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CULTURALLY, POLITICALLY, AND ECONOMICALLY, Mexico is a nation undergoing rapid change. Past characterizations of the country as rural, undemocratic, and protectionist have been replaced in the last decades of the twentieth century by descriptions that refer to Mexico as urban, opening to democracy, and market-oriented. For a country composed mostly of peasants before the Revolution (1910-20), Mexico has undergone broad and rapid urbanization; Mexico City has emerged as one of the world's largest cities at the end of the twentieth century. Throughout most of its history, Mexico has been ruled by strongmen or a one-party system; in 1997 pressures for an open democracy are greater than ever. Under the presidencies of Carlos Salinas de Gortari (1988-94) and Ernesto Zedillo Ponce de León (1994- ), the economy, long one of the most protectionist and statist of the nonsocialist countries, dramatically about-faced, embracing open-market policies and free-trade links with the United States and countries throughout the Americas.

Mexico's history is long. Although the timing of the arrival of the first inhabitants to the Americas has been a point of major controversy among archaeologists, recent archaeological findings indicate that tribes from northeast Asia walked across what is now the Bering Straits perhaps as early as 35,000 years ago. Finding abundant wildlife these peoples gradually moved south, populating the entire Americas over the next several thousand years.

In the area of present-day Mexico, the earliest settlers found a rugged and varied topography with only limited areas suited for human habitation. Viewed from space, modern Mexico roughly resembles a cornucopia, wide at the top but narrowing and curving to the east as it stretches southward. At the southern tip of the "cornucopia," the rectangular Yucatan Peninsula, described by some as a thumb, extends northward into the Caribbean Sea. Another discongruous piece of land, the Baja California Peninsula, is a long sliver of land offshore and paral-leling the northwest coast.

The land itself is characterized by a roughly Y-shaped series of mountain ranges. The two forks of the Y are rugged ranges that parallel the northern parts of the Pacific and Gulf of Mexico coasts. The base of the Y is a spine of mountains, with occasional breaks, that extends from central Mexico into Guatemala on the south. The center of the Y is a knot of active volcanoes in the center of the country, just south of Mexico City. Between the two northern ranges lies a high arid plateau, and the small coastal plains outside these mountain ranges are tropical rain forests. The Yucatan Peninsula is a flat humid jungle, and the Baja California Peninsula is a desert with yet another low mountain range running down its center.

Although most of the land has warm temperatures year round, lack of rainfall and rugged terrain were obstacles for the early inhabitants. Only the narrow coastal plains, the Yucatan Peninsula, and a few valleys in the southern area of the central plateau or in the volcanic central regions receive reliable rainfall for crops. Despite these constrictions, evidence indicates that between 7000 B.C. and 2000 B.C., corn had been domesticated, and agricultural villages had sprung up. By 1500 B.C., the Olmec, the first of a string of civilizations in Middle America, flourished.

The next three millennia would see a series of civilizations, each built on some of the advancements and traditions of its predecessors. After the Olmec in what is now called the Classic Period (0-A.D. 700), the Teotihuacán, Veracruz, and Monte Albán cultures built large ceremonial cities in south-central and eastern Mexico. From A.D. 700 to A.D. 900 in the Yucatan, the classic phase of the Maya civilization, considered by most archaeologists to be the most advanced pre-Columbian civilization in the Americas, was at its zenith. After A.D. 900, the center of power and culture shifted to the Valley of Mexico, site of present-day Mexico City, with the development of the Toltec and finally the Aztec empires.

The destruction of the Aztec Empire by the Spanish conquistadors in 1519 was one of the most decisive events in Mexican history. Aided by superior firepower and technology, and carrying deadly diseases for which the native inhabitants had no immunity, a band of several hundred European soldiers of fortune overran an empire of millions of inhabitants. In one of history's greatest epic stories, one which still reverberates in the Mexican psyche of today, a great civilization was virtually wiped out and replaced by an alien culture and political system. The Aztec capital of Tenochtitlán was leveled, and atop the ruins the Spanish built Mexico City, capital of half of their vast colonial empire in the New World.

