MEXICO: MIDTERM ELECTORAL PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92T00277R000100070003-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 22, 2016
• Document Release Date: March 31, 2010
• Sequence Number: 3
• Publication Date: June 1, 1985
• Content Type: NIE

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-'~ Central
" Intelligence
Secret
NIls81.84
June 1985
Copy 316
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Memorandum to Holders of N I E 81-84,
The Outlook for Mexico
MEXICO: MIDTERM
ELECTORAL PROSPECTS
Information available as of 20 June 1985 was used
in the preparation of this Estimate, which was
approved by the National Foreign Intelligence
Board on that date.
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THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS.
The following intelligence organizations participated in the preparation of the
Estimate:
The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organizations of the Departments of State and
the Treasury.
Also Participating:
The Assistant Chief of Staff for Intelligence, Department of the Army
The Director of Naval Intelligence, Department of the Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
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CONTENTS
Page
SCOPE NOTE ...................................................................................... 1
KEY JUDGMENTS .............................................................................. 3
DISCUSSION ........................................................................................ 7
Significance of the 1985 Races ......................................................... 7
The Opposition Challenge ........................................................... 8
Soviet-Cuban Role ........................................................................ 10
Election Issues ................................................................................... 11
The Economy ................................................................................ 11
Stalled Anticorruption Drive ....................................................... 12
Other Issues ................................................................................... 13
Election Tactics ................................................................................. 13
Election Prospects ............................................................................. 14
Alternative Outcomes ....................................................................... 15
PRI Election Sweep and Major Violence .................................... 15
PRI Loss of a Governorship ......................................................... 15
Implications for de la Madrid's Rule .............................................. 16
Implications for the United States ................................................... 17
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SCOPE NOTE
In our April 1984 National Intelligence Estimate 81-84, The
Outlook for Mexico, we warned that "the Mexican political system is
under greater stress today than at any time in the last 30 years," and
that, ultimately, "the preservation of Mexico's stability will rest on the
skill and competence of its leaders and on the strength of its political
fabric." The Intelligence Community was divided over the prospects for
political destabilization in Mexico in the next several years, but there
was unanimous agreement that in the coming years Mexico will suffer a
series of political and economic crises, which the United States will need
to monitor closely to protect its own vital interests.
This Memorandum to Holders updates that Estimate, with particu-
lar attention to the implications of the coming (July 1985) legislative and
gubernatorial elections on near-term political prospects. The Memoran-
dum also assesses the longer term implications of Mexico's continuing
economic difficulties.
The foregoing Scope Note i
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Figure 1
Administrative Units
C N tia
N 6,
C cfn
Sin
dtoaterrej
Saltilloa
Mexico
Zacatecas
!'dd Luis Puto$l
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1. Hidalgo
2. Mexico
3. Morelos
4. Queretaro
5. Tlaxcala
Boundary representation is
not necessarily authoritative.
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KEY JUDGMENTS
Mexican President de la Madrid was able to demonstrate strong
leadership during the earlier part of his six-year term by dramatically
reversing the grave economic crisis that confronted him when he took
office in 1982. He took advantage of a broad Mexican consensus that
new policies were needed to solve the country's difficulties by pushing
economic austerity as well as political reform and moral renovation.
This consensus has eroded over the past year or so as a result of pressure
from conflicting government and party interests, and he has had to
modify his goals in order to achieve an acceptable compromise. He has
relaxed his economic austerity program, thereby enhancing support for
his party in the coming 1985 midterm elections. He has also
to win elections and altered his strategy on curbing
corruption by generally not targeting top-level officials. These actions
partially reflect a pragmatic recognition of the economic and political
restraints facing him as well as political infighting among his advisers,
including maneuvering by several major subordinates to succeed him.
