Mexico: A Crisis in Confidence
Maybe too many lies were told about the economy. Maybe Zedillo is lacking in a national project. Maybe Zedillo is not governing, and the PRI dinosaurs have won the battle. Maybe the solution for Chiapas that was chosen some time back is not really about negotiation.
Humberto G. Bedoy
Nobody can deny that Mexico is in crisis. The question is, what kind of crisis? Some well known PRI government officials hold that the country is in the throes of an economic crisis, an exclusively economic crisis. As they see it, the country has little hard currency left, it has suffered serious capital flight, the exchange rate and basic goods prices are sharply increasing, unemployment is on the upswing, as is inflation... They even recognize that the economic crisis is extremely serious. In late January, speaking in the city of Mérida, President Zedillo himself admitted that the Mexican government had virtually no maneuvering room left. "We are at the point," he declared, "of total insolvency."
A Purely Economic Crisis?The Mexican crisis is having significant international repercussions. International Monetary Fund director Michel Camdessus stated that the US $17.8 billion loan extended to Mexico is "the largest ever granted by this financial organization in its half century of existence, and amply surpasses Mexico's debt capacity with the IMF." Taking into account the tequila effect that the Mexican crisis has touched off in many countries, he added that "there was no other alternative," given the risk of sparking "a genuine world crisis" since the Mexican economy is between 11 and 15 in the international line up.
The ministerial level Group of 7 meeting in Toronto on February 3 5 put the Mexican problem on its agenda, to see how to avoid a similar crisis in the future. The danger is obvious Mexico's total foreign debt is $185 billion and $81 billion must be paid in 1995.
So is it exclusively an economic crisis, as the PRI officials maintain? Or is there not perhaps a fundamental political crisis underlying Mexico's current system, one that is dangerously cracking the system's four pillars: presidentialism, the state party regime, centralism and corporativism? Did not this crisis begin with the "crash" of the computer system tallying the votes in the 1988 presidential election? The crisis has recently undergone particularly serious moments: the Chiapas uprising, the assassinations of prominent national politicians and of Cardinal Posadas, the kidnappings of high level business and financial figures, the fraudulent elections of 1994, the PRI's February 1995 loss in Jalisco, the 17 governors imposed "from the center" with no respect for electoral processes, etc. This crisis constantly feeds off structural realities in the system, including generalized corruption and a significant increase in social violence and drug trafficking.
Twelve Years of ChangesIt is clear that Mexico is in economic crisis. The country's economic model and strategy, imposed and zealously defended by the governing group, has failed. It has not built a healthy, stable economy in over 12 years, nor opened the doors to a solution to Mexico's key problem the unjust inequality.
But more careful analysis indicates that the crisis is, in fact, a generalized social one with manifestations in the economic, political and even ideological arenas. In terms of politics and ideology, Mexico is immersed in a crisis of confidence that is not a product of the economic crisis, but the contrary: the economic crisis is the consequence of a crisis of confidence in the government and its economic strategy.
The neoliberal model introduced in Mexico during the six year De la Madrid administration, and particularly applied during Carlos Salinas' term, has demonstrated its intrinsic inability to resolve Mexico's key economic problems. It has been said time and again that the economic model's positive and beneficial aspects will be seen in the medium and, primarily, long terms. But the structural changes begun over 12 years ago have led to an unprecedented foreign debt, the lowest real wage levels in more than a decade and the state's inability to create jobs.
The model has not generated productivity or increases in either production or domestic savings. Nor has the export sector adjusted in order to maintain monetary stability and sustained growth. The recent drastic devaluation has destroyed the model, which was based primarily on an influx of foreign capital.
Deceptive LanguageVarious factors influenced the generalized loss of confidence in this model. The first is the government's official language, which is equivocating, ambiguous and deceptive. The government speaks of price "adjustments" instead of price hikes. It speaks of employment "adjustments" as it implements massive layoffs. It "ensures" property, but is overseeing a de facto expropriation process. "Deceleration" is the term given to what is clearly a thoroughgoing economic recession. It is said that there will be no devaluation, but rather a "modification" in the peso exchange rate, and the obvious, structural crisis is referred to as an "economic emergency."
High level treasury and administration officials state that the guarantees Mexico made to get the substantial US bailout will not undermine the country's sovereignty. Yet the United States, in exchange for its loan package, now has "effective control over all income from foreign sales of Mexican petroleum." Mexico has also agreed to privatize the railroads, ports and airports, take special measures to control the money supply and implement stricter monetary and fiscal policies. The US will have periodic access to Mexico's national accounts and government expenditures and, along with the IMF, will impose an economic policy favorable to the nation's creditors. And this is only what has been made public. It would seem that, in official language, "sovereignty" is limited to defending one's national territory.