Fueled by its rich silver mines, a new colonial society emerged stratified by race and wealth. The upper echelon was European, in the middle were people of mixed European-indigenous heritage, and at the bottom were the descendants of the native peoples who had survived the European onslaught of the 1500s. The Roman Catholic Church was omnipresent in all aspects of society, religion, and education. The colony was ruled by a viceroy appointed by the king of Spain.

Troubled by turmoil in Europe and influenced by the liberal ideas of French and American philosophers and the French and American revolutions, voices in Mexico began agitating for independence in the late 1700s and early 1800s. The formal break began with a proclamation by Father Miguel Hidalgo on September 16, 1810. The struggle for independence was long and fitful, however, and freedom from Spain was not finally realized until 1821.

Despite hopes that independence would bring political and economic change for the nation's masses, in reality the only change was in the country's ruler. For the next several decades, various strongmen held power. A disastrous war in 1848 resulted in the country ceding more than half its territory to the United States. A civil war in the late 1850s set the stage for a brief democratic interlude under President Benito Juárez, a French occupation and the establishment of an empire under Maximilian I, and finally the beginning of a dictatorship in 1871 under Porfirio Díaz that would last four decades.

Historians' view of the Porfiriato, as the dictatorship of Porfirio Díaz is called, is a schizophrenic one. On the one hand, the dictator opened the country to development, building a modern system of railroads, roads, factories, and schools. On the other hand (and this is the view stressed in Mexico's version of its history), the wealth generated by this period of political stability and increased trade was concentrated in a small upper class while the condition of the lower classes degenerated. Indigenous traditions or associations were totally rejected while European fashion and mores were slavishly imitated.

In 1910 the pent-up resentment of the lower classes coincided with the political disaffection of middle-class intellectuals, producing the series of violent political convulsions known as the Mexican Revolution. Rebel groups sprang up across the nation, and Díaz resigned. Instead of uniting, however, the rebel groups soon turned on each other. Various men, supported by one of the rebel factions or remnants of the former central government, held the presidency in rapid succession as fighting swept back and forth over the country. Although they disagreed over who should run the country, the leaders of the Revolution were united in their calls for social justice, land reform, and a new sense of nationalism based on Mexico's indigenous heritage. When the fighting finally ended in 1920, the ideals that they evoked defined the new Mexican nation that emerged.

The constitution of 1917, still in effect, established the present-day framework of Mexican politics. A strong president with a six-year term, a relatively weak legislature dominated by the party of the Revolution, and a nominally independent judiciary were all established. The Roman Catholic Church was stripped of most of its properties and formal power. Much of the land was taken from large landowners and organized into ejidos ( see Glossary), or communes, for peasants to work. Heavily influenced by foreign liberal and leftist ideas and born of a popular revolution against oppression, the constitution had a decided revolutionary cast. The National Revolutionary Party (Partido Nacional Revolucionario--PNR) was formed in 1929 to successfully carry out the constitution's goals (the party later added the adjective "institutional" to indicate the consolidation of the redistribution phase of the revolutionary program--Partido Revolucionario Institucional--PRI).

The extent to which post-revolutionary administrations have implemented revolutionary ideals has been a benchmark by which Mexican historians have generally judged these administrations. Administrations in the 1920s and 1930s adhered to these goals more faithfully, the most significant act during these years being the nationalization of the petroleum industry. Post-1940 governments, however, seemed more concerned with political stability and economic growth than with land reform or new social programs.

The Revolution also had a profound effect on the role of the military. Formerly one of the largest and most influential players in Mexican politics, the armed forces were reduced in size after 1920 and their role redefined as one of guaranteeing domestic political stability. Quelling social unrest and eliminating guerrilla activity became their primary duties. As "servants of the people," units were more likely to be involved in development-oriented civic action than in training to defend the country from foreign intervention.

