Stabilizing the Peso--and Salinas’ Mexico : Colosio assassination rocks America’s southern NAFTA partner

Even before Wednesday’s assassination of Luis Donaldo Colosio in Tijuana, the 1994 Mexican presidential race was shaping up as the most important vote in that country since 1910, when a disputed election set off the bloody Mexican Revolution.

Now that a terrible act of violence has thrown Mexican politics into greater uncertainty and turmoil, Mexico’s friends in the United States and elsewhere must stand firm in support of outgoing President Carlos Salinas de Gortari and the extraordinary progress he has come to personify.

Colosio, 44, was Salinas’ handpicked choice to be the candidate of the powerful Institutional Revolutionary Party, or PRI, which has won--though not without allegations of fraud--every Mexican presidential election since it was founded in 1929.

Salinas was counting on Colosio, an economist who studied at the University of Pennsylvania, to carry on his economic policies, especially implementation of the historic North American Free Trade Agreement. Despite the controversy sur- rounding his selection, Colosio was acknowledged widely to be a capable and decent man; his death is a loss to Mexico.

The motive of Colosio’s assassin is still uncertain, but the effects of the bloody deed are all too apparent. Although the Mexican stock exchange and other financial institutions were closed Thursday, a national day of mourning in Mexico, many financial analysts fear the assassination will set back, at least in the short term, Mexico’s economy, which slowly and painfully has been recovering from recession and runaway inflation.

Coming on the heels of a brief but bloody peasant rebellion in Chiapas and the recent kidnaping of a prominent Mexican banker, the murder of a leading presidential candidate can mean only added pressure on Mexico’s still shaky finances.

That is why the initial U.S. government reaction was reassuring. In addition to appropriate expressions of outrage and sympathy by President Clinton and the State Department, Clinton met with Treasury Secretary Lloyd Bentsen to discuss details of a $6-billion line of credit to help stabilize the Mexican peso.

Also extremely helpful was Clinton’s statement that the U.S. government believes Mexican institutions are “fundamentally strong” and will ride out that nation’s current political turmoil.

Such expressions of confidence are vitally important now, not just statements from Washington but demonstrations of confidence from Los Angeles, New York and the many other financial centers where investors eagerly have pursued business opportunities in Mexico these last few years.

Investors have needed a safe, stable environment in Mexico for their investments, and Salinas largely delivered. The recent troubles in the southern state of Chiapas are less an indication that his free-market policies failed than a reminder of just how much still needs to be done to bring Mexico from the Third World to the First--politically as well as economically.

Salinas and the new generation of young political leaders he brought into the Mexican government--a generation in which Salinas and Colosio were seen as bright lights--have earned the world’s confidence. They have had the intelligence and foresight to begin to reform a moribund, state-dominated economy. They have had the political courage to do it with speed and scope that were unprecedented--and sometimes breathtaking.

Mexico’s foreign friends now must show similar farsightedness and courage as Salinas and his colleagues try to contain a political crisis that is unique in the nation’s history. If Salinas’ record is any indication, he will move decisively to resolve the turmoil. He will need time, but he and his generation have come too far, and taken Mexico too far, to turn back now. The United States must stand shoulder to shoulder with its good neighbor, helping Mexico through a very difficult passage.