De la Madrid's leadership will be put to the test on 7 July 1985,
when Mexico will hold elections for all seats in the Chamber of
Deputies, for seven governorships, and for numerous local offices. The
elections are particularly important because they will come at a time
when the ruling party's prestige and popularity appear low by historical
standards. A victory by the Institutional Revolutionary Party (PRI)
without widespread violence or blatant fraud would reaffirm de la
Madrid's overall standing, possibly increasing his leverage with power-
ful opposing interests. However, de la Madrid's influence would be
weakened if the party were forced to concede a key governorship C
The outcome
will also affect the pace at which de la Madrid believes he is able to
move forward with reform of the political system and will test the
nationwide 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 generally 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. We expect the USSR, Cuba,
and other Communist states to have little, if any, influence on the
outcome of the elections. In the near term, the Soviets almost certainly
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do not want to jeopardize their present bilateral relationship with
Mexico, because it enables them to promote a number of their interests,
including a large intelligence apparatus in the capital and valuable
access to Central American subversive groups.
Opposition parties will seek to capitalize on dissatisfaction with the
PRI's performance and are likely to emphasize continued economic
problems, and drug trafficking. 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 preparation for the election year, the government shifted to
more stimulative policies in mid-1984 as a means of creating more jobs
and arresting the decline in living standards. As a result, the Mexican
economy grew by some 3.5 percent in 1984. These actions, however,
have kept inflation high and will probably cause Mexico to miss some
key IMF targets, particularly the budget deficit. Furthermore, the
balance of trade surplus has fallen sharply so far this year, the peso has
again become overvalued, and capital flight is once more a serious
problem.
We believe
at the de a Madrid administration is
attempting to sweep the elections by pumping extra resources into its
campaign
Electoral irregularities, in our judgment, may spark violent protests by
PAN supporters in Sonora and possibly elsewhere in the north, particu-
We anticipate that civil disturbances for
the most part will be localized and without strong leadership. Incidents
of violence may be magnified by international media coverage, but
they are likely to be quickly tamped by the Army and other security
forces.
We envision several scenarios:
- The greatest likelihood is that the PRI will retain control of the
vast majority of elective offices, including all %zovernorships
with minimal violenc
- We believe it is less likely that, while the PRI will win most con-
tests, including all governorships, such victories will be marred
by serious and widespread disorders.
- There is only a remote possibility that the PRI will acknowledge
a PAN victory in any state. We believe PAN's best chance of
capturing a governorship is in Sonora.
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Even if the de la Madrid administration emerges from the 1985
elections relatively unscathed, the government is likely to face con-
tinued economic and political difficulties through the end of the
President's term in 1988. In 1986, the ruling party is scheduled to face
an even greater number of gubernatorial contests, and the administra-
tion's economic policies will remain contentious. In addition, we judge
that he will be unable to make major reforms in the political system
Moreover,
the constraints on the de la Madrid administration are likely to grow
during the remaining three years of his term.
De la Madrid's difficulties probably will be most acute on the
economic front. A continuation of present policies, while temporarily
spurring economic growth, will prevent Mexico from meeting most of
its 1985 International Monetary Fund targets. Furthermore, the weak
trade performance, combined with large interest payments on its
foreign debt, may cause Mexico to experience its first current account
deficit since the financial crisis of 1982.
Following the elections, we believe de la Madrid will attempt to
continue essentially stimulative policies while implementing some belt-
tightening measures to cool the overheated economy and placate the
IMF and the international banking community, including more rapid
devaluation of the peso and cuts in government spending. Nevertheless,
we expect Mexico's economic difficulties will continue, and as a result,
de la Madrid is likely to face increased and conflicting pressures from
influential sectors in the government and the ruling party. These
pressures are likely to mount as the 1986 elections approach, placing
greater political constraints on his ability to make difficult economic
and other decisions.
Despite these problems, we do not expect the July 1985 elections to
have major repercussions for US-Mexican relations in the short term
under the most likely scenario. The importance de la Madrid attaches to
the bilateral relationship is somewhat offset by general anti-American
resentment, which can quickly surface in Mexico, as it did following US
allegations of corruption at high levels within his government. Thus, it is
problematic whether de la Madrid will be more receptive to greater
cooperation in areas of key concern to the United States, such as
narcotics control, immigration, and Central America.
Relations could he seriously aggravated in the less likely event of
serious disorders in the north
Such violence would
also discourage international investment and foster greater illegal
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migration. Should PAN capture a governorship, the de la Madrid
administration would be wary of any links between the opposition and
US groups, possibly introducing greater discord in bilateral relations.