The Revolution added another irritant in the frequently stormy relations between the governments of Mexico and the United States. Long at odds over a variety of issues--including Mexican bitterness over territory lost in the Mexican War of 1848 and political and military interventions by the United States in Mexican affairs--the United States was alarmed by the leftist tone of revolutionary rhetoric and Mexico's friendliness with socialist governments and revolutionary movements worldwide. Often fueled by unspoken prejudices and stereotypes on both sides, friction between the two countries sometimes resulted in chilly relations and bitter denunciations by politicians. Not until the end of the twentieth century, when the two countries realized how economically interdependent they had become, did the rhetoric cool and genuine attempts at cooperation and understanding each other's political position occur.

Economic growth was probably the most significant legacy of the PRI in the mid-twentieth century. From 1940 to 1980, growth was rapid and sustained. The nation's vast mineral wealth was exploited. Petroleum reserves, estimated to be among the largest in the world, were used by the government to develop new petrochemical industries. Agriculture diversified and expanded, and government planners gave particular emphasis to the development of new crops for export. The industrial sector accounted for an ever larger share of the economy, and maquiladoras ( see Glossary), or assembly plants along the United States border, grew exponentially. By 1980 Mexico was the world's fifteenth largest industrial nation.

Although the numbers of Mexicans who could be classified as middle class rose, the benefits of economic growth were not shared by all of Mexico's citizens. The stark inequality that had characterized Mexico at the turn of the century was not significantly ameliorated by the processes of modernization that began in the 1940s. Despite the economy's rapid growth rate in the post-World War II period, an even faster rate of population growth meant that the economy could not produce sufficient jobs for the many millions of young people entering the workforce every year. The exhaustion of the land available for redistribution in the 1950s also created conditions of severe rural unemployment. Beginning in the 1950s, rural-to-urban migration began to change the face of Mexico from a predominantly rural to an urban society. The search for work often resulted in displaced workers living in worse conditions than before. The population of Mexico City, for example, swelled to 15 million in the 1990s, with millions living in miserable slums on hillsides or on marginal land on the outskirts of the city. Statistics on standard of living indices showed improvement in some urban areas and throughout the north, but few improvements in the south, where Mexico's population tended to be more rural and more heavily mestizo or indigenous.

The PRI's legacy of political stability and economic growth generated little enthusiasm or gratitude among the Mexican people. In fact, the opposite occurred, as the rise of an urban middle class produced pressures for political reform during the 1980s. Either by legal or fraudulent means, the PRI consistently won every election at the state and national levels, ceding only the occasional municipality to the conservative National Action Party (Partido de Acción Nacional--PAN) or to government-financed "satellite" parties. Widespread corruption only heightened cynicism. Corruption became synonymous with all government dealings, from the presidency to daily life, where most Mexicans had to bribe petty government officials to obtain basic public services. The PRI, the party of revolutionary change in the early years of the century, was now seen as the primary obstacle to reform.

Beginning in the mid-1980s, the PRI's overwhelming dominance over the political system began to decline. The massive earthquake that struck Mexico City in 1985 underscored the corruption and ineptitude of the authorities, who were slow to provide relief to the hundreds of thousands made homeless by the natural catastrophe. Spurred by government inaction, hundreds of nongovernmental civic associations arose in the aftermath of the Mexico City earthquake. In addition to providing resources for community self-help, many of these new organizations became a nucleus for opposition political activity during the latter 1980s.

The national elections of 1988 were a turning point in twentieth-century Mexican politics. For the first time in its six decades of continuous rule, the PRI's presidential candidate faced a formidable challenger in the person of Cuauhtémoc Cárdenas, a former PRI leader who had defected from the party because of its emerging free-market stance and its authoritarian practices. Ironically, Cárdenas was the son of one of the PRI's greatest national heros, President Lázaro Cárdenas (1934-40). During the late 1930s and early 1940s, the elder Cárdenas had assured his place in the annals of Mexican history by reviving the country's moribund land reform and by taking the unprecedented step of nationalizing the foreign-owned oil companies in Mexico.

