The next earthquake
Skinner, Curtis
POVERTY & POLITICS IN MEXICO CURTIS SKINNER further liberalizing...
...In the late 1970s, classes into a mere "exercise in hunger...
...Someone [April 6, 1986]: "Vatican Backs Struggle by Poor to End must have reminded Ratzinger that Paul VI, true to the teaching of Aquinas, had written in 1967 that "a revolutionary JOHN C. CORT, a pioneer member of the Catholic Worker movement, is uprising" could be justified "where there is manifest, longa co-editor of Religious Socialism, a publication of the Religion.& standing tyranny which would do great damage to fundamental Socialism Commission of the Democratic Socialists of America...
...Fortucourse...
...Though no around the city in the days following the disaster to channel rival organization is capable of competing on equal terms with private relief to the victims, known as damnif cados...
...The gist of the Baker scheme tored by the IMF...
...against PRI vote-rigging in municipal elections...
...Lifting equity restrictions on foreign investment also this year.caught Mexico at its most vulnerable moment since works against national industrial development...
...for existing debt burdens - is using third-world debt de- Mexico played a key role blocking the formation, of a Latin pendency as a wedge to dismantle nationalist barriers to United American debtors' cartel in 1983-84, and the country's harsh States capital and exports...
...The only question is whether default is downward debt spiral, and in any case, could make up the loss managed to benefit the bankers or the Mexican people...
...This lwllc~ Ina\ iii Nlc.`ilikl 1t, [IL 1[1111 an;l 1[icrcase cX4it'r THE COLLAPSE in international oil prices has put the fear earnings, but it will do so by further sacrificing popular living of the people into Mexico's De la Madrid government, standards, perpetuating the debt trap, and retreating from the and for good reason...
...Economists estimate that up to $60 billion left the country from 1977 to 1984, and up to $5 billion may have been siphoned out the first six months of 1985 solely through the practice of under-invoicing exports and over-invoicing imports...
...jobs, as will the maquiladoras' foray into the domestic marConsequently, the Saudi Arabian-instigated oil price plunge ket...
...opened Mexico's internal market to the development of the domestic market...
...As is often the case with IMF "structural support for the Baker initiative at last January's Mexicali adjustment" programs, the austerity burden fell mainly on the meeting with President Reagan and appears willing to take poor and working classes...
...by ern state of Chiapas, PAN militants occupied municipal of- linking De la Madrid's wage policy to Mexico's national fices in numerous towns and had to be forcibly removed by the subjugation under the foreign debt, forced oil sales...
...Ballot-box stuffing and fal- the left, divided into eight small parties, has had, a minimal sified voting lists robbed PAN gubernatorial candidate Adal- presence in the mass organizations that carry decisive,social berto Rosas Lopez of a likely victory in the important Sonora weight in Mexico...
...earthquake reconstruction...
...After fifty-six uninterrupted years in Another symptom of a deep lack of confidence in the PRI power, the ruling Institutional Revolutionary Party (PRI) is and growing mass politicization is the emergence of independcaught in the throes of a legitimacy crisis provoked by pro- ent self-help groups in the wake of last September's devastatlonged economic decline, the party's spectacular misman- ing earthquakes in Mexico City...
...Having pursued a market-oriented economic retrenchment strategy served as Washington's economic strategy for the past year, De la Madrid expressed model for the region...
...The PRI's ability to co-opt and buy off disaffected the Mexican psyche, greatly adding to the prevailing climate social groups in time-honored...
...President De la Madrid is under political organizations to demand wage increases,, aldebt considerable pressure from the United States, backed by the moratorium, and repudiation of the Baker Plan...
...Far, far too ment, but it should be made...
...The bets are that the PRF, the unemployed and marginal sectors, and compelling exces- never before having relinquished a governorship, will turn to sive reliance on fickle foreign markets for economic security...
...recent liberalizing measures, De la Madrid has revised foreign Meanwhile, Mexico's policy of wage restraints, consumer investment laws to permit majority equity by non-Mexicans in subsidy cuts, and divestment of state enterprise constrains new companies...
...Rejecting govchallenge to its authority from the political right and left as ernment assistance, numerous volunteer groups sprang up well as from a burgeoning grassroots movement...
...staples as rice, beans, and tortillas to increase severalfold...
...His personal rights and dangerous harm to the common good of the history of Christian socialism, excerpts from which are included country" (Populorum Progressio, 30 and 31...
...The competitive pressures covery" on the IMF's terms continued to elude Mexico...
