Mexico's new President takes office -- with $80 billion debt
No one knows better than Miguel de la Madrid Hurtado what troubles he faces as Mexico's new President.
With runaway inflation, 40 percent unemployment, a badly limping industrial base, a foreign debt of $80 billion, and no immediate way to pay even the interest, Mexico's immediate future is far from bright.
As he takes over the presidency Dec. 1 from Jose Lopez Portillo, about the most hopeful thing is that the Lopez Portillo era is over. The outgoing administration now is best known for presiding over the country's shift from prosperity to economic chaos.
Mr. Lopez Portillo had expected that it would be otherwise. The nation's newly discovered oil reserves had suddenly propelled Mexico into a major role in the world oil economy as its fourth largest producer.
But the enthusiasm of the early Lopez Portillo years gave way completely this year as Mexico's economy almost went belly up.
By overspending, overborrowing, and overextending itself, Mexico found itself in midsummer without any cash to pay its bills. It could not pay is debts and was unable to get new credit.
Mexicans couldn't wait for Mr. Lopez Portillo to go. The biting humor so much a part of Mexican life took on new flavor as cynical jokes made the rounds about the Lopez Portillo administration.
But Mr. de la Madrid is not laughing. ''Mexico has never been faced with a worse situation than it faces today,'' he said last month. ''There are no easy answers and we are all going to have to pay for the excesses of the past.''
He has already signaled a massive austerity campaign that will pinch all Mexicans. Some difficult things that Mr. Lopez Portillo refused to do - cut government spending, tighten the laws on corruption, keep prices and wages from rising - are going to have to be carried out by the new President.
''We have to bite the bullet,'' he says.
At the moment, it is far from clear that he will be able to do all that is necessary to get the economy moving again. He is not a politician, but a technician; not a forceful speaker, but a forceful technocrat. This can be useful, but in a nation accustomed to firm political leaders, it appears Mr. de la Madrid could come up short.
Labor is angry. The present focus of its wrath is the Lopez Portillo administration. But Mr. de la Madrid inherits some of this anger. Fidel Velazquez, the octogenarian leader of Mexico's powerful labor unions, is calling for a public-sector wage hike of 50 percent immediately, on top of the 30 percent boost received earlier this year.
Public-sector wages serve as the basis for wage-negotiating in the private sector. Mr. de la Madrid is going to have to give some on this issue - and the amount that he eventually concedes to labor will tell just how adroit a politician he is.
Carlos Tello Macias, the director of the Central Bank, who was named to that post by Lopez Portillo, said recently that ''Mexico can spend its way out of the current difficulties.'' This view is widely held in many political circles within the Institutional Revolutionary Party, Mexico's dominant political party.
But it is not a view shared by Mr. de la Madrid and his advisers, including Treasury Minister Jesus Silva Herzog. He has recently worked out a $3.8 billion International Monetary Fund credit, which requires Mexico to put austerity economic practices to work.
The debate goes on and may well inhibit Mr. de la Madrid from carrying out his austerity program fully.