After an intense campaign that was bitterly fought by both sides, the PRI's candidate, Carlos Salinas de Gortari, was declared the winner. The election results, which were delayed by a week because of a mysterious breakdown of the electoral computer system, were immediately contested by Cárdenas and his supporters. The Cárdenas camp alleged that the PRI had caused the computer malfunction and had systematically destroyed thousands of ballots to produce a last-minute victory for its candidate. Despite the left's protests, Salinas was sworn in as president in December 1988. The ensuing sexenio (as Mexico's six-year presidential term is commonly known) would be characterized by the most dramatic transition in Mexico's political economy since the 1910 Revolution.

As he began his presidential term, Salinas appeared to most Mexicans as an obscure but competent figure chosen from among several contenders within the cabinet of outgoing President Miguel de la Madrid Hurtado (1982-88). Salinas, however, faced a storm of opposition protests and bitter divisions within his own party. Moreover, for the first time in its history, the PRI held less than a two-thirds majority in the national Congress, a fact that would necessitate cooperation with the congressional opposition in order to pass the broad constitutional reforms needed to liberalize the economy.

The newly elected president was hard-pressed in the first months of his term to show that he could provide the strong leadership expected of a Mexican head of state. Salinas was quick to assert his authority, however. Within weeks of taking office, he ordered the army to arrest the corrupt leader of the powerful oil-workers union, who had been a vocal opponent of Salinas's candidacy. Throughout his term, Salinas repeatedly used his extensive powers to remove PRI officials, including several state governors who resisted his reform efforts or whose fraudulent election victories were too controversial to ignore.

Despite his stated commitment to democratization, President Salinas significantly augmented the already formidable powers of the executive branch. To push a series of sweeping economic reforms through the political system, Salinas concentrated broad policy-making authority in a technocratic elite committed to market economics, trade liberalization, and rapprochement with the United States. By the early 1990s, the Salinas administration's priorities had become clear. Political reform would be encouraged, but primary emphasis would be placed on the economic aspects of modernization.

Building on the policies of President de la Madrid, the Salinas administration carried out a comprehensive structural transformation of the Mexican economy. Salinas's domestic macroeconomic policies put into practice a package of market-oriented reforms endorsed by the United States and international financial organizations; these reforms collectively became known as the "Washington consensus." The three pillars of Mexico's structural adjustment program were the privatization of the country's vast network of parastatals, the liberalization of its foreign trade, and the modernization of its financial system.

It was through its comprehensive economic program, rather than its political reforms, that the Salinas administration left a lasting impact on Mexico. By the time Salinas entered office, Mexico had already dramatically reversed its foreign trade practices by acceding to the General Agreement on Tariffs and Trade (GATT--as of January 1995 became known as the World Trade Organization) in August 1986. As a result of its accession to GATT, Mexico unilaterally lowered its average tariff level from 100 percent ad valorem to a structure with a top rate of 20 percent. At the same time, it reduced or eliminated many non-tariff barriers such as import licenses and quotas, the combined effect of which had been to close the Mexican market to most foreign imports for more than fifty years.

The Salinas administration expanded the process of structural adjustment begun by its predecessor. A key element of the government's structural adjustment program was the privatization of Mexico's vast network of parastatal industries. Between 1986 and 1994, the government privatized more than 700 state-owned companies, including all eighteen government-owned commercial banks, the national telephone company, a national television network, airlines, movie theaters, several sugar- and food-processing plants, several large copper mines, steel production facilities, and the maritime port system. The sale of state-owned companies generated US$22 billion in government revenues, the majority of which was used to reduce the massive foreign debt and to finance new infrastructure and social expenditures.

In addition to the sale of state companies, the government also undertook a major overhaul of its Byzantine financial and regulatory systems. The Salinas administration oversaw the privatization of the domestic commercial banks and the passage of a new national Law of Banking and Credit that thoroughly modernized domestic banking. Opportunities for foreign investment, which had been severely restricted since the Revolution, were expanded considerably under the 1993 Foreign Investment Law. For the first time since the Revolution, foreigners were allowed to own commercial and residential property directly, rather than through a Mexican intermediary. New commercial and securities market regulations encouraged a massive influx of foreign direct and portfolio investment during the early 1990s. The most visible consequence of increased foreign investment was the explosive growth of the in-bond (tariff and tax-free) maquiladora manufacturing plants along the Mexico-United States border. Additionally, after 1993 the capitalization of the Mexican stock market soared, as a new generation of foreign (mainly United States) investors sought the higher returns afforded by emerging markets such as Mexico's.

