Mexico

By John Moody/Mexico City

For hard-luck Mexicans, 1987 is already a year that many would like to forget. Last week the peso crashed through the once unthinkable barrier of 1,000 to the dollar, a sharp signal of plummeting confidence in the country at home and abroad. Foreign banks have balked at extending new loans to keep the economy afloat. To make matters worse, with national elections 18 months away, the scramble to succeed President Miguel de la Madrid threatens to paralyze his government until a new President is chosen.

So far, Mexico's resilient population of 82 million has accepted the hardships heaped upon it. Recently, however, there have been signs that patience may be wearing thin. Last week more than 60,000 students and other demonstrators converged on the National Palace in Mexico City to protest a plan by the National Autonomous University of Mexico (U.N.A.M.) to tighten entrance requirements and increase annual tuition fees from an average of 10 cents to more than $90 a student. Speakers exhorted the government to stop payment on its crippling $100 billion foreign debt, demanded that workers receive hefty pay hikes to cope with the country's 103% annual inflation rate, and prodded officials to show backbone in their dealings with the U.S. Chanted demonstrators: "No to the Yanquis! No to the Yanquis!"

Emboldened by the turnout at earlier rallies, protest leaders called a strike at U.N.A.M.'s main campus in Mexico City that has prevented 400,000 registered students from attending classes since the end of January. Last week university officials agreed to submit all outstanding issues to arbitration.

The surge of unrest among Mexican students may have tapped a swelling current of discontent throughout the population. The main target: the De la Madrid government, synonymous in the minds of most Mexicans with the Institutional Revolutionary Party (P.R.I.), which has ruled Mexico without interruption for 58 years. Party officials were said to be stunned by the size and force of the student movement. Says Political Analyst Adolfo Aguilar Zinser: "There's no way of knowing what will set the people off. The government can squeeze salaries, raise prices, cut services, cheat in elections, and nothing happens. Suddenly they've got a real movement questioning their authority to make decisions the way they do."

A decade ago Mexico seemed on the verge of prosperity. Its vast oil reserves sent the economy into overdrive, and the government took full credit for the boom. Then came the tumble in energy prices, a mounting foreign debt and the yearly addition of nearly 1 million people to the work force. In September 1985 an earthquake devastated Mexico City, leaving 20,000 dead and 100,000 homeless. The illusion of well-being was supplanted by a brutal struggle to survive.

Six years ago the exchange rate was fairly stable at 23 pesos to the dollar. Last week the peso closed at 1,009. After years of devaluations, caused in part by a soft oil market and a growing trade deficit, the latest slip in the peso did not surprise economists. And the end is not in sight: most experts believe the peso will fall to 1,800 by year's end. Three-digit inflation is expected to continue. On Feb. 1 the postal service doubled its rates overnight without warning. A majority of the 20 million-member work force reportedly earns less than the minimum wage of $3.45 a day. Under such circumstances, even last year's 20-fold increase in Mexico City's subway fare to 2 cents a ride was cause for bitter resentment. Reason for the spiraling costs: the failure of successive governments to take politically unpopular steps, such as reducing food-price subsidies and curbing wages, that would dampen inflation.

As prices have increased, Mexico's standard of living has fallen. Only four years ago Miguel Martin Chavez, 50, the father of six children, had his pick of relatively lucrative jobs in the capital's construction industry. Now, when he works at all, he is lucky to earn $20 a week. Chavez plans to stay in Mexico City, but he knows that doing so is a risk to his family's health. Pollution is so bad in Mexico City (pop. 18 million) that birds regularly drop dead from the soot-filled sky. Last year the city endured several thermal inversions in which dense, low-lying clouds of smog literally forced residents of the capital to choke on the waste produced by the city's 3 million cars and 100,000 factories. Warns Economist Rogelio Ramirez de la O: "If there is a thermal inversion in which a whole lot of people die, the government will be blamed and there could be a violent response."

De la Madrid is no more likely to shut down belching smokestacks than he is to cut government spending. Barred by law from running again, he must announce the P.R.I. candidate sometime this year for the September 1988 presidential election. Open campaigning is frowned upon, but three men are touted as front runners: Energy Minister Alfredo del Mazo Gonzalez, a former governor of the state of Mexico; Interior Minister Manuel Bartlett Diaz; and Carlos Salinas de Gortari, the Minister of Budget and Planning. The P.R.I., traditionally uses lavish patronage and pork-barrel politics to ensure an impressive margin of victory.

As a result, Mexico's creditors sense that serious austerity measures are nowhere in sight. One New York bank last month wrote off as a bad debt $40 million of the $257 million it is owed by Mexico. A consortium of 200 U.S. banks is delaying the transfer of funds for a $7 billion loan. Says a foreign banker: "In 1987 spending will outweigh any prudence." That is unlikely to reassure many leery Mexicans. For most, the yearning for a better life is tempered by the knowledge that things can -- and probably will -- get much worse.