Also influential in this crisis is the total absence of governmental self criticism. Salinas gave the clearest example of this in his VI Government Report. Except for recognizing "involuntary" imperfections and irregularities in the electoral processes, he did not admit to a single qualitative error.
The new economic Cabinet leaves much to be desired and is fertile ground for continued mistrust, since it seems to be essentially more of the same. A fair number of the new government officials are Salinas people and it is assumed that they will continue the same line of conduct, with the same ideology, only more so now that the IMF and World Bank demand compliance with this line.
The only surprise in the new government was the appointment of a PAN member for the first time in Mexican history, with the naming of Antonio Lozano García as Attorney General. One of his first acts in office, however, was to exonerate Maria de los Angeles Moreno, Ignacio Pichardo and Humberto Benítez Treviño (the former attorney general) of the accusation of masterminding the September assassination of PRI General Secretary José Francisco Ruiz Massieu. Only two months earlier, in his position as PAN's legislative bench chief, Lozano had repeatedly demanded a thoroughgoing investigation into the murder.
Few changes can be seen in the exercise of justice in the wake of Lozano's appointment. The use of illegal procedures in the capture of supposed criminals continues, tortures and threats are common, etc. This is without even getting into the theatrics around Lozano's announcement of the supposed identity of Zapatista Subcomandante Marcos and alleged EZLN arms arsenals found in Veracruz and the Federal District "arsenals" so scanty that any second rate drug trafficker would have laughed.
Who's To Blame?A whole range of baseless declarations "interpreting" the crisis have further deepened distrust of the government. Javier Garduño Pérez, president of the Budget and Public Accounting Commission of the Assembly of Federal District Representatives, said on December 23, 1994, that the "financial tremor" that had shaken the Mexican economy "would not last more than a month" and that the "big time speculators and those taking out dollars would be the big losers." Reality quickly contradicted both statements.
President Ernesto Zedillo and Treasury Secretary Guillermo Ortiz declared that the current economic situation is a "short term adjustment" problem. The government soon seized on the EZLN in its search for a scapegoat to take the blame for the country's economic disaster. But the Zapatista uprising in Chiapas is one factor in the crisis, not the factor. A quick review of the Mexican economy in the months leading up to the Chiapas crisis is enough to reach conclusions more in line with reality.
* The commercial trade deficit increased $3.7 billion in only three months (October to December 1993), all before the EZLN had even made its first appearance.
* GDP growth rates show that Mexico has been on a downturn for a number of years. GDP growth was 4.5% in 1990; 3.6% in 1991; 2.8% in 1992; and only 0.4% in 1993. Another clear indicator is capital flight: $12 billion went out of the country just between March and August 1994.
* Latin American Economic System (SELA) secretary Salvador Arriola, a Mexican, had warned about the danger of excessive dependence on short term foreign capital known as "hummingbird" capital that only flits in and out of the country to make money from currency speculation.
* As the crisis began, Isaac Cohen, president of the UN's Economic Commission on Latin America, stated that "the Mexican government knew it had to devalue the currency since February 1994, but the Salinas administration preferred to spend $30 billion to defend the peso rather than implement measures that could have repercussions on the electoral process."
We can add to this Salinas' need to avoid both local protests against California's Proposition 187, which would annoy the United States, and a devaluation ("a President who devalues is a devalued President," said López Portillo in 1984). Carlos Salinas needed a clean resumé for his bid for the presidency of the recently created World Trade Organization.
All of these points are neatly summarized in Alejandro Nadal's statement in La Jornada: "the speculative investor never had confidence in the model of the neoliberal economic bubble, even before Subcomandante Marcos appeared on the horizon."
False StatisticsThe lack of confidence is also born out of the contradiction between "official" data and national reality. According to the official needs of the moment, the government touches up official statistics on the trade deficit, unemployment increases, inflation, buying power of wages, increases in past due loan portfolios, and the like.
"The Mexican government alters the statistics on its trade with the United States by over 50% of what the US Department of Commerce reported during the same period," declares researcher and businessman Emilio España Kraus. "The manipulation of these statistics is neither accidental nor disinterested. There are statistics for domestic consumption and statistics for foreign consumption. Just one example: the US reports having bought $1.875 billion more from us than the Mexican Secretary of Industry and Commerce reported 124% more."
"The Bank of Mexico's economic statistics," continues España Kraus, who has dedicated more than 20 years to researching this area, "are no more than a string of falsehoods and the economic decisions made by those in high level government position have invariably been based on them. Their attempts at governing thus tend to fail because one obviously cannot arrive at reasonable conclusions based on lies."
Falsified data, and deceptions, half truths, lies and contradictions in official statements. In one of his first speeches after the first big devaluation, President Zedillo himself said he would speak honestly an implicit admission that it has not always been thus.
"Today, all the corn and beans that we consume are produced in Mexico," declared Salinas in his VI Government Report. "That's not true," retorted PAN members, presenting statistics from the appendix of the report prepared by the Presidency, which reveals that $105 million was spent on importing corn and $8 million on beans in 1995.
It is not unusual to find the same statistic or event interpreted in different and even contradictory fashion, according to what's most convenient. When explaining the political crisis, the government portrays the EZLN as a small group of disgruntled peasants armed with sticks, responsible for tensions in barely four Chiapas municipalities. Yet, when it comes to explaining the economic crisis, the EZLN is directly blamed for the decapitalization of a country which was held up as a paradise of prosperity for six years, only to crumble in three short weeks.
Truths and Lies"If economic logic called for an offensive devaluation to detain the speculative tensions in 1994," declares journalist Carlos Ramírez, "the technical experts from the Bank of Mexico (BANXICO) opted for the risk of burning reserves to avoid devaluation. In one year, BANXICO sacrificed $22 billion in reserves for nothing. The first warning came in the second quarter of 1994, when capital accounts did not balance out with current accounts. It was the time for a devaluation. But, doing so would have contributed to the defeat of Zedillo, one of BANXICO's favorite sons and the favorite of Mancera, the bank's governor."
Truth seems to last six years in Mexico: what is true in one six year period is false in the next, and vice versa. It's no wonder that society as a whole is losing faith.
And what can be said of political slogans? Salinas' campaign slogan spoke of stability. Chiapas gave the lie to that one. Zedillo's slogan "Well being for the family" fell apart in a matter of days.
Like FujimoriOn July 14, then presidential candidate Zedillo said, "To a large measure, the strength of the judicial branch depends upon each magistrate and each judge acting with absolute independence, exclusively observing and applying the law. Independence should be the most important quality in judges." But once he was President, Zedillo sent the Congress a draft package of Constitutional reforms with no prior consultation, but which was obviously approved that effectively retired 26 Supreme Court magistrates. With the court non functional, Mexico's judicial branch has virtually ceased to exist. Appointing judges and magistrates was the prerogative of the Supreme Court.
Elements of the reform itself underscore this interference and maintain the judicial branch's subjection to the executive branch. "The President," says Emilio Krieger, former president of the National Association of Democratic Lawyers, "says [the reform] broadens the independence of the judicial branch. That's a lie. As currently worded, it gives the President the power to appoint magistrates and send the already approved names to the Senate. And not only the appointments: resignations should also be approved by the President who subsequently communicates those decisions to the Senate. In other words, the executive branch has total control over the Supreme Court. In Mexico, where the Senate is largely dominated by the President, it is simply joking with people to say that there will be greater independence. And another thing that seems extremely serious to me: this is the first case I know of in the history of Mexico in which the President carries out a collective, total dismissal of the country's Supreme Court members. One of the measures that Peruvian President Alberto Fujimori used to consolidate his power was to disregard the Supreme Court: he simply got rid of it. What Zedillo is doing is similar from a political point of view. It is extremely serious."
Enough!There's still more. On January 26, the reform to the Income Law for 1995 Fiscal Functioning was passed. Any kind of measure implying conditions that a foreign government attempts to put on Mexico when contracting a foreign debt must be approved by Congress. This "padlock" was called an "historic step," since it marked the recovery of a Congressional prerogative. But in its first concrete application the debate regarding the conditions the United States imposed in exchange for its recent credit package the measure simply failed. The PRI faction in the Permanent Committee refused to call the extraordinary sessions the opposition parties demanded to either approve or reject the imposed conditions.
Another factor leading to a lack of confidence is the now traditional impunity that protects both the police and the authors of major crimes. But there is also the accustomed impunity government officials have always hidden behind, as if it were an unwritten law, when they have been irresponsible, when they have fraudulently managed information and the economy. "Only the poor go to prison" is a truth of monumental proportions in Mexico.
