NATIONAL INTELLIGENCE ESTIMATE - THE PROSPECTS FOR MEXICO

Created: 1/29/1970

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CONTENTS

Pas*

CONCLUSIONS 1

I

L THE "CONTINUING REVOLUTION* 2

A. The One-Party

he

Progress

Population Problemthe Persistence of

INTERNAL PROBLEMS FACINC MEXICO IN THE10

THE OUTLOOK FOR US-MEXICAN RELATIONS15

THE PROSPECTS FOR MEXICO

CONCLUSIONS

Over the last three decadeso, Mexico hasevel of political stabilityace of general economic progress unmatched In Latin America. This achievement has been facilitated by theof US private capital, technology, and markets. But it is largely due to the developmentne-party system that has been strong enough to carry out an essentially pragmatic and constructive program, whileroad spectrum of political and economic interests.

In recent years the system, whose leaders claim it represents the "continuing Mexicanas shown signs of losing its ability to adapt to the changing needs of the society. We judge, however, that it will not bave great difficulty in dealing with growing problems and pressures over the next few years.

We are mora concerned with tbe system's continued responsiveness to tbe increasingly complex problems which it will face over the longer run. Thus we consider that the attitudes and actions of tbe next(which will take office in. towards suck critical issues as widespread poverty among the rural and urbaneritable population explosion and the growing disillusionment of tbe younger generation, will be crucial for continued political stability and economic progress in the mid- and. We believe thereanger that tbe system will become less responsive and tend to rely more heavily on its repressivesituation likely to promote instability.

In the event that tbe Mexican Government becomes bard pressed on domestic issues, there might be an increase in anti-US criticism and troublesome incidents in US-Mexican relations. However, unless the Mexican leaders become convinced that the US is abandoning orits special relationship with Mexico, we would expect no sharp deterioration in US-Mexican relations.

DISCUSSION

I. THE "CONTINUING REVOLUTION"

L During the first two decades of the so-called "continuing Revolution" that beganhere was considerable bloodshed and revolutionary change in Mexico's institutions. Since then, however, more pragmatic and eonitnjctive courses or action have provided pobtical stability and substantial, sustained economic progress unmatched in Latin America. We propose, in the following paragraphs, to examine the Mexican system, and (he shorter and longer run problems con/rooting it, and to evaluate the systems abilityope with these problems.

A, The One-Porty System

ver the lastean, tha Mexicans have developed and maintained ao essentially one-party system which has pre-empted most of the left and center. and much of (he right, in national, state, and local politics. To carry oq0 Revolution and to reduce tho influence of the country's military leaders who had traditionally dominated national politics. Mexican presidents bave developed an official national party based on major lectors of Mexican society such as the peasant, labor and professional organizations This parly, now known as the Institutional Revolutionary Partyas functionedffectively and civilian authority has been to firmly established that there has been no serious military revolt forhirdentury and every president6 hasivilian.

PRI has dominated the political scene so completely that it hasdefeatedresidential contest, and seldom in an ImportantWhen they have considered it necessary, the PRI leaders havemeasures were required to overwhelm tbe apposition in state andwhich might have been more closely contested. (Tbe PRl's useand manipulation of ballots in tbe recent gubernatorialYucatinase in point.)

the opposition parties only the small moderatelyAction Party (PAN) has consistendy opposed the PRJ inhas been able toRI candidate for the Chamber ofoffers theeal coo'.est in scene state and local elections. Whilehas caused the PRI some embarrassment in such elections, it hasto attract less thanercent of the votes cast in national elections.reflect its position as the "out* party but does not call forin existing government policies. The other two legally Inscribed political

parties erist on official sufferance and areider to maintain

ttempts to itart more vigorous opposition movement* have not prospered because most politically aware Mexicans realize that there is little future for anyone outside oF the PRI. Although some criticism is permitted, the press, radio, and television are kept compliant, if not subservient, by governmentover supplies aod bcecses and over advertising by state entities. Finally, since the executive branch dominates the judiciary, it is able to makeuse of police powen.enal code under which individuals are subject to long prison termsariety of vaguelyrues against society. These powers have been particularly -useful in dealing with members ot the various small splinter groups of leftist extremists who are able to exploitas studenthaveimited capability to initiate them.

n large part the PR! has been successful because of Its ability to convince major groups, including Important new ones such as commercial farmers and industrialists, that it is serving their interests. Jt abo has been able to resolve most of its internal conflicts within the party. Although its spokesmen maintain that the party is the main vehicle of the "continuing Mexicannd that its ideology is of the revolutionary left, the PRI's course has beenmarked by pragmatism rather than revolutionary fervor. In recent decades the pressure groups that have been most influential in, determining Mexico's policies have been the professional, industrial, trade and commercial agricultural interests which mate up the PRI's "popular" sector, rather than its numerically much larger labor and peasant sectors. In part, at least, this explains why the "continuingdestroyed the political and economic power of theandedprovided more benefitsew urban-based wealthy classreatly expanded middle class than for the impoverished rural and uiban masses who constitutehird of the Iota] population.

