The emergence of a mature, well-organized opposition may be the only promising development in Mexico this year. But the unexpected collapse of the peso, combined with the ruling party's mid-November election losses across the country, reflect an ominous loss of credibility for the country's president. PNS analyst Louis E.V. Nevaer, a Mexican writer and businessman, is author of "Strategies for Business in Mexico" (Greenwood Press, 1995).

MERIDA, YUCATAN -- Just days before celebrating his first year in office, Mexico's battered president faces a new credibility crisis. The Mexican peso has lost more than 20 percent of its value since September and the ruling PRI (Party of the Institutional Revolution) appears to have lost control of all major cities.

Last December the Mexican peso was sharply devalued, plunging the economy into the most severe recession since the Great Depression. The economic fallout has been widespread: a massive $52 billion U.S. emergency rescue had to be orchestrated by the Clinton administration, and millions of Mexicans have been thrown out of work -- a key reason why half a million have tried to enter the U.S. illegally this year. With inflation running at almost 50 percent this year, hundreds of thousands of small businesses have gone bankrupt, and the crime rate has sky-rocketed, as have suicides.

The political fallout is equally striking. For the first time in almost seven decades, the PRI's stranglehold on the nation's political system is coming to an end. The Nov. 12 elections in six states have given the opposition a new-found legitimacy. Indeed, the emergence of a mature, well-organized opposition is about the only promising development in Mexico this year. The National Action Party, known as PAN, has won the mayoralties of Mexico's largest cities, including four governorships, and is now firmly entrenched on the national stage: the PAN won the mayoral race in Morelia, capital of Michoacan, the home of the leftist party of Cuauhtemoc Cardenas whom many Mexicans believe won the 1988 election in which Carlos Salinas was named president. The far-reaching gains of the PAN have given it a momentum unlike anything since the conclusion of the Mexican Revolution in 1917.

The recent elections highlight more than President Ernesto Zedillo's continuing weakness. They also shatter myths. The PAN is described as a "conservative" party only because on the political spectrum it is to the right of the PRI, who are national socialists. In fact, it most closely resembles a combination of economic and political neo-liberalism with a reactionary social agenda. In favor of free elections, lower taxes and small business, the PAN also is against abortion, birth control and women and gay rights. A strong advocate of "new federalism," which seeks to return authority from the federal government to the states, it is unabashed in its goal of making the Vatican's moral teachings the law of the land.

The PAN, in other words, appeals to Mexicans of all classes. Mexico may bear the mantra of Revolution as a badge of honor yet most Mexicans raise their eyebrows at the hypocrisy of the PRI referring to itself as "revolutionary." PAN's campaign in last year's presidential elections summed up a widespread sentiment: "For a Mexico Without Lies."

What is definite truth is that Zedillo is now viewed as the weakest Mexican president in this century. Last January, American officials at the Treasury Department privately expressed concern that the Mexican leadership was not up to resolving the crisis. The wild fluctuations of the Mexican currency since September reflect the president's inability to convince Mexicans that the nation is on the right course to recovery. American investors, reluctant to recommend anything other than caution, echo the lack of confidence.

With the United States' own future now linked ever closer to Mexico's fortunes, the stakes are growing higher. Last October 27, when forecasts indicated a slower recovery than Zedillo had predicted, trading on the Mexico City stock exchange went into a frenzy sending the peso falling six percent in a single day. The sell-off spread north to Wall Street sending both the Dow and the dollar down. The Dow Jones Industrial Average experienced such wild fluctuations that trading curbs had to be imposed before it closed at 4,703.82, off 49.86 points or about 1.05 percent.

Since then, the dollar, for the most part, has risen or fallen against the German mark and the Japanese yen depending on how the Mexican peso fares. With the mid-November election results constituting a debacle for President Zedillo, stability appears less likely while the specter of a Mexico adrift and leaderless looms more and more real.