The dramatic restructuring and austerity measures of the Salinas years produced a positive turnaround in Mexico's macroeconomic performance, although they did not produce the sustained high growth rates which many had hoped for. Annual inflation fell from 159 percent in 1987 to 6.7 percent during the first three quarters of 1994. Concurrently, the average annual economic growth rate between 1988 and 1994 was a modest 2.6 percent. Unemployment and underemployment remained high, especially in the countryside, fueling record levels of legal and illegal migration to the United States. Moreover, the new prosperity was unevenly distributed, being largely concentrated in the north and among a minority of relatively well-educated, urban professionals and white-collar workers.

Perhaps the single most important catalyst for the transformation of Mexican economic policy was the Salinas administration's ambitious goal of participating as a full partner in the emerging North American free-trade zone begun by Canada and the United States in the early 1990s. President Salinas and his advisers viewed Mexico's integration into the world trading system as the only viable basis for their country's future long-term growth. Bowing to geographic reality, Salinas discarded decades of protectionist and nationalistic practices by past Mexican governments to forge a close and lasting economic and political partnership with the United States. The objective was nothing less than Mexico's full incorporation into the emerging North American financial and trading bloc. In 1991 Mexico began negotiations with Canada and the United States on the terms of a trilateral free-trade treaty, the North American Free Trade Agreement (NAFTA).

NAFTA became the cornerstone of Mexico's reform efforts and the ultimate test of its recognition as a new entrant in the community of modern nations. In preparation for Mexico's accession to NAFTA, the Salinas administration redoubled its efforts to open its markets and to increase the competitiveness of its domestic economy. Mexico also became more receptive to United States concerns on a range of bilateral issues, including narcotics trafficking and illegal immigration. In response to international pressure, the Mexican government improved its human rights practices and made the electoral process more transparent. In the weeks preceding the vote on ratification of NAFTA by the United States Congress, Mexico and the United States negotiated a series of side agreements on environmental protection that helped assure the entry into force of the treaty on January 1, 1994.

The ratification of NAFTA boosted international confidence in the Mexican economy, spurring an influx of foreign capital and fueling predictions of an imminent economic boom. National opinion polls showed President Salinas's popularity to be at an all-time high, and the PRI was preparing to pass the mantle of the presidency to Salinas's handpicked successor, Luis Donaldo Colosio Murrieta, in the August 1994 presidential election.

The triumphant mood in Mexico City was dashed on January 1, 1994, the day NAFTA entered into force, when a heretofore unknown insurgent group, the Zapatista Army of National Liberation (Ejército Zapatista de Liberación Nacional--EZLN), briefly took over four municipalities in the southern state of Chiapas. The Zapatistas, as members of the EZLN came to be known, consisted of several hundred indigenous people from the Chiapas highlands as well as a leadership and support network of white, university-educated Marxists and former guerrillas. The Zapatistas justified their armed movement and their violent takeover of the Chiapas municipalities as gestures of protest against the market-oriented economic policies of the Salinas administration, including NAFTA. These policies were blamed for the worsening living conditions of Mexico's rural poor. Additionally, the Zapatistas decried the state's historical discrimination and neglect of Mexico's indigenous communities and the authoritarian practices of the ruling PRI. The Chiapas rebellion galvanized the Mexican left and created a heightened awareness of the difficult circumstances of many of Mexico's indigenous people. It also provoked a strong military reaction and shattered the image of stability that the Salinas administration had tried to project to the world.

An even greater setback to Mexico's stability occurred on March 22, 1994, when PRI presidential candidate Colosio was assassinated at a campaign rally in the northern city of Tijuana. The Colosio murder was the first major instance of political violence against a high-level PRI official since the assassination of President Álvaro Obregón in the 1920s. Following initial reports that a lone gunman was responsible for the killing, additional evidence pointed to a conspiracy involving at least half a dozen security personnel believed to be linked to a local drug cartel.