8 the presidents of Mexico, and most of their lieutenants io the party and in their administrations, have-come from the generation that reached maturity aftereriod of revolutionary and counter-revolutionary violence. They have been largely drawn from the civil professions, particularly the law- in Ihe main, they are representative of the middle 2nd upper-middle classes- They tend to lack the color and charisma of the Revolutionary generation but also tend to be more highly skilled in the art of governing than were maoy of their predecessors.ense the party leadersrofessional

' Tb* relatively imall. MuUit, Popular Socialist Fatty (PFS) aod ibe even smaller Authentic Party of tha Meiican Jle-aluUon (FARM) itpported ihe PRI presidential candidate In IBMwillgainhe PPS andFARM probably do aot have inywheie near0 nwmben nqui/ed to be iegill* mienied. TSere isery mail Mtotia Com-mur.Ut Partyeir.bcn aad very Unit Uiflueace to Mexican politic*.

political elite, which rulesroad range of interest rather than for the benefitmall group as in many other Latin American countries.

The President

a the Mexican system the president plays the paramount role during his six-year term, by setting the direction for national policy and by manipulating the PRI and the government to carry out his programs. But the tradition of no re-election is 6rmly established and for several decades there has been no problem in carryingeaceful transmission of power. The presidentajor role in the selection of his successor.owever, no president has been able to extend his administration by controlling the actions of his successor. Indeed, the change of administrations provides the occasioneview of national priorities andubstantial turnover in the top-level leadership of both the PR! and the national government

arring death or serious illness, Luis Echevem'a Alvarez, the candidate of the PRI. will be the next President of Mexicoix-year term beginning inigorous and highly intelligentear-old bureaucrat, Echevem'a has never held elective office. He has served much of his public career under President Cuitavo Diaz Ordaz. first as tbe latter's assistant when he was Secretary ofnd then as Secretary ofwhen Diaz Ordaz resigned to run as PRI candidate for the presidencyhus, forecade, Echevem'a has been parteam which believes that the Mexican system requires firm coctrol from the top and which has Utile tolerance for dissent

esult of Echeverria's exteniive experience with Mexico's security system and problems, he is fully aware of the nature and extent of criticism of the PRI and the current administration.ampaign, during which he will undertake thc traditional exteniive visits throughout the country, provides himopportunity to establish pftMtia) Ita- tad loOftl officials and to become better acquainted with their problems. It also icrves to let large numbers of Mexicans. Including those in remote areas, know who will be in charge of the nation for the next six years; and, however limited it may be. to have some direct or indirect contact with him. Once inaugurated as President, Echeverrla will set about putting his own stamp both oo the government and on the PR', the core of Mexico's one-party system.

C. Economic Progress

exico's economic progress since thcs has beeney Ingredient has been the government's ability to combine increased emphasis on the public sector with encouragement for private investment, andttract US private Jnveirment while encouraging domestic capital formation and investment. Enlightened economic policies, accus to US financial andresources and markets, and, particularly in the last decade, earningsapidly increasing tourist trade, have also made important contributions.

Although foreign investment is not permitted in certain fields, such ascommunications and land ownership in border areas, and must operate under definite limitations in others, it has been attracted to Mexico by the assurancetable political and financial situation and of continuity in official policy. Foreign investors have prospered, while at the same time they have made substantial conoributioni to the modernization and expansion of the industrial and mining sectors of the economy. Mexico, however, is now at the stage where economic expansion is being largely 6nanced from domestic sources.