...A projected shortfall of $6 billion country's decades-long effort to develop an independent, inthis year has pushed Mexico back to the brink of default on its dustrial economy...
...However, the oil price plunge and redourace last July...
...It is sible for debts they neither contracted nor benefited from - in fact the United States' third-largest trading partner after especially when the creditors are the wealthiest financial inCanada and Japan...
...Having colluded the Jose Lopez Portillo administration borrowed heavily in with the International Monetary Fund (IMF) to cut popular international credit markets to finance an ambitious industrial living standards by almost half since 1982 in order to pay the development program based on enormously expanded petrocountry's commercial bank creditors, President Miguel De la leum production...
...As Fidel Castro noted at last summer's debt conference in Havana, reT HE ALTERNATIVE to this de facto default is a unilateral pudiating the regional public debt would help compensate for payment moratorium or flat-out debt annulment on the "illegitimate transfers" Latin America has made to the Mexico's part...
...fight inflation...
...long-term stability...
...The PRI has responded to PAN's growing power at the polls Since the "union insurgency" movement for political indewith ham-handed fraud and repression, provoking PAN street pendence and internal democracy was crushed in the 1:970s, protests that have turned violent...
...Having ruled out ment negotiations, the United States is pressing Mexico to the first as "irresponsible," the Mexican president is pressing water down its provisions for technology transfer and to ahead to open his protected economy to foreign trade and strengthen patent protections, which would help the transnainvestment, as called for under the Reagan scheme...
...While PAN advocates a vague laissez-faire business that money spent repaying the foreign debt be used for philosophy, its appeal to many Mexicans is not ideological...
...As a result, the government found itself compelled to increase its borrowing and deficit spending, consequently driving up interest rates, worsening inflation, and devaluing the peso...
...The government slashed vital consumer subsidy programs, allowing the prices of such food CURTIS SKINNER is a writer who specializes in Latin American affairs...
...Now the party faces an unprecedented of popular initiative to cope with the tragedy...
...A more equitable, ing their overall exposure as they postpone the day of reckon- but riskier, option is simply to cancel the debt, preferably in ing...
...long, repetitive, and abstract, it made one yearn for the day Another weakness of the first instruction was the false when seminaries will insist that degrees in theology will be impression that absolute pacifism is part of Catholic teaching, awarded only to those who have passed a Good Writing that violence in pursuit of justice is never justified...
...The De from its payments savings...
...In fact, any number of Latin American countries may have Commonweal: 400...
...The De the PRI's huge political machine, this popular mobilization la Madrid administration, meanwhile, has come under strong could wrest some important social concessions from De la criticism for corruption and inefficiency in aid administration, Madrid while laying the groundwork for political change...
...la Madrid also sold off dozens of parastatal enterprises, con11 July 1986: 397 tributing to a 40 percent unemployment rate that has thrown Mexico's decision to join the General Agreement on Tariffs legions of grown men on the streets of Mexico City to sell and Trade (GATT...
...Consistent with this over the last three years, cutting the standard of living for most approach, De la Madrid announced another round of budget Mexicans almost by half...
...A $35 billion trade cut-off would have stitutions and governments in the world...
...This capital flight - by far the largest of any debtor nation - has done enormous harm to the country by depleting foreign exchange reserves, reducing the government's tax base, drying up investment resources, and stifling economic growth...
...N AUGUST 1984, and again in April 1986, liberation theol- Neither instruction quoted or mentioned any liberation ogy hit the front pages of the world's newspapers...
...A case could be made for the stateThe second was more positive than the first...
...These fears classes of poor nations like Mexico should not be held responare exaggerated...
...In December and January of that election year, a bled austerity have given union bureaucrats like CTM chief rash of PAN-led mass protests broke out around the country Velasquez new cause for worry about restiveness in.-the ranks...
...months after signing a new commercial debt rescheduling agreement, unleashed by joining GATT and dismantling protective barFinance Minister Jesus Silva Herzog (who was ousted last riers may force stronger companies to become more efficient...
...The cost to Mexico is ever-deepening debt financial house in order, pursue economic development, and dependency, and the banks also lose in the long run by increas- begin to redress workers' living standards...
...money-losing public corporations up for sale are pure bureaulowered general import requirements...
...This encouraged other tober's IMF-World Bank joint meeting in Seoul, calls for Latin American countries to publicly acknowledge their unincreased lending on more flexible terms by multilateral agen- serviceable debts and so touched off the world debt crisis...
