Created: 3/29/1973

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President Luis Echeverria is more sensitive to his country'sthan most of his recent predecessors. He is concernefi about the threat that poverty and uneven development pose to political stability and economic growth, and about the ability of the long dominant party, the PRI. to provide political continuity and social peace. So far he has moved cautiously to attack these problems. He will probably remain cautious, because of limitedear that rapid change would itself endanger stability,esire not to undermine his own position or that of the PRI.

For domestic political reasons. Echeverria. like his predecessors, projects the strong nationalism that pervades Mexican society. This accounts in part for his criticism of the US ami other rich nations for their policies toward the developing countries, and his more assertive line toward the US generally. He wants toonspicuous role as spokesman in Latin America and the Third World, not only to demonstrate Mexico's independence, but also to increase its prestige and toid for regional leadership.

Mexico's circumstances and Echeverria's domestic objectivesthat he maintain good relations with the US. He is in any event

not viscerally anti-American and hearge measure offor the US. His intention is to maintain his nationalisticand play an assertive role abroad without damaging his much more important relationship with the US. Since Echeveriia's asser-tiveness must be public, he tries to balance it by giving the US private explanations and assurances, and hopes that in Washington's eyes this will suffice. He also argues that Mexico can help the US byoderating rofe with the nationalistic leaders of theand in the Third World.

If Echeverria felt forced to chooseontinuation of his critical posture and the maintenance of gcod relations with thc US. he would opt for the latter. In doing so. he would need room tohis way without appearing to bow to US pressure.


he behavior of President Luisreflects an increasingly assertive line towards thehis role as spolcesman for the Third World but also his sponsorship of additionalver foreign business. This Estimate assesses the meaning of Echevenia's activities in the Mexicanand considers their implications for US interests.


cheverriahrewd, tough, practical politician, who worked his way to the top through the Iiutitub'ona! Revolutionary Partynd the Ministry of Government, which handles security and intelligence. The PRI has controlled Mexico's politics for decades. Under the Mexican system, Echeverria exercisesunchecked authority over theduring his single, though he must take into account the interests of the middle class groups and the party bosses that dominate the PRL

chevem'a is more energetic than most of his recent predecessors and more aware of his country's problems- He sees thehat has providedears of politicaland economic growth under challenge, and he intends to revitalize it. He has two broad domestic concerns. One is for poverty and uneven development and thc threat they pose to political stability and continuedgrowth. Tbe other is for the health and effectiveness of the PRI, which he sees asisolated and unresponsive to needs, and in danger of losing its historical ability to provide for politicaland social peace.

espite his many statements on OSese matters, it is difficult to know the extent of the changes Echeverria has in mind. The problem of interpretation goes beyond the

inevitable gap between actions and rhetoric.

Itegree of uncertainty imposed

by the existence cf contradictory pressures


The Problems of Uneven Developmentver half of Mexico'sillion people arc locked into poverty. During the postwar period the economy has growneryrate of six percent per year, but the population is now expanding by well over three percent. The emphasis of government policy has been on modernization and rapid development, rather than on social welfare. The poor are still quiescent,esult of apathy and fear of authority, but theirkeep rising. Echeverria fears that in time the sheer magnitude of tbe problem will create an avalanche of pressure against constituted authority. Yet he knows that any substantial reduction of poverty will take decades,generations, andajor attack on it would overtax available resources.

arrage of propaganda, Echeverria has castigated the privileged classes for their indifference to the problem of poverty, and has called for far-reaching change. Hehopes to placate the poor and disarm radical critics of the system. But hisobjective is to convince the conservative elites that It is in their own best interest to join him in addressing the problems of poverty and uneven development in practical aad measured ways.

espite his rhetoric Echeverri3 has moved cautiously so far. There have been some tax and budget changes aimed at re-


distributing income, some changes inpriorities designed to stimulatedevelopment in rural areas, and thc beginningsrogram to reduce the birth-tale. He will probably stick to cautious and limited measures, because of the constraints under which ho must operate; limitedthe need to maintain rapid growth even as its fruits ate distributed moreand the fear that rapid change wouldacklash among investors and in the PRI and endanger political stability.

Dealing wilh Political Tensions

b'on among the politically articulate at the inability of new or critical political groups to make their views felt within the worried about the growing political tensions and the need to revitalize the PRI. He has tried to Ingratiate his administration with students, youngnd other disaffected elements, inviting them to make their influence felt within the PRI. or outside itoyal opposirion.

lthough Echeverria is probably sincere In wanting to co-opt or accommodate his critics, there are limits on what he can do. The main constraint is an unwillingness to jeopardize the political monopoly of the PRI or to undercut his own primacy. Also.and his colleagues are products of the system. They >ee tlie PRI as tho only legit:-mate ruling force, and their instinct Is to equate any organized activity againstpolicy with subversion- Thus, the gov-eminent has reacted forcefully to political activity which It views as unacceptableto itstudentpressures for greater local autonomy, and demandsenuine two-party system.

the conflicting desiderata, itwhether Echeverria canwhat amountselicate balancingwill be able to maintain politicalhis own term, but it il doubtfulcan prevent the buildup of politicaland frustrations over the longer run.


Contradictory pressures and values are also at work in Echeverria') relations with the US. Hit attitude toward the USrge measure of admiration, mixed though it is with envy and resentment He accepts as inescapable that Mexico's national destiny is tied closely to that of the US. But for domestic political reasons, he also feels it Imperative toationalistic posture.