Whatever the election outcome, we believe the situation in Mexico
will continue to present problems for key US interest
The existing constraints on the de a Madrid
administration, combined with Mexico's continued economic problems,
are likely to sustain the potential danger of political instability. In the
event of a major domestic crisis, the PRI may be tempted to exhort tra-
ditional anti-American feelings, which run deep through Mexican
society, in order to rally public support and retain political backing. The
Soviet Union and Cuba are likely to watch such developments closely
for opportunities that might benefit their relationship with Mexico.
The foregoing Key Judgments section is
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DISCUSSION
1. 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 (see inset on next page). 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 Mexi-
can Revolution, co-opting 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 averag-
ing 6 to 7 percent annually. Although the middle and
upper classes benefited disproportionately, other
3. In the past year or so, however, that consensus
has eroded, and de la Madrid's policy goals on a
number of issues-the economy, political reform, and
the "moral renovation" drive-increasingly have been
subjected to conflicting pressures from influential sec-
tors in the government and ruling party. In each case,
de la Madrid has modified his own goals in order to
achieve an acceptable compromise. On the economic
front, for example, the President shifted in mid-1984
from his policy of austerity to one of stimulation to
create more jobs and halt the slide in living standards
and thereby enhance support for the PRI in the
midterm elections, set for July 1985.
4. De la Madrid also has adjusted his strategy on
political reform and curbing corruption
groups also improved their lot.
2. 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 with-
drew. Newly elected President Miguel de la Madrid
adopted a stabilization program aimed at lowering the
country's triple-digit inflation rate, reducing the bur-
geoning public sector deficit, and restoring interna-
tional confidence in the government's policies. At the
same time, he sought to disassociate himself from the
Lopez Portillo administration by fostering "moral
renovation," a euphemism for curtailing official cor-
ruption, and promising to respect electoral outcomes.
As a result of such policies, most international observ-
ers awarded de la Madrid high marks for his perform-
ance, crediting him with cooling the overheated econ-
omy, 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 by manipulation 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. F__1
His
"moral renovation" drive has brought the dismissal of
numerous low-ranking officials but has generally
avoided targeting top-level officials.
5. De la Madrid's actions reflect in part a pragmatic
recognition of the political and economic constraints
facing him, as well as political infighting among his
advisers. strong
differences have emerged among key Cabinet officers
over the direction of the country's economic policy.
Meanwhile, a number of de la Madrid's subordinates,
including Salinas, Silva Herzog, Sepulveda, and Gov-
ernment Minister Bartlett, are visibly maneuvering to
succeed him at the end of his term in 1988.1
Significance of the 1985 Races
6. A major test of the de la Madrid administration
will occur on 7 July 1985, when Mexico will hold
elections for all seats in the national Chamber of
Deputies, seven state governorships (see figure 2), and
numerous local offices.
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Mexican President de la Madrid's efforts to revitalize
the ruling party have met with only limited success so
far in recovering lost popular support for the Institu-
tional Revolutionary Party (PRI) and improving internal
party control. Public disillusionment over the 1982
economic crisis, widespread cynicism regarding the
revelations of corruption of the Lopez Portillo adminis-
tration, and unexpectedly broad support for the Nation-
al Action Party (PAN) in the 1983 municipal elections
convinced de la Madrid and the PRI leadership that the
ruling party was in need of reform. Disagreements
within the ruling elite over the nature of the changes
required and resistance from local party chieftains-the
"caciques," whose entrenched positions might be
threatened by change-have hampered the effort.F_
Improving Internal Control
The economic hardship of the past few years has
reduced the government's ability to respond to the
interests of the PRI's three major mass-based organiza-
tions-campesinos (farmers), labor, and the "popular
sector"-as readily as in the past. The campesino sector
continues to lobby ineffectively for concessions on land
reform, and labor has had to accept wage settlements
resulting in declining real purchasing power for the past
few years. Labor support for the administration's poli-
cies could significantly decline if labor kingpin Fidel
Velazquez retires in 1986, as he has indicated he will.
