Given the PRI’s 1991 electoral rebound and Salinas’s popularity, it appeared that the 1994 transfer of power to Salinas’s successor would be routine. On November 28, 1993, Salinas named Secretary of Social Development Luis Donaldo Colosio as the PRI’s presidential candidate. Before joining Salinas’s cabinet, Colosio had served as president of the PRI and as a senator.
The indigenous rebellion in Chiapas on New Year’s Day 1994 upset the carefully laid plans for Colosio’s campaign. The Mexican public’s attention was so firmly riveted on Chiapas that the first two months of Colosio’s ill-fated campaign passed almost unnoticed.85
Only in March did the Colosio campaign finally begin to gather political momentum. At the ceremony commemorating the sixty-fifth anniversary of the PRI on March 6, Colosio was the sole speaker. There he promised to make “the PRI independent with respect to the government” and to admit foreign election observers. He also vowed to trim presidential power to “strictly constitutional limits.” The PRI candidate declared that many of Mexico’s ills were due to the excessive power assumed by past presidents.86
On March 23, as he was leaving a campaign rally in the border city of Tijuana, Colosio was gunned down. A twenty-three-year old factory worker, Mario Aburto, was arrested on the spot and charged with assassinating Colosio. The government declared that Aburto was a “lone nut” (a la Lee Harvey Oswald). Aburto, who was sentenced to forty-two years in prison, variously claimed that he was a “pacifist,” a political militant, or that he had pulled the trigger by accident after being pushed by the crowd (even though two shots hit Colosio!).87
Conspiracy theories to explain the assassination abounded. Blame was most commonly laid at the feet of hard-liners at the national level of the PRI. None of the various explanations officially offered for the Colosio assassination have satisfied Mexican public opinion, which interpreted the event as a violent settling of scores among the PRI political elite.88
It will never be known if Colosio became a convert to democracy sometime between his leaving the presidency of the PRI and his speech on March 6. Columnist Carlos Ramirez summarized Colosio’s democratic legacy as of 1991—his last full year as PRI president:
Colosio was one of the national presidents of the PRI who made speeches most strongly
Promoting internal democracy, but who was most inclined to impose PRI candidates. . . The
New PRI is the old PRI, and Colosio emerged as a dinosaur disguised as a democrat.89
On March 29, six days after Colosio’s assassination, Salinas assembled a group of state governors and PRI officials in the presidential residence and informed them that the replacement presidential candidate would be Ernesto Zedillo, who had served in his cabinet secretary of budget and planning and as secretary of education. Zedillo had resigned from the latter post more than six months before the election to manage Colosio’s campaign.90
Zedillo, unlike his four immediate predecessors who were National University graduates, had graduated from the National Polytechnic Institute. He had then earned a doctorate in economics from Yale and returned home to work in the Banco de Mexico, Mexico’s central bank. Upon learning of Zedillo’s candidacy, political scientist Roderic Camp commented, “Zedillo is a continuation of the De la Madrid and Salinas mold of the narrowly formed technocrat, and he is particularly Narrow.
The August 21, 1994 presidential election featured a number of innovations that were clearly an improvement over elections past. The IFE, headed by Jorge Carpizo, the widely respected former director of the National Human Rights Commission (CNDH), organized the election. Under IFE auspices, officials staffing polling stations were selected from a random sample of voters, as opposed to letting PRI and government officials select PRI sympathizers, as had occurred in the past. The IFE spent $730 million preparing the voter registry and providing photo IDs. Fourteen groups, including the Alianza Civica (Civic Alliance), a coalition of more than 400 Mexican non-governmental organizations (NGOs), coordinated election monitoring by 50,000 Mexican and 950 foreign election observers. Significantly, public funding paid for 90 percent of campaign spending, thus minimizing the influence of private donors.92
The final vote totals only confirmed what polling data had indicated. Zedillo received 50.18 percent of the valid votes, PAN candidate Diego Fernandez de Cevallos 26.69 percent, and Cardenas, who was the PRD candidate, 17.08 percent. The PRI won 275 of the 300 single-member congressional districts. In an apparent validation of the democratic process, voter turn-out was a near record 77.7 percent.93
Several factors explain why Cardenas lost his 1988 political momentum. As a result of five years of Salinas’s spin control and hostile media, broad sectors of the population felt threatened by
Cardenas’s party and its social policies. As had occurred in 1988, those with the least education— Cardenas’s logical base of support—voted for the PRI. Cardenas was not telegenic, and as Adolfo Aguilar Zinser, his campaign spokesman, lamented, “Cardenas never accepted the premise that this campaign would be won or lost in large part on television.”94
As soon as the returns were reported, the struggle shifted from the ballot box to public opinion. Alianza Civica reported that even though it did not change the outcome of the presidential election, there was widespread illegality, especially in rural areas. Its report on the elections concluded:
It is difficult to characterize in a single word or phrase the voting process that is so complicated and contradictory. One cannot simply reject the entire election, but neither can one accept the victors’ triumphalism or consider it an example of fairness and honesty.95
As had been the case in previous elections, the PRI had far more resources at its disposal than did other parties. A study by the IFE reported that the PRI accounted for 71.4 percent of campaign spending, leaving the other eight parties with 28.6 percent. The PRI benefited from its close linkage to the government. One of the foreign election observers noted:
When we were in Patzcuaro a couple of days before the election, you could see lines of peasants standing outside the bank, because they had just received money from the government support program, PROCAMPO. This was a not very well disguised attempt to buy their vote.96
On December 19, 1994, rebels in Chiapas announced that their troops had taken up positions throughout the state and that they had occupied several city halls. This was the straw that broke the camel’s or, rather, the peso’s back. However, the rebels were by no means the cause of the economic crisis, despite Zedillo’s lame attempts to blame the crisis on them.
