was able to fire Madtazn and hack off Irian thr proposalew years later in an aireventwiihnn ism h> Mexican PRI watchers i

The current Pn-sideiit's elf net* at politicalhave been mm* more limited Theyertain number ol teals in Ihe lower bouse lo ot> posalkm politicians and give slightly more power In the legislature bul do notlie internal workings of lhe PRI. Although Ihe Lopez Portillo leforms will allow more eurrenlv ol opinion I" lie s'oired in the Chamber of Deputies, they will in no way jeopardize the PRI's total control over government Thev have failed to catch on with Hiewaslackluster in the first elections held alter Ihe reform was instituted.

Tims. Il seems thai Mexico isituation where reform of the official party is ciinsidered too dangerou? by party members and reform ol th>-is considered tin meanimder. by the general public The genrrnrarnti response will probably amount to little more ihanot aboutileewchanges Thb may he tulfktrnt Meat Mexicans, including reforni-mindril middle class opponents ol lhe PRI, recognize thai the Mexican system works far better than lhe systems ofess developedThey feai that, il the system were to fall, it would be rerdaccd wiih something much worse. On the other hand, there Is litlle doubt lhat ihey are dls-


with the hypocrisy Inherent In the mien anJ with the severe liiniUliiim llut ihe system places on political choice.

E. Oongws

he most rxednrtable period of da men for tbe Mexican system will come in Ihe latter half ofhen the government will lie forced to take strong measures to curb population growth in Mexico City. As wc pointed out cai Iter, if greater Mexico City continues lo snow al the prewnl rate, it will containillion inhabitants in 1IJ1KI. while the Valley of Memo does not have the land and water toopulation of more than almulillion. As natural growih alone would put Ihe city's population above the critical level bv lire end of the decade or soon after, the government will base to not only stopion into Mexico Olv liot abo encourage native-bore residents to leave the capital

will present an immense politicalpeehixpanic times on, Mexicobeen the nation's center of culture,good living, power, and opportunity.considers it his right to gohe capitalto better htmsoU. to incapc past failures, orto be part of the action Mexico City isand Mecca rolled into one Noevererious attempt to restrict thecitizen'* freedom of movement: Ihe extensionauthoeitariaiimn into thb area wouldprecedent

Some experts ln-hew lhat. a* population presws harder on resource* tbe quality of hie inCity will decline to such an extent that morewill be trying to leave than to enter the area. This seems doubtful. Despite the massive Inflow of rural migrantshe squatter seltlemeiils around Mexico City, incomes are becoming more equal in the city even as inequality grows In the nationhole. This means thai, on ihe average, one will still improveeconomically by moving to ihe city. And mostbeat ihe average statistics indicate that, when other factors are held constant, migrants to Mesico City advance Inster and achieve higher status thanresidents Moreovr-r. the glamout of the capital will remain for years if not decades after ecottomic opportunities disappear and *rv>Rg ontrditions deteriorate

What then is the government to do? Oneperhaps (he only long-run solution, is to create other poles of urban growih. This will be difficult. Presidentorlillo'* plan In establish new agro-industrial centers alone the rnnvts will, under tlie best of circumstances, behe bucket by the end of Ihe decade With retard to already established urban areas, only Monterrey. Guadalajara, and the borderave been able to attract an appreciable number of rural-uibaii migrants. These areas already have serkout problems, wturh would he exacerbated by higher population growth ralea The oil centers of Tabasco. Chiapas, and southern Veracruz as well as some resort areas on the Pacific coast and in Yucatan are currently attracting some migrants, but this flow is more likely to subside lhan expand as ihe decade goes on. The olher ma>or cities of Mexico, now spumed by migrants, will have to he made more attractive through tax advantages, establishment ofthat is both labor Inlcmive and high paying, and decenton of tome government functions, if the problem is nol lo gel completely out of control by the tun of the century

The only viable interim solution lorrobably to expand ibe hnuli ol greater Mexico City beyond the Valley ol Mexico Greatly Increased lax ratesrackdown on tqualtcr settlements in ihe Federal District (both costly in political terms' could push even native-born resident* hexihe Valley At the same time the creation of high-speedlink* couldreatly expanilerl areathe citiM of Toluca and Pachucai into the new. greater Mexico City The present administration isthinking along ihese lines Implementing even this partial ami interim uilullou could put strains on the political system

