THE OUTLOOK FOR MEXICO

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A010200040001-5
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 27, 2016
• Document Release Date: January 16, 2014
• Sequence Number: 1
• Publication Date: August 13, 1957
• Content Type: NIE

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NIE 8 1 ? 5 7
13 August 1957
N? 297
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 81-57
THE OUTLOOK FOR MEXICO
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 13 August 1957. Concurring were the Special Assistant, In-
telligence, Department of State; the Assistant Chief of Staff,
Intelligence, Department of the Army; the Director of Naval
Intelligence; the Assistant Chief of Staff, Intelligence, USAF;
and the Deputy Director for Intelligence, The Joint Staff. The
Atomic Energy Commission Representative to the IAC and the
Assistant Director, Federal Bureau of Investigation, abstained,
the subject being outside of their jurisdiction.
ki
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"
THE OUTLOOK FOR MEXICO
THE PROBLEM
To estimate the situation and probable developments in Mexico over the next
' few years.
SUMMARY AND CONCLUSIONS
1. Unlike most states in Latin America,
Mexico has in recent years developed a
reassuring degree of political maturity
and economic viability. Organized along
federal lines, the country is in fact run
by an administration which is highly
centralized and controlled by a president
elected under virtually a one-party sys-
tem. The party is organized in such a
way as to be responsive to most of the
important groups in the country. In
addition, it has gained wide support
through a moderately progressive pro-
gram of economic and social improve-
ment.
2. The political outlook is one of continu-
ing stability and moderation. This pat-
tern is supported by the small but rapidly
growing middle class which is exerting
increased political influence. Although
there is still strong contrast between the
poverty of the majority and the wealth
of the few, labor has so far accommodated
itself to the government's program of bal-
anced economic development. The army,
which does not play an active role in poli-
tics, accepts the constitutional processes.
National elections are 'scheduled for July
1958, when the presidential candidate
selected by the incumbent (Ruiz Cor-
tines) , in consultation with the two ex-
presidents (Aleman and Cardenas) , is
virtually certain to be elected.
3. The economic outlook is also good.
Minerals continue to be an important ex-
port, but in recent years the increase in
the export of cotton and coffee is espe-
cially noteworthy. In 1956, the latter
accounted respectively for 45 percent and
15 percent of total exports. The bulk of
Mexico's foreign trade is with the US.
In the last few years tourism has made
up the deficit in Mexico's balance of
payments.
4. The Mexican government adopts a
tolerant attitude toward Communism.
This toleration, which in large part re-
flects the combination of liberalism and
Marxist socialism of the Mexican Revolu-
tion, would probably change if Commu-
nism became a serious internal threat.
While Bloc activities in Mexico are on
1
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the increase, the local Communist move-
ment is only a negligible factor in the
country's political life.
5. Mexico supports the idea of hemis-
phere defense. However, unless Mexico
considered that its national security were
threatened, it probably would not agree
to the use of its territory by US forces.
6. Mexico will face certain economic and
political problems during the next few
years:
a. In the economic field Mexico will
have to contain incipient inflationary
pressures. It may have difficulty in se-
curing a continuing ready market for
Mexican exports. A rapidly increasing
2
population will probably strain Mexico's
resources.
b. Mexico is a haven for Latin Ameri-
can exiles and a principal center of Bloc
activities in Latin America. Its tolerant
attitude toward this situation will prob-
ably cause friction with other countries
in the hemisphere.
c. While Mexico will remain generally
cooperative with the US, there are certain
sources of irritation between the two
countries. The most important of these
arise out of the seizure of US vessels
fishing in waters claimed by Mexico, the
proposed increase in US import duties
on Mexican minerals, and the migra-
tion of Mexican agricultural laborers for
temporary employment in the US.
