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Mexican Snake: José López Portillo

jose portillo (60K)

The conservative political savior José López Portillo[1] assumed the Presidency on December 1, 1976 after the tumultuous, populist, and extravagance of the Luis Echeverría presidency. On November 30, 1982, six years later, he left in disgrace; many, perhaps most Mexicans, considered him a snake, a man who had feathered his own nest while damaging the country by fiscal irresponsibility, corruption, and demagoguery. He spent much of the rest of his life in exile but went back to Mexico and died on February 17, 2004 at the age of 83.
     There were those who said he never should have become a politician but remained a member of a well-respected family, a university professor, an author, and a philosopher. Perhaps it would have been acceptable to become an administrator at the sub-cabinet level of the national government, for these did not require the political skills of a President. But he rose beyond to become Secretary of Treasury, 1973-75, and then President, 1976-82.
     He was born on June 16, 1920 in Mexico City. His father, José López Portillo y Wéber, was a soldier, engineer and historian of middle-class status, far above the average person. His paternal grandfather, José López Portillo y Rojas was a distinguished intellectual and member of the Mexican Academy who served in the cabinets of two conservative governments. He was proud of the fact that he was the great-great-great grandson of José María Narváez (1768–1840), a Spanish explorer who was the first to enter Georgia Strait in present-day British Columbia. The future president was born as somebody but not rich. He graduated from public schools in Mexico City, including the National University which he entered in 1939 and from which he graduated in law and political science in 1946. Part of his university education was obtained at the University of Chile with the aid of a scholarship from the Chilean government. He obtained his law degree in 1946.
     He married his childhood neighbor, Carmen Romano, in October, 1951. They moved into a three-storey house given to her by her father. She bore him three children--José Ramón, Carmen Beatriz, and Paulina. The couple were separated but reunited for the sake of appearances when he was designated the Partido Revolucionario Institucional (PRI) presidential candidate in 1975 for the campaign and the duration of his presidency. She performed the public duties of First Lady, mostly entertaining dignitaries and doing good works. She created the National System for Integral Family Development (a social assistance agency for families), and various programs to promote the arts. Nevertheless, the couple maintained separate lives throughout his presidency and physically separated again once he left the presidency. They divorced in 1991.
     The young man became a successful lawyer and a professor of law at his alma mater the National Autonomous University of Mexico (UNAM) in 1947, remaining in that role until 1958. His textbook on the general theory of the state earned him extra income. He wrote a book about the Mexican feathered serpent god Quetzalcóatl in 1965 and then, in 1975, a philosophical novel, Don Q. , wherein he waxes philosophical about figurative as opposed to literal meanings in life. In 1961, after he founded the doctorate in Administrative Science in the business school (Escuela Superior de Comercio y Administración (E.S.C.A.) in the National Polytechnic Institute. He seemed the stereotypical academic--teaching, writing a textbook, involving himself in academic administration--as well as being a novelist, painter, athlete, and equestrian. He was an attractive, charming man of virtu.
     Perhaps he entered public service in 1959 at age 39 because of his childhood friendship with Luis Echeverría Alvarez, a rising politician who would be President, 1970-76. They had played together as boys; enjoyed a friendship at UNAM students where they both worked on the school newspaper in 1940; traveled together on the, long voyage to Santiago, Chile where they studied on a fellowship in 1941; and continued their friendship after receiving their law degrees. Although It was common for a lawyer to practice law, teach part-time, and work at a low level national government job, he abandoned the law practice as he rose in government ranks.

luisecheverria (56K)

     His government career before becoming President in 1976 is briefly summarized. From a low post, he rose to the Cabinet in fourteen years. He was seen as an amiable, connected, technocrat or, at least, someone who could manage technocrats.


