Increasingly considered a part of North rather than Central America, Mexico straddles the southern end of the continent. Coastal plains along its Pacific and Caribbean seaboards rise into an arid central plateau, which includes one of the world's biggest conurbations, Mexico City, built on the site of the Aztec capital, Tenochtitlán. Colonized by the Spanish for its silver mines, Mexico achieved independence in 1836. In the "Epic Revolution" of 1910–1920, in which 250,000 died, much of modern Mexico's structure was established. In 1994, Mexico signed the North American Free Trade Agreement (NAFTA).

While most Mexicans are mestizo (mixed race), it is Mexico's Amerindian culture which is promoted by the state. This obscures the fact that rural Amerindians are largely segregated from Hispanic society, a situation that dates back to the Spanish colonial period and which has only recently been seriously challenged. The 1994 Chiapas Zapatista (EZLN) guerrilla uprising was on behalf of Amerindian rights, and in protest against the poverty of landless Amerindians. President Vicente Fox promised to act, but the Indigenous Rights and Culture Bill, watered down by a hostile Congress and enacted in 2001, was rejected by the EZLN and all the main indigenous groups.

The small black community, which is concentrated along the eastern coast, is well integrated.

As in much of Latin America, men retain their dominance in business and relatively few women take part in the political process.

Strengths

Global oil producer, with substantial reserves. Extensive mineral resources. Strong foreign direct investment. Diversification of exports. NAFTA membership. Low overheads.

Weaknesses

Debt burden. Vulnerable currency. Corruption. Affected by oil price changes and US slowdown. Weak tax system.

Profile

While in power, the PRI effectively ran the economy. The debt crisis of the 1980s, however, forced privatizations. The 1994 peso crisis needed a US-led $20 billion international bail-out and resulted in a severe slump. The Zedillo government launched tough reforms, but a global loss of confidence in emerging markets affected growth. Tighter fiscal management was rewarded by 2000, when investor confidence improved. The Fox government's tight fiscal and monetary stance secured the approval of the IMF and major credit agencies, giving the country greater access to cheaper foreign capital. However, pledges on social spending and poverty relief suffered and promises on large job creation also went unmet, as the export-led economy echoed the slowdown in the USA in late 2001.

Mexico was a multiparty democracy in name only until 1997; reforms culminated in a PAN presidency in 2000.

Profile

The PRI dominated Mexico from 1929. Regional elections in the 1990s showed the strength of opposition parties, and after grudging electoral reform, the PRI lost its monopoly on power in 1997. President Vicente Fox's PAN became the largest party in the Chamber of Deputies in the 2000 elections, but it lacks an overall majority. Fox promised a broadly conceived "government of transition."

Main Political Issues

President Fox's administration

Strong opposition in the Congress has frustrated President Fox's program of structural reform: by relying on advisers and cabinet rule, he neglected to consult the opposition and failed to build a legislative consensus.

Indigenous rights

Fox initially honored some conditions of the Zapatista National Liberation Army (EZLN) for new peace talks, by releasing prisoners and withdrawing troops from Chiapas. Serious revisions by the Congress to the Indigenous Rights and Culture Bill were rejected by the EZLN and indigenous groups, setting the peace process back.

Future of the PRI

Election defeats left the PRI faction-ridden and rudderless. Roberto Madrazo, a hard-liner elected party leader in 2002, has to unite the PRI to win the 2006 presidential elections.

NAFTA has bonded the economies of Mexico and the USA. Mexican imports have undercut US jobs, as has the relocation south of multinationals to benefit from cheap Mexican labor. Heightened post-11 September US border security complicated a bilateral agreement to deal with high flows of illegal immigrants but also hindered powerful drug cartels supplying the US market.

Mexico has free trade agreements with 32 countries, as well as with the EU and EFTA, and competes with Brazil to play a leading negotiating role for Latin America in the formation of a Free Trade Area of the Americas (FTAA) due to be signed in 2005.

Mexico's swing vote in the UN in 2002, which triggered a resolution on human rights in Cuba, inflamed relations with the Castro regime there and set President Fox against the Senate on the issue of who decides foreign policy.

Mexico has no ambitions beyond its borders, and the army acts to defend internal security. The military has, on the whole, avoided direct interference in politics. Most arms procurement is from the USA and France. In 1994, the role of controlling the border with the USA was passed to the police.

The Zapatista rebellion in Chiapas in 1994 elicited a brutal response from the army, acting on PRI orders. The increasing militarization of the state over the next six years hindered the peace process and led to a proliferation of paramilitaries, with the tacit blessing of the local PRI, who were blamed by human rights groups for the massacre of Amerindians. The PAN government has withdrawn some forces from key areas of the state.

Mexico is one of the largest oil exporters outside OPEC. Most oil production comes from offshore drilling platforms in the Gulf of Mexico. The industry was state-owned and state-run by PEMEX, the world's fifth-largest oil company, employing 120,000 people. The decision to privatize petrochemical plants has provoked serious social unrest, and further sell-offs, and deregulation remain politically highly sensitive. Despite its oil reserves, Mexico has embarked on a nuclear power program and projects to modernize the national electricity grid and boost natural gas production to overcome an energy crisis.

The largely unplanned conurbation of Mexico City struggles to accommodate around 20 million inhabitants as the absence of environmental controls contributes to perhaps the world's worst air quality and waste problems. PEMEX (the state petroleum company) stands accused of massive pollution.

