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Palace Politics

Palace Politics
How the Ruling Party Brought Crisis to Mexico

Drawing on candid interviews with former Mexican officials, a journalist reveals the inside story of the "perfect dictatorship" they once ran.

June 2008
312 pages | 6 x 9 | 26 b&w photos, 3 charts, 10 tables |

Bringing rare interviews and meticulous research to the cloaked world of Mexican politics in the mid-twentieth century, Palace Politics provides a captivating look at the authoritarian Mexican state—one of the longest-lived regimes of its kind in recent history—as well as the origins of political instability itself, with revelations that can be applied to a variety of contemporary political situations around the globe.

Culling a trove of remarkable firsthand accounts from former Mexican presidents, finance ministers, interior ministers, and other high officials from the 1950s through the 1980s, Jonathan Schlefer describes a world in which elite politics planted the seeds of a mammoth socioeconomic crisis. Palace Politics outlines the process by which political infighting among small rival factions of high officials drove Mexico to precarious situations at all levels of government. Schlefer also demonstrates how, earlier on, elite cooperation among these factions had helped sustain one of the most stable growth economies in Latin America, until all-or-nothing struggles began to tear the Mexican ruling party apart in the 1970s.

A vivid, seamlessly narrated history, Palace Politics is essential reading for anyone seeking to better understand not only the nation next door but also the workings of elite politics in general.

  • Acknowledgments
  • List of Presidents of Mexico, 1924-2006
  • Introduction: The Politicians' Testimony
  • Chapter 1: Politics at the Heart of the State
  • Chapter 2: The Strange Mexican State
  • Chapter 3: Did Structural Economic Failure Cause the Crises?
  • Chapter 4: The Macroeconomics of Elite Conflict
  • Chapter 5: The Crises That Didn't Happen
  • Chapter 6: The Unwritten Rules
  • Chapter 7: The End of Stability
  • Chapter 8: Struggle
  • Chapter 9: Schism
  • Chapter 10: The Inevitability of Elite Politics
  • Appendix A: Mexican Fiscal Data
  • Appendix B: The Pre-Electoral Spending Cycle
  • Notes
  • Interview List
  • Bibliography
  • Index

Jonathan Schlefer holds a Ph.D. in political science from MIT, where he served as editor-in-chief of Technology Review. Now a freelance writer who has written for a number of publications, including the New York Times, the Washington Post, and the Atlantic, he lives in Boston.


Palace Politics: How the Ruling Party Brought Crisis to Mexico actually begins in the early 1950s, when the Mexican political elite resolved a perilous internecine struggle over the presidency and consolidated what the Peruvian novelist Mario Vargas Llosa called "the perfect dictatorship." For two decades it was a remarkably stable political system—no mean accomplishment in a nation not yet ready for democracy. The old Mexican regime outlived all other authoritarian regimes of the twentieth century except the Soviet Union, and although it occasionally resorted to repression, it was not a police state. The Mexican economic "miracle" of sustained, rapid economic growth was spoken of in the same terms as South Korea's economy in the 1980s or China's in the 2000s. The success went far beyond macroeconomic statistics. Millions of Mexicans whose fathers had been peons laboring on vast haciendas now tilled their own fields, while a steady stream of migrants to the city found jobs in burgeoning industries.

Palace Politics follows that once perfect dictatorship through the 1990s, as it tore itself apart in ever-bloodier political struggles and perhaps—so President Carlos Salinas and other members of the political elite claimed—actual assassination. The former economic miracle now emblematized economic failure. Mexico's 1982 crisis launched the "lost decade" of the 1980s, a period worse than the Great Depression in much of Latin America. Mexico's 1994 crisis led the Asian, Russian, Argentine, and other crises, the first of a new wave in this time of expanded global financial speculation.

I based my research for Palace Politics largely on extensive interviews with the former Mexican political elite: presidents, finance ministers, interior ministers, and other high officials who held sway during the second half of the twentieth century. People often ask how I managed to get interviews with these former high officials. Were they living in mansions like mafia dons? Did they tell me the truth? And does not interviewing politicians at the top seem a distorted way of charting a nation's history? Does my very method not regress to the old "great man" theory of history (and nearly all my interviewees were men) at a time when we increasingly recognize the importance of social movements, as well as gender and ethnic politics?

