On October 21, 1969, a spokesman for the National Peasant Confederation (CNC) declared that the group supported forty-seven-year-old Interior Secretary Luis Echeverria for the PRI’s presidential nomination, thus signaling that Diaz Ordaz had chosen his successor. Never before had there been a PRI presidential nominee who had been born and raised in Mexico City. He was also the first of a generation of Mexican presidents who had never held elective office, so he had had less contact with the variety of interest groups that elected officials routinely deal with. Since their forte was the technical aspects of public administration, these presidents became known as the technocrats.1
On the campaign trail, Echeverria, a previously taciturn lawyer who had been viewed as a hardline conservative, metamorphosed into an extrovert who began criticizing the government that he had so loyally served. He repeatedly emphasized that poverty had become a national problem and stressed the need to change Mexico’s economic development model. Even though his election was assured, Echeverria traveled a record-breaking 33,000 miles during his campaign, which has often been compared to Lazaro Cardenas’s 1934 campaign.2
As expected, Echeverria breezed through the election with 85 percent of the vote, only 4 percent less than Diaz Ordaz had received in 1964. PRI (Revolutionary Institutional Party) candidates for the Chamber of Deputies won every single-member district, indicating the party’s continued dominance of the political scene.3
The Echeverria administration attempted to address a variety of problems, such as high unemployment, low wages, income concentration, and increasing rural poverty. Policy makers felt that increased government spending would lead, in Keynesian fashion, to higher economic growth. Such high growth would make it economically feasible to provide food subsidies and a massive expansion of services to the poor. Planners felt increased government spending and expanded services would ensure the stability of the regime by recapturing the loyalty of disaffected sectors of society.4
Echeverria’s economic policy, known as “shared development,” involved massive state intervention to stimulate the economy. The economic emphasis shifted from increasing gross national product to job creation and the redistribution of income. Echeverria financed government spending, which almost quadrupled between 1971 and 1975, by printing money and borrowing from aboard. Historian Enrique Krauze commented on Echeverria’s profligate spending: “With the money (printed or borrowed) raining down from his hands, he would wash away the responsibility for 1968.”5
Echeverria sought to break Mexico’s commercial dependence on the United States by signing foreign trade agreements with Western and Eastern European and Central and South American nations. In pursuit of these goals, he traveled to thirty-six nations, usually with an immense retinue. He even brought along mariachis and Indians to make tortillas and Mexican food so that the heads of state he visited could savor authentic Mexican cuisine. In 1970, Mexico maintained diplomatic relations with sixty-seven nations, while six years later the number had increased to 131. Echeverria’s international junkets were attacked by his critics who viewed them as too expensive and as distracting the president from solving Mexico’s problems. His supporters claimed the trips were necessary to overcome Mexico’s psychological and economic dependence on the United States.6
By the beginning of 1976, Echeverria had lost control over public expenditures. Inflation surged, resulting in an overvalued peso, which discouraged exports. Echeverria committed the same error his successors would repeat later in the century—he kept the peso stable relative to the dollar rather than devaluing to stimulate exports. The financial elite, already alienated by Echeverria’s leftist rhetoric and high government spending, responded to increased government indebtedness by sending their money out of Mexico. Capital flight in 1976 alone totaled an estimated $4 billion. At the same time, increased government investment resulted in massive imports, which worsened Mexico’s trade deficit. Between 1970 and 1975, this deficit increased from $1.0 billion to $3.7 billion.7
Eventually, Echeverria was forced to face the obvious—the exchange rate could no longer be maintained. On August 31, 1976, for the first time since 1954, the peso was devalued. The government allowed the peso to float—“like a rock” as Mexicans wryly noted—and it declined from 12.5 to the dollar to 28.5 before the end of the year.8
Unlike the 1954 devaluation, which was well timed, the 1976 devaluation was far too late in coming. This allowed speculators to drain financial reserves and ruined the incumbents’ reputation for sound financial management. It also left the government financially prostrate, so that it was forced to turn to the U. S. Treasury Department and the International Monetary Fund (IMF) for a bailout, thus sacrificing the nationalistic principles that Echeverria had proclaimed.9
Peasant unrest also caught up with Echeverria before he left office. During his term, peasants repeatedly staged land invasions in various states. Some had turned violent, and the army had intervened in many. In 1976, security forces killed fifty-eight in Chiapas after peasants there had killed three landowners.10
In November 1976, the landless invaded farms in northwestern Mexico, hoping that the relative power vacuum associated with the presidential transition would favor them. In Sinaloa, according to landowners, 200 landholdings were invaded. In Sonora, armed peasants occupied twelve properties in the Yaqui Valley. Seven of the invaders were killed in a bloody effort by police to oust them. To defuse the situation, Echeverria ordered that 247,000 acres be expropriated in Sonora and Sinaloa and given to 8,037 landless families. Six of the expropriated farms covered at least 2,470 acres—ten times the legal limit imposed by land reform legislation. Sonoran landowners, the group most politically hostile to Echeverria, were offered no compensation on the grounds that the land was illegally held. This act, coming only days before the end of the presidential term, further poisoned relations between the Echeverria administration and the business community.11
Echeverria expanded social security coverage (which included health care) from 12 million to 22 million and increased government spending for social programs to almost 24 percent of the budget, its highest level ever. Under Echeverria, the economy, which grew at an average rate of
5.6 percent, continued to outpace population growth.12
Such accomplishments are offset by the many negative aspects of the Echeverria administration. By greatly increasing the government’s role in the economy, Echeverria made Mexico’s fundamental economic flaws even worse. Between 1970 and 1976, as the state addressed myriad problems, public-sector employment increased from 600,000 to 2.2 million. During his term, foreign public debt over one year increased from $3.8 billion to $15.9 billion. Rather than decreasing Mexico’s economic dependence on the United States, that dependence increased as America exported food to Mexico, increased lending and investment, remained the major source of tourists, and employed Mexican immigrants who sent remittances home. At the time of the devaluation, the government signed an agreement with the IMF—where the United States held decisive power—further increasing U. S. influence.13
Not surprisingly, Echeverria was extremely unpopular when he left office, and his presidency was widely regarded as a failure. The 1976 devaluation shattered the illusion of progress associated with Mexico’s “economic miracle.” That year inflation hit 40 percent and economic growth slowed to 2 percent of gross national product—well below the rate of population increase. In the final tense months of his administration, rumors of a military coup circulated widely.14
World History