DISCUSSION
INTRODUCTION
7. Politically and economically, Mexico is one
of the most mature countries in Latin
America. About one-fourth the size of the
continental US, it is the third largest country
in Latin America, ranking after Brazil and
Argentina; it is second in population (over 31
million). Mexico's economy is rapidly becom-
ing diversified. Manufacturing is now join-
ing agriculture and the extractive industries,
the hitherto traditional bases of the economy.
About half of the country's inhabitants now
live in urban centers. The country has nat-
ural resources of power, minerals, and timber,
but economic development is handicapped by
climatic conditions, rugged topography, and a
limited amount of arable land. As in all
semideveloped countries, there is also a lack
of adequate capital and effective human re-
sources, although Mexico is more favored in
these respects than most other Latin Ameri-
can countries. The population is growing at
the rate of about three percent per annum.
It consists mainly of mestizos and Indians, is
about 50 percent illiterate, and is in poor
health generally. While there is a rapidly
growing middle class, there is still a strong
contrast between the poverty of the majority
and the wealth of the few.
8. Mexico's history in the 20th century has
been marked by profound changes in the
political, economic, and social structure of the
country brought on by the "Mexican Revolu-
tion." This revolution, which began with the
overthrow in 1911 of the 34-year dictator-
ship of Diaz, originated in popular resent-
ment against domination and exploitation by
an elite minority of politicians, army officers,
landowners, financiers, and ecclesiastics.
Fomented by intellectuals, the revolution
focused on improving the lot of the lower class
and the rapidly rising middle class. In
ideology, it combined elements of socialist, in-
cluding Marxist, and traditionally liberal con-
cepts; it was strongly nationalistic and sec-
ular. Revolutionary leaders envisaged the
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t!,tidiMIIStetT' 3
curtailment of foreign interests, freedom from
dependence on foreign capital and markets,
the growth of native industry, and agricul-
tural self-sufficiency. They also exalted the
Indian heritage and sought the material and
cultural improvement of the Indian and his
incorporation into national life. Moreover,
they were determined to reduce the role of the
church and to eliminate illiteracy.
9. Political and social ferment continued for
a decade after the overthrow of Diaz as the
old order fought reform and the revolution-
aries fought among themselves. During the
twenties and early thirties, the power of the
revolutionary regimes rested upon colorful
and autocratic military presidents and the
army. Erratic progress was made toward re-
form until the administration of Lazaro Car-
denas in 1934, when the impulse of the revolu-
tion reached its peak. Cardenas made the
first extensive effort to implement socio-
economic reforms embodied in the 1917 Con-
stitution. The role of government in the eco-
nomic life of the country was expanded
rapidly; the petroleum industry and most of
the railroads were nationalized. Considerable
progress was made in agrarian reform as
many large estates were broken up into small
individual farms and communal or collective
holdings. Urban labor, organized under offi-
cial auspices, gained substantial increases in
material benefits and political power. The
revolutionary educational program was in-
tensified and the modus vivendi with the
church, whose political and social position
had been successfully attacked by the revolu-
tion, was broadened.
10. Although all Mexican political leaders feel
compelled to profess adherence to the "Mexi-
can Revolution," the aggressive and com-
bative phases of the revolution ended with
Cardenas' term in 1940. Revolutionary ideals
are still loudly proclaimed, but the pace of
social welfare programs has been slowed in
order to expand the industrial plant, to in-
crease production, and to check inflation.
The government and certain business inter-
? ests have encouraged domestic, and, to some
extent, foreign capital to enter industrial and
commercial enterprises. Mexicans have be-
come increasingly receptive to US policies de-
signed to reduce tensions between the two
countries, and anti-Yankee sentiment has
somewhat abated.