Let me start with how I got the interviews and what I found the managers of the once perfect dictatorship to be like before taking on more substantive questions. To begin with, I undertook my research, originally for a Ph.D. thesis in political science at MIT, at a fortunate historical moment. I spent two years as a visiting researcher at the Instituto de Investigaciones Económicas (Economics Research Institute) of the National University of Mexico, first the academic year 1996 to 1997, then the calendar year 2000: the very years when the old political system officially crumbled and collapsed.

On July 6, 1997, I watched (as a sort of political tourist, not an official observer) the voting in a precinct in Tlalpan, a former colonial town in the southeastern hills of Mexico City where I was living. Citizens lined up at the neighborhood market with their credentials, which representatives of the independent Federal Electoral Institute—as well as of the half-dozen political parties in the race—checked against the established voter list. The secret ballot was still so novel that older people had to be shown how to step into the ingenious cardboard booths, mark their ballots unseen, fold and deposit them. In the evening, representatives of each party watched as deputies from the Federal Electoral Institute tallied the totals at the precinct. Election results were reported not just in aggregated numbers but also precinct by precinct, so party representatives at the precinct level could verify the count.

The left-leaning Party of the Democratic Revolution won in a landslide, capturing the Mexico City governorship, often considered the second most powerful political post in the nation, as well as the city's legislature. The news prompted a rise in the Mexican stock market. Finance and big business had abandoned their long-standing support for the old political machine; they now saw a functioning democracy as in their best interests. The machine had all but self-destructed.

My second year in Mexico, 2000, coincided with the old regime's official demise. Oversized posters of Francisco Labastida, candidate of the long-ruling Partido Revolucionario Institucional (Institutional Revolutionary Party), or PRI, were draped from treetops around the Angel of Independence, the monument in Mexico City where soccer and political victories are celebrated. Then, on July 2, Vicente Fox, candidate of the center-right party of opposition, National Action, won the presidency in an amazing landslide. As Fox's supporters gathered around the Angel that evening, the spotlights played on the stage where he would appear, but the PRI's posters could still be made out hanging above, grotesque relics of a suddenly bygone era. Such an exuberant, peaceful crowd, filling the streets in all directions, I have never seen before or since.

Everyone, except maybe the mid-level PRI functionaries who had hung the posters, knew the old regime was on the way out; only the timing was in question. The street vendors, having guessed the outcome, appeared everywhere around the Angel, selling rubber masks of former president Carlos Salinas, emblem of the dead era, along with cans of celebratory foam spray. Top government officials were prepared, too. As Fox's victory celebrations began, President Ernesto Zedillo went on national television to concede the PRI's defeat. The ruling party thus announced its own demise just as it had managed the finest moments of its past: hardly democratic—to forestall possible protest and disorder among the party ranks, Zedillo conceded defeat long before the official vote was in—but astonishingly efficient.

As Mexico thus pushed toward democracy, I burrowed into its undemocratic past. This apparently odd juxtaposition actually made a certain amount of sense, quite apart from the fact that seemingly radical changes generally derive more intimately from the past than might at first appear. Many high officials from as early as the 1950s were still alive and as sharp as ever, though sometimes in their 80s or 90s. And they were increasingly willing to talk frankly about how politics really worked. As the old regime crumbled—and many interviewees saw that its time had come—so did the regime's time-honored interdiction against publicly discussing its inner workings.


I started with a few references to officials from American scholars, principally Roderic Camp of Claremont McKenna College and Chappell Lawson of MIT. A mutual friend introduced me to Guillermo Barnes, a former Finance official and, in 2000, leader of the PRI's Mexico City delegation. He in turn introduced me to mentors such as Julio Rodolfo Moctezuma, finance secretary in the 1970s. I telephoned Victor Urquidi, an "insider-outsider," as he called himself, at the Colegio de México where he was teaching, and he invited me for a discussion. He had been a member of Mexico's delegation to the 1944 international conference in Bretton Woods, New Hampshire, that established the post-World War II economic system; he had been an advisor to the finance minister in the 1950s and 1960s and to a series of Mexican presidents (he knew Carlos Salinas as "Carlitos"); and he had been president of the Colegio. I looked up Antonio Ortiz Mena, the renowned Mexican finance minister from 1958 to 1970, in the phone directory. The screech of a fax machine answered, so I sent a note, doubting it was even the right number. In a few weeks an assistant said Ortiz Mena could speak with me. We talked for more than three hours; I know by the number of tapes I recorded.

