No Room for Compromising With Cardenas’ Big-Government Policies

This year, for the first time in modern history, Mexico was voting for a president in the midst of economic hardship. The two previous elections (1976 and 1982) took place after years of economic growth. This time around, the economy has been virtually stagnant for six years. Inflation, except for the last few months, has reached unprecedented highs. In last week’s presidential and legislative elections, the population had options for voting as never before.

A large share of the electorate decided to rebel against the ruling political party, the PRI, for either of two reasons: for the economic hardship of the last few years or for its dislike of the economic policies advocated by Carlos Salinas de Gortari, the PRI candidate. Most probably the voters had one of the two reasons in mind, but not both, when they voted for leftist candidate Cuauhtemoc Cardenas or conservative Manuel Clouthier.

The economy was not an issue in past elections because it had been growing at a relatively high rate, with low levels of inflation until the mid-1970s (even then, with economic growth substantial, inflation was not a critical political problem). Over the last six years Mexico’s population has become extraordinarily politicized and ever more critical of the government’s economic policy. In turn, the economic policy of the government experienced an important shift in 1985, when appropriate policies to face up to the economic ills of the country began to be adopted (like reduction in the government’s current spending and liberalization of imports). But the shift took place too late in the current administration to be able to show positive results by election time. Furthermore, the government failed to persuade the electorate that the new policies were different from those that had been implemented in the previous years. The result was that even the correct policies were identified with hardship.

But the policies advocated by Salinas, first as secretary of planning and budget and later as candidate, created a new phenomenon: opposition from within. The reforms that Salinas has been proposing entail the elimination of regulations, controls, inefficient government corporations and so on; not surprisingly, the whole bureaucracy that manages the structure of controls, regulations and such, as well as all the vested interests that benefit from the existence of these controls, made every possible attempt to block the reforms initiated during the outgoing administration.

In 1986 the opposition to reform began to take a new shape when a number of senior PRI politicians, led by Porfirio Munoz Ledo and Cardenas, broke from the party and regrouped under the banner of the Democratic Current. When Salinas was nominated as the PRI presidential candidate in 1987, the Cardenas group decided to nominate its own candidate, thus splitting the traditional PRI forces. In last week’s election Cardenas profited from both the discontent of large sectors of the population and those opposed to reform.

In terms of the future the election changed one major fact of domestic politics: Mexico now has viable opposition parties, and the political system will have to learn to deal with a country that can no longer be characterized as a “one-party state.” There will now be continuous pressure on the government, forcing it to be accountable on every decision that it makes. What this means in terms of long-term reform depends on what action Salinas decides to take as president. He could attempt to compromise with the opposition so as to build a national consensus for the future. This would mean an enlarged government and increased public spending. This is precisely what would serve the Cardenas supporters’ interests, for it would imply abandoning Salinas’ reform, which focuses on gradual structural change, and instead taking a radical stand on foreign debt. (Cardenas campaigned on the pledge to declare a moratorium on the debt’s interest payments.) With the possible exception of the debt issue, however, no national consensus is conceivable or possible on economic policy at this stage.

The other option before Salinas is accelerating the pace of reform so as to be able to reap the benefits early in his term. This would mean further change and probably some more hardship for the next two years or so, but also the possibility of regaining a higher level of economic growth. The truth is that Salinas has no real option; compromising with Cardenas would only mean turning the clock backwards, attempting to revive the policies of the 1970s that are precisely the cause of the country’s current economic difficulties. Hence, reform is what is likely to be the trait of Mexico’s future politics and economics.

Mexico is in for a new era in both its economic and its political life. What the elections really means is that the kind of change that Salinas stands for is long overdue and that it is high time to carry it out as swiftly as possible. Only change will give the country the substance that the new global economic and political era is already demanding. In spite of everything, that was precisely what Salinas stood for all along. It is inconceivable that he will now turn back.