POLITICAL TRENDS
11. Predominant political groups. The politi-
cal life of Mexico has for several decades been
characterized by one-party rule, executive
dominance, and a government which, though
federal, is highly centralized. The dominant
political party, founded in 1929 and dedicated
to the principles of the 1911 revolution, is now
known as the Institutional Revolutionary
Party (PRI). Although far from democratic
in operation, the party has been demonstrably
representative of, and responsive to, the needs
and wishes of most social and economic
groups. The extremely efficient party ma-
chine is organized on a functional basis both
nationally and at the regional level. This
functional structure comprises three organi-
zational sectors: an agrarian, a labor, and a
so-called popular group that includes the gov-
ernment bureaucracy, the professional classes,
intellectuals, small businessmen. Leaders of
these sectors play important roles in the de-
termination of party and, to some extent, gov-
ernment policy.
12. It is now established that the president, as
supreme executive of the nation and leader of
the PRI, is the most powerful political figure
in the country. Although ineligible for an-
other term, he has the strongest voice in nam-
ing his successor, whose selection is arranged
through close executive consultation with PRI
leaders, especially those ex-presidents who are
still national political powers (Cardenas and
Aleman). The president must be responsive
to the ideology of the revolution and the in-
terests of power groups within the govern-
ment, the party, and the nation, but he has
the power and responsibility to make major,
policy decisions. The role of congress is for
the most part reduced to the formality of
approving the president's program. The fed-
eral courts generally do not interfere with the
executive's will on major problems of national
policy. Some state governors are the presi-
dent's men, and local political bosses must in
ofiwouog
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iwitertir
practice conform to basic federal and party
policy.
13. Unlike most of its Latin American coun-
terparts, the Mexican army has in the past
20 years experienced a considerable decline in
political influence as an organization. It is a
professional corps whose mission includes the
maintenance of internal peace and the de-
fense of constitutional authority.' The army
as such does not now take an active role in
politics. Nevertheless, military leaders of
revolutionary background occupy important
government posts, including that of Secretary
of Defense. Some individual officers exert in-
fluence in the PRI both as party members and
through association- with leading politicians.
PRI leadership, aware of the latent power of
the army, probably would not select a presi-
dential candidate not acceptable to the
military.
14. Along with the decline of the role of the
army in politics, there has been a gradual
shift in the relative influence of the various
economic and social groups who support the
party. The demagogues, extremists, and rev-
olutionary political generals who dominated
until the late thirties have lost most of their
power; the agrarian elements never were im-
portant, and urban labor leaders have tended
to support the more moderate orientation of
the government. Lawyers and civil servants
have become increasingly powerful. The busi-
ness community is growing in influence; it has
received some encouragement from recent
presidents and has come to accept, at least to
some extent, the social and economic princi-
ples of the revolution. Despite competition
from other groups, urban labor still plays a
major role in party policy. The relations be-
tween government and labor are extremely
close; aspirants to political leadership can ex-
pect little success if they are opposed by
labor.
15. Rightist opposition. The only opposition
party of any importance is the National Ac-
tion Party (PAN) , whose chances of winning
a presidential election are practically nil.
With its program of conservative economic,
1 See Appendix on Armed Forces Capabilities.
4
political, and religious principles, it appeals
largely to upper-class Catholics and to certain
business interests. It has little nationwide
popular following. However, in an election
free from PRI manipulation, the PAN might
win a sizable minority in the federal legisla-
ture and gain control of several state gov-
ernorships and legislatures.
16. Communism. In Mexico Communism
operates in a climate of toleration which sterns
in large part from the mixture of democratic
liberalism and Marxist socialism inherited
from the revolution. This toleration extends
to the international operations of Commu-
nism; Mexico is one of the most important
centers of administration, propaganda, and
liaison for international Communism in Latin
America. The local Communist movement
presently is a negligible factor in the political
life of the country. However, it probably
would become an influential factor under con-
ditions of grave economic and social de-
terioration which would check the growing
force of the middle class and reverse present
trends toward moderation in class relations.
The local Communists have some capabilities
for embarrassing the government, arousing
ultranationalist sentiments, provoking public
disturbances, and effecting sabotage. They
have no prospect of seizing power by a coup
or of gaining control through democratic pro-
cedure. Communists have obtained positions
in various government ministries, notably
those of education and foreign affairs, but the
extent of their influence is difficult to assess.