19S0 the Mexican economy has expanded at an average rale of5 percent annually as compared toercent for Latin America asMoreover, thc Mexican rate roseercent ino 7in, while the Latin American rate declinedEconomic Crowth in Mexico and Latin

is now the largest sector of the economy and themost rapidly. It accounts forhird of gross nationalexpansion has focusied largely on import substitution. Mexicosubstantially increased the share of manufactures in exports, from0 to aboutercentanufacturing ii now fairly well

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diversified and includes Industries producing steel, various chemicals, motor vehicles, durable consumer goods, and some types of capital equipment. The prices of manufactures arc generally low by Latin American standards although many are high by world jtandards. While imports, particularly of capital goods needed in the industrialization program, have been increasingore rapid rate than have exports. Mexico has been able to attract enough foreign capital to cover its current account deficit.

The mining industries have increased their output by someercenturnishing increased supplies of iron and copper for thesector, and substantially raising their exports of one. lead, mercury, silver and sulphur. The petroleum industry, which was nationalized inhas increased outputercenteeting rapidly growingneeds andmall net surplus for export Moreover, it has earned profits for the state despite price controls imposed to benefit domestic consumers,

The agricultural sector of the economy, and particularly that portionfor export, has also made substantial progress.0 agricultural output has been growing at an average ofercent annually, thereby keeping ahead of the rapid annual increase in population. Government investments In infrastructure, particularly irrigation projects and transportation facilities, and its subsidies for com. wheat and other crops, havebeen iwtrumeotal in enabling Mexico, whichet importer of farm products during World War II, toet exporter.

D. The Populafion Problem ond ihe Persistence of Poverty

hile Mexico has made remarkable progress in many fields, relatively few of the benefits have trickled down to the hard core of unskilled urban and rural masses, who constitutehird of the (otalajor factor in the persistence of poverty has been the rapid spurt in population from someillion0 to an estimatedillion' The annual rate of increase in population has now reachedercent, one of Ihe highest In the world. It is likely to go evenclose to 4the present very limited family planning programs have any noticeable effect.

he impact of this upsurge in population is causing serious problems in rural and urban areas. While Mexico has sizeable amounts of arable land (some

' Although US business and official nlitioruiip. were badly strained at (he time ofrewooabJe compensation wm paid by the Mexican Covemment and the latter', policy of MexicaoUatioo ia thi* and other key area, of the economy woo came to boby foreign investor*.

'Toll Increase It the remitontinued high bjtb rate combinededuction in the mortality rate9 per thousandoeclineo rate of tniant mortalityer .houiand7 during theperiod. The heavyof populationadiusile* of Mexico City li liluitratcd byexico!f Population."

MEXICO: Distribution of Population

ercent of its total landuch of it has basically poor soil (hat requires irrigation and fertilizers to support moreare subsistence type ofThe absolute number of landless peasants has grown, because of the limited amount of land available for distribution and the increase in the rural population. Mechanization of the commercial farms has also swelled theof unemployed peasants, many of whom bave migrated to tbe otiei.esult Mexico City now has an estimated seven million inhabitants in itsarea, and two other cities (Monterrey and Cuadalajara) bave passed the million mark. These aad other urban areas have large numbers of unemployed and underemployed existing in submarginal conditions.

idespread rural discontent was one of the principal motivating forces of0 Revolutico and agrarian reform has been pursued with varying degrees of intensity by most Mexican governments since then. The massive distribution of land hasolitical success because it aligned recipients with thebut it has failed to secure lasting economic benefits for the great mass of Mexican peasants. Most ofillion or so farmers onidoi have no tide to tbe lands they work and are at the mercy of the tjidohere are alsoilLoo. beads of families whose private land holdings average about three acres and most of them ekeare subsistence with scant prospect of improving their Status.

ome two million landless peasants are even worse off. Tbe breeerowhich had enabled thousands of them to earn enough in the US to support their families, was phased out by thc US. Since there is little arable Land left to distribute, their chances of makingeagre living through fanning are minimal Unlike the tjidaianoi and the small landowners, the landless peasants have very little to lose through disruption of the status quo and some of them have become involved in attempts to seize land and in attacks oa local authorities. In the main, Mexico's landless peasants are now Little better off economically than they were

hile it has acted to ameb'orate certain agrarian problems, the government has not been willing toizeable reallocation of its resources from the support ofs trial;o improving thc lot of tbe rural and urban poor. Sizeable unemployment has kept incomes down, particularly for the less skilled, whether they remain In the countryside or Hock to thc slums in and around Mexico City.esult, the lower-paid salaried aad wage earning personnel were relatively worse off economically in recent years than their counterparts

of hu at

' Tba tjidoradlnonil form of tirul teoure to which tlie Mriicin Gaverorneot returnedup rainy of theaiciradaj- Amhitukpecified aaicaial liad but Joe* rvM own it irxj eioaol rent, lefl or mortgage it. Allocation ol theplot*etermined by theuthorities, who jeoeraily controlled bv theegional leaden al tbe PRI.

