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dirty work to the new president, who had not yet earned the confidence
of foreign financial markets. It was mishandled: the Mexico peso went
into a downward spin, and the nation was catapulted into its fourth
recession since 1982 and its worst since the Revolution. It took an
emergency bailout loan from the United States, with Mexican oil as
collateral, to prevent complete collapse of the peso.
By mid-1996 there were signs of a fragile recovery, but Mexico was
suffering still. Two million jobs and thousands of small businesses had
been lost. To avoid a complete collapse of the currency, interest rates
had been quadrupled, and the price of gasoline and utilities had been
increased, as had the value-added tax. The cost of food increased as
Zedillo eliminated subsidies for basic foods including tortillas. By 1997
Mexico City workers needed to labor almost twice as long (50 minutes)
as in 1994 (27 minutes) to purchase a loaf of bread. Half the Mexican
population was estimated to be living in poverty. The devastated middle
class was angry: it was government lies and ineptitude that had done
this to them. Salinas’s popularity plummeted with the peso, as did
world confidence in Mexican markets. Crime soared, as did migration
to the United States: the average number of Mexicans establishing per-
manent residence in the United States during the 1990s rose to 227,000
annually, 10 times greater than during the 1960s.
Oil and NAFTA
In 1998 the world economy was rocked by the Asian crisis, and oil
prices started to plummet, threatening yet another fiscal crisis for
Mexico. Although oil contributed only 12 percent to Mexico’s export
income, in contrast to a peak of 80 percent in 1982, taxes on PEMEX,
the government monopoly, constituted 39 percent of the federal budget.
Zedillo ruthlessly cut government programs in order to avoid deficits
and a drop in the value of the peso. Further cuts were not needed, how-
ever, when his government used its position as the fifth largest producer
of crude oil to organize a new cartel that included the OPEC nations
along with Norway: oil prices rose.
Driven by NAFTA and Zedillo’s fiscal austerity, Mexico’s economy
finally turned the corner, ringing up 7 percent growth in the GDP
in 1998 alone. Exports to the United States grew from $60 billion in
1995 to $100 billion four years later. These exports demonstrated a
new diversity: in addition to oil, machinery, clothing, fresh produce,
glass, and electronic parts. In fact, manufacturing outstripped oil in
importance and Mexico edged on China’s position as the largest single
THE MARCH TOWARD DEMOCRACY