Policy demands emanating from the popular sector are
more diffuse, since it is a diverse grouping of middle-
class organizations representing self-employed trades-
men, salaried teachers and other professionals, and
Rivalries within the PRI also take the form of
competition for legislative seats, state governorships,
and other political offices. Labor and the popular sector
have both succeeded in increasing their legislative
representation at the expense of the campesinos. In this
way, labor, in our judgment, is being rewarded for
accepting sacrifices necessitated by the government's
austerity program. The popular sector, in contrast, is
gaining influence because its candidates have the most
appeal in the heavily urbanized constituencies where
the PAN mounts its most successful campaigns.F__1
Expanding the Base of Support
Both the government and the ruling party realize that
demographic changes are eroding the PRI's traditional
base of support. Organized labor and the campesinos
are a much smaller portion of the population now than
they were 20 years ago. In recent years, the PRI has
sought to broaden its base by organizing services and co-
opting leaders in the urban slums, and by targeting
women, youth, and ethnic minority groups for special
attention. Nonetheless, efforts of some leaders of the
popular sector to promote formal inclusion of business
and commercial interests in the PRI have met with
strident opposition from labor leader Velazquez and
have been dropped.
The PRI has also sought to expand its base of support
by fielding more appealing candidates for public office.
It has experimented with intraparty primaries in some
localities, although party bosses have continued to dom-
inate the nomination processes. In key state and federal
races, however, Mexico City has more often designated
PRI candidates of its choosing. Resulting slates have
contained many fresh faces and considerable talent but
have been heavy on technocrats and light on experi-
enced politicians who command significant popular
support. j
The revitalization effort probably will continue to
meet with mixed success. Competition between the
principal sectors of the party is likely to grow so long as
the economy does not perform well. Resource con-
straints will limit the PRI's capacity to rally public
support for government policies, inhibit expansion of its
popular base, and hamper the administration's ability to
maintain policy coherence. Nevertheless, it is unlikely,
in our judgment, that any of the main pillars of the PRI
will formally break with the party, since none-either
on its own or with the help of the PAN or the Unified
Socialist Party of Mexico (PSUM)-could garner enough
support to break the PRI's virtual monopoly on power.
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
are likely to affect de la Madrid's ability to continue
his campaign against corruption and to allow greater
political pluralism. The PRI would 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 PRI victory without
widespread violence or blatant fraud would reaffirm
de la Madrid's overall standing, possibly increasing his
leverage with powerful opposing interests.]
The Opposition Challenge
7. Opposition parties (see table, page 10) view 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
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Figure 2
States Holding Gubernatorial Elections
United States
C.1 ll.,
N.
Mexico'
Guatemala
Q 300
federal deputies and senators, 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 attracted
support among the urban middle class and business
interests. Elsewhere, the PAN generally remains small
and ineffective, and presents little threat to the ruling
party (see inset on page 11). =
8. The PAN's strength in the north was demonstrat-
ed in 1983 when the party swept to victory in a
number of key municipal contests (see figure 3). 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 Chi-
huahua 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
9. As a result, we believe, de ]a Madrid subsequent-
ly resolved not to allow such losses to be repeated. F-
r'El J
Salvador
northern state of Coahuila, where PRI manipulation of
the elections was most evident, however, seized or
burned several town halls to protest election rigging.
At least one person died and dozens were injured in
related rioting.
10. 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 (see cartoon). 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
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Estimated
Membership
Institutional Revolutionary Party Adolfo Lugo Verduzco, president
(PRI), 1929
12-14 million
National Action Party (PAN), 1939 Pablo Emilio Madero, president
Bernardo Batiz, secretary general
250,000
Unified Socialist Party of Mexico Pablo Gomez Alvarez, secretary
(PSUM), 1981 general
Popular Socialist Party (PPS), 1948 Jorge Cruickshank Garcia,
secretary general
3,000-4,000
Socialist Workers Party (PST), 1975 Rafael Aguilar Talamantes,
secretary general
5,000
Mexican Workers Party (PMT), Heberto Castillo, president
1974 Jose Luis Diaz Moll, secretary
general
Revolutionary Workers Party Ricardo Pascoe Pierce, member of
(PRT), 1976 National Secretariat
12,500
Mexican Democratic Party (PDM), Ignacio Gonzalez Gollaz, president
1972
10,000
Authentic Party of the Revolution Carlos Cantu Rosas, secretary
(PARM), 1954 general
3,000
Orientation
Moderately leftist but membership in-
cludes variety of factions and outlooks;
nationalistic, identifies with revolution-
ary ideals
Center-right, proclerical, probusiness,
favors more limited role for government
in the economy
Espouses "scientific socialism" but works
closely with PRI
Advocates a government of workers but
works closely with PRI
Trotskyist, strongly supports human
rights
Generally viewed as rightist, rejects both
capitalism and Marxism
Right of center, strongly nationalistic,
works closely with PRI
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support from Mexicans in the capital and areas of
southern and central Mexico, but personality, ideologi-
cal, and tactical conflicts have weakened the coalition.