had been' Although price control* on basic food* help thoic regularly empioyed. large numberi of unemployed aad part-time worker* liveand-to-mouth baiii. Successive administrations have, however, been able to avoid any serious political repercussions from this situation bylose control over the leadership of the National Confederation of Campesinos (CNC) and the Confederation of Mexican Workers (CTM).

E. US-Mexican Relations

he main guidelines for Mexico's foreign policy, which stress the principles ofntervention, juridical equality of nations large and small, and the peaceful settlement of disputes, reflect the country's proximity to and preoccupationts relations with the US. Widely held and deep-rooted feelings of mistrust and fear of the Colossus of tha North, though diminished, still loom large in the Mexican view of the world. Those feelings had their origins in the loss of about half of its territory (the area comprising Nevada. Utah, Texas. California. New Mexico, and Ariiooa) to the US wellentury ago. They were revived by various incidents that occurred during the first few decades of theespecially by the two US military interventioas on Mexican

ver the last quarter centuryhere hasarkedin US-Mexican relations. In thehe settlement of the claims arising from the natioaalizatioa of foreign oil companiesajor source of discord. Mexico cooperated closely with the US in hemispheric defenseduring World War IIexican Air Force squadron served with US forces in tlie Philippines. Over the last decade mutual efforts to improve relations have brought the solution of the Chamizal border dispute, which began in the last century, and have facilitated close cooperation co irrigation andpower projects.

afor factor in tha improvement tn US-Mexican relations has beeo the decision by the Mexican political leaderstable, cooperative relationship with thc US is in their country's best interests. The general acceptance by the US of Mexico as an equal, in dealing with problems and matters of common interest, has been instrumental in creating an atmosphere of mutual trust and cooperation, which has been established and significantly expanded during the present adrninurxation of Gustavo Diai. At the same time, however, every idrruriistiation since the revolution has stressed its "independent* foreign policy; the refusal to join the other Latin American nations in breaking off relations with Cuba is, in part, an example of Mexico's insistence that Its policies be determined only by Mecca tu

0 the loweitercent of individual wage earner* receivedercent of tout wagea and salaries while the highulercent receivedercent of ruch3 {the lut period for which ruchh- lowestercent

receivedercent ofwhile tbe upper ID percent receivedercent. II ether

toureuom* were included, the pterin* would be even gronstcr

lose cooperation between US and Mexican officialside range of problems in recent yean have led the latter to expect to be consulted in advance before thc US takes action affecting Mexico. Since the Mexican officials do not feel that they were adequately alerted before the US undertookIntercept" inhe measures taken to stop the smuggling of narcotics into the US have caused considerable resentment in official as well as private circles. The Mexican reaction underlines the sensitivity of their political leaders to the way in which US-Mexican relations are conducted and theirneed for reassurance that the special US-Mexican relationship is being maintained. Once that reassurance was given, Mexican officials stepped up search and destroy missions against the production and distribution of narcotics on Mexican territory that have contributed to progress on 'Operation Cooperation" (ex-Operation Intercept).

II. INTERNAL PROBLEMS FACING MEXICO INs

short-run ecooomic prospects are bolstered by its relativelyfiscal situation: it is one of the few Latin American countries notby urgent problems in this field. The Diaz Ordaz adrninistrationthe government's high-credit rating abroad, has attractedcapital to cover current account deficits in its balance of paymentsincrease reserves, and has kept domestic prices fairlye fudgeeconomy will continue to expand during the next two or three years andserious economic disruption appears likely in thes.

the longer run. however, Mexican governments will bebasic socio-economic problems which, if not resolved or substantiallycould cause serious disruption in the society. Unrest generated byin the distribution of the national income, corruption, andthe system generally has been increasing in recent years. Theill be particularly difficult to cope with as long as officialscarce resources on industrialization and commercial agriculture.in population, which exacerbates other problems,articularlyone, given the Mexican price in large farniUes and tendency to identifyof offspring with manliness. Tn addition, the growing number ofthat is below the ageowercent and increasingthe multiple problems created by the rapidly rising urban population,diversionteadily larger share of the national budget totransportation, waste disposal, water supply, and public health.

