The economic chaos that the country is experiencing has given evidence of the fragile foundations of the Mexican "miracle". Paradoxically, the economic crisis has brought a benefit: it avoided the outbreak of war in Chiapas. It was a completely unexpected turn of events.
Enrique Flota Ocampo and David Fernández
Mexican President Carlos Salinas de Gortari's farewell speech to Congress on November 1, 1994, was a marathon of self eulogies, void of self criticism. His PRI partisans gave him a standing ovation and fell over each other for a turn to flatter him. It was Mexican presidentialism taken to its extreme, an atmosphere that made it hard to perceive the deceit enveloping the country.
Official Numbers: Mexico's Moving Forward
Since 1994 Mexico has belonged to the exclusive club of countries in the Organization for Economic Cooperation and Development. The entry into the First World solidified Mexico's image as a prosperous country to the rest of the world. Salinas had worked hard to build that image, and among his many references to his economic successes, Salinas included the following:
"We have begun a stage of gradual and sustained economic growth that promotes the creation of permanent jobs, an increase in real salaries and a strengthening of the battle against extreme poverty. Behind us are the problems of debt, deficit, inflation and crisis."
"For the first time in a quarter century, Mexico is beginning a phase of economic expansion that is not buoyed by excessive debt or by an artificial increase in demand."
"Let's remember: we have moved from transferring 6% of the annual GDP out of the country to receiving an annual average 3.2% between 1990 and 1993. Between 1989 and July 1994, the flow of foreign investment increased to almost US$50 million, doubling the six year goal. The balance of payments' capital account had an overall surplus of US$31 billion in 1993, and the influx of foreign resources in the first half of 1994 was US$12 billion."
"The natural counterpart of the surplus in the capital account is a deficit in the current account. This deficit is proof that the country is using foreign resources to expand the national productive plant at a greater speed than if it used exclusively national financing. As opposed to what happened in the past, foreign resources are used to finance private sector investment projects, and this has meant an increase in investments with respect to the GDP, permitting an advance in the modernization of the productive plant and a structural change in the economy, without affecting reserves. The level of reserves (US$17.242 billion) allows us to strengthen our currency's solvency."
Bankers Euphoric
Throughout the reading of Salinas' report, a legislator from the Democratic Revolutionary Party (PRD) stood immediately below the platform holding a sign that said, "You are lying, Salinas." It was inevitable that the photo of Salinas with this "footnote" would be widely distributed. The incident led to a campaign against the PRD, making it look like an irrational and annoying opposition. But the PRD was right; Salinas was lying.
A number of the government's allies shared the deceit of Salinas and his party, among them the bankers, made wealthier with the help of government policies. They did not hesitate to certify that "for the first time in a long time, we will have a public administration with no economic surprises. Everything is defined and consistent. This will be the definition: continuity of the strategy within stability, but also continuity of change within the defined framework." (Quoted from a study of Mexico's economic situation in the monthly magazine of the Banamex Accival financial group, December 1994).
The height of the bankers' blindness or bad faith was this reading by Banamex of the foreign deficit: "Now people are focusing on the foreign deficit (one reason for concern disappears and we will invent and blow up another). In his sixth government report, the President reiterated his arguments to explain this phenomenon and disqualify the negative versions, which are superficial and non analytical: numerous countries have passed (or are passing) through similar conditions. Korea and Singapore, examples of success, have achieved high living standards: they improved their productivity and are fertile ground for profitable projects aimed at the foreign market; they are initiating an investment process, but lack savings to finance it so foreign capital enters to fill the gap (not to finance public deficits, as happened in Mexico, but to carry out private plans). This is where the gap comes in the commercial account, although also valuations (even nominal ones) in exchange rates, export dynamism, economic growth and improvements in the living standard contribute to the gap."
