$Unique_ID{COW02414} $Pretitle{279} $Title{Mexico General Overview of the Government of Carlos Salinas de Gortari} $Subtitle{} $Author{Embassy of Mexico, Washington DC} $Affiliation{Embassy of Mexico, Washington DC} $Subject{mexico president policy foreign economic mexican political public government international} $Date{1990} $Log{} Country: Mexico Book: Mexican Agenda Author: Embassy of Mexico, Washington DC Affiliation: Embassy of Mexico, Washington DC Date: 1990 General Overview of the Government of Carlos Salinas de Gortari (December 1988 - April 1990) When Carlos Salinas de Gortari was sworn in as President of Mexico on December 1st, 1988, Mexico was going through a particularly difficult time in the economic and political fronts. After an intense and highly competitive political campaign, the new Mexican President set in motion a comprehensive and straightforward program to meet the challenges facing the nation. On the economic front, since President Salinas' foremost commitment was to regain growth, his government immediately began negotiations to renegotiate the external debt. In the meantime, a far reaching domestic effort was undertaken to further reduce inflation. In political matters, a permanent consensus reaching process with the different political forces began in order to agree upon an electoral reform project. In social matters, a serious commitment was undertaken to alleviate the economic burden that weighs upon those Mexicans who have the least, since their most basic needs cannot wait until a suitable growth rate is recovered by the economy as a whole. Finally, decisive steps were taken to strengthen the rule of law in response to voters' demands for security. The economy. Economic policy can be broadly summarized through the following actions: 1) Harness price and wage volatility through a sensible agreement between workers, businessmen and government; 2) Renegotiate the foreign debt so as to eliminate the excessive burden that smothers economic growth; 3) Open up trade, thus making Mexican firms more efficient through international competition, and demand reciprocity from world markets; 4) Attract foreign investment to supplement domestic efforts, by putting forth a clear and simple set of rules, and by creating the legal framework to protect technology and intellectual property rights; 5) Privatize public enterprises which are not of strategic nature and that need large amounts of new investment; 6) Revamp the tax system, significantly reducing evasion, broadening sources of revenue at the same time that tax rates are lowered and streamlined with international standards; 7) Maintain a strict fiscal discipline to avoid inflationary pressures, make government performance more efficient, and have a more rational policy on subsidies; and 8) Develop the most urgent public works that economic growth will need, where possible through joint ventures with private investors. Nevertheless, if such a strategy is to render the expected results, care has been taken to assure the coherence between all economic policy instruments. Past experiences, like the oil boom, have shown that reaching reasonably high growth rates will only benefit our country if they can by sustained over a period of time without leading to a devastating combination of recession and inflation. The Pact for Stability and Economic Growth (PECE), is an agreement signed between workers, businessmen and government to achieve a significant reduction in the inflation rate. Each one of the participants negotiates, under a Pact evaluation board, the price and wage increases which are considered necessary. This scheme has been able to avoid the harmful effects of an outright price freeze, by allowing the structure of relative prices to be adjusted upon a joint basis. This collective approach towards a common economic problem has made it possible to reduce the 1989 inflation rate to 19.7%, down from 52% in 1988 and 159% in 1987. To service its debt, Mexico had been transferring abroad an amount equivalent to 6% of its GDP, on average, for the past seven years. This excessive burden nullified the effectiveness that any domestic measure, by itself, could have had to regain growth. Through 1989, the Mexican authorities reached several agreements with multilateral banking institutions, but it was not until February 4, 1990, that the debt renegotiation was concluded. International commercial banks, which held 48.5 billion dollars worth of Mexican debt, chose between a 35% discount on the principle, a fixed interest rate of 6.25%, and/or more credits equivalent to at least 25% of the former debt. The overall effect of the renegotiation process is equivalent to a 20 billion dollar reduction on Mexico's debt. Mexico acknowledges that this achievement will not solve all its economic problems, but not a single one could be fully addressed without it. Mexico has continued opening to world trade flows. Tariffs have substituted import permits, and their maximum rate is 20%, with an average of 10%. In 1982, 75% of Mexican exports were oil related; today, 65% of sales abroad are made up of non-oil products. Therefore, Mexico demands reciprocity from his trade partners and has repeatedly called for an end to protectionist practices which unfairly harm its exports. Mexico has enacted new regulations to attract foreign investment, by redefining the criteria and conditions that must be met to invest in the country, according to economic sectors. Foreign ownership limitations have been relaxed and simplified. Intellectual property rights are also fully protected by new legislation. Mexico wants to bring up foreign investment levels to 5 billion dollars a year, up from about 3 billion, and thus