I was a little devious about the order in which I did my interviews. Many of my first were with officials who had been in the Finance Ministry and closely allied Bank of Mexico in the 1950s and 1960s. Not all were retired—Mexican politicians tend to be hardworking and little interested in a life of leisure—but they were glad to talk about their economic successes. They referred me to protégés from later administrations, typically also from Finance or the Bank of Mexico. Once I had a reasonably clear picture of the Finance-Bank of Mexico story, I began contacting officials from rival economic ministries: Presidency (an oddly named ministry that managed public investment), State Industries, and Planning and Budget. In effect, I politely implied that I had their political opponents' viewpoints and would now like to get theirs. Yet these opposing political camps were not personal enemies (except in rare cases) and were sometimes personal friends. Bank of Mexico Director Ernesto Fernández Hurtado and State Industries Secretary Horacio Flores de la Peña, anchor of opposing sides under President Luis Echeverría, each referred me to the other.

If I had been interviewing former politicians from a Central American country, I might have had to travel to Miami or other foreign destinations, but nearly all former Mexican politicians lived in or near Mexico City; many still played some role in the government. Some had moved to nearby cities such as Cuernavaca, Ortiz Mena's home. Some had taken posts in their native Mexican states. They typically lived in handsome old residences in wealthier neighborhoods, but no different from other residences on the street.

Though I could not talk with former president Salinas (then persona non grata in his own country, he had retreated to Ireland, which did not have an extradition treaty with Mexico), I spoke with his father, Raúl Salinas Lozano, industry and commerce secretary in the 1960s. He was said by some of my interviewees to have been corrupt, but he hardly occupied one of those grandiose mansions such as mafia dons do (at least on television). Having moved to the cleaner air of Acapulco for health reasons, he was living in an apartment that might have belonged to a professor at an American university—and was decorated in much the same educated taste. (Around half of high Mexican officials were, in fact, professors at one point or another.)

One of my last interviews was with President Echeverría. Former officials were glad to give me his phone number but asked that I not use their names; the Mexican president was somehow above common mortals. I sent several faxes over the course of a month. Then one day when I returned from an interview, I saw my answering machine blinking incessantly. I ran through perhaps half a dozen messages from Echeverría's assistants (I could never keep track of them all), culminating in one from the man himself. "This is Luis Echeverría," he said in a rather high voice I will not forget, "ex-president of Mexico." He identified himself as ex-president of Mexico in a tone almost of surprise, as if he had never quite gotten used to it himself. I will never know who, if anyone, had mentioned me to Echeverría. He might have just taken into his own head to grant me an interview; that was often how he made decisions.

Echeverría was known for quick action. The next morning at eight o'clock I found myself breakfasting at his house, in the hills above the Mexico City plain not far from Tlalpan (but a more fashionable neighborhood than I had lived in). I liked him. Like many experienced politicians, he was agile at dodging questions if he wanted to, but he answered others forthrightly. He said we could talk as long as I wanted the next day, but when I arrived, it turned out I had been invited to a dinner party at which the topic was U.S. immigration law. Interesting but not useful for my book. The entourage then drove to a nearby theater in San Ángel to watch a movie. If anyone in the audience recognized the former president, no one indicated it.


I interviewed high Mexican officials because Palace Politics looks at the way they resolved or failed to resolve their internal conflicts. I argue that "cooperation" among competing political elites helped sustain the stable, growing economy of the 1950s and 1960s, even when most of Latin America suffered repeated economic crises. The grupo, or clique within the political elite, whose leader won the internal party contest for the presidential nomination—and hence automatically won that public relations event, the general election—did better in the next administration. But even losing grupos retained key posts and the hope of winning the next time. Such a promise of political survival allowed grupos to defend the system's broader interests, not just narrow factional interests, and the united state repeatedly mobilized to avert possible economic crises. After 1970, increasingly all-or-nothing "struggle" among grupos tore the political system apart and repeatedly erupted in economic crises. Whether the regime was statist (as during its first two crises) or free-market (as during its next two crises) hardly mattered. Now grupos that lost a particular succession contest increasingly feared—and met with—political exile. As intra-elite power conflict turned all-or-nothing, grupos vied to buy support for their leader's presidential nomination via overspending, public bank lending, manipulation of the securities market, and other perilous gambles that erupted in economic crises.

To a point, changing relations among political elites are reflected in socioeconomic data, which, of course, I sought. For example, real public sector spending in Mexico often soared in pre-election years when the PRI's internal contest for the presidential nomination took place: by 27 percent in 1975 and 22 percent in 1981. (These figures exclude debt payments, which do not buy political support.) Real public spending was slashed in actual election years, when victory was assured and succession was not in dispute: real spending did not grow at all in 1976, and it fell 8 percent in 1982 (still excluding debt payments). But for the most part, elite politics is not visible in socioeconomic data, precisely because it matters in its own right and is not a mere reflection of socioeconomic forces.

