Mexico. The ultimate domino?

Earlier this year, the main square of Tuxtla Guti'errez, the capital of the southern state of Chiapas, was taken over by schoolteachers on strike. At night the square became a campground. Behind a strikingly modern cathedral, men and women wrapped in serapes for warmth huddled together on multicolored blankets.

Groups clustered around guitarists, singing Mexican folk songs. An occasional campfire made it look like some sort of Mexican Scouts' jamboree in an unorthodox setting.

An edge of tension, a hint of potential violence, hung over the scene. Townspeople lined police barricades -- some shouting their solidarity with the strikers, others expressing outrage that their children were not getting an education.

Yet the strike was resolved peacefully. The teachers, whatever their potential for stoking radicalism and social unrest in poverty-stricken Chiapas, are allied to the ruling elite. Indeed, their union was organized by the Institutional Revolutionary Party (PRI, from its Mexican name), which has governed Mexico for more than 50 years.

This co-option of potential opposition characterizes Mexico, at least for the moment, and helps explain why the country has avoided massive social upheaval despite its serious economic crisis and longstanding problem of social inequality.

As one Western diplomat who is a longtime resident of Mexico puts it, ``The Mexicans will, as they always have done, continue to muddle through. They have extremely serious problems and might have sporadic violence -- but the system is solid. It has worked at co-opting all forms of opposition for 50 years, and there is no indication that it won't adapt to the problems of the day.''

Most Mexicans would agree with this analysis.

Mexico is a nation in which a severe economic crisis has sharpened great social differences between the rich and the poor. It is faced with a population boom that would be difficult to handle in the best of times, a country in which social confrontation seems almost inevitable.

Almost miraculously the system seems to carry on regardless. Most people are like the teachers in Chiapas -- part of the established political system in one way or another. In spite of tremendous pressures, most Mexicans of all social strata think that the system will probably continue to work for the next five or 10 years, although its longer-term survival is unclear.

Mexico's current economic crisis began in 1982-83 when the price of oil (Mexico's main export) dropped severely and real wages fell 23 percent in a 12-month period. The economy was just beginning to recover at the start of 1985, but the price of oil fell by midyear, and inflation accelerated again. This has plunged the economy into a crisis, although not as severe as the one of 1982-83. On top of this, Mexico was rocked by earthquakes in September costing at least $5 billion in damages.

For several years most politically articulate Mexicans listened to, and discounted, predictions of American doomsayers that the Mexican political and social structure would crack under the strain of the country's great financial crisis of 1982-83. It was the most serious economic situation Mexico has had to face since its 1910 revolution. Members of the Reagan administration were among the prophets of doom.

Today, despite new economic setbacks, a second Mexican revolution has not yet occurred. If anything, the bulk of the Mexican population has distinguished itself by its remarkable passivity at a time of great hardship.

When most Mexicans discuss what they universally call ``the system,'' they look at its future in terms of economic and distribution problems. They seldom view threats to the system as being the possibility of left-wing subversion, working its way up through Central America.

The ``domino theory'' so popular among many Reagan administration officials and other North Americans finds no echo here. The theory holds that if the left-wing insurrection that triumphed in Nicaragua sweeps through the rest of Central America, it will eventually bring down Mexico, and even imperil the United States.

For instance, most Mexicans do not think a guerrilla takeover in Guatemala would be the main factor in determining their country's future. At most, Mexicans see the key factor in such a hypothetical takeover as creating a refugee problem and causing political ripples in the poor southern border province of Chiapas.

In short, US and Mexican analysts say that upheavals to the south would affect the whole country. They do not, however, say that these would decide Mexico's fate.

``In general, Mexico's continued political stability depends mainly upon what happens within Mexico,'' says Susan Kauffman Purcell, director of Latin American studies at the Council on Foreign Relations in New York. ``The stronger Mexico is, the less chance that anything that might happen in Central America will affect it. On the other hand, if Mexico is going through a series of severe internal economic and political problems, a difficult situation to the south does not help.''