These long statements reflect the euphoria reigning in what was proclaimed to be the "Mexican miracle" and the arrogant dismissal of any critical judgment. In this climate, the new President, Ernesto Zedillo, took office with no surprises. The "General Economic Policy Criteria" designed by his team was a continuation of the strategy and the optimism; estimates of 5% GDP growth, with a similar inflation rate, etc. Despite all of these warning signs, astonishment was one of the first reactions when disaster struck.
The Miracle Fades
Official propaganda has turned economic analysis into an almost impossible task. The data manipulation and the political handling of statistics has made it difficult to get access to real and complete information about what is happening in the country economically. Despite this, some indicators since 1994 exhibited the tendency toward a deterioration of the macroeconomic successes announced by the regime.
Of all these "successes," the one that was perhaps actually maintained through the sixth year of the Salinas government was control of inflation. According to the Bank of Mexico, accumulated 1994 inflation as of November was 6.1.
Putting a brake on inflation was an obsession to which the workers were sacrificed. Wages were one of the instruments used to achieve one digit inflation and it fell to the workers to take on the burden of job insecurity and low wages. In the second quarter of 1994, 43.5% of the urban working population earned under two minimum wages and, of these, 8.4% earned less than one.
The growth in the GDP strengthened optimistic expectations. After a zero growth rate in 1993 (0.4%), the GDP grew 2.2% in the first half of 1994 and was expected to reach an end of year growth rate of between 3 and 4%.
Supporting low inflation with wage and public spending restrictions contracted the domestic market. The collapse in sales estimated by some analysts to be between 17% and 20% from January to November 1994 intensified the problems of micro, small and medium businesses. Adding credit scarcity to this despite constant efforts to reduce interest rates but spurred on by ample room for banking mediation meant that the problems of these businesses had repercussions in the growth of overdue loan portfolios and the forced closure of some businesses.
Just between June 1993 and June 1994, expired loan portfolios in the banks increased 27%, reaching 41,625 billion new pesos. This increase was constant over the six years; between December 1988 (584 million) and June 1994 (41,625 billion), they increased 764%. Despite the seriousness of this problem, the banks' posture expressed in their annual convention in October did not waver: there will be no debt pardon, but rather case by case debt restructuring. "We are not speculators, but nor are we a public charity," they said.
The effect on unemployment was almost automatic. And unemployment was the only point on which the Salinas report admitted weaknesses, acknowledging that the promised jobs had not been created. But unemployment is also one of the indicators most wrapped in mystery. The only official data is that open unemployment (people at least 12 years old who were not working in the week investigated, but were available or were seeking involvement in some economic activity) in August 1994 was 3.6%. But this does not take into account the real unemployment problem, which is hidden by the informal economy and temporary work. According to Banamex, almost 20% of the working population works less than 35 hours per week.
Unbalanced Balance
But it was in relation to the foreign market that the national economy showed its greatest cracks. Mexico entered economic globalization and the opening up of markets with more enthusiasm than actual competitive ability. Throughout Salinas' six year term there was a constant trade balance deficit marked by trade with the United States, its main trading partner. According to Secretary of Commerce reports, the accumulated trade deficit was more than US$50 billion between 1991 and 1994.
The trade imbalance implied an imbalance in the current account, which was supported with the backing of international reserves. But that in turn implied attracting more foreign capital.
The reserves evolved favorably between 1988 and 1993, with constant growth:
(US$ billion)
December 1988 6.588
December 1990 10.274
In February 1994 the reserves reached their highest point: $28.66 billion But at that point they began to drop. The uncertainty generated by the assassination of PRI candidate Luis Donaldo Colosio exerted pressure on the peso and the stock market, and the government responded with currency sales and shares purchases. By June 1994 the reserves had dropped to $16.2 billion and by November, according to the Salinas report, they were hovering at $17 billion.
Gigantic Debt
And foreign investment? The flow showed positive balances, except that, according to reports from the Mexican stock market and other sources, about 56% was channeled to the market, with consequent volatility and a high risk of flight, which is what subsequently took place.
