Mexico
The Cycles of Crisis Are Narrowing
The Mexican crisis continues. Economic bankruptcy begins to squeeze the people. Corruption emerges daily for a bottomless barrel. In Chiapas peace is far from being sought. The system’s critical cycle appear to have reached a limit.
Raúl H. Mora Lomelí
Asked who will win in Mexico today, writer Carlos Fuentes implored, "Let us hope it will not be the cruel and mysterious Mother, the unfathomable Goddess of Darkness, the Coatlicue of the Skirt of the Serpents." Coatlicue is the name of the deity who receives offerings of blood and living hearts so that heroes and warriors will win. This occurs in the daily battle when the sun is victorious over the moon and the stars and continues illuminating with its light.
In a few short weeks, the crisis of confidence Mexico has been experiencing since January has become even more critical. The insecurity of the economic situation, the protests against impunity and corruption, the demands for a just and dignified peace in Chiapas fill the media and disturb the entire population. Open criticisms of President Zedillo's policies and his weakness abound. The entire system is being questioned. The escalating cycles of the crisis come ever faster and stronger.
Between Devaluations and Capital FlightThe official recognition that "something" was wrong with the economy occurred at the end of December 1994. Since then, the value of the Mexican peso has continued dropping in relation to the dollar. At the beginning of March, a dollar could buy 8 pesos. There is a promise, though uncertain, that the exchange rate will stabilize at a little over 6 pesos by mid year.
In the middle of that monetary juggling, a huge flight of capital was discovered, the import of production and growth goods was immediately frozen the "key," it was said and the international market, already open due to the Free Trade Agreement put into effect on January 1, 1994, was opened even more. For those who believed in "the promised land" of the free market, contracted debts doubled overnight.
In an attempt to explain the crisis, it was revealed that $23.5 billion left the country in 1994. No official information has been given about the amount of capital flight in recent weeks, as capitalists sought to put their wealth in foreign banks. The general director of Chemical Bank, John Donelly, declared on March 27 that $30 billion, most of it belonging to foreign investors, left Mexico in the last three months, If the foreign investors do not feel confident about their profits in Mexico's current financial situation, Mexicans themselves know it is even more fragile and feel it more intensely. Stability is impossible if it depends so heavily on speculative foreign capital. The illusion of growth based on the banking market has been smashed, but this has not led to a questioning of NAFTA or of the volatile investment policy.
Package of AnxietyOn March 8, before the population could recover from its surprise at the weakness of the Mexican currency, Secretary of the Treasury and Public Credit Guillermo Ortiz Martínez gave another surprise with his proposal to "strengthen" what he called an "Agreement of Unity to Overcome the Economic Emergency." But the government's skill at hiding the truth between appearances and secrets, the basis of so many promises of prosperity, was ineffectual this time. "We have lived weeks of great uncertainty, even of anguish; we are facing a sober panorama," Ortiz confessed that day on a national radio and television broadcast. "The citizens demand an explanation and a response from the government."
The explicit goals of the proposal are greater income for the government and a drop in state spending. This will reestablish the promised rhythm of stabilization and growth over time, but in the short term it will generate and this was an explicit confession shortages, impoverishment and unemployment. The justification is simply that errors were made "in the past" which must now be corrected.
The unconvincing new promise of a better future is based on a package of measures whose general effect has been popular discontent and an overall cost of living increase. With the goal of reducing the trade deficit and stabilizing the financial markets in the short term, the program includes an increase in the Value Added Tax (IVA) from 10% to 15% and a 9.8% reduction of government spending with respect to 1994. These measures, it is hoped, will save the government 13 million new pesos.
If the 50% increase in the IVA alarms both large and small consumers, even more distressing to the entire population is the 35% rise in diesel and gasoline prices effective March 8, with an 0.8% monthly increase to follow. Butane and electricity costs will go up 20%, also with an 0.8% monthly increase thereafter. Train transport and airport and highway taxes will increase 2.5% monthly.
A Country in BankruptcyThe measures were approved by legislators on March 17 and ratified with triumphant applause by the representatives of the Institutional Revolutionary Party (PRI). Their effects can already be seen in daily life; prices for food, clothing and school supplies have shot up. Prices have also gone up for medicine, milk, bread and tortillas, products that have officially set prices. The producers are charging illegal prices to consumers based on the increased cost of fuel and electricity. Inflation has soared, and official predictions are that it will hit 45% in 1995 (1994 inflation was 7.05%).