adequately supplement domestic capital, creating jobs and introducing new technologies. In the past, public enterprises had become an important economic policy instrument of the Mexican State. Nevertheless, the original purpose of this strategy was lost amid the growing financial and political burden that so many of them placed in a context of increasing economic difficulties. The fundamental responsibilities of the State could not be met in the education, health and services areas, at the same time that new investment to modernize or expand non strategic public enterprises could not be provided by government. Therefore, the Administration of President Salinas de Gortari readdressed the issue by establishing a clear privatization policy through which the State will recover the necessary strength to solve pressing social needs. The tax reform currently underway seeks to simplify existing laws and strengthen tax recollection. By broadening the tax base, the government has been able to lower tax rates while increasing overall revenue. Only with a stable and balanced income, the government will be able to have the necessary resources to satisfy social demands and create infrastructure without generating inflationary pressures. On the other hand, the participation of Mexico in the world economy will be enhanced by the streamlining of the tax system to international standards. Public expenditures have to be consistent with the main economic and social goals. While keeping a strict fiscal discipline to avoid waste, inflationary pressures and inefficiency, the allocation of resources is being improved. For example, subsidies, whose social benefits are diluted or lost in the economic chains that are supposed to deliver them, are being eliminated or reduced. Under the PECE, public sector prices have been periodically adjusted so as to comply with inflation objectives, both from price and government income perspectives. Since there are many public works which are needed to support economic growth, public investment in infrastructure has been increased. Strategic public enterprises, like those in the oil and electricity sectors, are getting the necessary resources to modernize and expand their activities. In other cases, like in highway building, joint ventures have been arranged with private investors. Politics. In the political sphere, the President of Mexico has called for an open and permanent dialogue with the opposition parties to agree upon an electoral reform that will encourage the expansion of democratic life in Mexico. Several local elections have taken place since then. For example, in the state of Baja California, the electoral result had no precedent in the recent history of Mexico. An opposition candidate, Ernesto Ruffo Appel, from the National Action Party (PAN), won the election for Governor, while his party also won the majority in the local congress and the municipal presidencies of two important cities: Tijuana and Ensenada. In late 1989, the Chamber of Deputies, after discussing the different possibilities of an electoral reform, agreed upon the necessary Constitutional reforms that establish the main guidelines for a new electoral framework which will provide greater confidence in the results. Since any Constitutional amendment needs a two-thirds majority in Congress, and for the first time no single political party meets that condition, the electoral reform had to be agreed upon by different political forces. During April, 1990, the Chamber of Deputies will be debating the specific regulations required to fully enact the original proposals. It should also be mentioned that a new Representatives' Assembly in the Federal District was inaugurated with the purpose of giving a proper scenario to debate and propose solutions to the complex problems of Mexico City. On April, 1989, after a very serious crisis in the national teachers' union, which centered around demands for a wage increase and union democracy, Carlos Jongitud Barrios, leader "for life" of the union, resigned after a private meeting with President Salinas. A few days later, the Ministry for Public Education announced a 25% wage increase for the teachers. With the idea of strengthening national unity, on February, 1989, the President issued a pardon for prisoners sentenced for crimes committed for political or social reasons and called on the states' governors to join this national conciliation effort. On August, 1989, the President proposed to the Chamber of Deputies an amendment of the penal code which, would facilitate the issue pardons in specific circumstances for this kind of convicts. The Chamber approved the reform in October. Regarding foreign policy, the President of Mexico has visited Venezuela, Colombia, France, Spain, the United States, Guatemala, Belize, Costa Rica, Peru, Portugal, Great Britain, the Federal Republic of Germany, Switzerland, Belgium, Chile and Ecuador. Law enforcement. One of the most often heard demands during the presidential campaign was for greater public security and a better administration of justice. The acknowledgement of this demand has been overwhelming and impartial. Thus, a number of individuals from different spheres of Mexican society, who had committed criminal offenses from privileged positions, have been arrested and held for trial. On January 10, 1989, the previously powerful and influential leaders of the oil workers' union, Joaquin Hernandez Galicia, alias "La Quina", and Salvador Barragan Camacho, were jailed for the illegal possession, stockpiling and introduction of firearms. Sergio Bolanos, a wealthy businessman who worked as a front for the union leadership, was also arrested on charges of tax evasion. On February 13, 