The Party Is Over : Part 3

Bordering On Chaos: Mexico's Roller-Coaster Journey to Prosperity
by Andres Oppenheimer

(Page 3 of 5)

The figures indeed were looking great. Foreign investment in Mexico's stock market had risen by a whopping 98 percent in 1993. Wall Street and London brokerage houses were pressing their clients to buy as many Mexican stocks as they could and take advantage of the economic miracle led by Mexico's young president. The country could boast record international reserves of $24.5 billion, up 25 percent from the previous year. Inflation had dropped to 8 percent from a record 160 percent a year when Salinas had taken office. New York brokerage houses were forecasting economic growth rates of more than 3 percent a year for the foreseeable future. Forbes magazine's ranking of the world's wealthiest people had just included thirteen Mexicans - placing Mexico right after the United States, Germany, and Japan as the country with the most billionaires. "You can't any longer think of Mexico as the Third World," the magazine had declared.

President Clinton, after wavering during his presidential campaign on whether to support NAFTA, had wholeheartedly embraced the plan for a new trade partnership with Mexico. Following the steps of President Bush, he had used the image of Mexico's U.S.-educated president to push the free-trade agreement through Congress - suggesting that the United States faced a now-or-never chance to bring Mexico into its fold. Clinton proclaimed his "enormous admiration for President Salinas and for what he is doing," and called the Mexican president "one of the world's leading economic reformers." Salinas was ecstatic. It was about as much praise as any foreign leader could get from a U.S. president.

This new image wasn't just good public relations, for which the Salinas government was doling out more than $11 million a year just in the United States. The president had in fact changed Mexico's economic course over the past five years. A man who had a foxy grin to match his shrewd personality, Salinas had built on free-market measures begun by his predecessor to launch a full-fledged economic opening, reversing several decades of nationalistic and statist policies. He had privatized 252 state companies, including Mexico's biggest commercial banks, the telephone monopoly, and hundreds of money-losing firms, netting about $23 billion in government reserves while reducing massive government subsidies to these enterprises. He had also accelerated Mexico's transition from a country that had relied on state-run oil exports for 78 percent of its foreign income in the early eighties to a nation that now made 81 percent of its income from private-sector manufactured goods exports, even if critics pointed out that such change resulted largely from lower international oil prices. At the same time, he had opened the doors to foreign investments in previously off-limits areas of the Mexican economy, which had rapidly changed the face - or at least the facade - of the country.

Almost overnight, the main streets of virtually all Mexican cities had been dotted with the neon signs of brand-new McDonald's, Domino's Pizza, and Pizza Hut outlets. Even Taco Bell had opened a franchise to do the unimaginable - push U.S.-made tacos down Mexicans' staunchly nationalistic throats. Mexico City restaurants once filled with laid-back government bureaucrats were now teeming with energetic young businessmen glued to their U.S.-made cellular phones while making deals over lunch. U.S.-style department stores had moved en masse to Mexico, offering every American consumer product imaginable.

The fact that massive U.S. imports were causing Mexico to run increasingly higher trade deficits seemed no cause for alarm: Government figures showed that enough foreign investment was flowing into the country to help it pay for its imports. "Besides, hadn't Japan run trade deficits for fifty years before becoming one of the world's leading exporters?" the confidence-brimming president asked skeptics. And if there were any doubts left, Salinas could even boast about a feat that would have been ridiculed only a few years earlier: The same country that had played the role of a Third World leader only a few years earlier was about to be accepted as a full member of the Organization for Economic Cooperation and Development (OECD), a select group of the world's richest nations. Salinas was almost universally hailed as the man who had carried out a second Mexican revolution, the biggest transformation of his country since the 1910-1917 Mexican Revolution.

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The night of the party, Salinas had even more reason to be happy. Only five weeks earlier, he had managed to impose his long-term protégé Luis Dona do Colosio as the presidential candidate of the Institutional Revolutionary Party, the state party commonly known by its Spanish initials, PRI, that had ruled Mexico for sixty-four years.

Colosio, another U.S.-educated public administrator, wore a subdued Afro hairstyle, loved motorcycles, and was only two years younger than Salinas. He had made his entire political career under Salinas's wing. Salinas had first recruited him as a young economist, had appointed him as his presidential campaign manager, and had later placed him at the helm of the ruling party and of the social development ministry - two key jobs for a young politician with presidential aspirations. Although the two men jogged together, shared a passion for attractive women, and talked to one another in private in the Spanish-language familiar tu, Colosio would always walk one step behind Salinas when the two appeared in public and would refer to him as "el señor presidente" even when Salinas was not around. Colosio was the president's political son.

Considering the circumstances, Colosio's appointment had gone down smoothly. There had been growing criticism within the PRI and among democratic-minded opinion leaders of Mexico's political tradition whereby outgoing presidents single-handedly picked their successors. Critics demanded that Mexico start picking its presidential candidates through primary elections. In the early nineties, when the Soviet block had collapsed and the PRI remained as the world's oldest ruling political party, the critics argued that the east the PRI could do was to start a democratic process within its ranks.

© 1999 by Andres Oppenheimer

About the Author

Andres Oppenheimer is a Latin American correspondent for the Miami Herald and the author of the widely praised book Castro's Final Hour. In 1987 he was co-winner of the Pulitzer Prize for his reporting on the Iran-Contra scandal. He lives in Mexico City and Miami.