I therefore interviewed high officials or politicians; in Mexico under the old regime, there was no distinction. Every time I cite individuals without reference to a printed source, I am relying on my interviews with those individuals. I systematically sought differing viewpoints. I made a list of all officials, living and deceased, I would ideally have liked to interview for each of the six administrations from 1952 through 1988, the era when the old political regime was most firmly consolidated. The list was as follows:

  • The president of Mexico.
  • The finance secretary and the director of the Bank of Mexico, traditional allies.
  • Secretaries of economic ministries that were often rivals of Finance and the Bank of Mexico: Presidency, not the president's office but a separate ministry that planned investment before 1976; Planning and Budget, responsible for all planning and budgeting after 1976; and State Industries, which managed a vast array of public enterprises, from steel to chemicals, electricity to oil.
  • The interior secretary, the highest political official after the president, responsible for maintaining order and running the party machine, the federal police, the national spy agency, and the electoral apparatus.
  • All those considered serious contenders for the PRI's presidential nomination.
  • All those who were a secretary of one of the principal ministries, director of the oil company Pemex, director of Social Security, or president of the PRI, for two or more administrations.

I was able to interview many of these individuals—for example, five of the six living ex-finance secretaries from the period and all four living ex-directors of the Bank of Mexico. When an official was deceased or otherwise unavailable, I sought a colleague or son in politics who was likely to know his perspective. For example, for the 1952-58 administration, I interviewed the press secretary of President Adolfo Ruiz Cortines and the sons (themselves subsequent high officials) of Finance Secretary Antonio Carrillo Flores and Interior Secretary Ángel Carvajal. For the 1964-70 administration, interviewees included Finance Secretary Antonio Ortiz Mena, Interior Secretary (of course, later President) Luis Echeverría, and the deceased President Gustavo Díaz Ordaz's close ally, Health and Public Welfare Secretary Rafael Moreno Valle. I list interviewees at the end of the book.

I also relied on firsthand accounts. Emilio Carrillo Gamboa, son of Finance Minister Antonio Carrillo Flores, not only discussed what he had heard from his father and witnessed himself as long-time director of the state telephone company, but also provided a copy of his father's diary for the crucial year 1954, with some personal information excised. Published accounts such as those by Alfonso Corona del Rosal, one of the most important politicians of the 1950s and 1960s, and by Finance Secretary Antonio Ortiz Mena supplemented interviews. Many secondary sources were, of course, indispensable, but for politicians' testimony, the works of Roderic Camp and Jorge Castañeda's The Inheritance: Archaeology of Political Succession in Mexico stand out.

I did all my interviews on the record and, usually, on tape. Where interviewees asked me to keep isolated remarks off the record, of course, I scrupulously did so. One interviewee asked that our entire discussion be off the record, and so it has remained. (His name is not in the list of interviewees.) Whenever possible, I sent all quotations, direct or indirect, to interviewees to check for accuracy. The idea was not that they could change their minds or take remarks off the record after the fact. Rather, it was that if I had misinterpreted a statement or its context—remarkably easy in a long interview, especially if it is taped—I would make changes to reflect what interviewees genuinely meant. A few were concerned about some quotes, but sometimes extended discussions led to mutual agreement about what they had legitimately meant. The quotes themselves are, I believe, about as close to hard facts as Mexican political history gets.

As a journalist for years before I began the Ph.D., I followed my usual practice of writing out questions for each interviewee ahead of time—generally the morning or night before—but barely glancing at them during the interview. I would flip through them toward the end to be sure I had not forgotten something important. At first, I also tried requesting responses on a scale of 1 to 10 to questions gauging internal elite struggle, external social pressures, and other matters. This effort was a flop. Perhaps my experience as a journalist doomed it: to get thoughtful answers, I have long been convinced, you must listen to interviewees and respond, not try to march them through some pre-established drill. In any event, Mexican officials balked: they would not even give me a number, or they would toss out one tentatively only to change it later. Instead, they would launch into long and sometimes very useful discussions.

