A country in trouble looks for solutions

The visit was going to be a routine one. The government public relations woman was bringing in a foreign journalist to see a prominent local businessman in this provincial town. The large, solidly built, middle-aged shoe manufacturer supported the ruling party. There was nothing about the interview, therefore, that promised the unexpected.

But instead of singing the praises of the government, the manufacturer launched into a ripping attack on the ruling party's corruption, inefficiency, and inability to handle the economic crisis.

What then were his solutions to this sad state of affairs?

I don't know, he answered. I only know that the country is in trouble. Mexico's woes

The severe economic crisis afflicting Mexico since 1982 has brought on a mood of national introspection and questioning.

``No one is sure they have the answers anymore,'' says one young foreigner working with development projects in Mexico. ``The crisis has caused a new political opening. New voices, such as the private sector and the opposition parties, are participating in the debate. . . .

``When the crisis hit, it seemed that the old model fell apart. Today people are asking basic questions about which road Mexico should take.''

Mexico's huge $96 billion debt adds sobering immediacy to the debate. And making matters worse still for an oil-producer like Mexico is the latest round of oil price cuts.

Faced with these, Mexico will have the greatest difficulty paying interest on its debt, let alone beginning to pay back the principal.

As if that were not enough, September's earthquake caused what most experts believe is a minimum of $5 billion in damage. That, too, has somehow to be paid for.

But those who hoped Mexico's mood of anxious questioning would have an impact on the midyear elections were disappointed. Instead, the dominant note struck by the ruling Institutional Revolutionary Party (PRI) was business as usual -- with traditional Mexican electoral fraud widely regarded as having occurred yet again. The optimists have not given up hope of political reform.

Now that the PRI has made clear once again that it is fully in charge, these observers say, the party may yet attempt to come to an understanding with the main opposition party, the right-wing PAN (National Action Party), in order to keep it within the electoral system. The optimists stress that co-opting the opposition has been a traditional PRI tactic.

Meanwhile, the debate continues, centering on two issues:

1. Whether there should be changes in the political arrangements by which the PRI has ruled Mexico for more than 50 years.

2. What economic road to take out of the present debt-burdened slump. The political debate

Among the broad range of diplomats, politicians, academic analysts, and Mexicans-in-the-street interviewed for this series there was consensus: that in order to survive, the system evolved by the PRI must be adapted; that the PRI will have to give a much larger political voice to the opposition parties.

``PRI can, for the next five or 10 years, continue to be the dominant party,'' says a prominent Mexican political scientist, ``but in a time when it doesn't have many economic goodies to distribute, it can't be the only one [with any political power].''

As its name suggests, the PRI (Institutional Revolutionary Party) institutionalized the 1910 revolution, making it part of the establishment. Many of its critics charge that in doing so it ceased to represent the interests of the majority of the Mexican people, who are poor, and -- during the current economic crisis -- are getting poorer.

Few doubt that the PRI could win a presidential election if it were held now. But the party support is becoming increasingly apathetic.

Indeed, disenchantment with the PRI is almost universal.

It arises both from the economic crisis and from reports of massive high-level corruption in past administrations, and at least continuing lower-level corruption in this one.

People continue to vote for the PRI out of a combination of inertia, habit, and fear. They also feel a lingering sense of being incorporated into the system through membership in PRI-dominated labor unions, peasant movements, or community organizations. Most important, they vote for the PRI because they don't see the opposition as a viable alternative.

Most Mexicans still view PAN, the largest of the relatively small opposition parties, as overly right-wing, pro-US, and dominated by business interests. And they mistrust the radicalism of most left-wing parties.

Largely because of PRI's control over the nation, neither right- nor left-wing parties have been able to convince most Mexicans that they have any hope of winning.

Nevertheless, the PRI retains enough of its old populist traditions to frighten the upper classes and the private sector. This was especially true during the 1970s and early '80s, when the ruling party reacted to the economic crisis with radical measures such as the nationalization of the banking system.

``The private sector now wants to change the rules of the game,'' says Juan Molinar, a Mexican political scientist who works in a research institute attached to the National Autonomous University of Mexico.

``The bank nationalizations so frightened it that the business sector now wants some insurance against any further unilateral actions by the President.''

This could mean, Mr. Molinar said, both a diminishing of the almost unlimited power of the president and greater participation of the business sector in government and party decisionmaking.

Businessmen, like many others in the Mexican ruling elite, are now waiting to see whether the PRI will give the opposition greater opportunites for working within ``the system,'' as it's called in Mexico. If not, say Molinar and other Mexican political scientists, businessmen will turn more and more to the right-wing PAN.

For instance, in the northern states of Nuevo Le'on and Sonora (where reports of electoral cheating in the midyear elections were especially strong), PRI could try to reconcile PAN voters to often fraudulent PRI victories by inundating those states with money and by attempting to run honest pro-business administrations there. In one way or another the aim would be to co-opt much of the local PAN support while giving it more of a role in ``the system.''

