MEXICO DEAD MEN DON'T PAY UP Almost everything is going wrong at the same time

By Pico Iyer.

''For my country and my people,'' Mexican President Miguel de la Madrid Hurtado wrote in an advertising supplement, ''(the World Cup) will give us a chance of showing the world the reality of Mexico.'' So, alas, it has. When the President stepped forward before 300 million TV viewers around the globe to open the quadrennial soccer tournament three weeks ago, his speech was drowned out by an almost unprecedented chorus of boos. A few days later, Mexico City's huge Aztec Stadium, unfilled even during a major game, ran out of water. At one point its official clock broke down; at another, the sound system went dead just before the playing of the Mexican national anthem. Even the host nation's 2-1 victory over Belgium in its opening match ended in chaos as tens of thousands of celebrators rampaged through the center of the capital, commandeering public buses and tearing pieces off the national monument of independence. By the time the revelry died down, 134 people had been arrested, at least 250 had been hospitalized, and a woman had been gang- raped beside the city's main thoroughfare. To top things off, the ''eternal flame'' representing the country's independence was stolen. The symbolism was all too perfect. In Mexico of late, almost everything that could go wrong has gone wrong. A devastating earthquake last September killed perhaps 20,000 and left tens of thousands in tents and tar-paper shacks around a capital that is already the world's largest metropolis. American officials appearing before a U.S. Senate subcommittee last month publicly condemned Mexican officials for corruption and complicity in drug smuggling. The recent decline in the price of oil, the country's major export, stripped in a single month the already debilitated economy of one-third of its projected foreign exchange. And earlier this month the peso, which was worth 26 to the dollar in 1982, fell in only a week from around 530 to 750. By now, this fury of calamities has pushed Mexico to the brink of defaulting on its foreign debt of $98.6 billion. As De la Madrid recently warned, ''Dead men don't pay debts.'' Last week the country scrambled to avoid a financial collapse. The Central Bank intervened in currency markets to push the peso back to 660. De la Madrid appeared on TV, stronger and more simpatico than usual, to allay doubts about his wavering government. Paul Volcker, chairman of the U.S. Federal Reserve Board, made a secret trip to Mexico to try to expedite a loan package for the roughly $6 billion that the country needs to continue servicing its foreign debt. Though a rescue loan now seems likely, the conditions set by financiers will probably be tough. Commercial banks have refused to bail Mexico out until it has reached an agreement with the International Monetary Fund. And the IMF will not help until the country has slashed its domestic budget and reduced an inflation rate that may exceed 90% this year. The more Mexico tries to placate its creditors, however, the more it unsettles its people. Earlier this month the price of tortillas quadrupled overnight. Next month the cost of a Mexico City subway ride is likely to increase from one peso to 50. Such developments are not easy on a typical worker, whose real wages have sunk, by one estimate, to their 1967 level. Yet many Mexican officials feel that their diligence in making sacrifices, and in honoring every debt payment so far, has been insufficiently recognized by creditors abroad. ''Mexico requires special treatment,'' said Angel Gurria, head of foreign credit at the Finance Ministry. ''But bankers balk at setting a precedent.'' Many of those balkers come from Mexico's potential backers to the north. Former U.S. Ambassador John Gavin reportedly urged American bankers to withhold loans from Mexico until the country began to show signs of serious / economic reform. The Administration firmly maintains that Mexico cannot simply make domestic cuts, as it did during its debt crisis in 1982, but must swallow its pride and open itself up to more free trade and foreign investment. Said Senator Phil Gramm, chairman of the U.S.-Mexico Inter-Parliamentary Committee, last week: ''If they do what needs to be done, they won't need our help. If they don't, there isn't enough money to help them.'' According to one American official, the U.S. might provide financial assistance more readily if Mexico provides increased assistance in the war against drugs. As it is, the country now accounts for roughly one-third of all the heroin and marijuana imported into the U.S. Many in Washington believe local Mexican authorities not only assist in the traffic but also appear to have protected those who carried out the brutal murder last year of Enrique Camarena Salazar, an American Drug Enforcement Administration agent. U.S. concern was hardly soothed when Mexican Foreign Secretary Bernardo Sepulveda Amor shrugged off the incident as ''only a police case.'' Last week Sepulveda reiterated that the battle against drugs would subside only when U.S. consumption slackens. As domestic and international pressures mount, both the poor and the middle class have grown increasingly disgruntled with the Institutional Revolutionary Party. During the 57 years it has ruled the country as a one-party democracy, the P.R.I. has never lost a presidential or gubernatorial election. That could soon change. The conservative, probusiness National Action Party has shown considerable strength in Chihuahua, the country's largest state, where elections will be held early next month. Many Mexicans suspect that the P.R.I. may lose the gubernatorial race--or win only by tampering with the results. In the present climate of unease, either outcome could prove incendiary. Small wonder that some P.R.I. officials are now reciting a gloomy slogan: ''We may win Chihuahua but still lose the country.''

With reporting by Andrea Dabrowski and Harry Kelly/ Mexico City