Earlier this year, about 20 percent of PSUM's mem-
bers bolted, announcing they would form a new
hardline Marxist party that would look to Moscow and
Havana for support.
11. More generally, we expect the USSR, Cuba, and
other Communist states to have little, if any, influence
on the outcome of the elections. In our view, Moscow
has not provided extensive financial and other assist-
ance to Mexico's leftist parties because it views them as
weak and ineffectual. More important, the Soviets
almost certainly do not want to jeopardize their
present bilateral relationship, which enables them to
promote a number of their interests. These include a
large and active KGB presence in Mexico City, a
valuable conduit for advice and support to Central
American groups the Soviets favor.
12. We believe that the Soviets will continue to
cooperate with Mexico City, rather than attempt to
undermine it, in the near term. In our judgment, they
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The PAN, which was formed in 1939, has demon-
strated growing strength with the electorate in recent
years. At present, it controls 51 of the 400 seats in the
Chamber of Deputies, as well as a number of state
legislative posts and mayoralties. PAN officials charge,
that they would hold additional
practiced in past elections.
The PAN is organized at district, regional, and
national levels. It is strongest in northern Mexico, where
residents are more conservative and enjoy a higher
standard of living than in the rest of the country.
Although PAN officials assert they represent no special
class or economic interests, support for the party has
traditionally been greatest among the middle and upper
classes, particularly within business and professional
circles. In recent years, the PAN has benefited from the
protest votes of many Mexicans who, while not PAN
loyalists, have sought to express their displeasure with
the PRI.=
The current national leader of the PAN and its
presidential standard bearer in the 1982 elections is
Pablo Emilio Madero. He is independently wealthy and
is a former federal deputy. He also is a scion of
Francisco Madero, one of the fathers of the Mexican
Revolution.
The PAN's political ideology favors less government
involvement in the economy and greater free enter-
prise. Madero has been critical of the PRI's nationaliza-
tion of Mexican banks in September 1982, for example,
are likely to realize few dramatic breakthroughs in
their ongoing efforts to enhance their influence, al-
though de la Madrid is likely to visit Moscow before he
leaves office. What limited gains they achieve, we
believe, will not alter Mexico's nonaligned foreign
policy or threaten US interests in Mexico. We consider
it unlikely that the Soviets and Cubans, given the
benefits they now derive from their relationship with
Mexico, will change their policy significantly in the
next few years. =
13. Mexico's leaders, for their part, appear less
concerned about opposition from the left than the
right.
year
but asserts his party is no less nationalistic than the PRI.
The PAN also advocates reform of the anticlerical
provisions of the Mexican Constitution and has called
for a truly independent judiciary and more powerful
legislature.
The PAN's limited financial resources and weak
organization have hampered its drive to attract greater
public support. It is the only major political party in
Mexico that has consistently refused to accept any
official subsidies. For this reason, it cannot afford to
field candidates in all parts of the country or to
maintain a full-time salaried party leadership or senior
staff.)
The PAN leadership also has had to paper over
differences between activists and traditionalists within
the party. The activists assert the PAN needs a younger,
more dynamic leadership, and they dismiss as futile the
party's continuing attempts to gain power through
elections. The traditionalists, such as Madero, counsel
patience and favor continued participation in the politi-
cal process. Although Madero and other party leaders
seek to play down such differences, as recently as 1976
the schism proved so divisive the PAN was unable to
agree on a presidential candidate.