Echeverria realizesooperative relationship is essential ca Mexico's economic development and, ultimately, to its political stability. Whereas trade between the two countries accounts for three percent of total US exports and Imports, it accounts forercent cf Mexico's. Total Mexican imports, which are mostly capital goods and rawneeded for industrial growth, currently exceed exports by about SI billion per year. Thi) deficit is made up by earnings from US tourism, by remittances from Mexicansin the US, and by foreign Investment and credit, mostly from the US. Thus, tbe Mexican economy Is vulnerable to aof relations with the US.

Nevertheless, Echeverria feels he must be responsive,reater Or lesser degree, to the strong nationalism that pervadessociety. Itationalism of many other developing nations


wary or communism, wis quiet: to expel live ranking members of the Soviet Embassyecause the USSR had been indirectly involved in the movement ot Mexicanto North Korea for training in guerrilla warfare.

Echeverria is ambitious torominent role for Mexico as spokesman for the developing nabons. He wants toMexico's independence, elevalo itsprestige, sndid for leadership in regional affairs. From his point of view, thc more independence of US in-terests he can exhibit the greater lha payoff domestically andperhaps, increased leverage on US actions towards Mexico. Ke has posited an adversary relationship, between the developed countries and the have-not nations, and he has been highly critical of the US and other richfor alleged injustices perpetrated against the underprivileged Third World. Still.has no intention of damaging his much more important relations with tho US to achieve the gains he anticipatesore assertive role In Third World and regional affairs.

Since his assertive role mustublic one, he balances it by giving the US frequent private expUnations of his purposes, andof his basic friendship. [He insists that Mexico will beosidon'tooderating role among nationalist nations and to serve as counterpoise to such vociferousof "anti-imperialism" as Castro and Allende, But Echeverria feels he mustredible independence of US policy tooderating role. This dualism will be reflected in efforts by Echeverria to serve as diplomatic bridge between Washington and some of the capitals of Latin America, as he has privately offered to do. .

is essential to Echeverria thatunderstand and accept the gameBecause of what he sees as arecord of support for the US whencounts, he probably believes thatdoes. If he hecame convinced thatconsidered his words and actionsto its own interests, he wouldprovided he did not feel pushedwall


Restrictions on Foreign Investment

relationship betweenbusiness in Mexico in recent yearsdescribed as an "alliance forin past decades Mexico led theLatin America in imposing controlscapital, the impact of the varioushas been outweighed by specialfor US investon:elatively large domesticfinancial management, andstrong record on such sensitive mattersremittance of profits andnationalized foreign assets. There nowthanillion of direct foreignin Mexico, of which about two-thirdsthe US-

exico has recently passed laws which expand government control over foreignThey call for closer scrutiny of newproposals, majority Mexican control over new enterprises, and government review of contracts involving the import ofThe laws will make Mexico somewhat

less attractiveocale for foreign invest-menti They are in part,esponseequests from foreign businessmenlear slatement of (he rules of ihe game, and (hey will probably blunt the thrust of ultra-nationalistic elements who would like tocurtail the role of foreign capital. The measures affecting investment represent for the mostodification of existingand they jive the government broad discretionary powers to grant exceptions. Such exceptions will be forthcoming, if only because Mexico cannot produce the capital to1 percent share of all new enterprises.

hrough these and subsequentEcheverria will aim lo increase theshare of ownership and management of business enterprises, to channel newand technology in accord with Mexican priorities, and to reduce the visibility of US parucipation in the economy. To the latter end. he will also encourage European and Japanese investment.esult, some US businessmen will experience reduced oppor* tunities. closer supervision of their activities, and, in certain cases, smaller profit margins.

ut Echeverria gives every indication that he intends (he impact of his measures to be gradual and moderate, and that foreign investment will be welcome as long as itood export potential, introduces newand helps to reduce unemployment -He will work to avoid damage to thcclimate by consulting regularly with thc leaders of the American community, bynew measures judiciously, and by backtracking discreetly should that prove necessary. Echeverria realizesroad loss of confidence in Mexico would ruin the now strong prospectsontinued high raw of economic growth.


cheverria has staked his personalon gaining an equitable solution to the problems of the Mexicatt region, where the waters of the Colorado River flowing in from the USaline content whichaffects agriculture. He has led die Mexican public to expect some dramaticfrom the US. and he appears confident that tho BrownelI study, personallyby President Nixon, will resolve the long-standing impasse Unless he seesprogress soon, Echeverria will feelto seel; adjudicationhird party or tolaim for redress at the World Court-Drug Control

exico itroducer of illicit drugs for the US marketonduit for drugs produced elsewhere. "Die Echeverria government has agreed to coojierate fully with the US effort against the drug traffic. It has committed considerable resources to support thc commitment, and in response to US urging, would probably commit more. But even with all of Echeverrias political clout, the flow of drugs wdl be difficult to stow and all but impossible to stop, so.long as the US marker_ remains profitable^-

ecause of these domestic constraints and because he will want to avoid theof acting under USee| ft necessary to move gradually


and carefully. The control of drug! could thereforeerious bilateral issue. Echeverria would expect, and accept, some

fie would almost certainly try to minimize tlie impact of the drug issue on other aspects of bilateral relations.

ing Mexican cooperation, at leas; temporarily.-

if it became clear that he was endangering Mexico's relations with the US, he would modify his publiche would need room to maneuver his way. withoutto bow to US pressure.

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