Some analysts are more concerned about the potential political polarization and destabilizing effect on their country of any direct US military intervention in Central America. They believe any such intervention would touch off years of guerrilla warfare in the region.

Meanwhile, a broad consensus in Mexico holds that the system set up by PRI in the 1920s, which claims to carry forward the work of the 1910 revolution, is in no danger of sudden collapse. There is little fear of immediate catastrophe such as mass uprisings or military coups. Almost all of the diplomats, academics, politicians, businessmen, and average Mexicans interviewed for this series agree that a more or less modified PRI will continue to rule Mexico for at least another five or 10 years.

Beyond that period, few such Mexican or foreign analysts are ready to venture any guesses. What they fear most is a steady deterioration of the economic situation and a potential unraveling of the system of broad-based political alliances with which the PRI has governed since 1928. If that happens, the party, in order to maintain its power, might retreat into authoritarianism.

PRI's system of alliances was built up after the revolution. The military chiefs who emerged with power after the civil conflict tried to mediate beteen the main social classes. They made concessions to landowners, to the business sector, to peasants, and to workers. These sectors were incorporated institutionally into the PRI.

Many critics of the PRI charge that, although this system of alliances has worked in governing the country, it also stopped the government from building a coherent economic model. It is difficult, critics say, for the PRI to embark on a more conservative economic policy without alienating peasants and workers, or a more liberal course without offending the business component of the party.

Many US and Mexican analysts are concerned that Mexico has reached a dead end in its efforts to provide a decent life for its rapidly expanding population. (Mexico's growth rate is 2.6 percent a year. This year's population is 79.7 million. It is estimated that in the year 2000 it will be 112.8 million.) If this problem is not resolved during the coming decade, many say, the system will unravel.

If Mexico is to provide a semblance of a decent life for most of its people, it must have a climate of international economic prosperity and major structural reforms, say these analysts. It will be impossible to carry out such reforms for the next fews years because of political reasons.

According to Carlos Tello, an academic who served as planning and budget minister in the administration of President Jos'e L'opez Portillo, Mexico's greatest needs are an agricultural sector that can feed the growing numbers of people and an industrial sector that can produce goods cheaply for them.

Critics on both the right and the left of Mexico's political spectrum, liberal academics as well as thoughtful businessmen, say Mexico's economy is caught between an inefficient state-owned enterprise and an unproductive private sector. The large state-owned sector (i.e., oil) is plagued by lack of planning, bureaucracy, and corruption. The private sector holds back from making investments, because it both mistrusts the government and has grown used to making quick profits from speculative ventures rath er than productive projects.

At the same time, the deep structural changes necessary to make the Mexican political-economic system work for most of the country's people are viewed as politically impossible. Such reforms would either be viewed as radical and deeply alienate the Mexican private sector and the Reagan administration or viewed as conservative and estrange the peasants and workers who consititute PRI's popular base.

But an extreme change toward a completely private-sector-oriented, ``Reaganomics'' type of economy -- desired by many businessmen -- would be largely unacceptable to PRI's popular base. Finally, any move that tended to diminish the power of the PRI bureaucracy would arouse great opposition within the party's own ranks.

Meanwhile, Mexico's population leads an increasingly difficult life. The sufferers are not only the very poor but also those who are reasonably well off -- compared with much of the third world, although considered poor by US standards.

``Francisco'' (he was forthcoming about everything except his last name) is a young taxi driver with three children. Dark-skinned and squat in build, he clearly shows his Aztec ancestry.

Francisco rents his cab, which means that he is better off than millions of Mexicans who are unemployed or who earn minimum wage. But he is not among the minority who own a substantial amount of property.

Five years ago, before the economic crisis began, Francisco worked 10 hours a day and ate meat every day if he so chose. Now, 12 to 14 hours a day of driving in Mexico City will buy meat three days a week.

Higher up the social scale, people well established in the middle class have also undergone changes for the worse in their standard of living. These changes have made them increasingly dissatisfied with the PRI -- a feeling greatly heightened by what they view as the rampant corruption and economic mismanagement of previous administrations.