      Understanding the Echeverría regime (1970-76) is imperative to understand the López Portillo presidency. President Echeverría tried to become a hero to the average person in the mode of President Lázaro Cárdenas (1934-40) after the hard-line, iron fisted conservatism of his predecessor, Gustavo Díaz Ordaz under whom he had been Interior minister, responsible for domestic politics and security. As such, Echeverría had ordered the repression of the Student Movement of 1968 and was responsible for the Tltatelolco Massacre of October 2, 1968 just before the Mexico City Olympiad . As Jim Tuck remarks:

 
[He] released students who had been arrested after Tlatelolco. ordered rigid price controls on basic commodities, added a 10 percent tax to luxury items and a 15 percent surtax to bills in first-class restaurants and nightclubs, increased subsidies to universities and technical institutes and gathered the highest percentage of National Autonomous University (UNAM) graduates (78 percent) in his cabinet.[2]


He tried to help the rural poor, regardless of cost, creating some 17 million more ejidos (communal farms) partly by expropriating rich, irrigated lands in Sonora and Sinaloa states. Money was poured into rural credit banks and ejidos received preferential treatment. Echeverría thought it could jump start economic development among the rural poor and increase agriculture production simultaneously. He was wrong, very wrong. Mexico had to import foodstuffs.
    When his Treasury Secretary, Hugo B. Margáin, balked at borrowing more money, domestically or externally, to finance federal government programs, he was dismissed an sent to London as Ambassador and the pliant López Portillo was put in his place in May, 1973. López Portillo had no qualms in doing what his friend wanted. He found the means to finance the programs of his friend. Although he did improve the tax collection system, he continued borrowing vast sums.
         Petroleum played a key role in both the Echeverría and López Portillo because Mexico was an oil-exporting nation during the decade that crude oil prices skyrocketed. The first jump in oil prices came with the Oil Crisis of October, 1973 when the conservative Organization of Arab Petroleum Exporting Countries embargoed petroleum exports to the United States. They were angry because the US supported Israel in the Yom Kippur War against some of its members. Oil prices skyrocketed from $3 a barrel to almost $12 a barrel by March, 1974, creating inflation and recession in countries allied to the United States. Mexico was the third largest trading partner of the US and the US was, by far, its largest trading partner. Quadrupled oil prices helped Mexico at first and enabled its government to borrow funds but Mexican dependency on the gigantic US economy created problems as American spent less in Mexico. By the time José López Portillo took over on December 1, 1976, the peso had dropped in value from 12.5 pesos per dollar to 20 pesos per dollar and the external debt had risen from $6 billion dollars in 1970 to $20 billion dollars in 1976.
     López Portillo became president without significant opposition once Echeverría had chosen him but he campaigned throughout the country so people could see the next president and to touch base with the various politicos in the PRI. He was seen as a conservative technocrat who would stabilize government finances and the economy not as a politician. No one doubted he would “win”—the PRI candidate was always the winner—but the National Action Party (PAN) fought within itself over ideology and over the efficacy of running a presidential candidate and, thus, supporting the sham.
          In the first few years, he and his administration did all the right things to stabilize Mexico. He effectively let others know that he was his own man, that Echeverría was the past president. He reassured the business community. He persuaded labor to moderate its wage demands while encouraging business and industrial leaders to cooperate with labor with the Alliance for Production (Alianza para la Producción). He reorganized cabinet agencies. The Secretary of Budget and Programming replaced the Seceretary of the Presidency. Agriculture and Water Resources were combined. The Secretariat of Natural Resources and Industry was created. He planned to cut the budget deficit from 9% of the Gross National Product in 1976 to 6% in 1977 and then to 2.5% by 1979. Taxes were increased on excess profits, luxury items, motor vehicles, some incomes. Price controls were extended on basic foods. Some drug prices were decreased by 60%. López Portillo’s administration saw the inflation rate drop in half from 30% to 15% by mid-1977. The economy grew only 2% but it grew.
         To curry favor with the Mexican left, he had a political amnesty law passed. In an unprecedented move in an anticlerical country, he received Pope John Paul II in January, 1979; the Pope celebrated a open air mass. The Mexican Constitution forbade public religious ceremonies.
         One of his greatest achievements was to move Mexico towards democracy by enlarging political participation The Federal Law of Political Organizations and Political Processes of 1977 lowered the number of members a political party needed to run candidates in elections. Alternatively, a party could get conditional registration to run candidates which would become permanent registration if it received 1.5 percent of the national vote. The minority parties gained from free television and radio time. The lower house, the Chamber of Deputies, was enlarged by constitutional amendment to 400 members, 100 of which would go to minority parties on a proportional representation basis. PRI maintained hegemony, however. As Joseph Klesner notes, the reform probably fragmented the opposition left.[3] On the other hand, PAN, the center-right party, gained seats and national attention.