...In collaboration with attracting business and promoting exports requires keeping Mexico's quasi-official trade union organization, the Confed- wages "competitive" (low), maintaining a brutal rate of peso, eration of Mexican Workers (CTM), the government held devaluation, and taking further steps to privatize the mixed wages well below annual inflation rates averaging 60 percent economy and eliminate state subsidies...
...In current bilateral trade and investtemporary relief afforded by the Baker Plan...
...embassy, marchers shouted, "Thieving govwould further discredit the PRI and undermine the system's ernment, you're sold to the gringos...
...Given this confrontational background, the local elections A left-organized Mexico City demonstration on February .6 scheduled for Chihuahua this July stand as a watershed in drew 50,000 marchers from 122 workers', peasants'i, and Mexico's political history...
...by corrupt government functionaries or used by businessmen To avoid a forced default by Mexico that would set a for secure investments and real estate purchases in the United dangerous precedent for the rest of debt-strapped Latin States and Europe...
...On the other hand, PRI hardliners like With oil prices in a long-term decline, Mexico's foreign II July 1986: 399 debt is unpayable, as even De la Madrid cabinet members credit suspension, Mexico only stands to gain by halting the privately acknowledge...
...EXAMINING LIBERATION THEOLOGY Christians & the class struggle JOHN C. CORT Injustice...
...By late 1985, workers earning the cuts and state enterprise sales in a major February 1986 speech minimum wage (about three dollars a day) were spending over on economic policy and the debt...
...have moved aggressively to exploit the issue in recent months...
...and announced cratic boondoggles, others provide subsidized goods and serCommonweal: 398 vices to business and consumers that cannot profitably be CTM chief Fidel Velasquez oppose any weakening of the replaced...
...Mexico's sharply negative effects for the U.S...
...fashion has been sapped by of crisis and insecurity, but also inspiring impressive examples years of austerity...
...month as finance minister following sharp differences within However, they will certainly drive many small Mexican manuthe De la Madrid cabinet) had to request from the bankers a facturers out of business, resulting in the loss of thousands of six-month extension on principal payments...
...Cardi- theologians...
...and the weakness of the left, two aspects of the same problem...
...As for a clean break from the debt tar baby...
...percent of Chihuahua's municipalities, including the major De la Madrid faces a mounting political challenge to this cities...
...Not so understandable was the failure to quote nal Joseph Ratzinger, the controversial prefect of the Vati- Marx, especially when Ratzinger, in the first instruction, made can Congregation for the Doctrine of the Faith, issued two such sweeping generalizations as this: "Atheism and the deinstructions that either explicitly or implicitly criticized libera- nial of the human person, his liberty and his rights, are at the tion theologians...
...outstanding foreign debt of $97 billion and made three years of The seeds of Mexico's debt bondage lie, ironically enough, grinding economic austerity imposed on the poor and working in the country's emergence as an oil power...
...Demonstrators in the impor- Baker Plan...
...Should this occur, there is a high It is a recipe for continued dependence on external borrowing potential for statewide violence since PAN controls over 60 and petroleum exports...
...and for its failure to provide long-term relief for the damnificados, tens of thousands of whom are still camped out on O N THE electoral front, the rightist National Action Party city streets...
...la Madrid policy of continuing full interest payments with A three-to-five-year total debt payment moratorium, with fresh credits and rolling over the accumulated principal lets the future interest payments limited to 20 percent of the total value banks keep the loans formally in good standing and their of exports, would give Mexico vital breathing space to put its profits intact...
...At stake is and economic growth as a short-term distortion, in the long run the state governorship, which PAN candidate and Ciudad it undermines the country's financial integrity by: reducing the Juarez mayor Francisco Barrio Berrazas stands to win in clean state's internal revenue base, increasing the carrying cost of elections, according to the polls...
...Mexican business leaders and government of- developed world in recent years in the form of excessively high ficials have warned direly that such a step would provoke interest rates, an overvalued dollar, deteriorating terms of crippling economic retaliation from the United States, includ- trade, and capital flight...
...A huge chunk of this money, however - Madrid is extremely reluctant to take further belt-tightening perhaps as much as half of the total - was never invested in measures for fear of driving a sorely-pressed population into Mexico at all, but ended up deposited in Swiss bank accounts open revolt...
...By September 1985, Mexico had fallen out of compliance with its IMF austerity goals and was barred from further borrowing...
...Though some of the foreign-owned maquiladora assembly-and-export plants...
...Oil exports account for 70 percent of Mexico's foreign exchange earnings and the price shortfall severely undercut government savings...