The pretty side of the capital flow was expressed in a positive capital account. But the flip side of this "coin" was its impact on the current account and the foreign debt. At the end of the first half of 1994, according to data from the Bank of Mexico, the Mexican stock market and the World Bank, the total foreign debt reached historic levels: US$140 billion. It should be pointed out that during the Salinas period, official data no longer differentiated the nominal value and the total value of the foreign debt (public and private) the information used instead was the percentage of the GDP that the debt and debt service represented. The officially recognized public foreign debt reached US$85 billion. The private foreign debt was undoubtedly encouraged by the government's modernization policy.
The domestic public debt must be added as well. In November 1994, it was 130 billion new pesos (approximately US$40 billion at that date's exchange rate). The drama of this data is that it indicates the disappearance of state assets used to cushion the domestic debt. Income from the sale (privatization) of public enterprises particularly the banks and TELMEX was supposedly channeled to pay the domestic debt, but at the end the state still had its large debt and no longer had what had been its most productive businesses.
These were the fragile foundations of the Mexican economy. The incidents in December simply revealed just how fragile they were.
"Black Monday"
December 19 was "Black Monday," the beginning of chaos. That day the tenth out of eleven that ended with losses the stock market dropped 4.15%. That same day the demand for dollars grew stronger.
The pressures on the currency and stock market forced an emergency meeting of the Pact for Well Being, Stability and Growth (PABEC). At that meeting it was agreed to raise the upper limit of the peso's movement against the dollar to $.53. Extending the floating rate signified a 13.89% devaluation, which meant an accumulated 28.8% depreciation of the peso in 1994.
In the Chamber of Deputies, PRI members stubbornly insisted that this was not a devaluation, but an expansion of the floating rate, and attributed the measure to the effects of Chiapas, even more tense after the electoral fraud. They rejected PAN and PRD criticisms and refused to take the measures proposed by those parties: meet with Minister of the Treasury Serra Puche, protect the grassroots economy and index wages to the devaluations.
The announcement of the "widening of the peso's floating rate" increased the demand for dollars. Everyone especially US investors recalled that Serra Puche had assured just days before that there would be no devaluation. Capital flight accelerated.
The Peso in Crisis
The crisis continued. Two days later the PABEC members met again. Based on an analysis of financial market behavior, they concluded that the agreement just one day earlier to expand the peso's floating rate "did not detain the speculative process unleashed in the financial markets." Given this, "financial authorities decided to let currency supply and demand freely determine the exchange rate until the exchange market demonstrates stable conditions," explained Serra Puche. From that day on supply and demand would, without limits, determine the peso's devaluation. In the PABEC meeting, Serra reportedly said that international reserves had dropped to US$6 billion, forcing him to take these measures.
The PABEC signers agreed that the prices of goods and public and private services would be maintained without alterations for the next 70 days, and all salary agreements would also be maintained (a 7% increase in minimum salaries, plus a tax grant equal to 3% of 1994 salaries).
That same week, while presenting the National Economy Award, Ernesto Zedillo offered an explanation of the causes of the devaluation. In contrast to the first days, he did not identify Chiapas as the main factor this time. During 1994, he said, some economic imbalances, up to a year ago considered manageable, took on worrisome proportions.
For its part, the Bank of Mexico issued a bulletin explaining that the pressures on the exchange market had worsened due to "a strong deficit in the current account [of the balance of payments] in 1994 and a similar perspective for 1995, in a context of relative capital scarcity in the international financial markets and the threats to the social peace made recently by the EZLN, which have created an atmosphere of uncertainty that impedes the country's healthy economic development."
Generalized Frustration
On day 21, the crisis reached the market. The massive sale of shares by foreign investors was about to provoke a "crack" in the stock market. The key indicators dropped 11.46% during the day. Hasty intervention by institutional investors, who bought more than 971 billion pesos worth of shares, reversed the tendency. The market closed with a 3.10% loss.