Another danger which Is always present in the Mexican political system I* that of presidential dealh or inccm*|ielence. There is no vice president in the Mexican system, llie legislature has Ihe duly under ihe const it ii lien locplacctncnlresident unable to completr hi* term olce and, ile retiiaoe. in tlie letm. to hold new elections The actual result would pcotatblytrverr crisis. The Mexican Intislaluir i* irwd to taking orders. Dot to making decision* or its own Moreover, while certain memhers of the PRI. ihe cabinet, the bureaucracy, and the labor union* have considerable influence, there areingmakern the Mexican system apart (nanlgmegrnxclf Mexican presidents are usually relatively young and in goodo Mexican president has died in office since the early days of theaccidents or


assassination arc always possible. Such an even) woulilevere strain on the system

KM. Although when il comes to selecting presidents the Mexican System has at least asecord as most democracies, the possibility always exists that an imsuitahle or incompetent person might be chosen for the iob. (Some Mexicans would say that this already happened in the case olresident, given his key role in the system, would he dangeioiis: The system would probably survive if there were no other major strains. If,umber of other pressures converged, serious political instability could arise.

nemployment, under the best ofwill probably reachcrccnl0 If unexpected economic difficulties arise, the rate could go still higher This, In and of itself, should not severely strain tlie system as long as jot) opportunities for the educated and politically aware lenialnHowever, high rates of unemployment in cmiiuiic-tion with olher factors could prove dangerous.

Av.ti, init,'. Mexicans pride themselves on their difference* from Central Americans

An Imtobihty Checklist

he chance thati catchnstability will arise in Mexico in Ihe itSOs i> ten ihan one in leu liocaute of this low probability, observers will lend to overlook the signs of such instability if they should appear. This mind-set will br partkiibily strong among tlnise observers with the most Mexican experience, no matter how bad the situation Is. these experts can always remember how the Mexicanovercame worse problem*r whenever B> cofrirast,rruh*t> wil eono predict imminent resolution -as they base every year once. The alarm!sen of the journalists will further harden Ihe mind trt ofea) danger exists that the exiierts will ignore any signals of instability lhat might come up.

more dangerous would

he disarray in the government caused perhaps ley an incompetentower struggle in the labor movement after the death of aging labor kingpin Fidel Velasquez,harp increase in middle class ciillclsm. Under these conditions, Ihe patron-client relationships that eneomiiass even the unemployed would be weakened and Ibe. unemployed might feel lhat tbey had nothing to lose from radical action

ome experts believe lhat,ituation where most of Cenlral America goes Communist, Mexico could fall prey to outside subversion. These experts point out lhat the Mexican oilfields areiles or so frum the Guatemalan border and wonder ifcould become, lhe "last domino"eries (of one. so far) that began with the Sandinlsta victory in Nicaragua We see very lltlle likelihood thai this will happen during Ihef course, the country is already in severe Irouble for purely domesticommunist government in(assuming that one comes to power) might well be no more dangerous to Mexico than the present Communist government in Cuba. Certainly, il wnuld be easier to sabotage the Mexican oilfields (if anyoneurpose for doing so) from Cuba by sea than by crossing ihe mountains and jungles of Feten and Chiapas. As for lhe demonstration eflecl of Central


I. This document woi disseminated by the Notlonol Foreign Assessment Center. This copy is lorot motion ond Uit of the recipient ond of persons under his or hie jurisdictionwed-to-know basis. Additional essential cftsseminolion may be authorized by rh-otliciors within their respective departments:

o. Director of Irttdtgcnc* and Resecech, lor the Deportment of Stole

b. Director. Defense Inteiigencn Agency, for tha Office of the Secretary of Oefense

ond tht organization ol the Joint Chiefs ol Staff C. Assistant Chtef of Staff for Interagence. for the Depswtmenl of Ihe Army

of Naval Intoligenco, for the Department al the Navy

Chtef of Staff, Intelligence, for the Department ol the Air Force

of Intelligence, for Headquarters Marine Corps

Assistont Administrator for NationcJ Security, for the Department of Energy

Director. FBI. lor Ihe Federal Bureau ol Investigation

of NSA. for the National Security Agency

j. Special Assistant to the Secretary lor Notional Security, for Ihe Department of the Treasury

k. The Deputy Director for Notional Foreign Assessment tar any other Depar'meeil or Agency

be retained, or destroyed by burning in accordance with applicable lo Ihe National Foreign Assessment Center.


this document isseas, Ihc overseas recipients may reloina period nol in excess of one year. AtnV eajlof this period, Ihe documentdestroyed or returned to the forwarding agency.onshould bo requestedforwording agency to retoin rt in accordonce

rirle of this dacumenl when used separately from the text should be unclos

Original document.

Comment about this article or add new information about this topic: