MID-TERM ELECTORAL PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01058R000100240001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 32
• Document Creation Date: December 22, 2016
• Document Release Date: April 22, 2010
• Sequence Number: 1
• Publication Date: May 20, 1985
• Content Type: MEMO

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24
20 May 1985
SUBJECT: Mid-Term Electoral Prospects
Summary
We believe Mexican President de la Madrid
has become increasingly unable to control the strong
differences that have emerged among his Cabinet ministers over
the direction of economic policy and less able than previous
presidents to control maneuvering to succeed him.
De la Madrid's leadership will be put to the test in July,
when Mexico will hold elections for all seats in the Chamber of
Deputies, seven governorships, and numerous local offices. The
elections are particularly important because they will come at
a time when the ruling party's prestige and popularity appear
ALA M 85-10053
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low by-historical standards. The outcome of the contests could
further weaken the Institutional Revolutionary Party (PRI) if
it sustains even a few major defeats or is perceived to have
won through blatant cheating. The races will also indicate the
extent to which de la Madrid is willing to democratize the
political system, and they will test the appeal of the
opposition.
The center-right National Action Party (PAN) currently
poses the greatest political challenge to the PRI, but the
PAN's strength is concentrated primarily in the northern
states. Elsewhere in the country, the PAN is small and
presents little threat to the ruling party. Mexico's weak and
divided leftist parties will provide only token competition for
the PRI, in our judgment.
Opposition parties will seek to capitalize on
dissatisfaction with the PRI's performance and are likely to
emphasize the economy. Although de la Madrid's austerity
policies have brought Mexico back from the brink of financial
disaster, they have involved high social costs. Budget cuts
have reduced subsidies for food and other consumer goods and,
we estimate, the real purchasing power of most Mexicans has
fallen by a third since de la Madrid assumed office.
In recognition of its vulnerability on the economy, the
government shifted to more stimulative policies in mid-1984 to
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create-more jobs and slow the decline in living standards.
These actions, however, have accelerated inflation and caused
Mexico to miss some key IMF targets. A second factor adding to
public disenchantment has been the failure of de la Madrid's
much publicized "moral renovation" campaign. Recent
revelations of high-level police involvement in narcotics
trafficking are likely to erode the government's credibility
further.
The outcome of the elections is most likely to weaken de
la Madrid's public standing and political stature in the
government, in our judgment. We can envision several
scenarios.
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----The greatest likelihood is that the PRI will retain
control of the vast majority of elective offices,
including all governorships, with minimal violence.
-- We believe there is a somewhat lesser probability the
PRI will win most contests, including all
governorships, but that such victories will be marred
by serious disorders, including considerable loss of
life and major property damage.
-- There is only a remote possibility that the PRI will
acknowledge a PAN victory in any state. We believe PAN
stands the best change of capturing the governorship in
Sonora.
with a possible violent backlash in the north and overspending
on the races, will indirectly contribute to de la Madrid's
troubles and the longer term erosion of the ruling party's
still considerable base of support. Even if the de la Madrid
administration emerges from the 1985 elections relatively
unscathed, the PRI will face mounting difficulties through the
end of the President's term in 1988 and beyond, in our
judgment. In 1986, the PRI is scheduled to face fourteen
gubernatorial contests, and the administration's economic
policies are likely to be an even more contentious issue. We
believe de la Madrid is unlikely to provide either the
appropriate policies or the firm leadership that would be
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required to bring about strong economic recovery. In fact, we
estimate that the current economic growth rate of 3.5-4.0
percent will prove unsustainable and that economic growth
probably will average closer to 1-2 percent in the closing year
of the administration. In addition, we judge that de la Madrid
lacks the political backing within the PRI that would be needed
to liberalize the political system substantially or to root out
much of the corruption that has become endemic in Mexico. The
de la Madrid administration's shortcomings are likely to become
even more apparent during the remaining three years of his term
and result in growing public disillusionment.
Any repercussions of the elections for US-Mexican
relations probably will be largely indirect and reflect the
deterioration in Mexican economic performance brought about by
overspending on the contests and diminished popular confidence
in de la Madrid's ability to govern. De la Madrid almost
certainly knows that he will need US help on trade and
financial matters, particularly if another financial crisis
ensues. Moreover, the importance he attaches to the bilateral
relationship, together with his dependence to a large degree on
Washington's goodwill, should make de la Madrid receptive to
greater cooperation in areas of key concern to this country,
such as narcotics control, immigration, and possibly Central
America.
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Nonetheless, should the PAN capture a governorship, the de
la Madrid administration would grow more wary of alleged links
between the opposition and US groups, possibly introducing
greater discord in bilateral relations. If major violence in
the north accompanies the elections, tensions could spill over
the border, as they did last year after local election disputes
prompted PAN supporters to seek refuge across the border and
resurrected charges of US backing of the PAN. The damage to
bilateral relations would be commensurate with the level and
duration of violence. At the extreme, it could disrupt
commercial and financial relations and spur further illegal
migration to the United States.
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Text
Mexico's Institutional Revolutionary Party (PRI) has
enjoyed a virtual monopoly on power since its inception in the
late 1920s. It has never lost the presidency or a
governorship, and it has dominated most lesser offices. The
PRI has maintained its hold on power by integrating key groups
into the political process, centralizing political and economic
power, identifying itself with the Mexican Revolution, coopting
or coercing opposition groups
Also contributing to the ruling
party's longevity have been the economic gains Mexico has
achieved under its tutelage. From the 1930s through 1981, the
country experienced a fairly steady, diversified growth
averaging 6-7 percent annually. Although the middle and upper
classes benefited disproportionately, other groups also
improved their lot.
This impressive record, perhaps unparalleled in Latin
American experience, was suddenly challenged in 1982 when
Mexico confronted its gravest financial crisis in a half
century. Several years of rapid growth based on rising oil
export earnings and massive foreign borrowing came to a sudden
halt as international oil prices fell, capital flight soared,
and creditors withdrew. Newly elected President Miguel de la
Madrid adopted a stabilization program aimed at lowering the
country's triple-digit inflation rate, reducing the burgeoning
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public sector deficit, and restoring international confidence
in the government's policies. At the same time, he won popular
favor with his pledges to foster "moral renovation", a
euphemism for curtailing official corruption, and to respect
electoral outcomes. As a result of such policies, most
international observers awarded de la Madrid high marks for his
performance, crediting him with cooling the overheated economy,
turning the external payment accounts around, and preventing a
social explosion during a prolonged period of austerity. In
our view, he was able to demonstrate strong leadership during
his first months in office in part because of the prevailing
consensus among virtually all groups in Mexico that past
policies had failed and that new ones were needed to solve the
country's difficulties.
The President's political honeymoon, however, seems to be
ending, and de la Madrid appears to be wavering between several
conflicting policy goals. The Mexican President's handling of
a number of issues--the economy, domestic politics, and the
moral renovation drive--have called into question the strength
of his leadership. In each case, de la Madrid has backed down
on key aspects of his programs. His lack of commitment to the
initiatives outlined at the beginning of his term has led to
public disillusionment, according to US Embassy reporting. De
la Madrid announced, for example, that his administration would
abide by the decisions of voters in elections,
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Similarly, he has repeatedly
called for moral renewal, but he has sought to avoid a thorough
housecleaning of the sort that would implicate senior
government officials.
These actions, and the growing popular dissatisfaction
with his leadership, lead us to conclude that de la Madrid is
relatively weaker and less in control of political developments
than were any of his recent predecessors at comparable points
in their terms. This weakness is exemplified by his apparent
inability to control political infighting among his advisers.
According to US Embassy reporting, strong differences have
emerged among key Cabinet officers over the direction of the
country's economic policy. Budget Minister Salinas and Foreign
Minister Sepulveda reportedly have pursued expansionary
economic policies over the objections of Finance Minister Silva
Herzog and Bank of Mexico Director Mancera. Meanwhile, a
number of de la Madrid's subordinates, including Salinas, Silva
Herzog, Sepulveda, and Government Minister Bartlett, are
visibly maneuvering to succeed him.
De la Madrid has other political liabilities as well. He
did not hold elective office before assuming the presidency and
with few exceptions has selected fellow technocrats as his
closest advisors and Cabinet members. As a result, his
administration is relatively isolated from traditional
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political constituencies inside and outside of the ruling
party, in our judgment. Moreover, de la Madrid is not a gifted
speaker, according to US Embassy observers, and he lacks the
facility his immediate predecessors enjoyed to convince members
of the public and party leaders to support his initiatives.
Significance of the 1985 Races
A major test of de la Madrid's political abilities will
occur in July, when Mexico will hold elections for all seats in
the national Chamber of Deputies, seven governorships, and
numerous local offices. The outcome of the balloting, which
will take place close to the midpoint in de la Madrid's term,
could have a major impact on de la Madrid's effectiveness for
the remainder of his term. According to a Mexican Government
official who spoke with US Embassy officers, the President is
concerned about his popularity and wants the PRI to do at least
as well in the coming elections as it has in past midterm
races.
The results also are likely to affect de la Madrid's
ability to renew his campaign against corruption and to foster
greater political pluralism. The PRI could tarnish its image,
for example, and further discredit the President's reform
efforts if it resorts to obvious fraud to win key contests. On
the other hand, a failure to win a decisive victory could
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reduce-"the President's leverage with powerful vested interests
opposing political reform.
The Opposition Challenge
Opposition parties are viewing the elections as a major
opportunity. The center-right National Action Party (PAN),
which officially received about 18 percent of the vote in the
1982 elections for federal deputy and senator, currently poses
the greatest potential challenge to the PRI. That challenge
will be concentrated primarily in the northern states, however,
where the PAN increasingly has come to express the aspirations
of the urban middle class and business interests. Elsewhere,
the PAN generally remains small, ineffective, and presents
little threat to the ruling party.
The PAN's strength in the north was demonstrated in 1983
when the party swept to victory in a number of key municipal
contests. In July of that year, the party won mayoral races in
Durango and Chihuahua, both capitals of northern states, and 10
other cities in the two states. The year before it had
captured Hermosillo, the capital of Sonora. The opposition
victories in Durango and Chihuahua lent credibility to de la
Madrid's pledge before assuming office to conduct honest
elections, but they also apparently caused significant concern
among top officials in the ruling party.
As a result, we believe, de la Madrid subsequently
resolved not to allow such losses to be repeated. PRI
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victories later in 1983 in the states of Baja California and
Puebla were accompanied by widespread fraud, according to US
Embassy
Leftist parties, which captured about 5 percent of the
congressional vote in 1982, show no sign of mounting a threat
to the electoral dominance of the PRI. The largest and most
active, the Unified Socialist Party of Mexico (PSUM), was
formed in 1981 when the now defunct Mexican Communist Party
joined with four smaller groups in an attempt to pool resources
and votes. The PSUM draws its greatest support from Mexicans
in the capital and areas of southern and central Mexico, but
personality, ideological, and tactical conflicts have weakened
the coalition. Earlier this year, about 20 percent of PSUM's
membership bolted, announcing they would form a new hardline
Marxist party that would look to Moscow and Havana for
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support. So far, there is no evidence that Moscow and Havana
are involved with the splinter group. More generally, we
expect the USSR, Cuba, and other Communist states to have
little, if any, influence on the outcome of the elections.
Mexico's leaders, for their part, appear less concerned
about opposition from the left than the right and we see little
n
prospect leftist parties will command significantly greater
support in the next several years. Nor do we believe there is
much chance they will withdraw from the electoral system, since
they receive government subsidies under the country's election
laws. In our judgment, only the minuscule Trotskyist
Revolutionary Workers Party, whose leaders have called for a
"political revolution", is likely to consider violence to
further its aims.
Election Issues
The Economy
Party loyalty has long been the principal factor
influencing voter behavior in Mexico, but other concerns also
will affect the balloting in July. Economic issues are likely
to be a major target of opposition parties, and they will
attempt to exploit dissatisfaction with inflation,
unemployment, and declining living standards. Although de la
Madrid's austerity policies have brought Mexico back from the
brink of financial disaster, they have involved high social
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costs. Budget cuts have reduced subsidies for food and other
basic consumer goods and, we estimate, the real purchasing
power of most Mexicans has fallen by one third since de la
Madrid assumed office. Embassy reports state that government
policies also have led to greater shortages of consumer goods,
including meat, milk, eggs, natural gas, and gasoline, than at
any time in the past decade.
Stalled Anticorruption Drive
Adding to public dissatisfaction has been de la Madrid's
much publicized "moral renovation" campaign, which he has made
a cornerstone of his administration. According to the US
Embassy, the effort was initially greeted with broad popular
approval but is now widely perceived as having failed to reduce
the level of corruption significantly. High public
expectations are giving way to resentment the government has
not done more. Recent revelations of high-level police
involvement in narcotics trafficking are likely further to
detract from the administration's public credibility.
Some members of the public have become disillusioned
because the government with few exceptions has not filed
charges against senior officials of the past or the present
administration. The most prominent person now behind bars on
corruption charges is Jorge Diaz Serrano, the former head of
the state oil company, but he has not been brought to trial
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and, in our judgment, probably will not be. The government
apparently fears that Diaz Serrano, like former Mexico City
Police Chief Arturo Durazo, who is now in Los Angeles awaiting
extradition, could implicate other members of the present
administration. More generally, we believe public cynicism
about the de la Madrid administration's commitment to halting
corruption will continue to grow.
Other Issues
Local issues and candidate appeal also will influence
voters' choices. For this reason, as well as the PAN's strong
base of support in the north, the governor's race in Sonora is
being hotly contested, according to press
Foreign policy, on the other hand, is likely to have only a
minor impact on the campaign. De la Madrid almost certainly
will portray his adiministration as a defender of peace in
Central America, a champion of world disarmament, and a leader
among Third World governments, but at least one opinion poll
has indicated that international issues are not of great
concern to the electorate.
Election Tactics
We believe the PRI is using a broad strategy consisting of
legal and extralegal tactics in attempting to make a strong
showing in the elections. It is seeking to win by respectable
means where possible,
The ruling party is endeavoring to use its superior
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organizational and financial resources, as well as its control
over the media, to good advantage. In addition, the government
introduced more expansionary spending policies in mid-1984 to
soften the effects of austerity. The administration is
lavishing public works projects on districts where it expects
close races, for example, and it is taking account of the
elections in timing economic policy announcements. We expect
the de la Madrid administration will boost the minimum wage
substantially before the elections, and it probably will
postpone exchange rate adjustments until after the 7 July
election date. At the same time, the PRI will remind voters
that it is the party that best embodies the ideals of the
Mexican Revolution and that it is responsible for the
considerable economic progress the country has realized under
its leadership.
Such tactics will enable the PRI to win most races, but
fraud will provide the margin of victory in a number of
contests. US Embassy reports state it is virtually certain
that the PRI will steal some close elections, particularly in
the north, where the potential for opposition inroads is
greatest. Moreover, appeals by opposition parties to reverse
election outcomes are unlikely to be successful because the PRI
dominates the institutions in the appeal mechanism, such as the
federal and state election commissions and all state
legislatures.
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The PAN, for its part, will concentrate its more limited
resources on selected races, particularly in the northern
states. The party has placed a special emphasis on finding
attractive, popular candidates, most of whom are drawn from
business and professional circles. According to US diplomatic
reporting, the PAN also is attempting to present an image of
clean politics in order to highlight the corruption issue. PAN
leaders believe that absenteeism is a major reason why their
party has not done better in the past and that increased
popular involvement in the elections will make it more
difficult for the ruling party to steal the contests. The PAN
also will strive to broaden its political base and to shed its
reputation for being an elitist party.
Election Prospects
In view of the ruling party's considerable resources and
its willingness to use extra legal measures where necessary, we
believe the PRI will easily win most of this year's races and
remain the dominant political force in the foreseeable
future. No opposition party has officially won a governorship
in the past 56 years, and we are confident--we view it as a 90
percent probability--this record will not be broken in the
coming elections. US Embassy reporting suggests PRI leaders
believe the loss of even one governorship would be taken as a
sign of weakness and that it could contribute to the party's
demise.
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The opposition also is unlikely to improve its position
greatly in the Chamber of Deputies. At present, parties other
than the PRI control 101 of the 400 deputy seats, of which 100
by law are reserved for the opposition. We expect the ruling
party's opponents to pick up fewer than a half dozen seats in
the chamber.* The PRI is likely to experience its toughest
challenge in a number of municipal elections, particularly in
the north. Local races will be held in 14 states, including
Sonora, where the PAN stands at least an even chance of
retaining control of Hermosillo, the capital, in our
judgment. We believe the PRI will respect opposition victories
in federal and state deputy races and local contests that rival
parties have won by wide margins. It will allow such victories
in order to maintain the appearance of democracy, counter
allegations of vote rigging, and give other parties limited
incentives to work within the system.
Nonetheless, opposition parties are likely to charge the
PRI with a variety of electoral irregularities, even before the
official results are announced. If large numbers of voters do
not consider the results valid, they almost certainly will
organize demonstrations and occupy town halls. Some may engage
*No seats in the 64-member Senate are at stake in this
election. Senators are elected concurrently with the President,
and all currently belong to the PRI. Neither legislative body
has much influence on public policy; each essentially is a rubber
stamp for the President's legistative agenda.
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in short-lived hunger strikes, but such activities)in our
judgmenttare unlikely to reverse election outcomes.
PAN supporters in the north, possibly including unemployed
youths, are the most likely to engage in violent outbursts
protesting government electoral fraud. PAN leader Pablo Emilio
Madero stated publicly last October there almost certainly will
be violence in Sonora if fair elections are not held.
Nevertheless, we anticipate civil disturbances associated with
the elections will be scattered and largely spontaneous. There
is only a remote possibility, in our judgment, that the unrest
in the north or elsewhere will severely tax the resources of
local security forces and the Army. Moreover, according to
Attache reporting, the military remains staunchly loyal to the
government, and is,likely to use whatever degree of of force is
necessary to restore order.
Election Repercussions
Even though the PRI is almost certain to win decisively,
the electoral process is likely to weaken de la Madrid's
political position in our judgment.
a possible
violent backlash in the north, will indirectly contribute to de
la Madrid's troubles and the longer-term erosion of the ruling
party's still considerable base of support. We can envision
three principal scenarios.
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In our estimation, the greatest likelihood is that the PRI
will retain control of the vast majority of elective offices,
including all governorships,
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major protests,
probably involving limited violence, in the north and possibly
elsewhere. Although we do not believe that the outbursts will
get out of hand or be widespread, the public perception that
the PRI employed fraud would increase cynicism about the
honesty of the electoral process. At the same time, the
frustration of PAN and other opposition party militants would
heighten the potential for more serious violence in future
races.
Nevertheless, we believe such an outcome would cause de la
Madrid to see the election results as a renewed mandate for his
administration. In general, we would expect him to pursue his
consensual approach to governing. This approach however, could
cause difficulties in short order. His unwillingness to force
resolution of disputes among advisors, for example, or strongly
to back his initiatives would indirectly encourage infighting
among PRI and government officials. We also anticipate de la
Madrid would endorse contradictory and shifting policies as he
attempted to deal with economic difficulties. During the
remainder of de la Madrid's term, we would expect slow progress
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on some fronts, such as moral renovation, and stagnation on
others, including political liberalization and party reform.
PRI Election Sweep and Major Violence
An outcome that we see as less likely is a decisive
victory by the PRI in most contests, including all
governorships, followed by serious disorders, including major
property damage and considerable loss of life.
The PAN's national and state leaders probably will not
instigate such violence, but major disturbances could grow out
of milder forms of party-sanctioned protest and government
responses. Serious protracted rioting by PAN supporters almost
certainly would give impetus to efforts of some PRI leaders to
deny the PAN legal status and keep it off the ballot in future
elections.
As a consequence of major disturbances, we would expect de
la Madrid not only to retrench on his commitment to promote
greater political pluralism but also to adopt somewhat more
repressive policies in an effort to maintain order. This could
result in a greater number of arbitrary arrests, firmer
handling of labor disputes, and increased media censorship. It
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might also lead Mexico's rulers to adopt more stridently
nationalistic policies as a means of promoting unity and to
cooperate less closely with the United States on issues of
mutual concern. Serious violence would add to de la Madrid's
economic problems by spurring capital flight and discouraging
domestic and foreign investment.
The adoption of hardline policies would, in turn, increase
the government's dependence on the military and security
forces. Perhaps with this in mind, de la Madrid already has
been attentive to the needs of the armed forces. He has
granted the military pay raises in excess of those for
civilians. He also has allowed the armed forces to acquire new
and more sophisticated equipment, including a squadron of
supersonic aircraft for the Air Force, modern patrol vessels
for the Navy, and new armored vehicles for the Army. In
addition, he has named military officers to a number of posts
traditionally held by civilians, such as state governorships,
sub-Cabinet positions, and seats in the Chamber of Deputies.
PRI Loss of a Governorship
There is only a remote possibility, we believe, that the
PRI will permit a PAN gubernatorial victory. Should such a
victory occur, however, it would most likely be in Sonora. For
the government to recognize such a victory, several conditions
probably would have to be met:
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- An overwhelming and obvious PAN victory in the state.
-- The strong likelihood of widespread, serious violence
if the wishes of voters were ignored.
-- Extensive and potentially embarrassing international
media coverage of the elections.
-- Consensus within the top echelons of the PRI that
conceding the contest would be less damaging to the
party's interests than resorting to fraud.
If the PRI surrendered a governorship, it most likely
would be as a result of negotiations following the elections
rather than immediate recognition of an opposition victory.
The PRI would first attempt to avoid giving up the governorship
by offering the opposition lesser offices, such as contested
mayoralties or disputed seats in the Chamber of Deputies. If
the PRI ultimately conceded a statehouse, it would portray the
loss as evidence of de la Madrid's commitment to political
reform.
Nonetheless, for the PRI to acknowledge defeat in a
gubernatorial race would be a major blow, since observers
inside and outside the party would view it as a precedent for
losses of additional statehouses in the future. In response to
such a setback, we would expect the de la Madrid administration
to withhold some national funds from the opposition-controlled
state government in an attempt to undercut its leadership. The
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PRI already has employed this tactic with mixed success in
dealing with PAN-administered municipalities. Nevertheless,
the advent of an opposition-dominated state administration
would add to the stature of the winning opposition party,
dramatically symbolizing that the long-dominant PRI no longer
was invincible. Such a development also would make the de la
Madrid administration even more wary of alleged links between
the PAN and groups in the United States, possibly introducing
new strains in bilateral relations. More generally, the loss
of a state to the opposition would tend to underscore the
weakness of de la Madrid's leadership and make it more
difficult for him to maintain support for his policies.
Implications for de la Madrid's Rule
Even if the de la Madrid administration emerges from the
1985 elections relatively unscathed, the PRI will face mounting
difficulties through the end of the President's term in 1988
and beyond, in our judgment. We believe de la Madrid is
unlikely to provide the firm leadership or appropriate policies
that would be required to bring about strong economic
recovery. In fact, our economic projections suggest that the
de la Madrid administration may face the prospect of growth
rates of just 1-2 percent in the closing years of the term. In
addition, we judge that he lacks the political will that would
be needed to liberalize the political system substantially or
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to root out much of the corruption that has become endemic in
Mexico. Moreover, the de la Madrid administration's
shortcomings are likely to become even more apparent during the
remaining three years of his term. The public's
disillusionment with government policies almost certainly will
grow.
De la Madrid's difficulties probably will be most acute on
the economic front. Expansionary economic policies begun in
mid-1984 are undercutting Mexico's agreement with the IMF for
1985. The government's spending spree is keeping the public
sector deficit and inflation near last year's levels, which are
far above targets set with the Fund. Moreover, external
accounts are deteriorating because of the overvalued exchange
rate and the soft world oil market. These trends strongly
suggest Mexico will be unable to meet most of its IMF targets
this year. This will make it more difficult for the de la
Madrid administration to secure the new loans from foreign
creditors it will need in 1986 and to finance public works
projects in the 14 states scheduled to hold governor's races
next year.
Mexico City probably will find it difficult to revert to
more austere economic policies after the July 1985 elections
because of de la Madrid's lack of firm leadership and the
belief of the President's advisors that most Mexicans will not
quietly accept further reductions in their standard of
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living. At the same time, the influence of Finance Minister
Silva Herzog and other Cabinet ministers who in the past have
advocated adherence to Mexico's economic adjustment program has
been declining, while that of Budget Minister Salinas, Foreign
Minister Sepulveda, and others favoring greater government
spending, has been increasing, according to the US Embassy.
We believe that de la Madrid and other authorities lack
the political support within the ruling party necessary to make
needed structural changes that would improve Mexico's economic
prospects over the medium and longer term. These include steps
to reduce the public sector's role in the economy, make
domestic industry more efficient, and increase international
competetiveness. As a result, we expect Mexico to lurch toward
a new economic crisis until a consensus reemerges that stronger
correctives are required to right the economy.