PAN leaders probably will not endorse violence as a
means to protest electoral irregularities, especially so
long as Madero remains party head. In recent months,
however, Madero has warned that violence is inevitable
unless the government permits fair elections. F_~
We see little 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 tinder the country's election
laws
The Economy
14. Party loyalty has long been the principal factor
influencing voter behavior in Mexico, but other con-
cerns 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 previous austerity
policies brought Mexico back from the brink of finan-
cial disaster, they involved high social costs. Budget
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Figure 3
Major Mexican Municipalities Controlled by Opposition Groups, May 1985
? \ . Coahuila j
Hermosillo ' ?
J Chihuahua
% ^ ? h l
Baia r1......_ ? /`' '1
2acatecasrSan Luis Ciudad
an Victoria
ayarit
7 . ?
7 7
GuadSlajara/
f
*ih?;5 ~~-
Colin p1. ? (
cuts reduced subsidies for food and other basic con-
sumer goods and, we estimate, the real purchasing
power of most Mexicans has fallen by one-third since
de la Madrid assumed office. Although increased
economic growth since mid-1984 has eased some
hardships, the average Mexican is still faced with high
inflation and greater shortages of basic consumer
goods
Stalled Anticorruption Drive
15. The government's failure to reduce corruption
significantly despite de la Madrid's much publicized
"moral renovation" campaign may have an impact on
the election. At a minimum, the opposition will try to
take advantage of it. The effort was initially greeted
/ AQu:icc alicntes Mexa
C o.inaju4Io n l)isiroo
Queer?taro ALxek..
with broad approval particularly following revelations
about the preceding administration.
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Sur x J 1 ..:...o..~
Durango ' Seltillo ? .
&liacan N
? Controlled by PAN (National Action Party)
Controlled by PPS (Popular Socialist Party)
Is Controlled by PST (Socialist Workers Party)
Controlled by PSUM (Unified Socialist Party of Mexico)
A Controlled by PDM (Mexican Democratic Party)
Controlled by PARM (Authentic Party of the Revolution)
---- Estado boundary
? Estado capital
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Police Chief Arturo Durazo, who now is in Los
Angeles awaiting extradition, could implicate other
members of the present administration. More general-
ly, we believe public cynicism about the de la Madrid
administration's commitment to halting corruption
will continue to grow.
Other Issues
17. 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 gover-
nor's race in Sonora (see inset on page 14) is being
hotly contested, according to press and other reports.
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 indicat-
ed that international issues are not of great concern to
the electorate.
Election Tactics
18. 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. The ruling
party is endeavoring to use its superior organizational
and financial resources, as well as its control over the
media, to good advantage. 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.
In addition, the government has introduced more
expansionary spending policies since mid-1984 to soft-
en the effects of austerity and has lavished public
works projects on districts where it expects close races.
It is taking account of the elections in timing economic
policy announcements, and it probably will postpone
exchange rate adjustments until after the 7 July elec-
tion date.)
16. The opposition is attempting to exploit the fact
that 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
The government apparently
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Nowhere will the PRI face stiffer competition, in our
judgment, than in the northwestern border state of
Sonora. The PAN gubernatorial candidate, Adalberto
Rosas Lopez, is well known throughout the state and
highly popular In
contrast, the ruling party candidate for governor, Ro-
dolfo Felix Valdes, has not lived in Sonora since 1941
and presides over a divided state party organization.
we expect the
ruling party to take whatever measures are necessary to
retain control of Sonora's statehouse. As a result, civil
disturbances are likely, and the government probably
will have to call upon the security forces, including the
Army to maintain order.
Sonora, which borders Arizona and is Mexico's second
largest state, is known for its sprawling ranches and
farms. The state also has a reputation for having an
independent-minded citizenry and frontier outlook.
Sonorans are proud that the Mexican revolution began
in their state and that four of the country's presidents-
Huerta, Obregon, Rodriguez, and Calles-were natives.
Sonora's violent history gives ample precedents for a
spirited reaction if the PRI goes too far in tampering
with electoral results.
Although the ruling party has long dominated Sono-
ran politics, the PAN in recent years has made signifi-
cant inroads. The center-right opposition now controls
three cities: Hermosillo, the capital, San Luis Rio
20. 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 empha-
sis on finding attractive, popular candidates, most of
whom are drawn from local business and professional
circles.
