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2/13/96

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Drugs, democracy part of Mexico's 'turning point,' scholars say

STANFORD -- As a medical doctor, Jacobo Zaidenweber thinks of his country as flat on its back in an intensive care unit for the sixth time in 25 years. "Sometimes we've been hit by a train; other times we've been hit by a truck. Everyone tells us we are doing OK - that we are going to make it," he said, but his own prognosis is that Mexico "cannot bear another crisis in the year 2000."

Zaidenweber, an oncologist turned industrialist who negotiated textile tariff provisions of NAFTA for the Salinas government, was among those invited by the Mexican Students Association to participate in a campus symposium on Mexico's latest "turning point." The Feb. 9 forum was co-sponsored by the university's Center for Latin American Studies and the North America Forum, programs that support scholars who do research in Latin America.

Two alternative scenarios emerged - one of a recovering Mexico, far better off than Russia, because Salinas, its last authoritarian ruler, tackled the most difficult economic reforms and because the country's political leaders are now moving toward creating a real democracy.

The more pessimistic scenario includes increasing violence and corruption, similar to recent developments in El Salvador or Guatemala, as the centuries-old centralized, hierarchical and authoritarian system breaks down. Growth in the underground economy and in income inequality, as well as increasing signs of splintering in political parties, were listed as worrisome trends. While no one at the conference suggested that Mexico should or could return to a closed, socialistic economic order, several participants said the rhetoric of capitalism, imposed from the outside, makes it impossible to define a legitimate stabilizing role for the state.

The camp of the cautious optimists included Zaidenweber and three American scholars - Stanford economist Paul Krugman, University of California-Santa Barbara political scientist Kathleen Bruhn and Stanford anthropologist George Collier. The more pessimistic tone came from Mexican participants Ramy Schwartz, a journalist and co-director of the economic journal Carpeta Púrpura, and Rodolfo Stavenhagen, a professor and senior research scholar at El Coegio de México and former president of the Human Rights Commission in Mexico.

Mexico's vital economic signs "look pretty good" for the next few years, said Krugman, who added that he was basing his analysis strictly "on the numbers" that international economists normally track - such indicators as growth in gross domestic product, population growth and debt load. Krugman was critical in 1993 and 1994 of Wall Street and U.S. government leaders who, he felt, overlooked the underlying indicators and talked up investment opportunities in Mexico.

Since the currency crisis of December 1994, U.S. loan guarantees have helped prevent a collapse of the Mexican economy, he said. "It doesn't make a newspaper headline, but we didn't lose the money and Mexico's situation isn't as bad as it could have been."

Bruhn said Mexico has reached the point where "perestroika without glasnost is beginning to do more harm than good." But she added that Mexico has the institutional structures, including political parties and economic reforms, that Russia lacks for moving toward a genuine democracy.

Collier, who has studied Indian peasant communities in Chiapas since the 1960s, said those communities have "great capacity to change, to hunker down to withstand economic setbacks and to form new kinds of alliances. I think the central government has to learn to let go and [not try to] control everything from the center," Collier said, but he added that the movement also must "recognize that the state has a role to invest in basic social infrastructure."

Mexico's indigenous people need local control of their government budgets, a fact that the World Bank has failed to recognize in its aid programs, said Salomon Nahmad, former director of Mexico's National Institute for Indigenous People. The central problem of Mexico, he said, is creating "a new social relation" between groups.

Schwartz compared Mexico in 1994 to the United States in 1929, just before the Great Depression. The similarities, he said, include monopolistic industries, labor unions losing wages and power, slipping farm production, prospering crime syndicates and no deposit insurance or other social benefits. He estimated that the underground economy could constitute half of the total economy, with illicit drug trade alone making up as much as 10 percent of the total economy.

Without a "New Deal" in sight, he questioned whether Mexico can ever improve its longstanding problems with income disparity, violation of human rights and ecological degradation. "The neo-liberal economic model," he said, "has not delivered [economic] growth, better distribution [of wealth] or stability. . . . It's not enough to have democracy and growth. We also have to think about distribution of wealth, and that is a problem no one, even in the United States, has a solution for."

Better distribution of wealth cannot be Mexico's first priority, Krugman said. "You have to have an economy that's alive first. In the United States, I'm in favor of retaining the tax and transfer system we have. I don't think Mexico can worry about that yet."

Stavenhagen disagreed. "Today's politicians are slaves of some economic dogma that doesn't work," he said. At least 30 percent of Mexico's population lives in extreme poverty, not knowing how they will feed or house their families, he said, and many communities' survival is dependent on U.S. migrants sending money home.

"More are poor, and also they are getting poorer. This has not changed with the
neo-liberal model and not with the [mixed economy] model before that," he said. Mexico's "hierarchical, authoritarian and centralized political and economic system," he said, "is breaking down, but we don't know what's coming in its place. . . . I don't have an answer, but I'm insisting on opening up a real debate" with neo-liberals who claim to have the only one.

Bruhn cautioned that bringing democracy to Mexico requires more than conducting open, fair elections. Losers of elections also need access to information and influence, including an independent judiciary, she said. The current winner-take-all system, she said, causes problems for the economy in that government data lack credibility. There is also no basis for political compromise, and the stakes are so high in elections that people resort to violence. "No country where political leaders are murdering each other can be considered stable," she said.

Although opposition parties have been gaining influence since 1988, she said that party discipline has diminished so that local party actions, such as the recent PRD blockade of oil wells in one state over compensation and environmental issues, are not necessarily endorsed by national party leaders who are engaged in sensitive negotiations on political reform. "This makes it hard [for leaders of other parties] to commit to any deal with the PRD leaders."

"The risky strategy of the radical left," she added, "is to stonewall until the administration collapses in hopes of getting a better deal. It's more likely that conservative factions would step in," she said, if a political collapse occurs.

The PRI, the party that has controlled