I systematically questioned interviewees about a number of critical matters. For example, one concerned the political elite's reaction to a bloody massacre at Tlatelolco Square in Mexico City in 1968 that brought a series of anti-authoritarian protests to an end. (Responsibility for the massacre is still disputed. Although the square was full of uniformed soldiers, they appear not to have perpetrated it; the perpetrators appear to have been paramilitary "sharpshooters" not under military command. The question is who was commanding them.) It has been widely said that in the wake of Tlatelolco, political elites split irreconcilably, supporting or opposing President Gustavo Díaz Ordaz, and that that schism launched the regime's long decline. I asked every interviewee in high office in 1968 about such a split. They lamented the events of Tlatelolco but, without exception, denied that any division had occurred. Clearly, the myth of a split was constructed outside the inner circle. Such was the cloak of secrecy in which the old Mexican political system operated.

In regard to other questions about the old regime, I did find out-and-out disagreement among observers in positions to know. One such matter was whether Antonio Ortiz Mena, finance minister from 1958 to 1970, was ever a serious presidential contender. The broader question here is whether Finance was a ministry of técnicos, or technical experts, distinct from the políticos, or politicians, in other ministries. Did the political system grant an autonomous Finance Ministry extraordinary latitude to manage the economy—a task it performed extraordinarily well in those years—in exchange for shutting it out of the real contention over political succession? Ortiz Mena and several other credible interviewees said he never had been a real presidential candidate, but his economic advisors and other interviewees said otherwise. Moreover, Ortiz Mena himself concurred that Díaz Ordaz, who became president in 1964, had seen Ortiz Mena as a rival.

When I encountered such disagreements, I always report them. My interviewees doubtless tended to reconstruct the past to accord with their views and interests. Every human being surely does so, and the tendency is no doubt greater concerning a regime so secretive that one group of high officials might not know what another was doing. Journalists come to sense (however fallibly) when someone is deliberately trying to evade or lie about known facts. I rarely experienced that feeling during the interviews. With rare exceptions in the course of a few interviews, I believe my interviewees told the truth as they saw it.

When I ran up against what seemed honest disagreements, it became my responsibility to resolve them. Disagreements about Ortiz Mena's prospects for the presidency were hardly surprising. Being or not being a presidential candidate was not a binary condition, but a condition compounded of layers of ambiguity. Only the president himself knew who he was really considering as a successor and whose names he tossed out as "stuffing" to keep everybody guessing. The operative question is whether an individual was widely perceived to be a real candidate within a political system, it bears repeating, shrouded in secrecy. Díaz Ordaz has been accused of everything but political naiveté. If he saw Ortiz Mena as a presidential rival, Ortiz Mena was a rival, whatever he himself thought.


Palace Politics may seem out of harmony at a time when so much effort is devoted to understanding democracy and social movements—fundamentalism, whether Christian or Muslim, racial and gender politics, mass migration, community participation. This book not only looks back at relations among political elites from a bygone authoritarian regime, but also (to some inevitable extent) reflects the author's gratitude toward those individuals for generously, even bravely, discussing events they shaped.

Further, Palace Politics speaks well of a small group of men (and they were almost all men, though, like most Mexicans, often of mixed white and indigenous blood) who, however their regime occasionally lashed out at popular unrest, wisely guided the economy through perilous shoals in the 1950s and 1960s. At times, the argument approaches the great man theory of history: the revered ex-president Lázaro Cárdenas acted powerfully to consolidate elite cooperation in 1951; the messianic, power-hungry Luis Echeverría loosed elite struggle in the early 1970s; the failed dynasty builder Carlos Salinas brought economic and political disaster in the early 1990s.

There is a narrow answer and a broad answer to these concerns about a book on political elites. The narrow answer is that Mexican officials of the old regime lived in a different world from Mexico today, let alone a world of full democracy (if it ever existed). Those officials sometimes accomplished great good, sometimes wrought great harm, and should be understood in their own context, not against a contemporary backdrop.

The broad answer is that democracy and social movements matter greatly but never make elite politics disappear. Indeed, democracy itself rests on elite cooperation, on the American idea of a "loyal opposition"—a bargain promising political losers long-term survival in exchange for commitment to the political system. The famous "checks and balances" of the U.S. Constitution seek precisely to protect weaker political leaders, as well as to prevent impulsive policies. Even the original Constitution's terrible wrong of allowing slavery and granting Southern politicians three-fifths of a vote for every slave that whites owned was once necessary to secure allegiance to the tainted democracy of the day. When Southern politicians feared that they were politically doomed within the union—and it was they who decided, not social movements or poor white foot soldiers—the Civil War broke out. We, the people, have our interests, often ill defined, conflicting, and poorly represented. But even under the best of circumstances, our leaders define the political environment within which interests contend. They loose struggle or forge cooperation.


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