The bankers applauded the measures by immediately increasing interest rates 74%, including on matured loans. As a consequence, peasants, construction, small and large businesses and various factories were burdened with an increased debt overnight. Obviously, hundreds have already declared bankruptcy, while others continue accumulating debts. Some employers in the state of Jalisco, for example, owe the Mexican Social Security Institute 250,000 new pesos. Others simply do not pay their social security or taxes, and offer their own "social security" to their employees by promising to pay for any eventual illness.
Private businesses are not the only ones under such pressure. The governments of ten states of the Republic have declared that they cannot pay their debts. Alberto Cárdenas Jiménez, the new governor of Jalisco, stated on March 21 that "if bank rates continue to increase, government debts will be an irresolvable problem in two months and could force a bankruptcy declaration." The public debt Cárdenas faced when he took office on March 1 was 2.8 billion new pesos, and monthly interest payments were 11 million pesos; now they are more than 100 million. The governments of Nueva León, Sonora, and the state of Mexico face similar situations. Secretary of the Treasury Ortiz Martínez declared on March 23 that the public debts of these states, which together reach 22.6 billion new pesos, will "somehow" be renegotiated. The state cannot go bankrupt or declare a moratorium on payments.
As a compensation for this packet, a 10% salary increase was authorized for minimum salaries and professionals. "A joke," commented some of the supposed beneficiaries; "ridiculous," sneered others
An Analysis of the CrisisGoing beyond President Zedillo's reaction of blaming "the past," economist Juan Luis Orozco Hernández, rector of the Free Institute of Philosophy and Science of Guadalajara, analyzes the problem this way:
"The 1994 95 financial and currency crisis is the result of structural situations unique to the capitalist model, which naturally bring periodic crises that can be predicted, combated and alleviated, but not avoided. The crisis is, in addition, the result of current situations, due to Mexican circumstances and the method, or bad method, of designing the economic model.
"At the structural level, it should be taken into account that periodic crises are intrinsic to all capitalist systems. Their intensity and periodicity are due, among other factors, to two mechanisms with different influences: the multiplier effect of investment where marginal propensity to consumption and savings has a strong effect and the acceleration principle, unique to investments in production of capital goods. When the marginal propensity to consumption is very high, which is the case of underdeveloped countries with a very unequal distribution pyramid, as in Mexico's case, the growth and earning indexes are very high during various economic cycles. But, necessarily, economic cycles, also long, of deceleration and deep recession come later.
"The continuous cycle of growth gives way to the so called 'economic miracles,' where the capacity for saving is small given the high propensity to consume and low tendency to save, which makes it hard to deal with the recessive cycles. In these recessive cycles, with low and dropping savings capacity, it is difficult to confront the crisis.
Clinton's "Generosity""Given this situation there are three possible roads, which are frequently taken simultaneously in other countries, and now unequivocally in Mexico: 1) wait until the system automatically self corrects, with greater impoverishment for salaried workers; 2) try to increase exports based on lower salaries that favor lower production costs; and 3) get foreign loans to inject fresh money into the system many times largely only to pay off previous debts and obligations which necessarily bring inflation, at least initially, and thus lower the buying power of salaries.
"Only the large capitalists, primarily those who export the bulk of their production, benefit from the crisis. Internationally, there are central economies and periphery economies in capitalism. The central economies are those which, both in bonanza times and during crises in the economic peripheries, continue to have high earnings."
A parenthesis here in Orozco's explanation. It was this same argument, without such an explicit confession, that immediately turned President Clinton into the promoter of the $50 billion international loan to Mexico. Since it was the moment of the devaluation, there was no danger of loss. It would have been more dangerous to not help a member of NAFTA, he said. For even greater security, the Mexican government was obliged to accept that, if it defaulted on the $20 billion loan approved on February 21, the profits from oil exports would be appropriated. Mexican Petroleum (PEMEX) is thus now mortgaged, even though the nationalization of petroleum was celebrated once again on March 18. President Lázaro Cárdenas must have turned in his grave, remembering the steps he took in 1938 to guarantee national sovereignty.
The Crisis Could Be Seen ComingContinuing Orozco's explanation:
"It must be noted that Mexico's crisis is not new. The government has been continually warned since 1992 and it knew that a grave crisis was brewing.
At the beginning of 1993 recommendations were made that it 1) devalue at that moment modestly and not so traumatically; 2) discourage finished goods imports, with the goal of encouraging domestic production; 3) promote industry and agriculture to strengthen competitiveness, increase domestic supply of products and reduce pressures on foreign trade and the balance of payments; and 4) lower interest rates, which assumed control of the banks and of the rich.