The wronged and irritated Mexican population, steeped in this crisis of confidence, seeks any chance for revenge. The February elections in Jalisco were its most recent opportunity. PAN's decisive victory was largely an "Enough of the PRI!," echoing the "Enough!" that rang out from the Chiapas forests on January 1, 1994. It is very hard today to distinguish between those who voted for the PAN and those who cast a "punishment vote" against the PRI.
Crowning the widespread crisis of confidence, President Zedillo comes off as insecure and weak. Is he really insecure? Is he without a national project? Is he not getting good and correct information? Is it haste? Inexperience? It's hard to know, but the abrupt and even contradictory turns Zedillo takes are disconcerting.
Barely a month in office, Zedillo, in describing what he saw as the main cause of the country's crisis, distanced himself considerably from the Salinas report. But only days later he asked that guilty parties not be sought and ended up justifying Salinas' administration and making excuses for Salinas himself.
Forthing and Backing on ChiapasZedillo's insecurity is most clearly demonstrated in his handling of the Chiapas problem. On December 1, his inauguration day, Zedillo declared that it was possible to achieve "a new negotiation that brings us to a just, dignified and definitive peace" in Chiapas. He promised that there would be no government violence. "I am confident," he said, "that there will be none who are not in accord; the army will unilaterally maintain the ceasefire. We will seek all means by which to arrive at an accord based on harmony, democracy and opportunities for development with equity. We want a country of peace, a nation of equity, a Mexico of justice for all."
Seven days later, Zedillo's presence in Tuxtla Gutiérrez implied a green light to PRI representative Eduardo Robledo to take office as governor of Chiapas, even though the EZLN had announced that it would consider the treaty over if Robledo were ratified, given the fraudulent elections and Robledo's own record. Then, on December 14, Zedillo proposed a legislative commission, made up of legislators from the four parties represented in Congress (PRI, PAN, PRD and PRT), to negotiate a peace. This caused confusion since he had earlier recognized the National Intermediation Commission (CONAI) presided over by Samuel Ruiz (bishop of San Cristóbal de las Casas, Chiapas) as the proper mediation channel.
The government had set up an interview for January 12 between Secretary of Governance Esteban Moctezuma and Subcomandante Marcos, who in turn declared an indefinite EZLN truce. But at the same time, the pro government paper El Nacional published a document prepared by the National defense secretary but signed by Moctezuma containing aggressive language against the EZLN. The President offered one hand as a symbol of dialogue and peace, even as he curled the other into a fist. Only later did it become clear that the army and the US financial sector particularly the Chase Manhattan Bank were pressuring Zedillo to make that fist.
Moctezuma met with Marcos on January 15; this was the President's peaceful hand. On February 2, Zedillo attended a breakfast with the armed forces in its arms factory and three days later issued his ultimatum against the EZLN. On February 9, he ordered the army to advance towards the Zapatista occupied zones in Chiapas, following an aggressive speech by National Defense Secretary Rodolfo Reta Trigos, who declared, "This is war." With the discovery of Zapatista "arsenals" in Veracruz and the D.F., the President took another aggressive step: he issued orders to detain a number of Zapatista leaders, including Marcos. At the same time, the Attorney General's office "discovered" Marcos' identity, announced with much fanfare as Rafael Sebastián Guillén Vicente. This was the government's fist coming down on the Zapatistas.
But then on January 30, the eleventh day of a hunger strike by Bishop Ruiz, the President instructed his national defense secretary to suspend the army's advances and limit military presence in Chiapas to what it was at that particular moment.
On February 11, the army isolated the communities in the zones where the EZLN had been, particularly in and around Ocosingo, Las Margaritas and Altamirano. There were rumors of bombings and military confrontations, which the government denied. The press, NGOs and the Red Cross were denied entrance to the area. That same day, more than 100,000 people filled the Zócalo, Mexico City's main plaza, asking for peace. Yet a Ministry of Governance spokesperson declared, "In no way is this war." In presidential language, the "disgruntled" EZLN members were heading up a subversive group that is "not grassroots, indigenous or even from Chiapas and has participated in "committing multiple and serious crimes."
Then, surprisingly, President Zedillo backed off again. On February 14, he handed down instructions to the Attorney General and the army to "suspend any action that could lead to confrontations in Chiapas." Newspaper ads, street marches and fasts clamoring for peace multiplied. The EZLN retreated deep into the forest to avoid head on clashes with the army, while the civilian population in the area fled from the army's advance. The President reiterated that his government was seeking peace and dialogue. But, why dialogue with "criminals"? And how can it be done at the same time orders are out for their detention?