By the end of December, the peso succumbed totally. It had reached the level of 6 pesos to the dollar, a close to 100% devaluation. At that point, public explanations for the collapse began to be made. Gustavo Lomelí wrote in El Financiero, "Reports gathered reveal that the advisability of adjusting the exchange rate began to be considered last May, and in September and October the need to raise the floating rate of our currency 10% and increase the peso's slide with respect to the dollar from 40 to 80 cents (old pesos) was presented to the economic Cabinet and the transition team between the old and new administrations. President Carlos Salinas rejected this petition again and again, on the recommendation of then Secretary of the Treasury Pedro Aspe and Miguel Mancera, governor of the Bank of Mexico."
The consequences were multiple. The Latin American financial markets resented the jolt because it caused a general loss of confidence among First World investors. The financial system trembled before the possibility that, as in the 1980s, Mexico might have problems paying its foreign debt. Within the country, frustration and bravado dominated. The Zedillo campaign slogan "Well being for the whole family" changed abruptly, and more sacrifices were demanded of everyone. The crisis reached the immense majority of businesspeople, especially franchise owners who had debts in dollars, those involved in merchandise imports, and even those with peso debts because of the increase in interest rates.
Paradoxically, the explosion of the economic crisis had a positive aspect; it averted an outbreak of war in Chiapas. The Chiapas conflict had entered a dangerous phase. With the change in government, Jorge Madrazo, the second Commissioner for Peace and Reconciliation in Chiapas, had presented his resignation. He could never meet with and interview Zapatistas and there was an impasse in the conflict. Simultaneously, social decomposition and agrarian and post electoral conflicts moved to center stage, generalizing conflicts among the various social actors.
In this context, events snowballed during November and December, until they revealed the government's intentions: finish off the Zapatistas militarily. Eight incidents demonstrated that this was the government plan.
Finish off the Zapatistas
1. In his November report, Salinas presented a provocative image of the Chiapas situation. The tone, rather than conciliatory, was arrogant and self serving. He did not mention the EZLN by name, calling it only "the armed group." According to Salinas, the army had won the war in January and had the military situation under control. Old accusations were brought against the EZLN once again: the social situation does not sufficiently explain the armed uprising, it is part of a political strategy; "foreign" leaders want to internationalize the conflict...
In his report, Salinas introduced a significant allusion to the bishop of San Cristóbal, Samuel Ruiz: "The armed conflict that emerged in Chiapas has singular roots.... It is a geographically isolated zone, with close to 70,000 inhabitants dispersed in small communities, and it also coincides with the corresponding diocese." It is significant because dioceses have never been used as geographic reference points in official discourse; it insinuates a relationship between the uprising and the "diocese," that is, Samuel Ruiz.
2. On November 3, newspapers in the capital published an ad from the self named Supreme Tribunal of the Chiapas People disqualifying the work of the Solicitors' Office and the Electoral Tribunal of the Chiapas People, and reaffirmed the legality of the state elections, officially won by the PRI.
PRI Offers Its Hand to the PRD
3. A new government policy toward the PRD emerged during November. PRI Congressman Oscar Levin Coppel announced it in the Chamber of Deputies, in the framework of a presidential report, as a new deal between the PRI and its opposition:
"After having heard this important debate, I think we have great points of coincidence. I think we're ready. All of the fractions and many of us in the PRI are thinking about a new deal with the opposition.
"I want them to know that we are open to ending this battle of enmity that has divided Mexicans for eight years, that has hurt all of us and has been no more than a family feud.
"I want to say on behalf of many members of the PRI faction that we are willing, that we would compromise to reach a new agreement. We will try to reach an agreement even if many hardliners from both sides try to impede it."
