Last weekend, when Mexican President Miguel de la Madrid Hurtado rose to deliver the welcoming address at the opening of the World Cup soccer championships, he was roundly jeered by the crowd gathered in Mexico City's Azteca Stadium.
Minutes later, when the head of the world soccer federation mentioned de la Madrid, the boos were heard again.
The display of disapproval of the Mexican chief executive was an indication of how desperate the economic situation and how tense the politics have become in Mexico. The nation is squarely back in a serious recession caused by plunging oil prices and the need to pay billions of dollars of interest each year on nearly $100 billion in foreign debt.
De la Madrid's problems are not rooted solely in the Mexican economy. The president, in the middle of the fourth year of a six-year term, is perceived as a distant leader in a culture in which personality counts heavily. And Mexicans have a history of hooting at authority figures during sporting events.
Nevertheless, the same crowd probably would have cheered him two years earlier, according to several Mexican experts.
Mexicans then had some hope that there would be a payoff for the two years of economic austerity and cataclysmic recessions their country suffered in 1982 and 1983. The economy was beginning to recover, and inflation was retreating.
But today much of that hope has been drowned in oil. The steep, 50 percent plunge in oil prices since New Year's Day has depleted the Mexican treasury and strained the country's ability to pay a foreign interest bill expected to approach $9 billion this year. In 1985, Mexico relied upon oil for nearly half its domestic tax collections and 70 percent of its export revenue.
The nation is entering another severe recession. In the last few days, Mexicans themselves have become panicky, buying dollars at a dizzying clip and sending the peso plummeting.
There is renewed concern among U.S. officials and international officials that cash-strapped Mexico may stop making interest payments it owes banks unless it can borrow billions of dollars from official sources such as the International Monetary Fund and from private commercial banks.
Mexican officials have said the country needs to borrow $4 billion in new money this year, $2.5 billion of it from commercial banks and the rest from other governments and official institutions such as the IMF.
Although some commercial bankers argue that Mexico is exaggerating its borrowing needs, international monetary sources familiar with its finances said that the figure is understated. Mexico will need at least $6 billion to $7 billion in new foreign loans this year, these sources said.
Mexico has been locked in negotiations with the IMF since last September, before the plunge in oil prices. The country and the multinational lending agency neared an agreement in December, but the bottom fell out of the oil market.
The agency and Mexico are haggling over the size of the country's budget deficit. Mexico took steps to trim spending by $1 billion last April, but said it cannot reduce the deficit by as much as the IMF wants because of the sudden loss of oil revenue.
The IMF argues that if the country is to contain inflation and restore investor confidence, it must take further painful steps to cut spending. The recent plunge in the peso is an indication of how fragile investor confidence is in the Mexican economy.
But additional spending cuts will further exacerbate the plight of the poor, who already have seen the prices of basic commodities such as tortillas skyrocket because the government has ended many subsidies to reduce the deficit.
Mexico City sources said that a high-level Mexican delegation will visit Washington this week in an attempt to break the impasse with the IMF and meet with U.S. Treasury, State Department and Federal Reserve officials. Sources said it was not clear who would head the delegation.
Mexican Finance Minister Jesus Silva Herzog has said that if the country cannot devise an economic program acceptable to the IMF, it will try to negotiate directly with commercial bankers for new money and easier terms on outstanding loans. Commercial banks, which are owed about $70 billion by Mexico, so far are adamant that until Mexico comes to terms with the IMF, they will not discuss new loans.
So far, Mexico has scrupulously paid every dime of interest it owes -- to commercial banks and official lenders. But Mexican observers and international monetary sources say that there is a real possibility that if Mexico cannot get new loans this year, it will find it economically and politically necessary to reduce its interest payments to commercial banks.
That could rekindle the festering Latin American debt crisis -- the region owes $370 billion to foreigners, about $270 billion of it to banks -- and could force many U.S. banks to put Mexican loans on their problem lists, an action that at a minimum would reduce profits in the final months of the year.
Mexico also is under pressure from the U.S. government to take steps to open up its economy to foreign competition, dump money-losing state companies and remove other roadblocks to economic growth.
