Will the New Broom Sweep Clean?

By George Russell

De la Madrid inherits a national crisis with the presidency

All the trappings of electoral democracy were there. For 218 days, the presidential candidate had barnstormed the Mexican countryside. He had listened to complaints and appealed for support in the most remote and neglected hamlets. Preceded by hordes of journalists and skilled advancemen, he had toured a total of 55,800 miles in 31 states by jet, helicopter, rail, bus and ship. The candidate had even stumped for 79 miles on foot. He had attended 1,287 meetings, forums, assemblies and receptions. He had eaten 63 campaign breakfasts, 148 campaign lunches and 32 campaign dinners. He was the guest of honor at 21 get-elected evening parties. Finally last week the ordeal was over, though the results had been known throughout the entire campaign.

The majority of the ballots of Mexico's 31.6 million registered voters in the July 4 presidential elections will not be tallied until this week, but Miguel de la Madrid Hurtado, 47, a shy, Harvard-educated technocrat and lawyer, has nothing to worry about. He is sure to take office on Dec. 1 as Mexico's 21st President since its epochal revolution of 1910. Like most of his predecessors in the 53-year history of Mexico's monolithic and dominant Institutional Revolutionary Party (P.R.I.), De la Madrid was the personal choice of the man he was replacing, in this case Jose Lopez Portillo, 62. De la Madrid's campaign was designed not so much to guarantee him victory--that was assured under Mexico's system of "guided" democracy--as to give him the political savvy to handle his job.

De la Madrid will need all the help he can get. His extravagant campaign was a sign that the P.R.I. was running scared, and with reason. The U.S.'s populous (72 million) and oil-rich southern neighbor is in the throes of a profound economic and social crisis. Inflation is running at an annual rate of about 60%, and last February the Mexican peso suffered a 40% devaluation. The country's current foreign debt is about $52 billion, among the highest in the Third World. Nervous investors have pulled some $6 billion of their capital out of the country in the past year. Government expenditures ate up 48% of Mexico's gross domestic product.* The U.S. figure: 23%.

Despite its oil wealth, Mexico remains a country of horrendous economic contrasts, now made worse by oil-boom inflation and the rising expectations of its middle and working classes. The bottom 20% of the Mexican population is worse off, in real economic terms, than it was in 1977. Approximately 50% of the population is undernourished, according to one study. What is more, the real challenge has yet to hit the country. By the turn of the century, U.S. analysts estimate, the population will have grown by nearly 50%, to about 100 million. The country needs to create 800,000 jobs a year just to maintain the present, precarious state.

As De la Madrid told TIME last week:

"Mexico has a duality: a modern and very advanced society with elevated levels of life, while other sectors have been left behind with low cultural, social and economic levels." But Mexico's middle class has been badly hurt by inflation and the floundering economy. Says one foreign diplomat in Mexico City: "Mexico's social changes have outpaced the changes in its political system. The middle class is now unhappy, but the political system hasn't adjusted fast enough to allow it to express its unhappiness."

It is the middle class, rather than the desperately poor, that De la Madrid must worry about. Public confidence in the country is sinking along with the economy. Mindful of Lopez Portillo's earlier promise of abundance, Mexicans, as one well-connected local lawyer put it, "feel deep bitterness at the deception." That, in turn, raises the specter of instability in Mexico, a matter of major concern to the U.S. Talk of a military coup is circulating on the dinner-party circuit in Mexico City. There is little likelihood of such a thing: the Mexican military has stayed removed from civilian affairs for half a century. The army is far more disturbed about the insurrectional possibilities along Mexico's southern border with strife-torn Guatemala, where guerrillas are believed to be taking refuge.

Nonetheless Mexico's Defense Minister, General Felix Galvan Lopez, in May took the extraordinary step of publicly denying that a military coup was contemplated. Said Galvan:

"Don't count on us soldiers to do your dirty work. None of us will."