Colosio was replaced on the PRI presidential ticket by his campaign manager and former education secretary, Ernesto Zedillo Ponce de León. The PRI once again faced a competitive election, with the main opposition challenge coming this time from the conservative PAN. Unlike the election of Salinas in 1988, the 1994 presidential election was judged by domestic and international observers to be relatively free and fair. During the months preceding the vote, the PRI had agreed to several major reforms of the electoral process, including antifraud measures such as transparent ballot boxes, photo-identification cards for voters, and the inclusion of a larger number of non-PRI seats in the National Electoral Commission. Zedillo won the election with a plurality of the vote, thus extending the PRI's dubious record as the world's longest-ruling political party (surpassing even the Communist Party of the former Soviet Union). Although Zedillo was elected to the presidency by a slimmer margin than Salinas, the results of what was probably the cleanest presidential election in modern Mexican history were accepted as legitimate by most observers and opposition groups.

The salutary effect of the August elections was not destined to endure, however. In September, another high-level PRI official, José Francisco Ruiz Massieu, was assassinated on a Mexico City street. Widespread speculation that an interfactional war was taking place within the PRI was supported by evidence linking a fugitive PRI congressman to the second killing. The scandal broadened shortly after the Zedillo administration took office, when evidence was uncovered linking former president Salinas's brother, Raúl, to the Ruiz Massieu murder.

The first month of the Zedillo administration coincided with a dramatic financial crisis that dealt a severe setback to Mexico's economic recovery efforts. The crisis was rooted in Mexico's accumulation of a dangerously high current-account deficit throughout 1994. To finance increased government spending, the Mexican government had floated a large number of short-term, high-yield bonds known as tesebonos . As the successive political shocks of 1994 drove capital from the Mexican stock and bond markets, and as interest rates rose in the United States, the Mexican government became increasingly dependent on short-term, high-yield instruments to attract scarce capital.

Following the Ruiz Massieu assassination, Mexican investors withdrew large amounts of capital from the Mexican market. This situation made it impossible for the government to pay dividends on a series of tesebonos that were scheduled to mature in December. Despite its untenable financial situation, the government dismissed the possibility of a devaluation of the new peso (for value of the new peso--see Glossary), but subsequently reversed itself in late December. The devaluation and the disclosure of Mexico's short-term liquidity crisis set off a run on the new peso and caused the Mexican stock market to lose half its value. The crash of the Mexican stock market reverberated throughout Latin America and other developing countries.

The consequences of the currency crisis in Mexico were severe. Consumer interest rates shot up to an average of 80 percent, making it impossible for many borrowers to pay interest on their loans or to make credit-card payments. Mexico's expanding commercial sector was devastated, as thousands of businesses were forced into bankruptcy or were required to lay off much of their workforce. The devaluation of the currency pushed annual inflation from 6 percent to nearly 50 percent, imposing a severe burden on consumers and pushing millions of people below the poverty line.

In January 1995, the United States provided assistance to Mexico in the form of a US$20 billion emergency debt relief package. The concession by the United States government of an emergency loan to Mexico was highly controversial in both countries. To assuage congressional opposition to the loan package, the administration of United States President William J. Clinton took the unprecedented step of requiring the Mexican government to commit its revenues from the national oil company as collateral.

As Mexico's economy stabilized in the wake of the financial crisis, a series of bizarre political events unfolded in the opening months of 1995. In the aftermath of the financial crisis, a rare public feud developed between former president Salinas and the Zedillo administration, with each side blaming the other for mishandling the crisis. Hailed as a modernizer just a few months before, Salinas had become the main target of public blame for the near-collapse of the financial system. Salinas's reputation suffered a further blow in connection with his brother Raúl's reported role in the José Francisco Ruiz Massieu assassination. Shortly after being cleared as a suspect by the attorney general's office, Salinas quietly left Mexico for apparent exile in Ireland.

