Mexico's crisis: a question of corruption, confidence, and cash
Behind Mexico's deepening economic trauma lies a legacy of mismanagement, overextended government spending, padded budgets, and perhaps worst of all - massive corruption.
Couple all this with the depressed economic picture throughout the world, and it is no wonder Mexico is so hard pressed economically. The decline in demand for oil, as well as a sharp petroleum price drop, simply did in the troubled Mexican economy - and sent Mexico begging with sombrero in hand for outside help.
The current international rescue operation will not be enough to bring order out of the chaos that now stalks the Mexican nation.
But international business specialists say the United States-sponsored bailout is a good first step. For one thing, it gives Mexico time for a long overdue economic housecleaning.
The first task is to restore some semblance of confidence in the government's ability to handle the economy. That is no easy task, however, for many stories of mismanagement by officials are coming to light. Moreover, this is a moment of transition in Mexico.
The government of Jose Lopez Portillo, badly battered by the mushrooming economic mess and the consequent massive public distrust of its intentions, has little more than three months in office. Miguel de la Madrid Hurtado, who becomes president Dec. 1, is scurrying to form his government and his policies.
Because of the crisis, President Lopez Portillo is keeping a low profile. Mr. de la Madrid does not yet have any power. There is considerable feeling that Mexico is more or less leaderless.
The key figure emerging in this situation is Jesus Silva Herzog, minister of the treasury since last April, who went to Washington and New York last week to negotiate the bailout package. In a sense, he is the hero of the hour - the one Mexican official out in the open.
That, of course, could prove his undoing. But someone had to carry the ball, and Mr. Silva Herzog has done the dirty work so far.
It now rests with others back in Mexico. There is no certainty they will be able to get Mexico's economic house in order quickly.
A major problem is corruption and graft - with kickbacks and payoffs a way of life for Mexican business. Mexico, of course, is not alone in this practice, but in Mexico businessmen, financiers, and government officials have made it an art. The cost is high.
This is one of the reasons there is currently such a loss of confidence in government. Rumors abound that members of the Lopez Portillo government, including some in the President's family and perhaps the President himself, have bankrolled millions in illegal earnings during the past 51/2 years. Some of this may be no more than rumors.
But if the past is any barometer for the present, it is likely there is considerable truth to the rumors. Dozens of high officials in previous administrations enriched themselves bountifully during the six-year term of their presidents. There is little reason to suspect this is not the case now.
President-elect de la Madrid is aware of this situation - and has promised that everyone in his administration will state her or his wealth at the time of inauguration and report it again at the end of his administration.
He has already shown that, although he is comfortable financially, he has no large holdings. And he has promised not to enrich himself during his presidency.
Whether Mexicans believe him will be a factor in the restoration of confidence in government that is so badly needed now.