"The government did not listen. It preferred to go further in debt. But one cannot indefinitely ask for loans, work minimally and still pay off the loans. Collapse is, and was, inevitable.
"Why didn't the government deal with the crisis it saw coming? There appear to be three reasons: 1) it was afraid of losing the presidential elections on August 21 it had already lost some state elections given the pressure and bad press that could result from a necessary devaluation and its consequences; 2) at that time, correcting the economic course could have been an obstacle to Salinas' pretensions of presiding over the World Trade Organization; and 3) it was thought that, if the country stabilized politically, foreign investment would flow in. This expectation was overestimated. No one saw, and no one wanted to see, that the majority of foreign investment has been more speculative than productive in recent years.
"In synthesis, Mexican capitalism has privatized profits and socialized costs. It has enriched a few and impoverished the majority, and now everyone has to pay for the irresponsible enrichment of those few."
Any Possible Solution?Renegotiate the debt? Review the NAFTA commitments? Although many people are demanding this, the Zedillo government has not even considered such hypotheses, because of already acquired international commitments and the opposition of large business and the banking sector.
Prioritize in practice, not only in public speeches rural production and small and medium national manufacturing? This is the most urgent and the most demanded. But large national businesses are opposed. This measure also goes against the policy promoted by neoliberalism of maximizing export production for the international market.
Finish privatizing the privatizable? Concretely speaking, this means PEMEX. The unimaginable political upheaval that such a measure would provoke prevents the government from acting, and it openly denies this alternative. In addition, it would be a death knell for national sovereignty.
Start looking right now for microeconomic solutions, instead of betting on the larger macroeconomic ones? The measures in the last emergency package promote the contrary. The package does not even urge those who earn more to pay more, through an increase in income taxes. Instead, the choice was made to increase taxes on products consumed by the people, as well as sell what the government produces at a higher price: gasoline and electricity. The choice was to control the poor, which is the easy solution, but useless in the long run. Once again controlling the richest was discarded.
The question remains about the validity of our very system, and the threat so Mexican of Coatlicue continues. The most painful thing is that this is the model so many other governments on this continent are trying to follow as an example.
A Perfect PlotIn the meantime, street violence is multiplying, with assaults on businesses and private homes, as well as car thefts. It is not only because the full impoverishing effects of March's economic measures have already been seen, but also because the citizenry's struggle for greater security has not been successful and because there has been no effective battle against police corruption and corruption in the justice system.
The memory of the 1994 assassinations heightens these demands. Attorney General Antonio Lacayo García promises to find both the intellectual and material authors in the deaths of Luis Donaldo Colosio Murrieta, Francisco Ruiz Massieu and Cardinal Juan Jesús Posadas Ocampo. The first anniversary of the assassination of PRI presidential candidate Colosio, on March 23, was full of homages and statues in his honor. Behind these memorials were detentions that have caused stupor, because they show the degree to which corruption and impunity have infected Mexico.
No one accepts the thesis, put forward officially from the beginning, that Mario Aburto Martínez, detained at the time and place of Colosio's assassination, acted alone and on his own initiative. Among the more than 11,000 sheets of paper bound into 27 volumes that make up the investigations, declarations, retractions, testimonies, and counter testimonies regarding the case, two possibilities emerge. The first was that the enormous confusion and the limitations of the intelligence apparatus will prevent truth from being reached. The second was made explicit in the weekly Proceso of March 20: there is "a perfect plot, carried out without error to the most minute detail, in which PRI militants, 2 Attorney Generals, 2 Special Fiscal Officers, 15 Federal Public Ministry Agents, some 60 Federal Judicial Police, municipal police and official bodyguards, including 17 select elements of the Presidential High Command, could all have penal responsibility for the assassination."
Corruption at the TopWith each passing day the hypothesis of a plot becomes more believable. The starting point was the "appearance" of a second video of the March 23, 1994 events in Lomas Taurinas, Tijuana. Because of 14 successive images, Othón Cortés Vásquez, the second "sharpshooter" of Colosio, was detained on February 24. His wife, Juana Valenzuela, argues against the testimony, stating that Othón is neither left handed nor ambidextrous, as he would have to be to have shot the "second" mortal bullet, according to ballistics reports.
A second element in support of the plot hypothesis came on February 25, when Colosio's security chief, Fernando de la Sota, was imprisoned. He had been interrogated and released five times, on a bond of 47,000 new pesos, but is now accused of giving false testimony.