Charges of high-level corruption, bribery, and the role of drug money in the assassination of government officials continued to grow. Despite convictions for the 1994 murder of PRI official José Francisco Ruiz Massieu, the motives behind the killing remained unanswered. Questions about the assassination increased when, in November 1994, Mario Ruiz Massieu, Mexico's assistant attorney general, younger brother of José Francisco Ruiz Massieu and the official in charge of the murder investigation, abruptly resigned, claiming that high-ranking PRI officials were thwarting his investigation efforts. When the investigation resumed with a new prosecutor in charge, Raúl Salinas de Gotari, brother of the former president, was arrested and charged with hiring a hit man to murder José Francisco Ruiz Massieu. It was widely assumed that pressure from high government officials to ignore Salinas's involvement was the reason for Mario Ruiz Massieu's resignation.

On March 2, 1995, Mario Ruiz Massieu was arrested at Newark International Airport before boarding a plan for Spain and charged by United States customs officials with failing to declare US$46,000. He was placed under house arrest, and proceedings for deportation began. Investigations of Mario Ruiz Massieu's finances revealed a US$9 million bank account in Houston. United States federal prosecutors charged that the money had come from Mexican drug traffickers, and a civil trial to seize the money began in February 1997. Despite claims from Mario Ruiz Massieu that the money was obtained legally, documents and witnesses in the civil trial claimed that the money had come from payoffs from drug traffickers to avoid prosecution. The case began to be called the "Mexican Watergate" as the Mexico City newspapers El Proceso and La Jornada published documents from the trial that also implicated former president Salinas and his brother Raúl in drug trafficking. Other stories implied that payoffs from drug traffickers might have played a role in the José Francisco Ruiz Massieu killing and in Mario Ruiz Massieu's resignation from the investigation.

As the Mario Ruiz Massieu investigation and trial continued, another drug-related scandal broke. On February 18, General Jesús Gutiérrez Rebollo, newly appointed head of the National Institute to Combat Drugs, was fired and arrested. While Gutiérrez Rebollo aggressively prosecuted several Mexican drug cartels in his ten weeks in office, he allegedly protected the Ciudad Juárez drug cartel leader, Amado Carillo Fuentes. Known as the "lord of the skies," Carillo Fuentes used a fleet of Boeing 747s to ferry cocaine from Colombia to Mexico and then to the United States. The revelations of bribery and involvement in drug trafficking were particularly embarrassing to the Mexican military, long considered the one institution in Mexico largely untouched by corruption. That assumption was again challenged when, in March 1997, Brigadier General Alfredo Navarro Lara was arrested and accused of trafficking, bribery, and criminal conspiracy in a protection scheme involving a Tijuana-based drug cartel.

In an effort to clean up the scandal-ridden National Institute to Combat Drugs, Attorney General Jorge Madrazo Cuéllar named Mariano Federico Herrán Salvatti as the institute's new head. Herrán had previously served as the top prosecutor in Mexico City, and underwent extensive background checks and drug and lie detector tests before being offered the position. All employees of the institute were given drug tests, and, in another embarrassment, the attorney general's office reported that 424 tested positive, about half of those for cocaine use. In his swearing in, Herrán reported that his greatest challenge would be "recovering the confidence lost and damaged by corruption, impunity, and the irresponsible actions of many bad public servants over many years."

The scandals surrounding the Colosio and Ruiz Massieu assassinations underscored a growing problem of corruption of Mexican political and law enforcement institutions and coincided with a surge in criminal activity in much of the country. By the mid-1990s, local drug mafias with connections to Colombian drug cartels posed a serious challenge to state authority in several remote areas of Mexico. With their control over enormous sums of money, manpower, and real estate, the cartels were able to evade prosecution through a combination of innovation and outright bribery of local officials and law enforcement agencies. In some cases, entire local and state law enforcement agencies had been effectively neutralized through the payment of bribes and the placement of local drug cartel informants in police units. These measures allowed the cartels to establish relatively secure transshipment corridors for United States-bound drugs. Mexican authorities reported that drug traffickers had even resorted to buying and retrofitting old airliners to carry cocaine from South America to the Mexico-United States border region.