PAN a so 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
Colorado, and Agua Prieta. We believe
hat the PAN would have captured
additional municipalities had honest elections been held
in 1983, when Sonorans last went to the polls.
President de la Madrid's selection of an outsider as
the PRI candidate for governor apparently was based
on his belief there was no party leader in the state who
could unify the PRI. Felix, a 62-year-old engineer, was
then serving in Mexico City as Minister of Communica-
tions and Transport. De la Madrid probably was aware
of Felix's reputation for being a shrewd middle-of-the-
road politician and, in contrast to the current governor,
Rosas, the PAN
candidate, is widely respected in Sonora and has the
strong support of the state party organization. Rosas,
who is 42 and an agronomist by vocation, formerly was
the PAN mayor of the state's second-largest city, Ciu-
dad Obregon. He is said to be an electrifying public
we think it unlikely the ruling party will surrender the
statehouse in Sonora or in any other state in the coming
elections. Even PAN leaders concede they would have
to win by a landslide for the government to acknowl-
edge an opposition victory.
limited political base and to shed its reputation for
being an elitist party backed by US interests. (c NF)
Election Prospects
21. In view of the ruling party's considerable re-
sources and its willingness to use extralegal 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
PRI leaders believe the loss of even one governorship
would be taken as a sign of weakness and would make
it more vulnerable to future opposition challenges.
Moreover, in order to placate PAN partisans and
reduce the possibility of disorders, the PRI may cut a
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deal with the opposition parties allowing them to win
some local and congressional elections in order to keep
the governorships and other key positions
22. Nevertheless, the opposition also is unlikely to
improve its position greatly in the Chamber of Depu-
ties. 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 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, in our judg-
ment, stands at least an even chance of retaining
control of Hermosillo, the capital. 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.
23. Nonetheless, opposition parties are likely to
charge the PRI with a variety of electoral irregular-
ities, even before the official results are announced. If
large numbers of voters do not consider the results
valid, they almost certainly will organize demonstra-
tions and occupy town halls. Some may engage in
short-lived hunger strikes, but such activities, in our
judgment, are unlikely to reverse election outcomes.
24. PAN supporters in the north, as well as unem-
ployed youths, are the most likely to engage in violent
outbursts protesting government electoral fraud. PAN
leader Pablo Emilio Madero stated publicly last Octo-
ber there almost certainly will be violence in Sonora if
fair elections are not held. We anticipate civil distur-
bances associated with the elections will be localized
but may well be magnified by extensive international
media coverage. There is only a remote possibility that
the unrest in the north or elsewhere will severely tax
the resources of local security forces and the Army.
the military
remains staunchly loyal to the government and is
likely to use whatever degree of force is necessary to
restore order. F__~
' No seats in the 64-member Senate are at stake in this election.
Senators are elected concurrently with the President, and all now
belong to the PRI. Neither legislative body has much influence on
public policy; each essentially is a rubberstamp for the President's
legislative agenda.F__1
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Implications for de la Madrid's Rule
30. Even if the de la Madrid administration
emerges from the 1985 elections relatively unscathed,
the PRI, in our judgment, is likely to face continued
economic and political difficulties through the end of
the President's term in 1988. In 1986 the PRI is
scheduled to face an even greater number of guberna-
torial contests, and the administration's economic poli-
cies will remain contentious. In fact, we believe that
the de la Madrid administration may face the prospect
of growth rates of less than 3 percent in the closing
years of its term as a result of the likely failure to
attract sufficient new foreign investment and the need
to cut back on government spending to meet IMF
guidelines. In addition, we judge that the President
will be unable to make major reforms in the political
system or to root out much of the corruption that is
endemic in Mexico. Moreover, the constraints on de la
Madrid's administration are likely to grow during the
remaining three years of his term.)
during the same period)
31. De la Madrid's difficulties probably will be
most acute on the economic front. Expansionary eco-
nomic policies begun in mid-1984 resulted in a posi-
tive economic growth of some 3.5 percent last year,
but the overheated economy is undercutting Mexico's
agreement with the IMF for 1985. Preelection spend-
ing is keeping the public sector deficit well above
target levels, and inflation is continuing at nearly 60
percent, far above the 45 percent set by the Interna-
tional Monetary Fund. Moreover, external accounts
are deteriorating because of the overvalued exchange
rate and the soft world oil market. Mexico's trade
surplus diminished some 40 percent in the first quarter
of 1985 because of falling oil revenues, the decreasing
competitiveness of nonoil exports, and rising imports.