The crisis resulted from the combination of:
¦ the increasing outflow of dollars resulting from trade deficits and debt payments.;
¦ the increasing use of short-term treasury bonds (tesobonos) to finance this outflow;
¦ the increasing overvaluation of the peso.
The outflow of dollars largely resulted from Mexico spending $32.8 billion to service its foreign debt in 1994. Another $21.2 billion left the country as a result of the deficit in trade
And services.97
The overvaluation of the peso underlay the crisis. Salinas had done a magnificent job of slowing inflation, which declined from well over 100 percent when he took office to 10 percent in 1993. However, the Mexican inflation rate was still well above the U. S. inflation rate, while the value of the peso was kept at roughly three to the dollar. The Salinas administration claimed that maintaining this exchange rate was vital for investor confidence and fighting inflation. Rather than devaluing the peso in 1994, the government implemented an expansionary fiscal and monetary policy to stimulate the economy, thus enhancing the PRI’s luster before the presidential election.98
The combination of the Chiapas rebellion in January 1994 and the assassination of Colosio in March caused many investors to question the security of their Mexican investments. As a result of these events, during the six weeks following Colosio’s assassination, Mexico lost more than $10 billion of its $28 billion in foreign reserves as investors, both domestic and foreign, moved their assets elsewhere.99
To entice investors to keep their capital in Mexico, the Mexican government increasingly relied on short-term, high-interest tesobonos. These bonds provided a measure of assurance to investors, since if a devaluation of the peso occurred, they would lose nothing as their return was payable in dollars.100
Investors flocked to the tesobonos since Mexico was regarded as creditworthy. This investment influx caused the value of the peso relative to the dollar to increase, which kept inflation low and facilitated imports. Imports also increased as economic recovery and easy credit fueled the demand for imported capital equipment, intermediate goods, cars, home computers, and big-screen TVs.101
As imports flooded in, exports declined, since the high value of the peso made them prohibitively expensive on the world market. The resulting deficits were sustainable only as long as Mexico could rely on new investments or foreign currency reserves. Through the summer of 1994, this latter remedy was applied. The September assassination of PRI Secretary General Ruiz Massieu once again called into question Mexico’s stability. After that, investors became increasingly reluctant to keep their funds in Mexico. The U. S. Federal Reserve raised interest rates by a surprisingly large three-quarters of a percentage point in November, which siphoned off investment that might otherwise have gone to Mexico. As a result, Mexico’s foreign currency reserves had declined to $11 billion by early December. At the same time, Mexico’s short-term public debt (mainly tesobonos) totaled $27 billion.102
The government continued to repay tesobono holders as the twenty-eight-day notes came due, but few were stepping up to buy new ones. By late December, Mexico’s reserves had declined to $6 billion. This decline was so precipitous that the government decided to devalue the peso by 15 percent to stave off financial crisis.