Maquiladoras – assembly plants on the Mexico–US border – have no effective environmental controls and are usually surrounded by insanitary slums. Environmentalists oppose the intense development of tourism along the coast and are concerned about high rates of deforestation.

A privately financed $14 billion road network, some 6000 km (3730 miles) of toll roads, is seriously underused and a commercial failure. Regional travel is mainly by bus; the unreliable railroad is largely for freight. Mexico City's new $2 billion international airport, situated on a dry lake bed 25 km (15 miles) northeast of the city center, will be operational from 2006 and will be able to handle 60 million passengers a year.

The national health care system is basic and badly underfunded, although an ambitious scheme was launched in 1996 to improve access to health services in marginalized areas. Mexico has a good reputation for surgery and dentistry, but this is mostly in the private sector. The rich also go to the USA for treatment.

Public education, officially compulsory for the first six years, is underfunded and rural provision is poor. The system is a mixture of the French and US models. There is a well-developed public university system.

Northern Mexico is a major center for narcotics shipments to the USA. Antidrugs police are accused by the USA of corruption. Guns are rife and minor incidents may end in shootings. The high crime rate in Mexico City is a major political issue. Reforms of the corrupt judiciary and the whole police force are perennial issues.

Mexico has enormous wealth disparities. Preliminary official figures in 2002 had six million families, or 26 million people, in extreme poverty. Independent figures in 1999 recorded 13 million. There is little social mobility; the old Spanish families retain their hold on institutions. In the past, the wealthy did not generally pay taxes and often benefited from the large state machine. Tax evasion remains a serious problem.

Rural Amerindians are probably the most disadvantaged group. In the last decade, poverty has forced them into city slums to work in factories or maquiladoras, where conditions and pay are poor. The 1994 Chiapas rebellion was fed by demands for more land and more assistance in farming it. The flow of poor rural migrants to the USA stems largely from the need to subsidize families back home.

Tourism is one of the largest employment sectors in Mexico, and a major source of foreign exchange. Attractions include excellent beach resorts such as Acapulco on the Pacific coast, and the new resorts of the Peninsula de Yucatán on the Caribbean coast. Impressive coastal scenery, volcanoes, the Sierra Madre mountains, and archaeological remains of Aztec and Mayan civilizations, designated as World Heritage sites, are major draws, as are the many Spanish colonial cities, such as Morelia and Guadalajara, which have remained virtually intact since conquest.

The Aztec kingdom of Montezuma II was defeated in war by the Spaniard, Hernán Cortés, in 1521. By 1546, the Spaniards had discovered large silver mines at Zacatecas. Mexico, then known as New Spain, became a key part of the Spanish colonial empire.

• 1810 Fr. Miguel Hidalgo leads abortive rising against Spanish.
• 1821 Spanish viceroy forced to leave by Agustín de Iturbide.
• 1822 Federal Republic established.
• 1823 Texas opened to US immigration.
• 1829 Spanish military expedition fails to regain control.
• 1836 USA is first country to recognize Mexico's independence. Spain follows suit. Texas declares its independence from Mexico.
• 1846 War breaks out with USA.
• 1848 Loses modern-day New Mexico, Arizona, Nevada, Utah, California, and part of Colorado.
• 1858–1861 War of Reform won by anticlerical Liberals.
• 1862 France, Britain, and Spain launch military expedition.
• 1863 French troops capture Mexico City. Maximilian of Austria established as Mexican emperor.
• 1867 Mexico recaptured by Benito Juárez. Maximilian shot.
• 1876 Porfirio Díaz president. Economic growth; rail system built.
• 1901 First year of oil production.
• 1910–1920 Epic Revolution provoked by excessive exploitation by foreign companies and desire for land reform. 250,000 killed.
• 1911 Díaz overthrown by Francisco Madero. Guerrilla war breaks out in north. Emilio Zapata leads peasant revolt in the south.
• 1913 Madero murdered.
• 1917 New constitution limits power of Church. Minerals and subsoil rights reserved for the nation.
• 1926–1929 Cristero rebellion led by militant Catholic priests.
• 1929 National Revolutionary Party (later PRI) formed.
• 1934 Gen. Cárdenas president. Land reform accelerated, cooperative farms established, railroads nationalized, and US and UK oil companies expelled.
• 1940s US war effort helps Mexican economy to grow.
• 1970 Accelerating population growth reaches 3% a year.
• 1982 Mexico declares it cannot repay its foreign debt of over $800 billion. IMF insists on economic reforms to reschedule the debt.
• 1984 Government contravenes constitution by relaxing laws on foreign investment.
• 1985 Earthquake in Mexico City. Official death toll 7000. Economic cost estimated at $425 million.
• 1988 Carlos Salinas de Gortari, minister of planning during the earthquake, elected president.
• 1990 Privatization program begun.
• 1994–1995 Guerrilla rebellion in southern Chiapas state brutally suppressed by army: 100 dead. Mexico joins NAFTA. PRI presidential candidate Luis Colosio murdered. Ernesto Zedillo replaces him and is elected. Economic crisis.
• 1997–1999 PRI's monopoly on power in Congress ended. Banks bailed out.
• 2000 July, PAN wins presidency and elections, ending 70 years of PRI rule. December, President Vicente Fox takes office.
• 2001 EZLN guerrillas and supporters make 16-day motorcade from Chiapas to Mexico City to push for an indigenous rights law.
• 2002 Former governor of Tabasco, Roberto Madrazo, a traditionalist hard-liner, elected new PRI leader.