' Wholesale pricesisen ao average ofercent annuallyhepriceIncludes certain goods under pricea riseercent; foe theonths9 over the corresponding periodxternalhowever, has raised tbe total of Mexico's medium- and long-term debt, which wasillionoillionnd to an estimated USW3 billion at present

' Average annual per capita income is0 in the eoucByilde as compared0 ia urban areas.

resident Diaz Ordaz has been aware of these problems and has attempted to cope with them. Hia efforts have been concentrated on expanding theprovide employment opportunities for the urban poor and for landless peasants and to increase Mexicanon aiding commercial agriculture- The industrial sector has performed well but it operates undersuch as the limited domestic market, the competition from well-established industrial powers, and the measures those powers have taken to protect their domestic industries. These constraints will continue and (in some respects) become more important ins, probably matting both import substitution and expanded exports of manufactures more difficult. The recent partial untying of US aid to Latin America ihouid benefit Mexican industry, however, and tariff preferences for the manufactured goods of the lesser developed nations would help still more. On balance. It is doubtful whether the growth rates forcf the past two decades can be maintained. Even if they are, the urban economy is likely to have difficulties in absorbing the increasing numbers of unemployed.

2S. In recent years, the government aod the PRI have also faced increasing difficulty in co-opting student movements. Some student groups, andthe organized university students, have been alienated by the shortcomings of the educational system, which lacks classroom and laboratory facilities and full-time teachers, as well as by tbe repressive features of the political system. Ini repeated student clashes with police and student riotingin bloody encounters between students and army troops on the eve of the opening of the Olympics in Mexico City. The students were not able to secure the support of labor or campttino groups and, since being severely mauled by the army, they have undertaken only limited demonstrations against the- regime.

owever successful thc PRI has been in controlling such protests and demonstrations. It has done littleositive way to close the generation gap between its leaders and Mexicans betweenndears ofone-third of tbe total population. Among those younger Mexicans critical of the PRI, thererowing conviction that the leaders of the system are satisfied with maintaining uttle moreacade of representative political democracy. The critics generally acknowledge the past achievements of the system, but insist that the party's leaders do not understand and are not concerned with the problems and aspirations of the younger generation.

he students arc no! likely to pose any serious immediate threat to either President Gustavo Diaz Ordaz or his chosen successor, Luis Echeverria.-Tbe student activists who led the antigovemment disturbances8 and other critics of thc present regime may Cry to disrupt Echeverria's campaign tour. Although there is the possibility that Echeverria may be seriously embarrassed and perhaps even injured by extremist demonstrations, his entourage has had extensive experience In handling demonstrators and in protecting the President

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and numerous foreign visitors. At the same rime, the political opposition knows the limits within which it may operate and the consequences forthem.

urthermore, the present administration recently hasons&tu. tional amendment lowering thc minimum age for voters toears and it may become effective before the0 election. This should serve to ameliorate, temporarily at least, the discontent of Mexican youth by giving anillion younghance to participate in the political process legally and peacefully. The voting preferences of these new voters would also provide an indication of the extent of alienation of youth from the PRI. If the official party does notore effective job of appealing to and satisfying thcof younger voters than it has in recent years, the main beneficiary almost certainly will be the PAN. This would' strengthen the PAN's chances in local elections, particularly in urban areas where it now receives considerable middle class support. Eventually, continued disaffection for the PRI among such voters would enable the PAN lo raise its opposition to the PRI to the point where the rigging of the results would become more and more difficult and obvious,

In recent years there also have been indications that labor is becoming resdess, particularly over its share of the national income and subordinate role in the PRI. An extensive revision of the labor code (which dates from die) is now underway, however, and should assuage labor discontent, at least for the short run, and help tomooth transition of power from Diaz Ordaz to Echevem'a. There are proposals for requiring employers to provide housing facilities, which, if adopted and implemented, could improve the living conditions of many workers. Minimum wages have been raised recently but we doubt that this will resultubstantial Improvement in the standard of living of the Mexican masses.

Similar discontent within the peasant sector of the PRI is not an immediate danger but meeting its needs poses more difficult problems, even in the. There is relatively litde arable land left to distribute, withoutthe commercial farms which provide much of the production for domestic consumption aad export.

