Section IV: POLITICAL ENVIRONMENT Political System, Elections, Parties Mexico has enjoyed political stability for most of this century, a phenomenon unique in Latin America and largely due to the political system set up after Mexico's bloody 1910-1917 revolution. The anchor of the system has been the ruling Institutional Revolutionary Party (PRI), which has held power since its founding (under a different name) in 1929. Encompassing most of the social forces dominant after the revolution, the PRI successfully adapted to changes in Mexican society over the years by alternating populist and conservative policies. The Mexican government has three separate branches, but, like many Latin states, the executive branch is clearly dominant. The PRI continues to dominate the bicameral legislature, holding 95 of 128 seats in the Senate and 300 of the 500 positions in the lower house Chamber of Deputies. In the past, the legislature was something of a rubber stamp body, always acting favorably on presidential initiatives. However, recent changes in the electoral code and results from legislative elections have increased the presence of opposition parties in the Congress. The Mexican judiciary is the weakest of the three branches of government, suffering from a lack of professionalism and susceptibility to outside influences, including corruption. Incoming president Ernest Zedillo has pledged sweeping reforms in the judicial system. Although the PRI has been the preeminent force in Mexican politics throughout this century, successive political reforms have opened up more space for opposition parties. The PRI's traditional advantages have included its vast nationwide organization and access to government resources, which in turn have prompted complaints of unfairness and fraud in elections. As pressure for reform increased, the government responded gradually. For example, in the late 1970s, opponents were given more opportunities to compete in federal elections with a specific number of seats set aside for them in the lower house. In 1989-1990 the Congress passed reform legislation that revamped the entire federal electoral system, creating a semi-autonomous Federal Electoral Institute (IFE) and a separate Federal Electoral Tribunal to adjudicate election disputes. The voter registration was completely revised and new voter credentials issued to some 45 million voters. The voter registry was submitted to internal and external, independent audits. The audits accepted by IFE and two of the three major parties indicated the voter list was reliable to within a 96% range. In 1993 and again early in 1994, the Mexican Congress passed additional electoral reforms to provide greater assurances for an open, transparent electoral process. The supreme decision making body of the IFE was placed under the control of non-affiliated citizen directors, removing the ability of government or political party representatives to intervene in IFE actions. Electoral crimes were further defined within the criminal code and an independent prosecutor to investigate electoral fraud was established. Limits on campaign spending and party financing were fixed. Electoral laws were modified to recognize the role of Mexican citizens as non-partisan "observers" of the entire electoral process and, in an unprecedented move, to allow for foreigners to witness elections as "international visitors." The key parties in the opposition lie to either side of the PRI in the political spectrum. The conservative National Action Party (PAN) advocates private sector-oriented policies and more honesty in government. Although the policies of the Salinas administration have stolen some thunder from the PAN, the conservative party has nonetheless increased its political presence in recent years. It held three state governorships -- prior to 1989, governors were always from the PRI -- and had many more office-holders at lower levels of government. The leftist Party of Democratic Revolution (PRD) espouses a more populist outlook and believes in more government intervention in the economy. Although the PRD's founder -- and former PRI member -- Cuauhtemoc Cardenas mounted a serious challenge to Salinas in the still controversial 1988 presidential race, the party has not been able to duplicate its electoral showing in subsequent races. Mexico had six small political parties registered for the 1994 national elections. However, it appears from initial returns that, of these, only the Labor Party (PT) obtained the minium percentage of votes to gain seats in the Congress and maintain it party registration. The August 21 presidential elections were marked by the highest voter turnout in modern Mexico -- more than 77% of the registered voters cast their ballots in a generally orderly and peaceful process. The three main candidates for the presidency were the PRI's Dr. Ernesto Zedillo, an economist and former Secretary of Planning and Budget and of Education; the PAN's Diego Fernandez de Cevallos, a lawyer and legislator; and, the PRD's Cuauhtemoc Cardenas, son of one of Mexico's most revered presidents. The three met on May 12 in the first ever