The political reforms of 1977 allowed more dissent than in any other Mexican election. Six parties besides the P.R.I, ran presidential candidates, and a total of 100 seats in the country's 400-member Chamber of Deputies were set aside for the opposition. Two weeks ago, some 40,000 supporters of the Unified Socialist Party of Mexico, a left-wing conglomerate that includes Mexico's Communist Party, jammed the huge Zocalo square in front of Mexico City's presidential National Palace.

Most of Mexico's political frustration is now directed at outgoing President Lopez Portillo. When he took office in 1976, the urbane Mexican leader was seen as the right man to correct the errors of his left-leaning predecessor, Luis Echeverria Alvarez. The charismatic President speedily pushed Echeverria's henchmen out of office, restored international business confidence in Mexico with pro-business rhetoric and a pledge of conservative fiscal policies, and promised the Mexican people an administration of "abundance." Lopez Portillo aimed to create millions of jobs, open up the country's political system to limited dissent and establish Mexico as a spokesman for Latin American and even Third World views. Said he: "We must not allow the magnitude of our problems to frighten us, nor to shake our determination."

In the beginning, Lopez Portillo had both luck and geology on his side. When he took office, Pemex, Mexico's national oil company, had begun turning up one oil and natural gas discovery after another in the country's southern Tabasco and Chiapas states. With an output of some 2.7 million bbl. per day, Mexico became the fourth largest oil producer in the world.

Says Industrialist Carlos Lopez Espinosa: "It was the miracle of the Virgin of Guadalupe. People were suddenly talking about how we would have to learn to spend all that money."

Lopez Portillo did not need many lessons. He launched Mexico upon a grandiose development program, spending billions of dollars on such huge development projects as a national agricultural production system and the first of 20 planned nuclear reactors. The number of federal bureaucracy employees in Mexico jumped from 1.2 million (a figure that Lopez Portillo had promised to cut) to 1.6 million. To finance his expansion program, Lopez Portillo borrowed heavily abroad, planning to repay the debts with oil revenues, which amounted to $14 billion in 1981. By 1979, it was already becoming clear that Lopez Portillo was seriously overspending, but the self-confident President pushed on.

Lopez Portillo was heading for trouble in any case, but last year's world oil glut brought a sudden end to Mexico's spree. As prices for crude oil began to drop around the world, Mexico stubbornly tried to hold the line. When Jorge Diaz Serrano, the president of Pemex, announced a $4-per-bbl. price cut, he was promptly sacked, and Mexican oil prices were jacked up again. Customers went elsewhere until Mexico bowed to the pressures of the marketplace. By that time, the country had lost about $1 billion hi revenue, and the drain has continued. Laments one Mexican businessman: "We thought we were going to become like Saudi Arabia. Instead, we became like Nigeria."

In desperation, Lopez Portillo devalued the peso in February. Then, victimized by his own indecisiveness and the pressures of the P.R.I.'s political machine, he was unable to hold firm on a wage freeze required to reap the anti-inflationary benefits of the devaluation. Within weeks, all government employees were given a 30% wage hike, and the government "recommended" that private-sector employers grant their workers increases of 10%, 20% or 30% "to restore purchasing power." In a single stroke, Lopez Portillo had wiped out most of the gains of the devaluation that had shaken his administration--and lost much of the prestige of his office. As he dolefully told one audience of Pemex workers: "Today I am a symbol of a devalued presidency."

Lopez Portillo compounded the country's political and economic troubles by encouraging the most deadly bane of Mexico's one-party system: corruption. La mordida (literally, the bite) has always been endemic in Mexican society, but with the huge infusion of oil money, corruption mushroomed. The outgoing President, for example, created 5 million jobs in six years. But at least half of the 2 million new public positions are suspected by

Lopez Portillo's critics to be what the Mexicans call aviadores (flyers), meaning that they are imaginary jobs for which someone is drawing an extra salary. Lopez Portillo himself raised eyebrows by putting his son Jose Ramon Lopez Portillo on the government payroll as a subse-cretary in the Ministry of Programming and Budget and hiring his sister as the country's director-general of radio, television and cinematography.