...core of Marxist theory...
...Another important factor, less often acknowledged by the political/business elite who exhorted Mexican workers to tighten their belts for the good of the country, was the headlong flight of capital from Mexico...
...economy, particularly in largest creditor, made $1 billion in 1985 profits...
...interest loans, meanwhile, increased substantially starting in banks to come up with at least half of the $4 billion in fresh 1979, as the United States pursued a tight monetary policy to credits Mexican finance officials say they will need in 1986...
...Some supporters see National Action as more responsive to The key roadblock to both progressive political change and local interests than the highly-centralized PRI, but most votes a socially responsible resolution of Mexico's debt crisis is the for PAN, Mexico's largest opposition party, are votes against PRI's stranglehold on the country's major labor organizations the government...
...and the police at the cost of seven lives...
...The quakes - which caused agement of the national oil patrimony (a deeply felt issue), and $6 billion in damage, killed up to 20,000 people, and left recent examples of gross bureaucratic corruption and electoral another 130,000 homeless - have had a profound impact on fraud...
...Studies in Ex1982...
...70 percent of their income on the basic food basket...
...The plan, commercial debt principal payments and go cup-in-hand to formulated by Treasury Secretary James Baker at last Oc- Washington for a $10 billion bailout...
...The United Front of Earthquake Victims, a-grass(PAN) has been a thorn in the PRI's side, particularly in the roots organization claiming 100,000 members, has held reguimportant northern states of Chihuahua, Sonora, and Nuevo lar street demonstrations demanding new housing and urging Leon...
...POVERTY & POLITICS IN MEXICO CURTIS SKINNER further liberalizing measures consistent with the plan...
...The Communist-led United Socialist Party, of tant central provincial city of San Luis Potosi torched the Mexico (PSUM), Trotskyist Revolutionary Workers Party municipal palace on New Year's Eve and were also dispersed (PRT), and social democratic Mexican Workers Party (PMT) with bloodshed by the security forces...
...Among tionals maintain their technological monopoly...
...But the real point is that the working ing a trade embargo and suspension of new credits...
...Citibank...
...unpopular program...
...massive fraud once again...
...In August 1982, with only $200 million reEnter the Baker Plan, the Reagan administration's touted maining in its central bank, Mexico was forced to suspend "growth solution" to the third-world debt problem...
...If this strategy produces immediate fiscal savings party's control at this time of acute economic strain...
...The net effect of these measures would be to strengthen De la Madrid's assault on popular living standards was foreign over domestic capital and restructure the economy to rewarded with a major debt rescheduling, but financial "re- the dictates of the world market...
...Passing in creditor bankers, to avoid a repeat of last year's farce that front of the U.S...
...But in effect it justified the New York Times headline nately, this was corrected in the second instruction...
...A critical problem was the steady decline in international oil prices beginning in 1983...
...Mexico is neither Cuba nor Nicaragua...
...above, will be published by Orbis Books in 1987...
...conjunction with other Latin American debtors...
...which proposes an inadequate $29 billion in fresh credits to fifteen countries over the next three years, but offers no relief DE LA MADRID tried hard to be a good boy for the bankers...
...De He has lived for ten years in Mexico...
...in October, only two...
...In tic capital - and use their size and technological "knowthis desparate strait, De la Madrid has two apparent choices: to how" to dominate the most dynamic industrial sectors, pardeclare a unilateral debt payment moratorium or opt for the ticularly capital goods...
...The country's outstanding foreign debt is bigger than celsior and in Statistical Abstract of Latin America have ever, with servicing charges estimated at $11 billion, and the shown that transnational corporations usually enter the market total public debt service burden (foreign and domestic) ac- by taking over an existing Mexican firm - displacing domescounting for almost half of Mexico's 1986 federal budget...
...The negative part followed in the subhead: "But Document also Sees New Forms of Slavery...
...For Mexico a Southwest already battered by plunging oil prices, and is not and much of the rest of the third world, progress depends on a a credible policy option for the Reagan administration...
...The cost of servicing Mexico's variableAmerica, the Reagan administration is arm-twisting U.S...
...The Baker/De la Madrid strategy for Chiclets and eat fire for handouts...
...In the south- The left wields a tremendously potent political weapon...
...As cies and commercial banks to debtor countries who undertake part of the rescue package, the incoming De la Madrid gov"structural reforms" to promote foreign and domestic private ernment agreed to follow a three-year austerity program moniinvestment and liberalize trade...
Vol. 113 • July 1986 • No. 13
