Political Thunder Over Zedillo

To his credit, Mexican President Ernesto Zedillo has been working diligently to evade the economic chaos that has plagued every Mexican political transition since 1976.

An economist himself, Zedillo realizes that next year’s presidential transition could well be the most difficult the country has faced in the modern era, due to the prospect of a rocky transition to an openly democratic political system.

In preparation, Zedillo and his economic advisors have put together a program of what they call “financial armor” to help shield Mexico from short-term financial problems ranging potentially from a peso devaluation to another round of bank collapses. The armor includes loans and credit lines of $23.7 billion from institutions like the World Bank, the International Monetary Fund and the Inter-American Development Bank.

Zedillo has helped develop economic stability not seen in Mexico since the 1970s. This year, for instance, the Mexican economy is expected to grow at a 3% rate while inflation falls to 12%, a far cry from an economic growth rate of minus 6.8% and an inflation rate of 51.8% in 1995. But amid these noteworthy economic achievements there are ominous signs of political trouble on the horizon, and Zedillo’s political skills have not matched his economic acumen.

After the president’s State of the Union address earlier this month, in which he called for tolerance and respect for others’ opinions, the members of his own party, the Institutional Revolutionary Party (PRI), refused to let Carlos Medina Plascencia, the presiding chairman of the congress, respond to the president on behalf of congress. They shouted him down with personal insults.

That was one more worrisome indication that Zedillo has lost the tight political control over his party enjoyed by previous presidents, and it raises the specter that he might not be able to control the PRI in the wake of the election, making him unable to negotiate an orderly democratic transition with the opposition parties, should they win in 2000.

The main economic threat facing Mexico is a banking system that, despite a recent huge government bailout program, is falling apart. One way to fix the banking problem is through a comprehensive reform that promotes economic growth and added taxation. But that might be impossible without first reaching a political accommodation with the opposition parties. The time has come for Zedillo to pay less attention to economics and refocus his energies on a workable political consensus.