The cynical and archaic behavior of the PRI representatives in evaluating the August presidential elections demonstrated the limits of these good intentions. Despite all of this, the PRI and PRD clearly moved closer, made concrete in meetings of PRD members with Zedillo. Zedillo emphasized the presidential disposition toward the PRD: public recognition, offering government posts, etc.
Seen from Chiapas' perspective, the PRI logic was to neutralize the PRD, flattering the maturity of the "dialogue" faction and isolating what Levin Coppel identified as the "hardliners" opposed to dialogue. It wanted to divide the PRD precisely around the issue of its relationship to the government. The consequences for Chiapas were obvious: the government was neutralizing one of the opposition poles and thus isolating the Zapatistas.
In this climate the government and PRI decision to support Robledo as Governor of Chiapas became clear, even though his electoral victory was challenged. Support him or, at least, increase the political cost of his head. In mid November the PRI began to mobilize in the state of Chiapas.
Who's Intransigent?
4. On November 28, Jorge Madrazo resigned as Peace Commissioner. In his final summary, he introduced allusions to EZLN "intransigence" into his speech, basing this mainly on the fact that the Zapatistas rejected all proposals for direct meetings, an element that was later capitalized on in the official posture.
5. In his inaugural address, Ernesto Zedillo outlined the path he planned to follow a strongly pacifist discourse, seeking solutions in dialogue and negotiation but he did not refer to concrete actions, which tend to be a real bridge to the Zapatistas.
Zedillo's address reiterated his desire for dialogue and included a new government ability to join the group of forces demanding dialogue and peace. Those who cried out pacifist slogans at the government thus realized with surprise that their cries now had to be directed at the EZLN. Government, political parties and civil society want a negotiated settlement, and only the EZLN is resisting. This is the cheap image that aims to isolate the EZLN. And this is the problem with pronouncements about peace, dialogue and negotiations they don't point out the responsibility of the government, which contradicts its pacifist discourse. In this sense, situating oneself equidistant from the government and the EZLN ends up benefiting the government and going against peace.
Against Peace
6. The government's actions were contrary to peace. The composition of the Zedillo Cabinet was the first demonstration of the resistance to changes. Pichardo Pagaza became Secretary of Energy, despite all the bad press about the assassination of Ruiz Massieu. A good many of the implementors of Salinas' economic policy survived in the new Cabinet (Serra Puche, Herminio Blanco, José Angel Gurría). There was also continuity in social policy (Carlos Rojas was ratified in SEDESOL and Santiago Oñate remained Secretary of Labor). The post electoral conflicts in Veracruz and Tabasco were carefully managed with a press close out, and the government took a harder stand in Chiapas, installing Robledo in office with Zedillo and the army present.
By demanding "unconditional dialogue," the government exempted itself from its own obligation to put conditions on the dialogue. The AEDPCh, the PRD, Bishop Ruiz and many others are demanding a solution to the post electoral conflict in Chiapas as a condition and a sign for the reestablishment of dialogue, but the government ignored this demand, making its own intransigence appear to be Zapatista intransigence.
Zedillo and the Army
7. The "pluralist" Cabinet of Eduardo Robledo Rincón, governor "elect" of Chiapas, was a joke. Official propaganda advertised that it would include a member of PAN and one of the PRD. The PAN member (as health secretary) was Baldemar Rojas, a quasi fascist who called Bishop Ruiz a Zapatista commandant. The PRD member was Eracilio Zepeda, a friend of Robledo's. His first action as secretary of government was to request the army to patrol Chiapas' streets. The rest of the Cabinet is filled with men who were functionaries in the anti grassroots governments of Absalón Castellanos and Patrocinio González Garrido.
8. The government's treatment of the army reflected the army's position of force. In his response to Bishop Ruiz's peace initiative, Jorge Madrazo was so absurd as to put members of the National Human Rights Commission at the barricades to make sure that there were no false accusations against the armed forces. Salinas praised this measure in his government report. Zedillo has increased the military budget while at same time he called the army "pacifist" in his speech during a breakfast with the armed forces two days after taking office. The presence and mobilization of the army in Chiapas was more evident each day. The ground was being laid so that, in case of war, it could look like the army was forced against its will and vocation to exterminate the indigenous to preserve national peace.