It is apparent, however, that they have been
unable to arrest the orientation of Mexico's
policies, which have become increasingly mod-
erate since 1940.
17. The Communists in Mexico are divided
into three groups. The Communist Party of
Mexico (PCM) numbers slightly under 4,000
members, while the splinter group, the Mexi-
can Workers and Farmers Party, has about
1,000 members. The more influential Peo-
ple's Party (PP) , a Communist front led by
Vicente Lombardo Toledano, registered about
75,000 members for the 1958 presidential elec-
tion. The PP has adherents in student and
intellectual circles, primarily among teachers.
axxogitia"'
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It is in these categories that Communist in-
fluence is most observable. ?The greatest nu-
merical Communist infiltration has been in
labor and agrarian organizations, notably the
organized farm workers, the electrical and
petroleum workers, and the federal bureauc-
racy. This has been of slight consequence to
the whole organized labor movement, which
is dominated by the progovernment, anti-
Communist Labor Unity Bloc. Communist
propaganda organs in Mexico have increased
in number, but only reach a small segment
of the population. There are numerous front
groups, a few of which are of considerable
importance as centers of Communist opera-
tions.
18. All three parties are tied to the interna-
tional Communist movement, although only
the Communist Party of Mexico admits fra-
ternal bonds with the Communist Party of
the Soviet Union. Lombardo Toledano, a fre-
quent traveler to the Bloc, is a vice president
of the World Federation of Trade Unions
(WFTU) and president of its affiliate, the
Communist Latin American Labor Confed-
eration (CTAL) , which has its headquarters
in Mexico City. The Communist and pro-
Communist organizations maintain active
contacts with Communists elsewhere in Latin
America, primarily in Central America and
the Caribbean Republics, supplying them with
propaganda, training, and travel support.
19. Mexico has no anti-Communist legislation
nor a serious program to weed Communists
from public office. Mexico is the only Latin
American country which has failed to endorse
the anti-Communist resolution adopted at the
Inter-American Conference at Caracas in 1954.
Since 1954 the administration has adopted a
somewhat firmer attitude toward the two
smaller parties and foreign Communists. On
the other hand, the government tolerates
within limits the People's Party probably as a
counterbalance to the 'National Action Party,
the party of the right, and as a factor con-
tributing to the appearance of multiparty
democracy in Mexico.
20. Present government policies. Govern-
ment policy currently is dedicated to a me-
thodical and unspectacular consolidation and
extension of the revolutionary gains of pre-
vious years. President Ruiz Cortines ? com-
petent and honest, but colorless ? better
characterizes modern Mexico than does the
caudillo, the demagogue, or the radical of the
earlier period. Early in his regime, which
began in 1952, Ruiz Cortines announced poli-
cies aimed at improved government opera-
tions and bureaucratic reform, but little has
been accomplished. Graft in Mexican gov-
ernmental agencies is a widely accepted insti-
tution. It remains a burden on the country's
economic life, although it has been somewhat
restrained in the higher government levels.
Programs of health, social welfare, and edu-
cation ? identified with the revolution ?,are
permitted only moderate expansion in order
to hold down government expenses and damp-
en inflation. The social security system has
been extended to a few rural areas, and the
health program has been modest. The gov-
ernment has made impressive outlays for edu-
cation, but has barely been able to keep pace
with population growth: the literacy rate has
not been significantly increased. In line with
the administration's anti-inflationary poli-
cies, only modest wage increases and other
benefits have been , conceded to labor. Al-
though the present government has slowed
the pace of social reform, this has resulted in
little popular dissatisfaction thus far.
21. Domestic political outlook. The outlook
is one of continuing stability and moderation.