1989, Eduardo Legorreta, a powerful entrepreneur, was arrested for his responsibility in several stock market frauds. Furthermore, several officials and agents of brokerage firms were sanctioned or permanently suspended. On April 9, 1989, Miguel Angel Felix Gallardo, considered the most important drugtrafficker in Mexico, and the main contact with the Medellin Cartel for the introduction of cocaine into the United States, was arrested. The results obtained in fighting drug trafficking during the present administration have been spectacular: almost 43 tons of cocaine, nearly 750 tons of marihuana and close to 730 kilos of heroin have been seized and destroyed. On June 11, 1989, the Office of the Attorney General of the Federal District charged Jose Antonio Zorrilla, former director of the now defunct Federal Security Directorate (DFS), with masterminding the murder of the prominent journalist Manuel Buendia, in 1984. He was arrested two days later and soon after the alleged trigger-man in the murder, Juan R. Moro Avila, former agent of the DFS, was also arrested. Also, on June 11, 1989, the recovery of the archeological treasures stolen from the National Museum of Anthropology and History in 1985 and the arrest of those responsible, was announced. On October 9, 1989, the Comptroller General informed that it had discovered irregularities in the personal finances of Eduardo Pesqueira Olea, Secretary of Agriculture and Water Resources in the past government, and at that moment Mexico's representative in the Food and Agriculture Organization (F.A.O.). He was therefore replaced and banned from holding any public office in the following ten years. NATIONAL DEVELOPMENT PLAN (1989-1994) The National Development Plan (PND) is the instrument through which the current government has defined both the basic national objectives and the strategies to be followed to attain. On the basis of the various proposals put forward in different public forums for public consultation and the commitments made by President Salinas de Gortari during his political campaign, the following are the basic national objectives as set forth in the Plan: 1. To defend our sovereignty and to promote the interest of Mexico in the world; 2. to enhance our democratic life; 3. to recover economic with price stability; and 4. to improve the living standards of the Mexican people through an increased efficiency of the economy. "There is a new eagerness to build the greatness of Mexico; the National Development Plan proposes the terms under which we can make it a reality." Regarding the defense of the sovereignty and the promotion of the national interests of Mexico in the world, the Plan states that the aim will be to preserve Mexico's political autonomy, territorial integrity, and control over the country's natural resources. Even Foreign policy will be based on the traditional principles of self-determination of peoples, non-intervention in the internal affairs of other nations, peaceful settlement of controversies, the equality of nations before the law, international cooperation for development, proscription of the threat or use of force, and the struggle for international peace and security. It is also aimed at protecting the rights and interests of Mexicans' beyond the borders (fundamentally in relation to migrant workers in the U.S.) through a substantial improvement in the functions of the consular representations, as well as by reaffirming Mexico's cultural identity in the world. With regard to the second objective, to enhance our democratic life, the PND establishes that the aim is to preserve the rule of law and make it effective, as well as to perfect electoral procedures and broaden political participation; therefore, new impulse will be given to mechanisms which will allow efforts agreed among different organizations of society and of the State in order to practice a fuller democratic life. As to the third objective, to recover economic growth with price stability, the PND defines two priority goals: on the one hand, to attain by 1994 a growth rate close to 6% per year and, on the other, to consolidate price stability by reducing inflation to levels similar to those of Mexico's chief trading partners. For this purpose, it is essential that the economy has the necessary resources to increase productive investment. In this regard, the debt renegotiation was aimed to reduce the net transfer of resources abroad from more than 6% of GDP per year to less than 2%, and increase the level of public and private investment--which dropped substantially between 1983 and 1988--up to around 8%. On the other hand, the policy for industry and foreign trade will focus on making Mexican products more competitive in international markets and on modernizing the productive apparatus by adopting higher standards of efficiency, by incorporating new technology and by carrying out the structural modernization of public enterprises. Moreover, foreign investment is conceived as an important economic policy instrument that will supplement domestic capital within the productive process. Finally, as regards the fourth objective set forth in the PND, to improve the living standards of the Mexican people through productivity, it establishes as a priority meeting demands for public safety, education, health, social welfare, food, housing, availability of basic services, access to culture, protection of the environment and, especially, the eradication of extreme poverty. The Plan also proposes the consolidation of a fair taxation policy that protects those with the lowest incomes without having an adverse effect on public finances. In this regard, the aim is to make policy for subsidies more selective and transparent