Furthermore, overvaluation of the peso and negative
interest rates caused capital outflows of $2-3 billion
32. A continuation of present policies, while tempo-
rarily spurring economic growth, will prevent Mexico
from meeting most of its 1985 IMF targets. Further-
more, the weak trade performance, combined with
large interest payments on its foreign debt, may cause
Mexico to experience its first current account deficit
since the financial crisis of 1982. Until the de la
Madrid administration corrects exchange rates, capital
flight will remain a problem. Under these circum-
stances, Mexico will be forced to draw more from its
foreign exchange reserves, rather than adding to re-
serves, as called for in the IMF program. Mexico may
also be forced to seek loans in international capital
markets that exceed IMF program limitations. =
33. Following the elections, de la Madrid will have
to pursue one of three general economic courses: to
continue essentially stimulative policies, to revert to
more austere ones, or to liberalize trade and invest-
ment strictures in an attempt to use the private sector
as the primary vehicle for spurring economic growth
We believe
~t at he will attempt to pursue the first
course w hi e implementing some belt-tightening meas-
ures to cool the overheated economy and placate the
IMF and the international banking community.
34. Mexico City probably will find it more politi-
cally feasible to adopt some austerity measures soon
after the July 1985 elections, to bring economic policy
in closer compliance with IMF guidelines, including
more rapid devaluation of the peso and cuts in
government spending. Nevertheless, the influence of
Finance Minister Silva Herzog and other Cabinet
ministers who advocate Mexico's adherence to the
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IMF adjustment program has been declining, while
that of Budget Minister Salinas, Foreign Minister
Sepulveda, and others favoring greater government
spending has been increasing,
35. A return to economic stabilization polices pre-
scribed by the IMF would be likely to lead to further
hardship over the near term. Mexicans once again
would face declining living standards, rising unem-
ployment, and decreased availability of goods as the
de la Madrid administration clamped down on govern-
ment spending. Inflation would remain high because
of further cuts in subsidies and rising costs caused by
devaluation of the peso. Any improvement in the
balance of payments over the near term most likely
would result from a contraction in imports that would
hurt consumers and dampen further private-sector
recovery. The longer reforms are postponed, the
harsher will be the measures ultimately needed to
sustain long-term growth.
36. If Mexico's economic difficulties continue, as
we expect they will, de la Madrid is likely to face
increased and conflicting pressures from influential
sectors in the government and the ruling party. In
addition, as the 1986 elections approach, there are
likely to be greater political constraints on his ability to
make difficult economic and other decisions. More-
over, the planned retirement of Mexican labor king-
pin, Fidel Velazquez, in February 1986, may intro-
duce new political uncertainties.
Implications for the United States
37. Under the most likely scenario, we do not
expect the midterm elections to have major repercus-
sions for US-Mexican relations in the short term.
Following the elections, we anticipate that de la
Madrid will generally eschew tactics that would aggra-
vate 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. However, the
importance he attaches to the bilateral relationship is
somewhat offset by the political potency of anti-
Yankee resentment that has resurfaced in Mexico
following US allegations of corruption at high levels in
the government. It is thus problematic whether, after
the elections de ]a Madrid will be more receptive to
greater cooperation in areas of key concern to this
country, such as narcotics control, immigration, and
Central America. Recent Mexican criticism of US
policy toward Nicaragua and resumption of oil ship-
ments to Managua may be indicators of this kind of
backlash.
38. Bilateral relations could be seriously aggravated,
moreover, in the event of serious disorders in Sonora,
if the Mexican Government believed it were being
pressured by the United States to accede to claimed
PAN victories. If major violence in the north accompa-
nied 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 not only with the level and duration of
violence, but also with the degree of perceived US
support being accorded to the PAN. Violence would
discourage international investment and foster illegal
migration. 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 bilater-
al relations. Meanwhile, the Soviet Union and Cuba
almost certainly would watch such developments
closely for opportunities that might benefit their rela-
tionship with Mexico.
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