         López Portillo lost his perspective when vast petroleum reserves were discovered in 1978 in the Gulf of Mexico. By the beginning of 1979, proven reserves were 26 billion barrels with possible reserves of 100 billion barrels. Mexico was suddenly in the same class as Saudi Arabia. As he said, “"In the world of economy, countries are divided in two: those that have oil and those that don't have it. And we have it!" “In 1981, Mexico became the fifth largest oil-producing nation with daily production of 2.3 million barrels (scheduled to be 2.7 million in 1981). López Portillo announced that proven reserves stood at more than 60 billion barrels, an increase of more than 20%. Oil exports, primarily to the United States, earned more than $12 billion as Mexico raised its prices in tandem with OPEC. Natural gas exports to the United States (300 million cubic feet per day) were priced at $4.47 per thousand cubic feet in an agreement signed by both nations in March.
         Profits from oil boom and monies borrowed massively based on those profits, present and future, were spent on investments in economic development projects regardless of merit. Incomes rose legally and illegally. The flow of money into Mexico overwhelmed accounting system, not that López Portillo cared. The Gross Domestic Product grew at the rate of 8% a year in the last years of the decade, surpassing the 6% rate of the years of the Mexican Miracle.
         The President believed he could end rural poverty and meet the nation’s needs for food and fiber with oil money. Mexican agriculture was unable to supply the nation’s needs; by 1980 Mexico a net food importer. So López Portillo emphasized production of basic foodstuffs for domestic consumption by creating the Mexican Food System (SAM). It sought to help small farmers grow more food for the domestic market while also subsidizing a “basket of staples to 19 million undernourished people. SAM was to be financed by oil revenue and international borrowing, something which could not be sustained by the economic crisis of 1981-82. President Miguel de la Madrid ended the program in 1982.
         Mexico became more independent of the United States in foreign policy. López Portillo proposed a World Plan for Energy Resources to the United Nations. He sponsored a North-South Summit in Cancún in 1981 to promote dialogue between First and Third World countries. Fidel Castro, the Cuban dictator, was received warmly, much to the displeasure of the United States. He reestablished diplomatic relations with Spain, broken since the fascist Francisco Franco came to power in 1939.
         He appointed relatives to important positions. His sister, novelist Margarita López Portillo, became Director of Film, Radio and Television. His son, José Ramón, became Undersecretary of Programming and Budget. The President bragged “¡Mi hijo es el orgullo de mi nepotismo!” ["My son is the pride of my nepotism"]. The Los Angeles Times asserted that Rosa Luz Alegria was his mistress when he was President and that he made her Minister of Tourism. [4]
         López Portillo and his advisers were betting on the “never never’, that international oil prices and international demand for oil would remain high or increase, allowing Mexico to finance its needs and desires regardless of what happened to the United States economy. They thought that oil made Mexico free, finally, that the US needed Mexico more than Mexico needed the US. They were wrong. The United States economy determined Mexico’s economy.
         In the United States, “stagflation,” the continual rise in prices combined with slow economic growth and higher than usual unemployment, was fueled by the quadrupling of oil prices in 1973-74 and its fallout. In the post-WWII period, inflation had averaged 3.2% but reached a 7.7% rate after the Oli Crisis. Then it rose to 9.1% in 1975. By 1979, it had risen to 11.3%, then to 13.5% in 1980. It fell from 10.3% in 1981 to 3.2% in 1983. Automobile prices increased 72% between 1973 and 1979. New house prices went up 67%. In 1979, because the Iranian Revolution interrupted that nation's production of petroleum, gasoline prices increased 60%. High unemployment continued. Investment, savings, and productivity declined. Carter advocated and got the deregulation of many businesses and industries in hopes of stimulating business and industry but these measures had no apparent immediate impact.
         Stagflation in the United States and other Western nations reduced the demand for oil and, in 1981, they fell precipitously. Paul Volker, Chairman of the Federal Reserve System, began forcing interest rates upwards in 1979 to combat inflation.
         Mexico was hit with a double whammy. Its income dropped at the same time its service increased on its $60 billion external debt. López Portillo swore publically that he would defend the peso “like a dog”. It plunged in February, 1982 from 22 to 70 per dollar, or 78%, the steepest drop in Mexican history. The President was often met thereafter by barking. Devaluation meant, of course, that more pesos would be necessary to pay the dollar-denominated external debt. Richard Boudreaux noted: “By 1981, when the oil boom went bust, 87 cents of every dollar of assets held by PEMEX, the state oil monopoly, were owed to foreign banks. The debt was one-fifth of the country's total foreign debt. And in the month before the peso collapsed in August 1982 by 60%, a crisis of investor confidence sent $9 billion out of the country.” Mexico had to default on its debt and give up some freedom of action in order to get emergency aid from the United States and international agencies.
         In a fit of fury, López Portillo announced the nationalization of the banks in September, 1982. In his State of the Union address, he blamed the banks for Mexico’s financial ills, saying that they had aided and abetted the capital flight. He broke down in tears, begging the forgiveness of Mexico's impoverished millions. They didn’t. He finished out the remaining three months of his term in disgrace.
         The new President, Miguel de la Madrid Hurtado, was a sober, conservative, technician with a master’s degree in public administration from Harvard. He promised a moral renovation in the government and a few visible people were prosecuted He resisted efforts to punish his processor, letting him go quietly into exile in Europe. Perhaps some house cleaning occurred at lower levels. He would reverse much of what López Portillo did, including the bank nationalization, restoring confidence in the business and industrial communities. Mexico would join GATT, opening the Mexican economy to competition.