so that it can strengthen effectively the purchasing power of the neediest groups. Similarly, food policy seeks to ensure supply and improve commercialization systems in order to benefit both the producers and the consumers. Lastly, regarding public health, special mention is made of the problem of drug-trafficking, which will be attacked vigorously by the State, since it is considered not only a public-health problem, but also one of national security and international solidarity. FOREIGN POLICY Mexican foreign policy is based upon the notion that, since Mexico has a strong national culture and a clear sense of identity, its international relations should be undertaken with confidence and self-assurance. Therefore, the process of opening up to the world rests upon what President Salinas has called "forward nationalism", a concept through which Mexico strives to enhance its political and economic standing in today's international context, leaving behind outdated fears and prejudices. "In the international sphere, our performance has been active, dignified and prouded. Due to the seriousness of its efforts and its positive contribution to the world peace and cooperation, Mexico is today held in greater respect in the community of nations." Carlos Salinas de Gortari has stated that the great worldwide transformations are inevitable: "We cannot avoid their impact, and to suppose that would be tantamount to inviting others to impose change on us, suffering its negative effects and losing the opportunity to take advantage of its potential benefits." Therefore, Mexico's foreign policy will strive, on the basis of its traditional principles, for a new kind of role in an international context which is increasingly determined by the emergence of new trade blocs such as the European Market, the Pacific Basin and the free-trade relationship between Canada and the United States. This is why Mexico's modernization will not only be a complement, but also a necessary condition for preserving its sovereignty and promoting its national interests. Origins and recent history of Mexico's Foreign Policy The roots of Mexican foreign policy can be traced to the beginning of the nation's independent life. Mexico suffered many violent foreign interventions from the European powers as well as from the emerging power north of the border, causing Mexico several invasions and the loss of half its original territory. As a result of these painful experiences, Mexico soon developed a defensive approach long before the 1910 revolutionary movement. Nevertheless, relatively strong and stable governments came out of the revolution, which in turn developed the conceptual tools to confront a hostile international environment: The Carranza Doctrine, which refers to the principle of non-intervention, and, later on, the Estrada Doctrine, which refuses to condition diplomatic recognition to any government. During the 1920s, Mexico struggled to consolidate and preserve a sovereign state; it was not until the 1930s that Mexico adopted an active foreign policy. Outstanding examples are the participation in the League of Nations regarding the invasion of Abyssinia and during the Spanish Civil War, the support to the Republic, the political asylum given to its government and a large number of refugees. IN 1942, Mexico declared war against the Axis powers and focused its support of the Allied cause mainly through the export of raw materials. In 1946, Mexico was a founding member of the United Nations and participated in the Organization's security council. In spite of its overall agreement with the hemisphere's security measures, it became a top priority for Mexico to avoid any involvement in the cold war disputes. Mexico systematically opposed unilateral interventionism which is sometimes disguised as "collective security", especially with regards to Latin America. Accordingly, Mexico was the only country in Latin America to maintain diplomatic relations with Cuba, even against the 1964 resolution voted in the Organization of American States to isolate the new socialist regime. During these years, the central feature of Mexican foreign policy was its formulation in strict legal terms, thus avoiding confrontation with other States. Mexico has supported most multilateral organizations, but the field in which it has had its most significant participation is disarmament. This commitment resulted in the subscription of the 1967 Tlatelolco Treaty, which prevents the proliferation of nuclear weapons in Latin America. In spite of the different interpretations of the treaty, it has remained an example of how developing countries can strive towards peace. His participation in both the U.N. disarmament commission, and his involvement with the Tlatelolco Treaty, made Ambassador Alfonso Garcia Robles receive the Nobel Prize for Peace in 1982. During the early 1970s, President Echeverria promoted efforts to coordinate the perspectives of developing countries which led to the Declaration of Economic Rights and Duties of the States. Mexico supported Salvador Allende's government in Chile, and broke diplomatic relations with that country a few months after the 1973 military coup. From this moment on, Mexico received a significant amount of South American refugees, fleeing from repressive military regimes in the area. In 1977, soon after the death of General Francisco Franco, Mexico reestablished diplomatic relations with the newly arisen Spanish democracy. During these years, President Lopez Portillo led a more active foreign policy, especially with regards to Central America. In 1979, Mexico and Venezuela, signed the San Jose agreement, to sell oil in preferential conditions to the Central American