Internal security is the principal function of the Mexican Armed Forces and they have proven capable of handling unrest decisively and expeditiously in thehe army is often called upon to restore order throughout Mexico, except in Mexico City where the formidable police forces usually are able to maintain order. The student riotsowever, were of such magnitude that the army was called in to bring them under control. The security forces need more modem communications and transportation equipment but are prob-

personnel of tbe Mexican Aimed Forces is0 men dittiibuSed as follows:nd Air. There is0 man rural defease corps which it under the command of various mditary lOne* but has (united training aod equipment for dealing with serious disturbances.

ably capable of coping with much greater opposition than they have beenwilh up to now. They would, however, be heavily taxed by widespread violence in the countryside. We judge that their capabilities will remainunchanged over the next few yean.

ver the longer run, we judge that the next administration, and itswill have increasing difficulty in maintaining the present highlyand controlled political system The very success of that system, inelatively open society, hasuch more sophisticated electorate. This present generation no longer accepts the oldquess did previous generations, and it has indicated the need for changes in the PRI leadership and style. President Diaz Ordaz, in his Erst year th office, permitted one of the more liberal PRI leaders. Carlos Madrazo. to experiment with "opening up" the system to give local party members an effective role in the selection of party candidates and leaders. When powerful state leaders saw their dominance threatened, they opposed the reforms Mfldrazo had tried to introduce, as president of the PRI. and he was soon sacrificed.Echeverria has shewn few signs of being innovative, be is an intelligent and pragmatic individual. If he does try to modernize the system, his chances for success wJI dependonsiderable degree upen his selectionarty president less heavy-handed and more subtle than the ebullient Madrazo was (Madrazo died Innd upon.giving his agent the land of armthat Madrazo did not get from Diaz Ordaz.

n the basis of his previous record we judge that Echeverria is not likely to make any radical changes from the policies of the Diaz Ordaz administration. We think that he probably will be somewhat more concerned with the problems of students and youth generally, than the incumbent regime, but equally as ready to apply force to keep dissent within "tolerable" urru'U. Echeverria has already declared that the poverty of rural Mexicans is the nation's primary problem and he will undoubtedly do what he can to alleviate it We doubt, however, that he can or will undertake the massive reallocation of resources needed to cope with it. because he would consider that this would be economically infeasible and create serious political difficulties fcr the PRI.harp policy shift would, indeed, slow spending on both productive enterprises and social facilities in the cities, and generate resentment among urban workers and businessmen. Furthermore, it is not at all clear that resources transferred from the modern, urban sector to the rural sector would substantially increase employmentand incomes for the potential migrants to the dries.

f Echeverria decides to maintain the system largely unchanged, his regime will probably have to rely increasingly on force and uitimidation to maintain public order in thc urban areas, where the students are concentrated, as well as in the rural areas.ourse would also mean an Increasing reliance upon the armed forces, whose younger leaders are not as closely aligned with thc PRI and as dependent upon it for promotion as were tho present olderof military commanders. In the event of prolonged or recurrent public

unrest we think the Mexican military leaders would attempt to use the regime's increased dependence on themever forarger rola in national politics. We do not expect unrest on this scale to occur in Mexico over the short run. and if it does Echeverria will have time to make adjustments in the system. The chances of widespread public unrest over the longer run depend heavily upon the PRl's ability and willingness to cope with the needs of the changing Mexican society, whileniriimal use of its repressive powers.

An additional complicating factor, over the longer run. may occuresult of strains in Church-State relations. Over the last four decades or so an eSective modus vivendi has been worked out by the Church and government leaden to replace the bitter conflicts that marked the firstears of theUnder Diazracticing Roman Catholic, Chuch-State relations have measurably improved despite the increased involvement of some of the Catholic clergy and laity on behalf of Mexico's distressed masses. Tlie morememben of the religious hierarchy have tried to restrain thisor "Committed" sector of the Mexican Church because they do not want to risk endangering the regime's toleration of their activities in education and other fields, which are forbidden under7 Coostitution.

Under Echeverria, however, who isracticing Romaa Catholic and alsoeputation of being anticlerical, the "Committed Church" movement is likely to create strains that will cot be so readily resolved. Over the last year, even the Diaz Ordaz adrruriistration has been showing signs of uneasiness over the "Committed Church's" activities in the social welfare field. This is asensitive area because the official party claims that it is the custodian of the welfare of the masses. Thus the PRI is likely to oppose any activity by the Church thai might benefit its principal rival, the PAN, which Is generally viewed as being aligned with the Catholic Church.

occurs In the la it four ymin o( his term.