The most dramatic incident occurred on February 28, when Raúl Salinas de Gortari was arrested, accused of masterminding the assassination together with PRI senator Manuel Muñoz Rocha, currently a fugitive from justice. On March 15 Raúl Salinas was implicated even more, when he was presented as a "protector" of drug traffickers, specifically of Juan García Abrego, head of the Gulf Cartel, who is wanted by the FBI.
Suspicions, more than facts, implicate high level government officials, as well as the PRI leadership, in these events. From the United States came the accusation of what national experience shows, still without proof, to be true. While Assistant Secretary for International Drug Trafficking Affairs Robert Gelbard congratulated the Zedillo regime's efforts and noted that, thanks to it, these problems have become known, he also underscored new evidence of "high level" corruption in ex President Salinas' government.
Salinas GoesColosio's campaign coordinator, current PRI senator Samuel Palma César, accepts the plot hypothesis, and is happy to see that "we are on the right path to finding out the truth." He inadvertently touched again on the possible motive for the assassination: two weeks before he was gunned down, Colosio had publicly promised a political reform that would separate the party and state, after 66 years of PRI government marriage.
Palma rejects this as a motive, insisting that there was no rupture between candidate Colosio and President Salinas, who designated him with his own powerful finger, or between Colosio and the PRI, who sponsored him. But the public and popular suspicions are based on the detention of Raúl Salinas de Gortari.
Nobody can forget that Raúl is the brother of Carlos Salinas, President at the time of the assassination. "Nothing happens in Mexico without the approval of Mr. President," is an almost unappealable aphorism in national politics.
Carlos Salinas de Gortari tried to defend himself from this on February 28, half an hour after his brother's detention was made public. He demanded on television that the Attorney General unambiguously declare that Carlos did not cover up any aspect of the case, and, on the contrary, gave full support to the special investigation into Colosio's assassination. He also but took advantage of the occasion to demand recognition that the December devaluation was an error of the current government, not a result of "past errors."
Impatient because he received no response, Salinas declared a total hunger strike three days later "until these issues are clarified." Ernesto Zedillo applauded his actions and said he was proud to have been his collaborator, and denied that he had stained the image of his predecessor. "I did not do this; it was done by the former President's brother, Raúl."
The traditional pact in the Mexican system no political intervention by former Presidents was broken; "as in the times of Lázaro Cárdenas and Plutarco Elías Calles," was the general commentary. Like Elías Calles, Carlos Salinas also left Mexico. He did so to give classes, offer services, he claimed. He did it to free himself from justice and enjoy the riches he accumulated and for which he should be subjected to a public trial, correct members of other parties and civic movements.
A Bottomless Barrel The game, initiated to clarify the Colosio case, was complicated by similar implications in the Francisco Ruiz Massieu case. Mario Ruiz Massieu was accused of obstructing the investigation and search for those guilty of his own brother's death. He was called to testify on March 1, and, once exculpated, left Mexico, But he was detained suddenly in the United States on March 3 for having lied in his customs declaration about the amount of money he was carrying: $50,000. He was detained, it is said, as a result of collaboration between the FBI and Mexico's Attorney General. He is now also accused of "unexplained enrichment"; his US bank accounts total more than $7 million.
There is nothing definite in either of these two cases. There is even less clarity about the assassination of Cardinal Posadas, although his successor, Juan Sandoval, the Cardinal and Archbishop of Guadalajara, has already presented the necessary proof, according to the press.
What has become clear to all is that corruption has filtered into every aspect of life and impunity has been accepted for too many years. President Zedillo's March 12 promise that impunity has ended was received with incredulity and fear: "How many more implicated people are to be discovered?" "Who can trust the keepers of order and justice if it appears there is a bottomless barrel full of s...?"
Chiapas: Peace?At the initiation of a dialogue that will not be easy, we offer a summary of the cycles of this other national crisis to date.
The work done by the first Peace Commissioner in the Chiapas conflict, Manuel Camacho, had no effect. After Colosio's assassination, the EZLN responded that 97.88% of the indigenous people consulted rejected the proposals from the round of dialogue that took place between February 21 and March 2, 1994. The second Commissioner, Jorge Madrazo, was unable to do more in the midst of the electoral process absorbing the country.
The army had kept the EZLN occupied zone encircled after January 12, 1994. Numerous accusations, coming from diverse sources, protested the army's human rights violations.
Chiapas' merchants, landowners and the "rich" continue, their fight against the indigenous demands and supported the persecution of the EZLN. At the same time, they fought to remove Bishop Samuel Ruiz, mediator in the dialogue, from his seat in San Cristóbal.
