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1991, Mexico in

Mexico thrived in 1991. Government efforts to stimulate the economy by encouraging private enterprise continued to pay off as the economy performed well for still another year. Less successful, however, were efforts to rid the nation's electoral system of its reputation for fraudulent practices. Serious negotiations for a free trade agreement began in June.

Politics. The August 18th elections for the National Chamber of Deputies, half the Senate seats, and six governorships served as a test of the government's willingness to democratize the political system. In addition, fraud-free election were important to improve the nation's reputation in the United States, with which it was negotiating a free trade agreement. In 1988, President Carlos Salinas de Gortari of the Institutional Revolutionary Party (PRI) barely squeaked to a victory amidst widespread charges of voter fraud. Since then, Salinas promised a fraud-proof electoral system. New laws created a relatively independent Federal Electoral Institute, tough vote fraud penalties, and a hard-to-counterfeit voter credential. Fear that PRI was losing control prompted the passage of a provision giving an automatic majority in the Chamber to any political party which received 35% of the national vote; PRI was the only party likely to obtain such a percentage.

In spite of these new measures, opposition groups began fearing that the government would use any means necessary to insure a PRI victory. Few people doubted that PRI would win a majority of the votes, for a July public opinion poll showed that over 60% of the electorate supported PRI. The opposition parties feared that the government and PRI would commit fraud in those elections which the opposition parties thought they could win. The Federal Electoral Institute was so slow in issuing the new voter credentials that perhaps as many as nine million never received them. Opposition parties complained. Some demanded the postponement of the elections. Some demanded that foreign observers be invited to monitor the elections to prevent fraud, a demand the government rejected on the grounds of national sovereignty. Government welfare expenditures rose significantly before the election, particularly in places where PRI faced electoral difficulties.

As expected, PRI steamrolled the opposition with about sixty-one percent of the national vote. The National Action Party (PAN) was second with over eighteen percent. The Democratic Revolutionary Party, whose candidate almost beat Salinas in 1988, saw its vote percentage drop from about thirty percent to below ten as a result of its internal disarray. PRI won 320 of the 500 deputy seats, including all forty in the Federal District, where opposition parties had been strong. It also won back a Senate seat there and claimed victory in all the gubernatorial races. PAN won one hundred deputy seats and a Senate seat in North Baja California state. The other parties fared poorly,.

Two gubernatorial races provoked so much controversy that the PRI candidates had to abandon the posts they had just won. PAN claimed that its candidate, Vicente Fox, former president of Coca-Cola of Mexico, won the Guanajuato governorship but that it was stolen by PRI. In the face of PAN-led demonstrations, the newly-elected PRI governor took the oath of office and then resigned, forcing a new election. To insure that Fox could not run, the Guanajuato state legislature enacted a law requiring gubernatorial candidates to be natives of the state, which Fox is not. In nearby San Luis Potosí, the new PRI governor also resigned amidst opposition charges that opposition candidate Salvador Nava had actually been elected.

Most observers agree that these elections demonstrate Salinas' determination to achieve economic reform before tackling political reform. To do so, he must have the support of the PRI machinery and a free hand in the Chamber of Deputies. During the 1988-91 term, he had to bargain with PAN to pass some laws. The new PRI majority, added to the votes of some small, tame opposition parties, not only guaranteed passage of ordinary laws but also enactment of new constitutional amendments. Speculation quickly arose that Salinas wanted a constitutional amendment allowing him to run for another six-year term in 1994. More important, however, is the fact that the new majority allows Salinas to pass whatever laws necessary to implement the forthcoming free trade agreement with the United States and Canada.

Mexico remains politically stable, but its political system shows serious signs of trouble. In March, Salinas had to fire his attorney general and launch a probe and reorganization of the federal judicial police because of alleged human rights violations. In April, eavesdropping devices were discovered in the offices of the government's National Commission on Human Rights. International human rights organizations issued reports severely criticizing Mexico's human rights record.

Economics. The Mexican economy performed well even though it is closely tied to that of the United States, which was in recession. The gross domestic product grew almost five percent between January and June. Exports, led by non-petroleum products, rose almost sixteen percent compared to the previous year. The stock market boomed with the index rising ninety percent in the first eight months of the year. The labor-business solidarity pact help drop inflation to its lowest level in thirteen years, estimated to be about 15%. The foreign debt declined. Foreign investors, principally from the United State and Japan, significantly increased their participation in the economy. Automobile and truck manufacturing rose from 550,000 units in 1990 to 650,000 in 1991. The rising domestic economy and the concomitant demand for oil led PEMEX, the government oil monopoly, to adopt a three billion dollar exploration budget.

Encouraged by the success of his earlier reforms, Salinas continued to liberalize the economy. The government sold controlling interest in its largest bank, BANAMEX, to a group of Mexican private investors for over three billion dollars. Mexican financier Carlos Slim gained control of the former government-owned telephone company through a 1.7 billion dollar investment. Another twenty percent of the company's stock was sold abroad. In June, Salinas ordered the union-controlled Veracruz Port Service, long noted for corruption and inefficiency, dismantled and replaced by a private sector firms. This reorganization quickly and dramatically increased cargo handling at the nation's largest port. Foreign companies were invited to explore and drill for oil, a move reversing over fifty years of government policy.

Mexican firms launched a number of cooperative ventures with U.S. firms which promised to expand their markets. Vitro, the $2.76 billion glass manufacturer in Monterrey, signed aa agreement with Corning Glass that will put Vitro's products in U.S. stores. Wal-Mart, the U.S. retailing giant will open three stores in Mexico in collaboration with a Mexican retail firm.

Social welfare. Salinas created a new agency, Solidarity (PRONASOL), to encourage private citizens to invest sweat equity as well as money in efforts to improve health conditions and to build small public works projects. Funded with over three billion dollars, Solidarity made important gains in improving living conditions among the nation's poor, reaching people who had never benefitted from previous programs. The adoption of this approach represented a break with past government policies whereby the central government was ladled out the largess, often on purely political grounds.

Foreign affairs. The main foreign policy goal of the Salinas administration is the successful negotiation of a free trade agreement with the United States and Canada. Mexico lobbied diligently to help President George Bush successfully obtain fast-track negotiating authority for a North American Free Trade Agreement. Since that authority was obtained in May, Mexican representatives have met with their counterparts in Canada and the United States to hammer out a series of agreements to be submitted to their respective governments in 1992 and tobe effective in 1993.

Simultaneously, Mexico sought expansion of its economic activity in Central America. In January, the presidents of Costa Rica, Guatemala, Honduras, Nicaragua, and El Salvador met with President Salinas in southern Mexico to discuss plans for a free trade agreement by 1996 and devise a new payment schedule for Mexican oil. Mexico has long been a supplier of subsidized oil to these nations, a special relationship it is now using to obtain more favorable trade terms.

Continued trade and investment initiatives were made in Japan and Europe as the government sought to open new markets and attract more foreign capital.

Mexico supported the Persian Gulf War but limited its participation. Many citizens opposed any participation but the government joined the coalition in order to improve relations with the United States.