The national elections, scheduled for July
1958, will intensify political maneuvering, but
are unlikely to cause serious and widespread
unrest. Elections will be orderly and the con-
stitutional succession of a new administration
under PRI leadership is virtually certain. In
the Senate and the Chamber of Deputies the
PRI will assure itself an overwhelming ma-
jority, and allow a few seats to two or three
opposition parties. There probably will be no
major shift in policy away from the moderate
course of the Ruiz Cortines government.
22. Labor and the business community are the
most likely challengers to the status quo.
Within the next two or three years labor may
seek a greater share of Mexican prosperity
through increased wages and other benefits,
r
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but it is ufflikely that in the near future labor
leadership will seriously embarrass the PRI by
making extreme demands. The, business
community will persist in seeking to trans-
form its growing economic power into political
power, and probably will press for formal
recognition as a sector in the PRI. However,
labor and its allies within the party probably
will be able to obstruct such a bid. Neverthe-
less, even without formal political recognition,
business will continue exerting a growing in-
fluence upon the government.
ECONOMIC TRENDS
23. Mexico's economic growth since 1939 has
been rapid. With the decline of internal con-
flict, the country was able to benefit from the
general resurgence of economic activity dur-
ing and after World War II. In the period
1948-1956, the volume of agricultural produc-
tion rose 78 percent; manufacturing and
petroleum, about 56 percent; and mining
nearly 21 percent. In terms of constant 1950
prices, GNP between 1945 and 1955 grew from
$3.7 billion to $6.2 billion, while on a per
capita basis, it rose from $167 to $210. In
1956 GNP increased seven percent in terms of
constant 1950 prices and on a per capita basis
rose four percent. Agriculture contributed
about 20 percent of Mexico's GNP; manufac-
turing, mining, and power industries, 23 per-
cent; commerce, 29 percent; and transporta-
tion, service, and other activities, 28 percent.
Moreover, problems arising from power and
transport bottlenecks and other dislocations
have been met more effectively than in other
major Latin American countries.
24. Shifts in national economic policy have
accompanied and contributed to this growth.
Agrarian reform has lost its militant charac-
ter, and the redistribution of lands, having
proved economically disadvantageous, for the
most part ceased after 1946. Since then, the
government's agricultural policy has concen-
trated on increasing and balancing produc-
tion. At the same time, the government has
played an important role in the promotion of
industrial growth. Increased government
revenues generated by wartime prosperity
permitted a considerable expansion in the pro-
6
ductive base of the economy. After World
War II, the government devoted a larger share
of its growing revenues to public investments
in power and irrigation projects, rail and high-
way improvement, and petroleum production.
In the decade 1945-1955, of total investment
(about 14 percent of the GNP), 40 percent
came from the government and various gov-
ernment agencies which own and control the
petroleum industry, the highway and major
railway systems, a considerable part of electric
power facilities, and the major irrigation sys-
tem. Private investment was also encour-
aged by large-scale expansion of government
credit to agriculture and industry, by direct
and indirect subsidies, taxes and import duties
catering to domestic industry, and by the gen-
eral inflationary trend.
25. Mexico's chief problem is to maintain a
rate of economic growth exceeding the rapid
population increase while at the same time
resisting inflationary pressures. The high
rate of public investment and excessive expan-
sion of public and private credit have contrib-
uted significantly to inflation crises in 1948,
1949, and again in 1954. Living costs and
wage demands became difficult problems,
Mexican products became noncompetitive on
world markets, industry stagnated, and im-
ports caused severe drains on foreign ex-
change reserves. Peso devaluation, capital
flight, and renewed discouragement of foreign
investment followed. However, since the last
devaluation in 1954, the government has suc-
ceeded in dampening inflation by reducing the
scale of public investment, restricting private
credit, and holding down wage increases.