Organized crime not only represented a direct challenge to the rule of law but also was indirectly responsible for undermining democratic institutions. Evidence gathered from the Colosio and Ruiz Massieu murder investigations suggested that the drug cartels may have formed alliances with some of the informal political networks within the PRI. Reports in the Mexican media of corruption by public officials and law enforcement agencies eroded the public's confidence in Mexico's political institutions and created a climate of severe cynicism and mistrust of all politicians.

The erosion of public confidence in government agencies was reinforced by the apparent inability of police to stem a growing tide of criminal behavior in Mexico City and other large urban areas. By the mid-1990s, the problem of rising organized and common crime--a problem that Mexico shared with several other countries undergoing simultaneous democratic reform and economic austerity--had become a paramount public concern.

Responding to domestic and international pressure to fight crime and reduce official corruption, during the first weeks of his administration President Zedillo outlined a plan for the overhaul of the justice system and the professionalization of police agencies. To demonstrate his resolve to solve the 1994 assassination cases, Zedillo took the unusual step of appointing as attorney general a well-respected member of the opposition PAN.

President Zedillo's reform efforts were derailed by the financial crisis and by the continuation of guerrilla activity in Chiapas and, subsequently, in the states of Guerrero and Oaxaca. In April 1995, Zedillo ordered a major military offensive against the Zapatistas and their urban command structure. The operation managed to disrupt the Zapatistas' urban support network, but failed to capture the guerrillas' eccentric field commander and spokesman, Subcommander Marcos.

The government's war against narcotrafficking, as well as its counterinsurgency efforts in Chiapas and Guerrero, raised the military's profile in Mexico's civilian-dominated political system. The military, whose role since the 1940s has been largely confined to civic action and disaster-relief activities, despite some instances of corruption, was increasingly being called upon to replace unreliable police agencies in the interdiction of narcotics shipments. The army's indefinite deployment in Chiapas and Guerrero, which also represented a significant expansion of its mission, prompted some observers to warn of a growing political role for the military in the Mexican political system.

By early 1997, the Mexican economy had stabilized and the political system was continuing its gradual transition toward increased representativeness and responsiveness. Throughout 1996 the opposition PAN won a number of important municipal and gubernatorial elections. The left did not fare as well as the right, having failed to regain the momentum it had acquired during the late 1980s. The opposition victories in 1996 set the stage for strong challenges to the PRI in the 1997 midterm congressional elections, the first balloting for the key post of mayor of Mexico City in the summer of 1997, and the 2000 presidential race.

In the medium term, Mexico faces the continuing challenge of carrying through its political and economic reforms in the face of further potential setbacks. A major challenge facing Mexico is that of restoring healthy economic growth and improving domestic productivity and national competitiveness in global markets. Mexico's participation in NAFTA provides strong incentives and opportunities to increase the competitiveness of the Mexican economy. One of the key problems will be to continue opening the economy while minimizing the potentially destabilizing human costs of economic dislocation, particularly of rural communities that have been threatened in the short run by freer trade.

Another key problem facing Mexico into the twenty-first century will be that of promoting balanced development among the country's diverse regions. Data from the 1990 national census show a declining but still significant gap in basic quality-of-life and educational indicators between the relatively prosperous north and the less developed south and southwest. Once sustained growth is restored, Mexico will be challenged to overcome the wide regional disparities that threaten to create, in effect, two Mexicos.

Finally, Mexico appears to be undergoing a fundamental transformation of its political culture. The corporatist patterns of political participation that were promoted by the PRI during its sixty-year period of undisputed rule are being replaced by more liberal forms of civic association. Recent electoral reforms and opposition victories at the state and local levels suggest that Mexico is in transition from a one-party authoritarian system to a multiparty democracy. During the first half of his term, President Zedillo took significant steps to weaken the historically strong link between the PRI and the state. The reform process is threatened, however, by the growing problem of crime and the penetration of the state by criminal organizations. One of the principal political challenges facing President Zedillo and his successors will be that of fashioning a robust response to crime that does not resort to authoritarian methods that could reverse the reform process.

March 24, 1997
Tim Merrill and Ramón Miró

Data as of June 1996


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