More surprise back pedaling that same day. The governor of Chiapas asked permission to step down from his post, which in Mexican politics translates as a forced resignation. He was replaced by Julio César Ferro, "a Chiapaneco from the Federal District." On March 2, yet another backstep the orders to detain EZLN members were temporarily suspended.
A Public Relations CoupIn the midst of this strange two step, the latest and most serious scandal burst onto the public scene and one of the many unwritten rules in Mexico was broken. Raúl Salinas de Gortari brother of the ex President was taken into custody, accused of being the brains behind the assassination of PRI General Secretary José Francisco Ruiz Massieu. The measure solidified the rupture between the Zedillo government and Salinas.
The apprehension of this political figure responded to Zedillo's political need to gain credibility among the population and the confidence of investors. But the cost could well be too high.
Perhaps to somewhat temper the division between the group in power and calm Salinas supporters within the current government, the Special Prosecutor for the Ruiz Massieu case declared it closed with Raul Salinas' detention. And perhaps to lend security to María de los Angelos Moreno, the current PRI president, and Secretary of Energy Ignacio Pichardo Pagaza, charges were filed for "connected crimes" against former assistant Attorney General Mario Ruiz Massieu brother of the assassinated man who had implicated both men in the homicide in order to muddy the investigations. Ruiz was detained in the US with FBI help, thus sending a message of harmony and amnesty to the public sector Moreno and Pichardo represent.
All this governmental infighting is extremely serious and puts Mexico's governability at risk. Former President Carlos Salinas further riled the national political climate by insolently declaring a "total fast" until he is exonerated of responsibility for the economic crisis undermining the country and until the Attorney General declares that Salinas never attempted to block investigations into the murder of PRI presidential candidate Luis Donaldo Colosio. Salinas was trying to show what he is capable of doing if hit in his sore spots.
The Dinosaurs ReturnRepudiation of Salinas' declared "fast" by virtually all social and political sectors in the country was rapid. As the intellectual Carlos Monsiváis pointed out, the nation could not take seriously this insolence of a subject who attempted to govern at the world level and is now only exhibiting small town reactions. Salinas irresponsibly risked greater deterioration of the country's social coexistence.
Zedillo's response was docile: he quickly sent an emissary to reconcile with Salinas and the Attorney General's office, and issued several communiqués exonerating Salinas of any responsibility in the Colosio case. The issue of Salinas' possible responsibility in the national financial crisis was put on the agenda, to await a better moment.
The moral of this whole farce could be: power makes one lose one's sense of reality. But the farce also demonstrated that Zedillo still has some political maneuvering room to manage the conflicts in the governing circle, no matter how serious they may potentially be.
The cause for greatest concern is that both the apprehension of Raul Salinas and the authoritarian management we have seen in the Chiapas situation reflect the fact that a hard line has been imposed within the government. The dinosaurs displaced by the Salinas technocrats are now back, and chafing at the bit for revenge. A number of indicators demonstrate that Zedillo is essentially no longer governing.
For example, one of the presumed Zapatista leaders detained on February 9 Javier Elorreaga had a safe conduct document issued by Zedillo himself. He was picked up by the army just after arranging the agenda for an EZLN dialogue under the direct auspices of the Ministry of Governance. Does this mean the military took control, or that Zedillo betrayed the EZLN? We cannot be sure. In any case, it means there is no longer enough political space to carry out a peaceful solution to the conflict in Chiapas.
The Laws Are a Trap for the EZLNThe proposed new "Law for Dialogue, Reconciliation and Dignified Peace in Chiapas" is another manifestation of this reality. This bill is being drafted in the strictest secrecy, among parliamentary groups and political parties with no input from society. It offers absolutely no recognition of those in arms, and doesn't even call the armed group by its name. It refuses to recognize the National Intermediation Commission or Bishop Samuel Ruiz, opens no possibility for the return of people displaced by the conflict and maintains the orders to capture EZLN representatives with no guarantees. This proposal could only have been conceived of as something that the EZLN would reject, to thus give the government new justifications to label the Zapatistas "intransigent," a legal trap to facilitate the rebel forces' annihilation.
As was to be expected, the Zapatistas rejected the initiative. This isolated them from the population at large, but they had no choice. In reality, they are being cornered, both physically and socially.
One hope is that the Congress will substantially modify the bill, thus making dialogue possible. But the current alliance between the PRI and the PAN in the country's co government undermines this hope and leads one to think that the solution opted for, some time back, is military. If this is true, all of us as Mexicans will soon be lamenting that fact.