Moreover, variables beyond Mexico's control could depress
the economy. A $2 per barrel reduction in world oil prices
annually during the remainder of de la Madrid's term would
cause economic activity to drop 2-4 percent a year between 1986
and 1988. Rising international interest rates or slower growth
in the US economy would also adversely affect Mexico's external
accounts.
As Mexico's economic difficulties become more acute, as we
expect they will, Mexicans on both the right and the left on
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the political spectrum are likely to become more vocal in their
criticism of the government. Antigovernment protests almost
certainly will increase in number and seriousness, both in
urban areas and in the countryside. Nonetheless, we do not
anticipate they will reach regime-threatening proportions
during the remainder of de la Madrid's term.
If, as is likely, de la Madrid's difficulties in leading
his Cabinet and the PRI become more pronounced during the
remaining three years of his term, considerable controversy
will surround his choice of a successor. We believe labor and
leftist interests within the ruling party will oppose the
selection of another technocrat. Under such circumstances, de
la Madrid could be compelled to designate a candidate more
broadly acceptable within the PRI or to adopt somewhat more
populist policies in the waning days of his administration in
an effort to placate such key constituencies.
Implications for the US
Under the most likely scenario, we do not expect the
midterm elections to have major repercussions for US-Mexican
relations in the short term. In an effort to arouse
nationalist sentiment and bolster its domestic standing, the
PRI could make greater use of anti-Yankee rhetoric and more
directly criticize US policy on Central America. PRI leaders
earlier this year sought to discredit the PAN by branding it a
tool of US interests. The same officials have asserted that
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members of the US mission in Mexico City are interfering in the
country's political process through their public statements and
occasional meetings with opposition leaders. Yet allegations
of US ties to the PAN now appear to have subsided, and we do
not expect alleged US links to the PAN to be a major campaign
issue.
Following the elections, we anticipate that de la Madrid
will generally eschew tactics that would aggravate relations
with the United States. Serious strains have emerged between
the two countries since the murder of a US Drug Enforcement
Administration official earlier this year, and we believe de la
Madrid desires to improve relations and keep them on an even
keel. He almost certainly knows he needs US help on trade,
financial, and other matters. Moreover, the importance he
attaches to the bilateral relationship, together with his
dependence to a large extent on Washington's good will, should
make de la Madrid receptive to greater cooperation in areas of
key concern to this country, such as narcotics control,
immigration, and possibly Central America.
Major election-related disturbances in northern Mexico
however, would tend: to aggravate existing-strains in US-Mexican
relations and to introduce new ones. PAN supporters protesting
electoral irregularities could riot and then seek refuge in the
United States to avoid government reprisals, much as occurred
late last year after local elections in Piedras Negras, a
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bordertown across from Eagle Pass, Texas. Under such
circumstances, Mexican authorities might charge their US
counterparts with harboring fugitives, and PRI supporters
almost certainly would resurrect allegations of US favoritism
toward the PAN. Tensions would rise even higher if PAN leaders
called upon the large Hispanic community in the United States
to support their cause.
The adverse repercussions for bilateral relations would be
even greater if the violence were of such a scale or duration
that the authorities had difficulty containing it. Principal
transportation arteries in the north, including roads and
bridges linking Mexico to the United States, almost certainly
would be blockaded, if only temporarily until security forces
could restore order. Meanwhile, commerce across the border
would be disrupted and communities on each side, whose
economies in recent years have become increasingly intertwined,
could lose millions of dollars in trade. In such an event,
Mexican leaders almost certainly would attempt to use the
United States as a scapegoat for their problems. In the
aftermath of such incidents, Mexico's international creditors
would be less willing to extend loans or trade credits to the
government or private business. A sharp reduction in credit
available for an extended period would tend to depress economic
activity, limit Mexico's ability to import US goods, and spur
illegal migration to the United States from Mexico.
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UK)
Moreover, the deterioration in Mexico's economic
performance associated with all of the election scenarios would
adversely affect bilateral trade and financial relations, cut
returns on US investments in Mexico, and spur illegal
migration. Under these circumstances, Mexico City probably
would approach Washington requesting special treatment on trade
or financial matters. If another financial crisis arose, we
expect Mexico City would seek emergency aid from the US
government.
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SUBJECT: Mid-Term Electoral Prospects
Original - Requestor
1 - D/ALA
1 - ALA/MCD
2 - ALA/MC/MX
ALA/MC/MX,. I (20 May 1985)
31
SECRET
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