"POOR MEXICO," the saying goes, "so far from god and so close to the United States." Coined by a Mexican president in the late 1800s, the saying remains ample evidence of the fear and mistrust Mexicans have always felt toward their northern neighbor. Not without reason: In a war largely forgotten on this side of the Rio Grande, the U.S. in 1848 seized almost half of Mexico's territory. In 1914 and 1916 we invaded Mexico again, to control a revolution whose outcome we feared.

Between conflagrations, however, Mexico is largely ignored by official America. Despite our obvious strategic concern with the nation that shares our southern border, few Americans have taken an interest in Mexico. Perhaps this is a reflection of the cultural chasm that separates our two nations. In terms of our national heritages, values and beliefs, Alan Riding writes. "Probably nowhere in the world do two countries as different as Mexico and the United States live side by side."

After six years as The New York Times bureau chief in Mexico City, Riding has developed an understanding of this complex nation equaled by few. In Distant Neighbors be shares the wealth, explaining the intricacies of a complex nation. Distant Neighbors' best moments come early in the book, as Riding methodically dissects Mexican culture, language and lifestyle. He understands the peculiarities of Mexico's historical legacy and the influence this legacy has in a nation preoccupied with its past. He also explains the ambivalence Mexicans have toward the giant to the north a nation they regard with a mixture of fear and envy.

But Riding's treatment of Mexico's recent political history is less successful. It isn't easy to accurately describe a political system which rules by myth. While ostensibly a democracy. Mexico has been ruled by the same party, the PRI, since 1920. The PRI (Party of the Institutional Revolution) began as the centrist party which emerged from the tumult of the Mexican revolution and has steadily consolidated power ever since. Its leadership has never hesitated to cajole or co-opt the wayward peasant leader or union boss. If all else fails, the PRI retains a powerful ability to repress its more intransigent opponents.

Unlike in other parts of Latin America, however, the recourse to violence has not been taken frequently. The last time was in 1968, when, a few months before the Mexico City Olympics, more than 100 students were killed when security forces opened fire at a rally in the capital.

Instead, Mexico has enjoyed relative economic success which has allowed the government to spend away many of the nation's incipient social tensions, as well as perpetuating a stable political system and system of one-party rule that is without peer in the Hispanic world.

This political stability, however, may well be illusory. The system leans heavily on the memory of the revolution, the decade-long civil war which began in 1910. The revolution's myth contrasts sharply with Mexican reality; It gave peasants erstwhile control over their land, installed a democratic system that has never functioned as such, and instituted a broad program of social reform whose effects, 65 years later, have yet to be felt.

The contradictory nature of the Mexican political system presents problems for Riding. He puts his years as a journalist in Mexico to good use, filling his discussion of modern Mexico with anecdotes and crispy presented narrative. His chapter on the widespread corruption within the Mexican political system is one place where this works well. But the anecdotes disguise a lack of analysis, which hurts his discussion of Mexican polities. He provides a plethora of fact but fails to provide the key that ties the complex Mexican political system together.

This problem becomes apparent when Riding discusses the current period of crisis in the midst of which Mexico now seems to be. Riding's fears are well founded. The two pillars of Mexico's past stability, its economic success and the resilience of the PRI, both appear weak. The country gambled on its new-found oil wealth, borrowing heavily through the 1970s and using the black gold as collateral. But oil prices have stagnated while interest rates have risen, leaving Mexico with a debt burden approaching 100 billion dollars.

The loan money was used to fund an expanded government, but Mexico's new leaders are technocrats who lack the political savvy and personal forcefulness of their predecessors. Miguel de la Madrid, K-School grad and Mexico's current President, has grown increasingly unpopular as he has responded to the nation's financial straits by slashing social programs. The current budget cuts are the first for many years in Mexico, where presidents since the 1930s have spent to keep the myth of the just revolution alive and forestall social unrest.

But it is not the threat from the masses left out of the Mexican miracle which worries Riding. What Mexico faces instead, he cautions, "is a mutiny of the middle classes inspired by the right." A valid point, and one borne out by the experience of other nations faced with the problems Mexico must deal with in the next few years.

But Riding's alarm is short-lived. In what seems like an inappropriate attempt to close on an hopeful note, Riding ends by praising the even-tempered, gentle nature of the Mexican people. But having failed to previously make the connection between politics and the Mexican national character, and given his pessimism of the previous chapter, his cultural generalizations sound simplistic.

In a book so obviously aimed at an American audience, Riding should have stuck with the warning of his penultimate chapter. It is a timely point: Given the Reagan Administration's fear of a wave of leftist takeovers in Central America, it's important to underscore that Mexico faces the same problems which launched authoritarianism in other relatively advanced Latin American nations. With the rest of the region enjoying a democratic renaissance, Washington should be concerned about a potential dictatorship next door--and respond with something more constructive than crude intervention or sheer indifference.