Lorenzo Meyer, a Mexican academic at a major think tank, says the growing disenchantment among the middle classes will be the PRI's most serious political challenge in the next few years. The PRI can survive if the middle classes are politically apathetic. But if these people see a political party on the horizon that presents them with a strong alternative -- which at present they do not -- they could start actively opposing the PRI. This could pose serious problems for the ruling party.

Most Mexicans are economizing, but for the least fortunate Mexicans, a drop in their income can result in dire misfortune, such as the death of a child.

Although there are no clear figures, social workers and doctors who deal with the poorest of the poor report a disturbing rise over the last two or three years in infant mortality and malnutrition, which had previously been declining for decades. Mexico's infant-mortality rate, which in 1982 was 53 per thousand births (respectable but not excellent even by third-world standards), has risen steadily since the economic crisis began in 1982-83.

Despite the mounting economic hardships, most Mexicans still back the ruling party, but listlessly and rather cynically. They increasingly support the PRI because of tradition and see little alternative in the minority opposition parties, say political anaylsts.

Many Mexicans, too, are cynical about President Miguel de la Madrid Hurtado's efforts to eradicate the government corruption that became a public scandal under his predecessor, Jos'e L'opez Portillo. They seem to believe that President de la Madrid and his immediate circle are probably honest personally and are making some effort to control corruption within the party and government. But they are losing hopes of real reform.

``In the last year or so I have wanted to change parties [and leave the PRI], but all the parties are alike,'' says a young woman previously active in PRI affairs. ``They're all looking for power. Once they have the power, they don't give a hoot about the rest of the country.''

The acid test of corruption, and perhaps the determinant of the present administration's political future, will come within the next year with the rebuilding of Mexico City after the devastating September earthquakes proceeds. If the government is perceived as handling the situation corruptly or inefficiently, the results could be very grave for Mr. de la Madrid.

PRI officials say their party is the only one that is truly national. The largest opposition political party, PAN (the National Action Party) received only a small percentage in July's midterm election.

``PAN is just a right-wing interest group allied with business interests in the north, and the left-wing parties are mainly a group of squabbling intellectuals with little mass support,'' says the government official.

Many Mexicans concede that, whatever PRI's defects, social progress has been made under the party's leadership. As one upper-class woman who works as a social worker and supports the ruling party puts it, ``In roughly 65 years, literacy rates have gone up from 18 percent to 87 percent. Life expectancy has risen from 44 years to 63 years.''

Not even the most enthusiastic PRI officials and party supporters, however, are inclined to rest on their laurels. They know they will have very little to offer Mexicans for the next few years. What they are most interested in is surviving the crisis.

They must also face the entry into the job market of Mexico's baby boom of the late '50s, '60s, and early '70s. Mexico's population has increased from 19.8 million in 1940 to 79.7 million today.

This would be a challenge even in a time of relative economic prosperity. It swamps the PRI's traditional system of distributing material benefits to various sectors of Mexican society.

``The PRI has always kept the different sectors of its power base happy by giving out pieces of the pie,'' says Carlos Frederico Paredes, a former Salvadorean vice-minister of planning who lived in Mexico as an academic for several years. ``But the pie has shrunk, so there is less to distribute. Right now, in an effort to stimulate the economy, the government is giving the largest slices to business, and the workers are having to make do. This can't go on for a long time without the system having to cha nge. Economic scarcity which lasts for a long time means new political arrangements.''

If this assessment is correct, over the next 10 years the PRI will either have to reform, giving more political space to opposition groups and dissent and overhauling itself internally, or it is likely to retreat into authoritarianism, most observers say.

Historically, most Latin American governments have taken the second, authoritarian, alternative. Most Mexicans hope the PRI will choose the first -- reform. Either way, events farther south in Central America are unlikely to play a dominant part in Mexico's decision. First of four parts. Tomorrow: Mexico's efforts to find a political-economic solution for the future.