26. Despite large manpower and resource
potentials, the government will have difficulty
in maintaining a satisfactory rate of economic
growth. Power and transport facilities must
be enlarged and improved before other pro-
duction facilities can be expanded signifi-
cantly. An increase in agricultural produc-
tion is largely dependent on the costly devel-
opment of new acreage. Moreover, invest-
ment at a rate necessary to bring expansion
bears heavily on the economy, requiring a con-
tinued sacrifice of consumption levels to pro-
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vide investment funds. A disproportionate
part of this burden has fallen on wage and
salary earning groups through indirect taxes,
controlled wages, and high profit levels. There
is considerable potential for development in
petroleum. However, this nationalized indus-
try (PEMEX) , because it has maintained low
domestic petroleum prices, has not accumu-
lated investment funds needed to keep its re-
serves, refining capacity, and distribution
facilities in line with economic expansion.
27. No immediate crisis threatens the Mex-
ican economy, although the government is
faced with the problem of controlling infla-
tionary pressures. Mexico's financial position
is good. While the public debt has grown at
a moderate rate as a result of borrowing for
public investment, carrying charges are within
the capabilities of the economy. Public rev-
enues have mounted rapidly at a pace compa-
rable to national income, and in 1955 and 1956
modest budget surpluses were used to reduce
the debt. The 1957 budget envisaged expendi-
tures totaling about $600 million distributed
as follows: investment, 47 percent; education,
13 percent; other social services, 11 percent;
public debt, 12 percent; military, 10 percent;
general administration, 6 percent. It is prob-
able that actual revenues and expenditures
will exceed the anticipated budget.
28. The country's international financial posi-
tion has improved considerably since the 1954
devaluation. The inflow of foreign capital,
the repatriation of Mexican capital, and mod-
est surpluses in the balance of payments were
responsible for the rise in exchange reserves
from about $200 million in 1954 to over $469
million at the end of 1956.
29. Mexico normally has an unfavorable bal-
ance of trade. Last year this imbalance in-
creased. The rise in imports, generated by
investment programs and growing prosperity,
has come at a time when the prices of imports
have been increasing. On the other hand,
quantities exported and export prices have not
increased correspondingly. In 1956, imports
totaled about $1,070 million, of which the US
furnished 78 percent; exports totaled, after
adjustment for undervaluation, about $855
7
million,2 of which the US purchased an esti-
mated 75 percent (including 20 percent of US
requirements of such vital defense materials
as antimony, graphite, lead, zinc, and cad-
mium) . The imbalance of $215 million was
financed, as in 1955, primarily by receipts from
tourism (which have been increasing) and
from inflows of direct investment capital.
While mineral exports are still important to
Mexico, cotton and coffee have recently as-
sumed great importance, the former account-
ing for 45 percent of Mexico's exports in 1956,
and the latter for some 15 percent. The main
imports continue to be capital goods and in-
dustrial raw materials.
30. Assuming no serious adverse shocks from
outside, the outlook for Mexico's economy is
good although there is some prospect for a
further slow-down in the rate of economic
growth. It seems likely that a new moderate
government will also subordinate social re-
form to a policy of economic progress and em-
phasize economic stability along with growth.
Government policies will to some extent be
determined by economic nationalism. It is
highly unlikely that any new government will
retreat to any significant degree from the
established monopolistic policy on petroleum.
Any conspicuous increase in foreign invest-
ment is likely to bring about additional re-
strictions. There will be growing demands to
raise wages and prices, to ease credit, and to
expand public investment, but over the short
term at least, the government will resist these
pressures or neutralize them by making mod-
est concessions. Over the longer run, these
demands may develop into a serious political
problem.
INTERNATIONAL RELATIONS
31. Mexico's conduct of its international rela-
tions reflects a strong desire to demonstrate
its national independence. Largely as a re-
sult of having suffered foreign influence and
intervention in its affairs during the 19th and
early 20th centuries, Mexico is a strong advo-
2 Declared export prices of metals, livestock, and
? agricultural commodities usually reflect under-
valuation and require adjustment to reflect the
actual values.
