Mexico's future: it's linked to help from Washington

TWO recent events may persuade Mexico's President Miguel de la Madrid Hurtado to reconsider relatively new policies designed to revive his nation's faltering economy by welcoming private investment, selling off the biggest white elephants among 943 quasi-state industries, spurring nonpetroleum exports, and entering the General Agreement on Tariffs and Trade, a 90-member organization that stimulates world commerce by lowering trade barriers. The first episode involved United States congressional hearings conducted last month by Sen. Jesse Helms in which witnesses castigated Mexican officials for their alleged complicity in drug trafficking. United States Customs chief William von Raab implied that every Mexican official ``up and down the ladder'' was on the take. Such a wild charge was received here as the political equivalent of fingernails clawing a blackboard. ``Stick it to the gringos!'' was the sanitized translation of the collective response that rippled through universities, union halls, and government agencies.

The second incident was the booing of Mr. de la Madrid at the opening of the World Cup championship in this ancient Aztec capital. The largely middle-class crowd of 100,000 gave him Mexico's sibilant version of the Bronx cheer three times: when he entered the stadium, when an international soccer official praised him, and when he attempted to make brief remarks.

The danger is that these events will persuade the President, a cautious, Harvard-educated technocrat who lacks a feel for the popular pulse, to move even more slowly on -- or even jettison -- plans to open Mexico's economy to market forces during his remaining two years in office. He may conclude that the US is out to get him, and that staying the course with an unevenly applied but impressive austerity program will only enhance his unpopularity.

Needless to say, pampered unions, owners of inefficient companies, strident nationalists, and self-serving bureaucrats whose jobs depend on ubiquitous regulations decry reform of Mexico's hugely protected economy. They complain that introducing the magic of the marketplace will spark gains by foreign corporations; bankruptcies; and higher joblessness in a country where 40 percent of the 23 million-member labor force lacks employment or works only a few weeks a year.

The day after the stadium rebuke, Mexico's acutely offended jefe m'aximo (head of state) vowed that he would not change a comma in his country's highly nationalistic investment statute. This law restricts foreign investors to minority ownership in ventures unless the government approves an exception -- as occurred when International Business Machines agreed last year to invest $91 million in microcomputer operations.

Revising the so-called ``Mexicanization'' requirement would have signaled to the world business community greater congeniality to private investment in a country where the state generates or controls almost two-thirds of the gross domestic product.

In the face of herculean challenges near the end of their mandates, de la Madrid's immediate predecessors pursued populist measures to ingratiate themselves with the masses. In both cases, their actions -- Luis Echeverr'ia's turning over to peasants large northern farms in 1976 and Jos'e L'opez Portillo's nationalizing the banking system in 1982 -- impelled capital flight and sharpened the country's economic problems.

Should de la Madrid follow their demagogic lead and, for example, ever suspend or reduce payments on the country's nearly $100 billion external debt, Mexico would become a pariah to world bankers and traders.

In reaction, the President might designate to succeed him in 1988 a nationalist firebrand in lieu of a moderate leader convinced of the imperative of an export-driven growth model to revive a flaccid economy.

Ambassador John Gavin's departure in mid-May means that deadlock and drift beset Washington's policy toward a country that is infinitely more important to US security than all of Central America. If Senator Helms insists on convening more hearings, the least the White House can do is to dispatch spokesmen who recognize that -- its flaws aside -- de la Madrid's centrist regime has endorsed important economic changes. In addition, it has halted concessionary oil shipments to Nicaragua's Sandinistas, while improving relations with Jos'e Napole'on Duarte's government in El Salvador.

Continued Mexico-bashing will fan populist sentiments here, loft the stock of de la Madrid's advisers who scorn economic liberalization, and increase the likelihood that this country's next chief executive will delight in crossing swords with Uncle Sam.

George W. Grayson is John Marshall professor of government at the College of William and Mary, Williamsburg, Va., and author of ``United States and Mexico: Patterns of Influence.''

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