miguel de la madrid (84K)

         Away in Spain, López Portillo defended his political and economic actions including an autobiography but continued an unconventional personal life. He lived with his Mexican mistress, Alegria, and divorced his wife, Carmen in 1990. After he and Alegria split, he married retired Yugoslavian-born film star Sasha Montenegro in 1995 and had two children with her. They returned to Mexico in the late 1990s but separated years later. His health worsened. Double bypass heart surgery in 2001, ulcers on his legs in February, 2003, and respiratory and heart problems when he was admitted to Angeles del Pedregal Hospital in February, 2004. He died at 8:15 PM on February 17, 2004, surrounded by some fifty relatives and close friends.
         His obituaries blamed him as a corrupt, incompetent. As it were, a snake. López Portillo had become very rich while in office according to popular lore. Not only had e bought an expensive mansion for his mistress but was able to replace it with another when his wife confiscated the first. Before he finished his term, he built a five mansion compound on a hill overlooking Mexico City, “dog hill” as wags called it. Many claimed that he became a billionaire[5] while in office. He was able to live in Europe. He certainly acquired money from somewhere; he was not rich before becoming President.
         Perhaps his fascination with Quetzalcoatl, the Toltec feather serpent and god-king encouraged that view, a mocking of his artistic and intellectual interests. He certainly had dreamed big, of making Mexico less dependent upon the American behemoth, of using oil revenues to develop the nation over the long-term for a sexenio was too short a time. Quetzalcoatl, was driven out; so was López Portillo.
         The United States was in economic difficulty for more than the decade of the 1970s and its conservative leaders could not solve the problems. How was Mexico expected to do better? If the world economy had not gone into a tailspin in 1981 and petroleum prices had not plummeted, López Portillo might have won the bet. But Presidents are not supposed to gamble on such a scale. López Portillo did to his everlasting shame.