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cate of the doctrine of nonintervention of one
state in the affairs of another. While seeking
to avoid specific commitments in disputes in-
volving the major powers, it is generally
aligned with the West.
32. With the US. Although distrust of the
US lingers in the public mind, as well as in
the government, the Ruiz Cortines adminis-
tration has been friendly and generally coop-
erative with the US. However, there are cer-
tain sources of irritation between the two
countries:
a. The migration of Mexican laborers to the
US has injured national pride, and has led
to Mexican complaints of maltreatment of the
workers by US employers and officials. The
regulation of this traffic is now relatively ef-
fective under the terms of a -"bracero agree-
ment" which was reached in 1951, and subse-
quently amended. The dollar remittances of
the braceros have become an important factor
in Mexico's current balance of payments and
the government is unlikely to press for sub-
stantial alteration of the agreement. How-
ever, it will continue to seek increased benefits
for the braceros.
b. Mexico claims nine miles as the extent of
its territorial waters in contrast to the US
claim of a three mile limit. Both the Mexi-
can government and the press have been
aroused over the alleged violation of their
waters by US fishermen. In 1956 the Mexi-
can navy seized and fined numerous US ves-
sels, confiscating their catch and gear.
c. The Mexican mining industry, with gov-
ernment support, strongly opposes the recent-
ly proposed increase in US import duties on
lead and zinc and fears severe retrenchment
if the increase is effected. Lead and zinc
have accounted for about 12 percent of the
value of Mexican exports, and 75 percent of
these metal exports have been sold in the US.
d. The tolerant attitude of the Mexican gov-
ernment has permitted the use of the country
as a center for Bloc activities in Latin America.
? Combined with a certain historical antipathy
for the US, these problems are both periodic
causes and excuses for anti-Americanism.
Mexico has rejected a bilateral military agree-
8
ment with the US, and leftist agitation, pri-
marily among students, has led the govern-
ment to be cautious in expanding the small
US-sponsored technical assistance program.
33. Even though Mexico's cooperation within
the US-Mexican Joint Defense Commission is
only nominal, military relations with the US
have become closer in recent years and the
army has adopted US training techniques as
well as US doctrine. However, the govern-
ment, somewhat suspicious of US motives and
sensitive to opposition from extreme nation-
alists, has repeatedly declined to negotiate a
bilateral defense pact with the US. Short of
a major war directly affecting Mexico, it will
probably refuse a military agreement with the
US. It probably will also continue to refuse
foreign military missions. However, Mexico
has recently received a $10 million reimbursa-
ble credit for the purchase of military supplies
and equipment.
34. Mexico is a signatory to the Rio Treaty
and supports the idea of hemisphere defense.
Realizing its strategic importance to the US,
Mexico relies on US military strength for pro-
tection against armed aggression by a major
power. Unless Mexico considered that its na-
tional security were threatened, it would prob-
ably not agree to the use of its territory by US
forces.
35. With Latin America. In general, Mexico's
relations with other Latin American countries
are friendly. These relations have been dis-
turbed in recent years only by occasional flare-
ups of the old dispute with Guatemala over
British Honduras (Belize) , where the two
countries have overlapping claims, and by
protests of countries whose exiles Mexico har-
bors. Mexico has been more faithful to the
widely accepted Latin American doctrine of
the right of political asylum than any other
country except Uruguay; as a consequence, it
has long been a haven for numerous exiles,
some of whom are Communists. Hence, al-
though Mexico has not supported these revo-
lutionary groups, it has been the center of
revolutionary plotting, which has indirectly
contributed to unsettled conditions in Central
America and the Caribbean.
avessaMt
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36. With the Soviet Bloc. Mexico maintains
diplomatic relations with the Soviet Union,
Czechoslovakia, and Poland.3 Within Mexico
overt activity by Bloc missions has increased
markedly in recent years. However, opera-
tions designed to promote closer cultural ties
through special Bloc missions, subsidized
travel to the Sino-Soviet Bloc, and active bina-
tional centers have met with only limited
success. Economic operations have resulted
in a net increase in trade, but the Bloc's share
of Mexico's total foreign trade is still negli-
gible. Mexican officials have turned down
Soviet suggestions of economic assistance.