countries. The French-Mexican declaration in 1981, regarding the political significance of rebel forces in El Salvador, is considered to be the extreme example of such an approach in foreign policy. In the Cancun Summit of 1981, 22 heads of State and Government met to discuss North-South relations. During the de la Madrid Administration (1982-1988), Mexican foreign policy tried to address the need for better relations with the highly developed nations, due to the debt crisis, and support the search for a political solution to the Central American problems, for example, through the Contadora Group. This area was considered to be both a threat to Mexican national security and an area where the traditional Mexican appeals to non intervention and pacific solution of conflicts needed to be applied. In 1987, Mexican foreign policy principles were incorporated into Article 89 of the Constitution. The basic, and now constitutional precepts which make up Mexico's foreign policy, are: self determination of peoples; non intervention in the internal affairs of other states; international cooperation for development; proscription of the threat or use of force; and the search for international peace and security. "Guided by our principles, our foreign policy is designed to make early and flexible use of diplomacy, of respectful, frank and beneficial bilateral relations, and of active promotion of our interest in multilateral agencies and forums." Foreign Policy Activities of President Salinas One of the best examples of the importance that the President of Mexico has given to foreign policy is the intense international activity he has developed so far. On July 1989, he visited Venezuela and Colombia, signing important cooperation agreements; days later, he attended the Bicentennial of the French Revolution in Paris, where he held interviews with the President of United States, the Prime Ministers of Canada, France and Great Britain, the Chancellor of the Federal Republic of Germany, the Secretary General of the United Nations, as well as with many other political leaders. At the end of this trip, the President of Mexico met in Spain with King Juan Carlos and with President Felipe Gonzalez. On August, 1989, President Salinas visited Guatemala and signed important cooperation agreements regarding migration, combat against drug-trafficking, communications, and commercial and financial assistance with President Vinicio Cerezo. President Salinas made a State Visit to the United States in the first days of October, 1989. During his visit to Washington, D.C. and New York, the President of Mexico met with President George Bush, both at Camp David and at the White House. Later on, he also met with Vice-President, Dan Quayle; Secretary of State, James Baker; several Congressmen; heads of international banking institutions; and Mexican-American leaders. During that visit, President Salinas delivered an addressed to a Joint Session of the U.S. Congress, where he demanded reciprocity in trade policies, understanding towards the migration phenomena, and cooperation in the flight against drugs and in ecological protection efforts. Both governments signed six agreements regarding trade, tourism and ecology. As a result of this visit, respect, cordiality and dialogue have been the main features of the bilateral relationship. Days later, President Salinas attended in Peru a meeting of the Group of Rio, where it was agreed to work jointly towards improving regional trade flows and to continue the flight against drug-trafficking. On October, 1989, President Salinas also made a State Visit to Costa Rica, where he met with President Oscar Arias to discuss bilateral issues and the peace process in Central America. At the end of January, 1990, President Salinas went on an important working trip to Europe which included visits to Portugal, Great Britain, West Germany, Belgium and Switzerland. Likewise, he addressed the European Community Commission, the GATT organization and the World Economic Forum. This intense tour was carried out in order to strengthen the presence of Mexico in that continent, to diversify our political and economic relations and to encourage links with the Europe. In March, in a significant foreign policy gesture, President Salinas made a State Visit to Chile in order to reestablish diplomatic relations with the new democratic government of President Patricio Aylwin. Days later, President Salinas also met with Rodrigo Borja, President of Ecuador. In the near future, the President of Mexico will address the Annual Luncheon of the Associated Press in Los Angeles; Dan Quayle, Vice President of the U.S., will visit him in Mexico City; a meeting, also in Mexico City, will take place with Pope John Paul II; and he will make a tour to important Far Eastern countries in June. In the past year, Mexico has been visited by the Prime Ministers of Denmark, Japan, Canada and Jamaica; and the King and the Queen of Spain made their second State Visit to Mexico. After the 1989 U.S. military invasion of Panama, the government of Mexico expressed its strongest condemnation to the use of armed force as a way to solve any international conflict and requested an immediate end to hostilities. The Mexican government recalled that, at the right moment, it had condemned the conduct of Manuel Antonio Noriega as an individual and stressed once again the need to fight drug-trafficking. However, it also made it clear that fight against crime cannot be an excuse to intervene in a sovereign nation. "We are both aware of the political, economic and cultural changes in the world, and Mexico firmly upholds the principles of nonintervention and selfdetermination of peoples, especially in Latin America."