Mexico—a dash of democracy?

Press, 3 July 1985, Page 16

Mexico—a dash of democracy?

From ‘The Economist,’ London

The party which has held 100 per cent of the political posts in Mexico for the last 50 years could this month permit just one or two to pass into the hands of the opposition. An instruction from the President to allow the unthinkable — a state governor to be returned somewhere in the country from outside the ruling party in the mid-term “elections” on July 7 — would start to bring the West tenth larget economy to belated maturity. It would also accelerate exactly those changes in Mexico’s economy that President de la Madrid, coached by the 1.M.F., is striving to make. Mexico needs to open up. On a visit to Spain last month, Mr de la Madrid saw how that once despised country was again seizing the leadership of the Spanishspeaking world. The secret: an increasingly liberal economy marching in step, under Mr Felipe Gonzalez, with an increasingly liberal body politic. To President de la Madrid and his influential Finance Minister, Mr Jesus Silva Herzog, half of that Spanish equation is appealing. They realise that Mexico cannot dig itself out of its $96 billion debt or create employment for its youthful hordes without the help of foreign investment and an economy capable of exporting things other than oil. What they have not yet understood is that the economy cannot be opened up without loosening the grip that the Institutional Revolutionary party, the P.R.1., has on every part of Mexican economic life. A vibrant Mexico requires democracy, not because one party

is necessarily better than another, but because only pluralism can break that stranglehold on the economy. Pluralism is the best way of making politicians less important, of getting every action and inaction in the public sector probed, of seeing that the private sector is ruled by the market instead of by established politicians’ friends. Other countries have been here before. Spain has brilliantly succeeded. Hungary has never quite carried through its ambitions of economic liberalisation, because it could not grasp at political freedom. On a grander scale, Mr Deng Xiaoping’s China will fail too if its economic reforms prove so uncomfortable for most members of its one permitted party that they smother Dengism when Deng goes. In Mexico the central Government, which means in effect the governing party, extends its monopoly everywhere. Through it passes about 70 per cent, of the country’s gross national product. The result is that Mexican business, which should have been flourishing on the American import boom, is as stagnant as the country’s politics. Manufactured exports are falling off, priced out by too high a currency, even while Mexico’s oil price drops, as it did lastjnonth by another inevitable $1.50 a barrel. The whole I.M.F. package, so forcefully put through by President de la Madrid to the plaudits of the world’s banks, is at risk. President de la Madrid is belatedly moving to dismantle many of the old barricades against freer trade and foreign investment. (Foreign investment is under 5 per cent of all investment, compared

with 40 per cent in wealthy Canada,) He is trying to knock down some cosy deals between the al-ready-rich and the political establishment. He has cut the Budget deficit, sold off State assets, cracked down on corruption, cut inflation. Under his prodding it is even possible that Mexico may at last be joining Gatt, the freer-traders’ club, from which Mexico is the largest abstainer. These moves will not succeed if every permit, every licence, every wage-deal still has to be struck with the man from the P.R.I. Mexico’s stability is also at stake. Rigged elections this month, particularly to executive posts such as governorships, will lead to violence. This violence will, of course, be put down, but in a manner unbecoming to a country of Mexico’s importance. With each repression the pressure will grow and the economy will not. When change does come, it will risk coming with a bang. President de la Madrid, now half way through his term of office, can start to defuse that bang with a single instruction. He should tell his party to hold off the usual “alchemy” this month in one or two states, such as Sonora in the north, where the opposition National Action party, the P.A.N., is clearly popular. Not that the fledgling P.A.N. is an obviously better party than the P.R.1., but some choice is preferable to none. Such a commitment to pluralism would start to open up Mexico’s economy as much as any advice from the I.M.F. Without it, the P.R.I. will, within a decade, begin to lose its legitimacy both with the half of the population which is aged under 20 (to whom the excesses of Central America may seem attractive) and with Mexico’s

friends in the United States and the Hispanic world. In Washington, Mexico’s future is no longer just a matter of stability across the border. Mexico is now the United States’ third trading partner, more important to its economy than any West European country. A successful economy south of the border is now a legitimate matter of domestic concern north of it. Mexico owes itself a little openness. It has long been a leader of the Spanish-speaking world. Its vivacity, its real civil liberties, its

culture, its stability have made Mexico City a focal point of Latin civilisation. It is a refuge to those suffering from the excesses of Left and Right elsewhere on the continent. But as others in Latin America sidle towards democracy, the system in Mexico which has “worked” for 50 years will look increasingly tawdry. Of the major Latin neighbours, only Chile, Paraguay and Cuba remain beyond the democratic pale. That is no company for Mexico. Copyright — The Economist.