televised presidential debate, an event that gave a considerable boost to Fernandez' candidacy and allowed the PAN to achieve an historic high in terms of votes in the August elections. The results of the presidential race, as reported by IFE, were (including null votes): Zedillo - 48.77%; Fernandez - 25.94%; Cardenas - 16.88%. (Without the null votes factored in, the results were: Zedillo - 50.18%; Fernandez - 26.69%; Cardenas - 17.08%.) These results will be certified by the Chamber of Deputies after it convenes on November 1. Inauguration is December 1. Nature of Bilateral Relationship The relationship with Mexico is among the United States' most important and complex. It is shaped by a mixture of mutual interests, shared problems, growing interdependence, and differing national perceptions. Historical factors, cultural differences, and economic disparities add further intricacy to the relationship. The scope of U.S.- Mexican relations goes far beyond diplomatic and official contacts; it entails extensive commercial, cultural, and educational ties. Along our 2,000 mile border, state and local governments interact closely. The two countries cooperate on a wide rage of issues, including trade, law enforcement, immigration and environmental matters. An independent, strong, and economically healthy Mexico is fundamental to U.S. interests. Both governments actively discuss ways to improve cooperation on an array of bilateral issues. Since 1981, this process has been formalized in the U.S. - Mexico Binational Commission, composed of U.S. cabinet members and their Mexican counterparts. The Commission holds annual plenary meetings, and many subgroups meet during the course of the year to discuss a range of topics, including trade negotiations and investment opportunities, financial cooperation, narcotics, migration, law enforcement, cultural relations, education, border cooperation environment, labor agriculture, housing and urban development, fisheries, and tourism. The most outstanding feature of our bilateral relationship in recent years has been the implementation of the North American Free Trade Agreement (NAFTA) by Mexico, the United States, and Canada. Preliminary negotiations for NAFTA began in 1990 and culminated with the agreement's passage by the legislatures of all three countries in the fall of 1993. Beyond the commercial aspects, which are dealt with elsewhere in this report, NAFTA brings together the three nations of the North American continent culturally, socially and politically. Increased interaction between our nations on the trade front will foster greater understanding of each other's political systems, appreciation for cultural differences, and a much more open atmosphere for conducting our full range of relations. Major Political Issues Affecting Business Climate In its sixth and final year, the Salinas administration encountered difficult and unexpected challenges, including a largely indigenous armed uprising in the southern state of Chiapas, the assassination of a major presidential candidate, and a growing concern over crime, highlighted by the kidnappings and subsequent multi-million dollar ransoms of two ranking business leaders. These events, though unsettling for Mexico, have not caused the United States government to fear for stability in Mexico. The United States remains confident that Mexico's political and economic institutions will continue to weather these crises and move forward to fortify the political stability which Mexicans have experienced for the greater part of this century. The peaceful and orderly fashion in which the August 1994 elections were conducted and the historic high voter turnout are signs that the Mexican people maintain a strong faith in their nation and its institutions. The events in Chiapas underscored the depth of socio-economic and political problems which still exist in Mexico, particularly with regard regard to indigenous and lower-income groups. The Salinas administration's response to the Chiapas uprising was to enter into talks with the armed rebels and redirect government resources to help alleviate the social and economic hardships still faced by native communities in Chiapas. The Salinas administration, which has devoted 55 percent of its budget on social spending such as the National Solidarity Program (PRONASOL), recognized that still more attention needed to be paid to social issues throughout Mexico. Incoming president Zedillo has announced plans to continue with the macro-economic policies of President Salinas, but with increased focus on microeconomic policies to help the poor, as well as small and medium businesses, including through employment creation, labor training, and investment in technology, and decentralization of government programs. United States support for full implementation of NAFTA has not been affected by events in Mexico. The U.S. is confident that as NAFTA improves economic prosperity for all three of the agreement's partners, the benefits to Mexico's economy will provide the Mexican Government with additional tools for addressing the socio-economic needs of the Mexican people.