Soon a chain reaction began. Investors lost confidence, dumped pesos, and caused others to dump their peso holdings. Treasury Secretary Jaime Serra Puche flew to New York to plead with seventy money managers and top bank executives to keep their funds in Mexico. In two days, the value of the peso declined from 3.5 to 7.5 to the dollar. During the next three months, the Mexican stock exchange lost 50 percent of its value.103
To prevent a massive decline of U. S. exports to Mexico and a possible refugee crisis, as well as to protect the image of neoliberalism, later in January U. S. President Bill Clinton provided Mexico with $20 billion in loan guarantees from the Treasury Department’s Exchange Stabilization Fund. This was accompanied by loans of $17.8 billion from the IMF and $10 billion from the Bank of International Settlements. Clinton and the international financiers felt it was necessary to intervene to: 1) protect U. S. investors who otherwise would have lost their capital, 2) restore calm in international financial markets, 3) support Zedillo and the PRI, and 4) to maintain confidence in NAFTA.104
On March 9, 1995, Zedillo offered an austerity plan designed to restart the economy and restore investor confidence. It included further decreases in government expenditures, increases in the price of gasoline and electricity, and an increase in value-added tax (VAT) from 10 percent to 15 percent.105
The impact of lower government spending, higher government fees and taxes, and higher interest rates (to keep even more investors from fleeing Mexico) threw the economy into reverse. In 1995, the GDP fell by 6.6 percent. That year, as more than one million Mexicans reached working age, there were 750,000 layoffs. Per capita income fell below the 1980 level. The annual interest on loans, mortgages, and credit cards reached 100 percent, causing massive defaults among middle-class debtors. Banks, businesses, producers, and consumers all suffered as a result of the crisis.106
Zedillo himself was stigmatized with the image of incompetence. Voters took out their wrath on the PRI, which in early 1995 lost gubernatorial races in Jalisco, Guanajuato, and, for an unprecedented second time, Baja California. By mid-1995, the two major opposition parties governed nearly a third of the Mexican population at the state or local levels. As Paige Bierma noted:
Gone were the low inflation rates Mexicans had voted for; gone were the dreams of being able
To inch closer to U. S. standards of living; gone were many of the Solidarity checks the rural and
Urban poor had depended on; and gone were the illusions that many had had of the PRI.107
After the peso crash and the Chiapas uprising threatened to further diminish the government’s credibility, the Zedillo administration legislated yet another political reform in hopes of reversing a spate of PRI electoral defeats. This reform, the last of the twentieth century, had special significance since it set the ground rules for the 2000 presidential race.108
The 1996 political reform granted Congress the power to select nine general council members who would head the IFE. The nine would then select one of their number to serve as the IFE president. This provided the IFE with complete autonomy from political parties and the executive branch of government. The reform provided that the mayor of Mexico City be elected, rather than being appointed by the president as had occurred in the past. Campaign financing was greatly increased and made more equitable. The legislation prohibited campaign donations by governments, foreigners, churches, and corporations. Finally, the reform limited private campaign contributions to 10 percent of the amount received from public funds.109
In 1997, the IFE spent $264 million on organizing truly competitive congressional elections. Clear limits on campaign spending, more access to radio and TV for opposition parties, and more balanced coverage of the opposition on TV newscasts contributed to electoral fairness. For the first time, the distribution of public campaign financing roughly matched the proportion of the vote the major parties received.110
The PRI received only 39.1 percent of the vote in the 1997 elections, and this cost it its majority in the Chamber of Deputies. Almost as remarkable as the PRI losing its control over Congress was the broad range of opinion that characterized the elections as fair. Historian Enrique Krauze declared, “True democracy finally came to Mexico.” By 1997, as a result of numerous political reforms, the political playing field in Mexico was as close to level at those in many established democracies.111
The reasons for the PRI’s record low vote include: 1) corruption, which was highlighted by but by no means limited to former president Salinas’s jailed brother Raul; 2) resentment resulting from mishandling the 1994—1995 peso crash; and 3) the unpopularity of the PRI-imposed neoliberal economic model, which 64 percent of Mexicans opposed in a 1996 poll. Even though the PRI lost its majority in the Chamber of Deputies, it was still far from routed politically. In separate ballots on the same day, in senate races, the PRI won a plurality in all thirty-one states and the Federal District.
Reinvigorating Mexico’s economy forms a lasting part of Zedillo’s legacy. Between 1996 and 2000, buoyed by high oil prices and exports to its booming NAFTA partner to the north, Mexico’s GDP averaged 5.4 percent growth. By the end of Zedillo’s term, inflation had declined to a single digit. In 2000, the Mexican economy was deemed so sound that, for the first time, Moody’s Investment Service rated Mexico as investment grade.112
The improved economy allowed Mexico to avoid an economic crisis as power shifted from Zedillo to his successor. Mexico’s accumulation of $33 billion in foreign exchange reserves and a current account deficit that was only half that of 1994 made a run on the peso uninviting.113
Democratization, as well as economic recovery, enhanced Zedillo’s legacy. His handling of the 2000 presidential election further bolstered his standing. The week before the election, Wall Street Journal writers Peter Fritsch and Jose de Cordoba commented, “The victor in Mexico’s hotly contested presidential election this Sunday is clear: Ernesto Zedillo Ponce de Leon.” Not surprisingly, at the end of his term, Zedillo enjoyed a 69 percent approval rating, up from 31 percent five years earlier.114
World History