The country already has taken some of those steps. It announced it will join the General Agreement on Tariffs and Trade, the international institution that seeks to foster free trade. It has put a number of state companies up for sale and recently closed a money-losing Monterrey steel mill.
But many of those actions are unpopular. The steel mill closing put 10,000 workers out of jobs. Many observers worry that de la Madrid will find it politically impossible to take further reform steps during a severe recession in which Mexico feels abandoned by foreign lenders.
When it ran out of cash to pay its foreign debts in August 1982, Mexico quickly adopted the types of austerity measures recommended by the IMF, the U.S. government and the commercial banks -- and obtained billions of dollars of loans to help it over the hump.
By 1984, it appeared that the measures were working. The economy again was growing -- even if not at the pace Mexicans had become used to in the 1970s and not fast enough to create jobs for the millions of Mexicans that became unemployed during the recession. Inflation was retreating. Mexico was generating enough export revenue to pay its interest bills and maintain a level of exports that was needed to keep the economy expanding.
At the same time, the commercial banks, which hold about $70 billion of Mexico's foreign debts, were preparing to make it easier for the nation to pay its loans -- by lowering the interest rates on outstanding debt and postponing repayment of nearly all the principal until the next decade.
"We were the good boys in school," Finance Minister Jesus Silva Herzog said in a recent interview. The commercial banks were rewarding the "good boys" for taking the orthodox steps and, by setting Mexico up as the model debtor, were demonstrating to recalcitrant debtors such as Argentina the supposed advantages of behaving like Mexico.
If there is a model debtor today, it is Argentina, which last year stopped jousting with the international financial community, took stern anti-inflation measures and received billions of dollars of new loans.
But Argentina also faces serious financial problems and also has fallen off course on its IMF program. The IMF must decide this week whether Argentina is eligible for its final loan disbursement of about $300 million. If it is not, commercial banks will not give the country $600 million.
The issue of the debt has been escalating in Argentine politics, too. "You can believe that whatever Mexico does, we'll have to do, too," said a top Argentine official.
Others scoff at the notion that other major debtors would follow a hard-line Mexican approach to its problems. The region's biggest debtor, Brazil, has been helped by falling oil prices. Argentina may be helped indirectly if lower oil prices stimulate demand for its exports.
Venezuela, the other major debtor, is also a major oil exporter, but it has about $15 billion in reserves -- compared with Mexico's roughly $5 billion -- and a far smaller population than Mexico's.
Mexicans have seen their purchasing power deteriorate sharply since the debt crisis began in 1982. Not only have the prices of basic commodities soared because of reduced or canceled government subsidies, so have utility and gasoline prices. Import prices rose sharply as the result of peso devaluations.
The new recession not only will throw scores of thousands of Mexicans out of jobs, but it also will assure that new entrants into the labor force will further swell the already large army of unemployed.
Despite the more than 50 percent decline in oil prices since Jan. 1, there have been some favorable economic developments. Revenue from the World Cup and an anticipated increase in U.S. tourists worried about terrorism in Europe will add dollars to the coffers.
The country also just received a $475 million rebate from commercial bankers -- a reflection of rescheduled loans that carry a lower interest rate than Mexico had been paying.
The decline in worldwide interest rates also will help. Texas Commerce Bancshares Inc., the Houston bank company, estimated that Mexico's interest bill will fall to $9.2 billion this year from $10.1 billion last year and nearly $12 billion in 1984 because of falling short-term interest rates. Other experts predict falling rates could reduce Mexico's interest bill to as low as $8.5 billion.
Nevertheless, with oil prices down, Mexico will need to borrow billions of dollars of new money. In a recent interview, Silva Herzog said commercial banks also will have to reduce further the profit margin they add to their cost of funds to save Mexico some interest payments.
De la Madrid, in a speech last Monday, reiterated his contention that foreign banks, not just Mexicans, must make some sacrifices.
"The position of the banks has to be that there have to be some major structural changes in the Mexican economy before we can go forward in talks. Otherwise, we'd be throwing money down the drain," according to a key international banker.
There have been no serious negotiations between Mexico and its bank advisory committee since December and no meetings at all since early February.