Public opinion and many civic and political organizations supported the EZLN demands and urged a true dialogue. The National Intermediation Commission (CONAI), presided over by Bishop Ruiz, remained an open link to future negotiation.
The people in the state of Chiapas were divided over the elections for governor. Some favored the sure PRI "winner," Eduardo Robledo, and others supported Amado Avendaño. Finally, on December 8, there were two governors and two governments; Robledo, the official, and Avendaño, "in rebellion."
When Ernesto Zedillo took over the Mexican presidency on December 1, he declared, "I am convinced that it is possible to achieve a new negotiation in Chiapas. There will be no violence on the government's part, and I trust there will also be none on the part of those who have not conformed."
These comments gave hope and the expectation of a response to the EZLN indigenous peoples’ demands. They were not called "criminals" or "terrorists," but rather "nonconformists."
On December 15, as an immediate step, Zedillo proposed a Plural Legislative Commission, made up of senators from four parties. Four days later, the EZLN broke through the army encirclement, to demonstrate that it had not renounced its capacity for armed struggle. After that show of force, it proposed that CONAI mediate the conflict. On January 15 Subcomandante Marcos met in the Chiapas mountains with Government Secretary Esteban Moctezuma.
On February 5, the anniversary of the Constitution, Zedillo issued the EZLN an ultimatum and, four days later, the army moved toward EZLN territory. The Attorney General announced the identification of "Marcos" as Rafael Sebastián Guillén Vicente, and ordered both his and other Zapatista leaders' arrest for the crimes of "sedition, mutiny, rebellion, conspiracy, terrorism, carrying firearms for the exclusive use of the armed forces, provocation of a crime, and justification of this and other vices."
The national reaction was not only surprise at the military mobilization, but protest against it, since it went against what had been promised on December 1. There was also significant incredulity at the supposed identity of Subcomandante Marcos.
On February 11 President Zedillo, Government Secretary Moctezuma and Attorney General Lozano Gracia met with the three Mexican cardinals, who "informed" them of the accusations against Bishop Ruiz and offered explanations. Although the charges were later dropped, an unconfirmed rumor that the Vatican will request his resignation continues to circulate. Arguing that the Church should not be involved in politics, the Vatican's Ambassador to Mexico, Monsignor Prígione, has been the most opposed to Bishop Ruiz's mediation role.
Marches, protests, newspaper editorials and interventions by many national and international groups and organizations have multiplied throughout the country. All urge a cessation of the army aggression and a return to dialogue and negotiation.
On February 14, Eduardo Robledo asked for "license" a virtual resignation as governor of Chiapas. One tension thus disappeared. He put one condition, which has not yet been taken into account: that Bishop Ruiz also resign his diocese and his mediation role.
On February 22, the President proposed a law for peace, which included amnesty for the "fugitives." On March 5, the EZLN rejected the President's peace initiative and the legislators accepted the Zapatista objections to the bill as valid. On March 8 the Senate passed legislation for Dialogue, Reconciliation and a Dignified Peace in Chiapas.
On March 16, the EZLN accepted a re-initiation of the dialogue, but only through letters. On March 29, it accepted the dialogue and proposed the Basilica of Guadalupe, the Metropolitan Cathedral, and the National Autonomous University or the United Nations building as possible sites; all four places are in the Mexican capital. It also proposed a five point agenda: 1) agreement to a stable and lasting cease fire that would make the possibility of armed encounter more remote; 2) discussion of political, social, cultural and economic issues at the state and national level; 3) a regional reconciliation accord; 4) a cessation of hostilities accord; and 5) political and social participation of the EZLN and its members.
In SuspenseNone of the three crises has been resolved; not the economic debacle nor the criminal investigations nor the Chiapas conflict. Everything is in suspense and criticisms of President Zedillo are getting stronger and more open.
The PRI is showing many internal fissures. The National Action Party (PAN) more unified, and totally triumphant in elections for governor, representatives and mayors in the state of Jalisco on February 12 is already considered the victor in the upcoming Guanajuato and Yucatán elections. Its economic policy despite the debts PAN must assume in the states it wins endorses rather than questions the Federal Government measures. There are also fissures in the Democratic Revolution Party; it is divided by the choice to collaborate with or openly oppose Zedillo.
A demand is growing for the country to return to a truly federal system rather than the central one that has existed for more than 66 years. There is also a growing desire to put an end to omnipotent and omnipresent presidentialism.
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