A Gamble on War
These eight incidents were symptoms that allowed a clear diagnosis. The government strategy was to force the Zapatistas to negotiate in weak conditions or else go to war, and it had largely succeeded before the economic explosion. Other factors also must be added to this official strategy: the inability of the National Democratic Convention to become a significant actor, the pressures to contain the PRD's electoral advances and its subsequent defeat in August, the dwindling of public interest in the EZLN cause and a desire for peace.
For the Zapatistas, this meant negotiating from a position of weakness in very different conditions than those enjoyed during the talks in February 1994. After all the warnings they had given, if they did not negotiate, they would, in addition to appearing intransigent, have to go to war or lose credibility.
The government knows that the Zapatistas are willing to sacrifice themselves even to the point of death. By closing in on them, they were betting on war.
Imminent War
Various events had been adverse for the Zapatistas. The results of the August elections frustrated the possibility of a PRD government that would open the path to genuinely solving the Chiapas crisis. In the state of Chiapas itself, the imposition of the PRI candidate closed any space for political advances. The National Democratic Convention, conceived of as a way for civil society to promote a non military solution, also did not yield the hoped for results. The Convention's internal conflicts in the best style of the traditional left as well as its decreasing strength and ability to convoke, and its difficulty taking initiatives, converted this promising body into an insignificant actor.
At the beginning of December, the EZLN declared that the dialogue had broken down and communicated to the government that it would not maintain the cease fire. Facing the possibility of imminent war, the Zapatistas took actions that once again demonstrated their enormous political and operative skills. In the midst of high tension and expectations, they announced that they had broken through the army's military siege and that part of their troops were marching through the 38 municipalities of Chiapas. Geographically, this demonstrated their ability to extend the war through almost all of the state. At the same time, they were careful not to spark a confrontation that would unleash hostilities. Zapatistas appeared everywhere in those days, blocking roads and highways, going through communities, leaving clear signs of their presence.
Just as the government was mobilizing forces in Chiapas, the economic crisis intervened, in one blow losing the government all the legitimacy it had earned in public opinion to combat the Zapatistas. The cost of a war increased dramatically, given the delicate economic situation. The turn was radical and forced; the government had to give the country some kind of good news, and war was not it.
The PRI "Rebellion"
Later events have slowly been clarified, despite great difficulties. Crucial work by Bishop Ruiz and by the National Mediation Commission which the government had to recognize as a mediating body if it really wanted peace allowed the setting of a framework to avoid armed conflict. Both sides have made concessions to maintain a provisional truce and continue to cement a stable one.
Particularly relevant was the fact that the Secretary of Government had a direct meeting with the Zapatistas in the zone under his control. Although the details of this meeting have not been revealed, it is evident that a series of measures emerged from it that appear directed towards a new negotiation phase that could permit a political resolution to the problem.
But a new paradox the government now must confront a new obstacle: the "rebellion" of its own PRI base. Just when it looked like the government was about to resolve the situation, pressure came from its own rearguard.
Since his inauguration, Zedillo has made clear that he wants a new relationship with the PRD and that Salinis' rancor towards it is a thing of the past. His most notable advance was the signing of a pact among the four existing parties. The pact, and rumors of the removal of the PRI governors of Chiapas and Tabasco in favor of the opposition candidates who were actually elected, suggested the configuring of a consensus that would allow President Zedillo to govern the country.