Moreover, the Mexican government and most
of the press continue suspicious about ties
with the Bloc; Soviet intervention in Hungary
provoked a vigorous popular condemnation.
In general, the Mexican government probably
is wary of courting relations with the Bloc
for fear its relations with the US might be
adversely affected.
37. Mexico is a major base for Bloc opera-
tions in Latin America. These have included
s The size of the Soviet Embassy, employing about
50 Russians, is second only to that of the US.
The Soviet military attache staff, which has.
come under sharp Mexican press attack for espi-
onage activities, was until recently the largest.
The Czech Legation staff including 38 Czechs is
more than double that of the Polish Legation.
support and guidance for local Communist
movements and intelligence and espionage
activities directed against the US. In addi-
tion the Bloc missions have been particularly
active in the commercial and propaganda
fields. The Poles and the Czechs have been
more active in the Central American and
Caribbean areas than have the Russians.
Poland is the only Bloc country with diplo-
matic relations in Central America. Czech
commercial officials from Mexico stepped up
their efforts considerably in 1956, and were
instrumental in promoting a sizable increase
in Czech trade with a number of Central
American and Caribbean countries. More-
over, Soviet commercial officials made visits
throughout Latin America. However, trade
between these countries and the Bloc remains
negligible. Within the last two years the So-
viet ambassador and members of his staff
travelled to several South American countries.
38. Over the next few years, Mexico is likely
to maintain a friendly attitude toward the US,
and continue to support the West generally.
Closer military cooperation now appears pos-
sible, but in any event will remain limited.
Continued cooperation in controlling infor-
mally the acquisition of strategic materials by
the Bloc can be expected. However, economic
expediency may lead to a limited increase in
Mexico's trade with the Bloc.
t k-T
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APPENDIX
Armed Forces Capabilities
1. Army. The Mexican army, numbering
60,000 officers and men, is capable of main-
taining internal security and of defending its
borders against invasion by any Latin Ameri-
can power. However, by US standards its
combat effectiveness is negligible. It is not
likely that there will be a significant improve-
ment in army capabilities, which are limited
by the low quality of manpower, inferior
equipment, training deficiencies, and low pay.
2. Navy. The navy's capabilities are limited
to coastal patrol. Its personnel strength is
about 5,500. No significant improvement in
naval capabilities is likely during the next
few years.
3. Air Force. The Mexican air force, is ca-
pable only of supporting the ground forces in
maintaining internal security. Current air
r
APPENDIX
force inventory totals approximately 140 pis-
ton aircraft, all of US manufacture and a
number of which are not operational. Per-
sonnel strength is about 3,000 officers and
men, including 328 pilots.
4. The armed forces are supplemented by
three security forces: the Federal District
Police (7,000 policemen), the Rural Defense
Units (45,000 unpaid volunteers used exclu-
sively as local security units), and the Fed-
eral Highway Police, all three constituting
part of the army reserve. With a little addi-
tional military training, the Federal District
Police would have the effectiveness of infan-
try and cavalry troops of the regular army.
The Rural Defense Units, already military
in character, would have some value as par-
tially trained replacements for the army in
an emergency.
10
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esarlArillIEDIftrefili711 A II
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MEXICO
International boundary
National capital
Selected railroad
Selected road
rt-
? Principal air facility ? Naval activity
0 50
'
100
I
200
311:)0 Miles
? , I
0 50 100
I
200
300 Kilometers
CONFIDENTIAL
119 118 '
USIA DE?GUADALUPE
26080 7-57
104 91,6
CONFIDENTIAL
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SSO - 117 - 7/5
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