An even bigger cause for gossip in Mexico City is the huge, five-house compound that the outgoing President is building for his family on a hill overlooking the capital. Cynics have labeled the complex the "dog hill," a reference "to a Lopez Portillo remark that he would "fight like a dog" to defend the shrinking value of the Mexican peso.

De la Madrid must make tough decisions to help the floundering economy. He will have to continue the 17-point austerity program belatedly begun by the lame-duck Lopez Portillo administration. Among the targets: a reduction of the government's budget deficit from 15% of the G.D.P. to 3% by the end of 1985, import restrictions, government hiring freezes and probably a hike in Mexico's heavily subsidized energy prices. The current price of gasoline: 580 per gal.

One result of Mexico's change of leadership will probably be easier relations with Washington. Despite a warm personal relationship with Ronald Reagan, Lopez Portillo has discomforted the U.S. by indulging his ambitions as a spokesman for Third World concerns. He irritated Washington last August when, with France, Mexico recognized the Marxist-led insurgents of El Salvador as a "representative political force" in that country. Lopez Portillo called for negotiations with the guerrillas, thereby undercutting U.S. support for the civihan-military regime. He has frequently offered to act as an intermediary between the U.S. and Cuba over the crisis in Central America and has espoused the cause of the Marxist-Leninist Sandinista rulers of Nicaragua. On the touchy issue of the recent Falkland Is lands war, Lopez Portillo tried to have it both ways. His government supported Argentina's claim to sovereignty over the islands but also deplored the use of force in trying to settle the claim.

Somehow De la Madrid has escaped the controversy surrounding the outgoing administration even though, as Mexico's Secretary of Programming and Budget, he was responsible for Lopez Portillo's grandiose Global Plan for Development, a document that has now been discreetly shelved. One reason De la Madrid may have escaped criticism is his innocuous lifestyle. Highly disciplined and a deeply religious Roman Catholic, he is untouched by any hint of scandal. He likes to spend the weekend reading in his garden. Says one diplomat who has known De la Madrid for years: "He lives comfortably, but he has never lived extravagantly. Some of his friends even consider him a little tightfisted.

His conservatism and rectitude are well established."

Rectitude is something that De la Madrid wants to bring back into fashion in Mexico. He has constantly stressed the theme of "moral renovation." De la Madrid set the tone for his campaign after he discovered a P.R.I, worker driving a Ferrari that had been given to him by the mayor of Mexico City, Carlos Hank Gonzalez. De la Madrid had the man fired and asked for his resignation from the party.

That kind of morality does not sit well with the old-line machine politicians in the P.R.I., who also resent the fact that De la Madrid is a technocrat who has always stood above the rough and tumble of local politics. There were rumblings of unrest within the party when De la Madrid's nomination was announced, particularly since the P.R.I.'s then president, Javier Garcia Paniagua, was not informed of the choice beforehand. Nonetheless the tug of party loyalty, along with some selective purges, has apparently got the machine pols into line, although major power struggles are still reported to be going on within the P.R.I.

The key question is whether De la Madrid will be able to manage the party, and the country, during the necessary period of belt tightening. In Washington, some State Department experts are optimistic that he can succeed. Says one Government official, summing up business and banking reactions: "He's the perfect guy to confront the business and economic problems." Whether De la Madrid can restore confidence in Mexico's shaken presidency is another question. De la Madrid says only: "I know that my entry into the government will not be easy." He will have six years to find out just how hard it will be. --By George Russell. Reported by Laura Lopez and James Willwerth/ Mexico City

-Gross domestic product (G.D.P.) is the measure of all production within a country's boundaries. The more commonly known gross national product (G.N.P.) includes production by firms outside the country that are owned by the nation's citizens.

With reporting by Laura Lopez, James Willwerth/Mexico City

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