Donajd J. Mabry
         060410
__________
SOURCES:

Alexander, Charles, Jay Branegan, and Laura López, “A Freeze Play at the Banks,” Time, September 13, 1982.

Anonymous, “Carmen Romano,” Wikipedia, la enciclopedia libre. http://es.wikipedia.org/wiki/Carmen_Romano.

Boudreaux, Richard , “Jose Lopez Portillo, 83; Former President Led Mexico in Boom and Bust,” Los Angeles Times, February 18, 2004.

Cárdenas, José, “Niega López Portillo recibir pensión millonaria,” Noticieros Televisa, agosto 14, 2003.

Central Intelligence Agency, “Outlook for Mexico,” April 25, 1984.

Cuellar, Mireya , “Corrupción, frivolidad y despilfarro, ejes del sexenio
Lopezportillista,” La Jornada, February 18, 2004.

Kate Doyle, Prelude to Disaster: José López Portillo and the Crash of 1976
National Security Archive Electronic Briefing Book No. 115, March 14, 2004.

Escalona, Ivan, “José López Portillo,: monografías.com. http://www.monografias.com/trabajos12/hmlopez/hmlopez.shtml

Fisher, Swayze, “José López Portillo and The Financial Crisis of 1982,” Historical Text Archive, 2002. http://historicaltextarchive.com/sections.php?action=read&artid=554.

Kandell, Jonathan, “José López Portillo, President When Mexico's Default Set Off Debt Crisis, Dies at 83,” New York Times, February 18, 2004.

Klesner, Joseph , "Electoral Reform in Mexico's Hegemonic Party System: Perpetuation of Privilege or Democratic Advance?" Presented at the Annual Meeting of the American Political Science Association, Washington, D.C., 28-31 August 1997. http://www2.kenyon.edu/Depts/PSci/Fac/klesner/Electoral_Reform_in_Mexico.htm.
Mabry, Donald J., Mexico,” Americana Annual, 1973-1984.

Tolchin, Martin, “Paradox of Reagan Budgets: Austere Talk vs. Record Debt,” New York Times, February 16, 1988.
Tuck, Jim, “Black gold, fool's gold: the oiling of a crisis (1938–1988), “ Mexico Connect (http://www.mexconnect.com/articles/297-black-gold-fool-s-gold-the-oiling-of-a-crisis-1938%E2%80%931988).

Watkins, Thayer, “Financial and Economic Crisis in Mexico in 1982, “http://www.sjsu.edu/faculty/watkins/mexico82.htm.

Notes


[1] José López Portillo y Pacheco is his full name but he was known as José López Portillo.

[2] Jim Tuck, “Black gold, fool's gold: the oiling of a crisis (1938–1988), “ Mexico Connect (http://www.mexconnect.com/articles/297-black-gold-fool-s-gold-the-oiling-of-a-crisis-1938%E2%80%931988).

[3] Joseph Klesner, "Electoral Reform in Mexico's Hegemonic Party System: Perpetuation of Privilege or Democratic Advance?" Presented at the Annual Meeting of the American Political Science Association, Washington, D.C., 28-31 August 1997. Available at http://www2.kenyon.edu/Depts/PSci/Fac/klesner/Electoral_Reform_in_Mexico.htm.

[4] Richard Boudreaux, “Jose Lopez Portillo, 83; Former President Led Mexico in Boom and Bust,” Los Angeles Times, February 18, 2004. Jonathan Kandell, “José López Portillo, President When Mexico's Default et Off Debt Crisis, Dies at 83,” New York Times, February 18, 2004, asserted that he bought her a $2 million mansion in Acapulco and then another villa after his wife too the Acapulco dwelling.

[5] He contended in 2003 that he lived on an annual pension of about 1,723, 000 pesos ($158,656 in 2003).

Donald J. Mabry