The reaction of PRI members in these two states was surprising. They challenged the previously sacred presidential power, even pressuring with violence to keep the two governors in power. But more than the governors appeared to be at stake. Supporters sense that PRI's secure position as a state party is reaching an end. The rapid changes in the national reality are closing down spaces that the official party previously controlled absolutely, and its supporters are seeking a new accommodation. They are discovering the needs all opposition groups have, as well as the aggravating factor that they always face the risk of suddenly disappearing, as has happened to similar parties that owe their existence to the benefits given by the state power.
Today more than ever it is hard to say where the country is moving. In the midst of an economic crisis and a process of reconfiguring the state and society, each movement of the social actors influences the evolution. The only clear thing is that Mexico has entered a time of change.
Notwithstanding dogmatic assertions to the contrary, history has shown that crisis does not necessarily bring a people closer to justice or democracy. Conservative or regressive solutions have their influence in the crisis. But as more Mexicans internalize an understanding that "times" have changed and it is a special moment for social and political action to construct peace with justice and dignity, the balance will incline toward the side of life.
Rescue of the Millionaires
Despite the multi million dollar loans from the United States, the IMF and the international community that reached Mexico in February, the crisis has not been averted. The formula that the government is using to resolve the emergency situation is the same one that got it there in the first place.
The "United Plan to Confront the Emergency" is the same adjustment program, with the same price and salary controls, more debt because of new foreign loans, more strengthening of the export and monopoly sector of the economy, more reduction in social spending and the resulting drop in the quality of life for the majority of the Mexican people, the sale of the few remaining state industries trains and telecommunications, for the moment and finally, a growing vulnerability of national sovereignty.
The plan does not contemplate any kind of rescue policy for small and medium industries or any reactivation policy for the domestic market, and there are no job creation incentives. The economy cannot reactivate itself with today's high interest rates. The emergency is being dealt with by a recessive policy geared to the export market. Given this, Zedillo's economic team is clearly still more concerned with administering the riches of the 24 Mexican multimillionaires whose names appeared in Forbes than administering the interests of the nation.
A good number of owners of capital are still bothered because they were not informed about the devaluation beforehand, and are demanding that the damage be repaired. Rumors come and go about possible bankruptcies of national banks. The current disparity between interest rates and mediation benefits of the various financial institutions reveals a serious lack of coordination in the concrete economic policies.
Avoid the Tequila Effect
In this context, the funds for "economic rescue" approved by President Clinton and the IMF of up to US$51 billion, an amount unprecedented in all of history including that provided to rebuild Western Europe after World War II have been offered precisely on the condition of maintaining the original neoliberal economic project unaltered. In reality, the funds are an attempt to counteract the so called "Tequila effect" that threatened to unbalance the economic model in other Latin American countries: Argentina, Venezuela, Colombia, Chile. The final goal of this uncommon support is not so much to save Mexico Clinton said so himself but to rescue the whole regional economic project linked to the rescue of the US economy.
The financial operation is simple: a credit line will be opened to let the Mexican government pay the short term "Tesobonos" the country's treasury bonds and transfer them to medium and long term bonds. The Mayor of Lagos famous in popular Mexican folklore did something similar. To fill a hole in front of the municipal offices, he dug a hole next to the first one and used the dirt to fill the first one. He continued this way, hole after hole, until weeks later, he had got rid of not only the original hole, but also the town.
The problem now is that, before December's devaluation, large capitalists scandalously speculated with the "Tesobonos"; with only the variation of the peso against the dollar, they earned over 15 billion new pesos (close to US$5 billion, almost double the current national reserves).
Even more serious is that the conditions imposed by the United States seriously threaten our sovereignty and pawn the future of all of Mexico's income through petroleum sales, which is the collateral for the loans.
The emergency program and the Mexican government's acceptance of this new credit line are, in reality, a declaration of war by the government on Mexican workers, masked by the worn out line that today's sacrifice will guarantee tomorrow's economic recovery.
The crisis has confused the majority and the government continues to abuse its credulity. But the regime is not measuring the social consequences that its economic policies could have to guarantee or jeopardize the country's peace.