GMifmieplacement to compicte that terra.eplacement hi needed in thetwo vean. Conrreiaa provisioea! president and new presidential ejection are held.

has been extremely fortunate that its political system has notto the test of the death or serious incapacitation of the presidentThere is no vice-president, or other constitutionally designatedand Mexican presidents traditionally have been chary of eatabbshinguntil the last year of their term Inor several decadesthat traditionally had accompanied the transferal of power hasby the careful screening of candidates and by lengthythe actual transferal of power. If Echeverria should die or becomethe system might come under severe strain during the selectionsuccessor. At the very least, the coofL'eting interests of the party sectors,the groups represented in the popular sector, would be difficult towithout the customary strong guiding hand of the Mexican president.

n summary, we do no* anticipate serious difficulties for ihe nextover the short run. It is difficult to estimate either whether the problems lacing the Mexican Covemment will develop to serious proportions or how they will be handled If they do. By tho, however, tho system probably will be sorely tested by thc gravity and complexity of the problems confronting it. Even under optimum conditions and with tlie most judicious of policies, progress on Mexico's basic economic and social problems wdl be limited. Much will depend on whether the system retains the ability that has distinguished it over the lut several decades to adjust to changing situations and to continue to convince the major sectors of Mexican society that it is reprcsemting their interests. The attitude and performance of the next administration is crucial for continued economic growth and political stability under the Mexican system. In the light of developments over the last year ore see signs that thc system is losing its ability to adapt to the changing needs of the society and thereanger that it will become more repressive over the longer run.

III. THE OUTLOOK FOR US-MEXICAN RELATIONS

The future partem of US-Mexican relations will depend heavily upon the style with which US policies regarding Mexico are carried out, as well as the content of those policies. Thereasic residue of anti-US feeling in Mexico, which is kept alive by extremists on the right and left, but Mexicans in general seemed to have moved beyond the radical nationalism of the early stages of the Revolution. Diaz Ordaz and his predecessor. Adolfo Lopez, in partscuL-r. haveigh priority on maintaining close and friendly relations with tha US- We believe that, initially at least, Echeverria willimilar pattern. In view of his more strongly nationalist outlook, however, Echeverria may be more sensitive to the way In which US policy Is conducted, and to any alleged intrusions on Mexican sovereignty.

The next administrations attitudes and policies towards the US are also likely to be significantly influenced by Echeverrias choice to head theof Foreign Relations. Thereood chance that he will follow the example of Diaz Ordaz in concentrating his attention on domestic affairs and giving considerable responsibility to his Secretary of Foreign Eolations. In that case the attitude of the Secretary would be important for continued close cooperation with US officials. The present Secretary of Foreign Relations, Antonio Carrilio Flores, is convinced of the value of avoiding open clashes with the US and has worked assiduously to avoid them. Thus we would regard the appointmentimilarly oriented individual as Secretary of Foreign Relations,ignal that Echeverria is continuing his predecessor's high priority onsolutions of problems wilh the USinimum of publicity.

Thereew basic problems which have persisted despite the best of intentions on thc part of both US and Mexican negotiators. These include the salinity content of the Coloradond US import restrictionsariety of products which Mexico produces.'The top-level Mexican officials are aware

of the restrictions imposed on US negotiators by the powers of Congress in economic matters and foreign relations. Yet it is difficult for lower level officials and tbe Mexican public to understand these restrictions.inimum of adverse publicity is essential to continuing the present pattern of foint US-Mexican efforts to work out mutually satisfactory solutions to these and other difficult problems which may arise. The Mexican policy of maintairung relations with Castro's Cuba, for example, has caused relatively little strain In US-Mexican relations largelyesult of the way in which it has been handled by US officials and accepted by the US public generally.

inally, US-Mexican relations are likely to be affected, over the longer run in particular, by the next administration's ability to cope with its basic domestic problems. We think that Echeverria will continue, and perhaps even extend, the present administration's recent emphasis on increasing the Mexican-owned share of foreign enterprises in Mexico, and is likely to react strongly against foreign criticism or action directed against that policy. In the event that his administration becomes hard pressed on domestic issues* Echeverria might allow anti-US elements to operate mere freely to divert attention from his domestic problems. While we do not anticipate any sharp deterioration in relations, there may be an increase in annoying problems and in Mexican sensitivity to any dimunitioa of Its special relationship with the US. .

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