Many academic and diplomatic analysts say the only alternative to co-opting the opposition in this way would be increased repression, which would be damaging to both sides.

The snag, according to one analyst close to the PRI, is that if the PRI tries to be more flexible with the opposition, it may offend large chunks of its traditional power base.

Many peasants and workers strongly oppose any further concessions to the PAN, which they perceive as reactionary and pro-Yankee. The economic debate

President Miguel de la Madrid Hurtado's economic policies also risk taking the PRI a further step away from its base of peasant and worker support. His policies have two cardinal points:

Paying back Mexico's debts.

Opening up the country to foreign investment.

Coping with the foreign debt has forced Mexico to accept a modified International Monetary Fund-type of austerity plan. Budget deficits and government spending have been cut and an attempt has been made to hold down inflation. In the process, the income of an already poor population has been further eroded.

Over the last three years the average per capita income in Mexico has decreased by more than 10 percent, says Carlos Tello, a respected economist and academic who served as minister of planning and budget under President de la Madrid's predecessor, Jos'e L'opez Portillo. For those at the lower end of the wage scale, income decreased 35 to 40 percent from 1982 to 1984.

As a result, Mr. Tello says, income distribution has become still more unequal in a country that already has one of the most unequal income distributions in Latin America -- even worse than that of Brazil.

In his efforts to rebuild Mexico's battered economy, President de la Madrid is turning to export markets and foreign investment. If Mexico is to become a successful exporter, says Don Wyman, an American economist at the San Diego Center for US-Mexican Relations, its productive structure will have to be completely modernized.

``The money has to come from somewhere,'' Mr. Wyman says. ``Foreign private banks will not lend any more to Mexico, and it is doubtful that governmental and multilateral financial organizations will do so in the amounts necessary. Private foreign investment is the only available source of foreign capital.''

But many US and Mexican economists and political scientists are skeptical about the ability of de la Madrid's policies to get the country's economy going again and bring some benefits to the majority of the population.

Critics say the President's focus on exports makes Mexico increasingly dependent on other countries, principally the United States, at a time when international economic prospects are not good.

These critics point to government figures released in the beginning of May which show US investments in Mexico dropping last year. These critics also point out that this increased dependence on the US and the Mexican private sector makes it much harder to carry out the structural changes essential to Mexico's economy.

They say that as long as the de la Madrid administration is committed to paying off Mexico's foreign debt, the resulting drain on the Mexican economy will prevent it from recovering.

``What Mexico is actually facing is a crisis in its style of development and an exhaustion of its model of economic growth,'' Mr. Tello says. ``Only by assuming that this is the case will Mexico be able to overcome its present crisis and avoid recurrent and increasingly severe recessions.'' In search of a new model

People like Tello and Rolando Cordero, an economist who is a leader of the most moderate wing of the leftist United Socialist Party of Mexico, which he represents in the National Assembly, recommend a totally different model of development for Mexico -- a model that would start with the agricultural sector. Mexico, they stress, should produce most of the basic grains it consumes. Besides raising its production of corn, beans, and rice, they would expand agriculture to provide jobs and a minimum stand ard of living for rural Mexicans so they would not feel compelled to migrate to already overcrowded cities.

According to one politically moderate US academic who is an expert on Mexican agricultural problems, this would require more than a financial investment to bring education, seeds, fertilizer, irrigation, and marketing systems to the countryside. It would also require a redistribution of power.

The peasants will never get the resources they need unless they have the political power to press for them, this analyst maintains. Nor will they become truly productive unless they control some of the daily decisions affecting production. And yet this US academic is pessimistic about the possibility of such a redistribution of power taking place under the present Mexican system.

Messrs. Tello and Cordero would also change the focus of Mexican industry. They would concentrate on light industries and on producing the goods Mexico needs for its own development.

Instead of producing or importing toasters and other consumer goods for a relatively small middle- and upper-class elite, they say, Mexico should produce such essentials as wire to help electrify the countryside.

The principal problem with the system, according to these critics, is that it does not produce enough jobs, especially in the countryside. Consequently, Mexico City has become inundated with landless, jobless peasants looking for employment. The capital's population is expected to rise from 18 million now to 30 million by the year 2000.

Many academic experts are sympathetic to the proposals of Tello and Cordero. But they doubt that the necessary shifts in political power and economic policy can be achieved. Such plans would completely alienate both Mexican businessmen and the Reagan administration, these experts say.

Hence, the consensus is that for the next 10 years there will be no ``real'' solution to Mexico's problems; that, barring a major international economic crisis, the Mexican system can probably survive for five to 10 years with some social turbulence but without very great changes.

Under these circumstances, most analysts believe that Mexico will stand or fall largely on what happens within its own borders, in the US, and in the global economy. These factors, rather than events in Central America, are seen as the crucial elements in Mexico's future. Next: US-Mexican relations