AMLO outside the Senate, Monday, October 26

Worker's Party Deputy Mario di Costanzo Tears Apart Carstens Economic Plan

Monday, December 29, 2008

The Hidden Cost of Higher Energy Costs

Every month, every week, practically every day, the cost of basic utilities is on the rise in Mexico. This week ushered in gasoline-tax increase number 33 of 2008. Electricity has risen upwards of 100% this year alone, with prospects of more ahead: the front page of today's Jornada reports that although big business will, in fact, be getting a break on energy prices in the upcoming year, this is to be paid for by giving to them the subsidies that are being taken away from the public at large. Because electricity prices are pegged to the international cost of natural gas rather than what it actually costs to produce the electricity domestically, and because the government's goal is to "harmonize" (read: increase) the cost of energy in Mexico with ever-increasing global energy costs (while at the same time doing little or nothing to decrease Mexico's dependence on imported energy), expect continued monthly increases in your electrical bill throughout 2009.

Theoretically, I suppose, businesses which see their energy bills reduced will pass that savings along to the consumer in the form of lower prices. Unless they don't - and given the uncertain (at best) economic forecasts for 2009, and given that a large part of Mexico's major businesses are monopolies or quasi-monopolies, and given that the government sure won't be forcing them into it anytime soon, don't hold your breathing waiting for any price reductions. And even in the off chance that there are, the monthly surprises tucked into everyone's electric bills will be plenty enough to wipe them out.

Raising utility costs in the midst of the greatest world economic crisis since 1929 is dumb beyond belief. Higher energy costs provoke inflation in everything else, and at a time of eroding incomes, increasing unemployment and waves of immigrants returning to Mexico from the States hungry for work that doesn't exist, it's simply fuel on the fire. It would be entirely different if the gasoline and electricity hikes were being used for a massive, national investment program in alternative energy sources that could employ a swath of those returning immigrants, and others, in very worthwhile work. I would gladly pay double or triple my light bill if I saw banks of solar panels going up on every roof and light stansion, taking logical advantage of Mexico's sun-soaked climate. Or better yet, if Mexico put all its architects and engineers to work in designing and making the next generation of cheaper, more effective panels. Before the supposed failure of the "import-substitution" model (which should fairly have been called the "self-sufficiency" model, which is what it was), before Mexico became a country of piecework maquiladoras for, and adminstrators of, foreign concerns, it showed the world - three generations ago and with none of today's technology - that it could run its own oil industry just fine after the expropriation of 1938. Why couldn't it build and design its own panels now?

Therein, I fear, lies the rub. Mexico could build and even design its own solar panels if it were to want to, if the government invested even a part of what cloudy, cold Germany is pouring into solar research. The money could be found, just as money was magically found to build an oil refinery after we were told for so long that there wasn't any. What there is not is the will. The privatization of electrical energy in Mexico is now half-complete, that of oil - as we so dramatically saw this fall - temporarily aborted but the threat ever-present, and what private companies do not want is to have to subsidize (read: make accesible) the cost of their energy for the average consumer. "Harmonization" of energy prices with the volatile and pitiless international market will ensure that these energy providers will be able to make the same profits in Mexico as in the US, France and Spain, while at the same time benefiting from lower labor costs, no-bid contracts, and the same sweetheart package of tax deductions and deferrals their sister industries in other sectors benefit from now. Genuine national sovereignty can only result from genuine energy self-sufficiency, and a sovereign nation is one that is capable of making uncoerced decisions in its own national interest. And Mexico's national interest does not lie in making consumers pay more to subsidize (subsidies in this direction are apparently okay!) increasingly-privatized industries which, as time goes on, are having less and less to do with Mexico as a nation at all.

Sunday, December 14, 2008

Banamex and Citigroup: The Great Double Swindle

1. Beginning in 1995, the Mexican government bailed out the recently-privatized Banamex (Banco Nacional de México, italics obviously mine) to the tune of 79 billion pesos (seven and a half billion dollars) - a total which ascended over time to 104 billion pesos (ten billion dollars) in real value - as part of the giant Fobaproa bank bailout. Fobaproa, the costs of which were subsquently transferred to the Mexican taxpayer, saved Banamex from certain bankruptcy.

2. In 1998, the Citigroup came into being, assisted by the repeal the following year of the Glass-Steagall Act, a New Deal era law separating deposit banking from investment banking. The chief promotor of the law's repeal was Robert Rubin, Bill Clinton's Treasury Secretary, soon to become a director and senior advisor at Citigroup.

3. In 2001, Banamex was sold to the Citigroup for 125 billion pesos (12 billion dollars). This was done via a stock-market transaction (tax free, in Mexico), allowing Banamex to avoid paying the 12 billion, 500 million pesos it would otherwise have owed.

4. Citibank had long been the Mexican elite's bank of choice for spiriting money, drug money included, safely out of the country. Most famously, Raul Salinas, brother of former president Carlos Salinas de Gortari, laundered $80-$100 million dollars through Citibank to Swiss accounts.

5. In 2007, Banamex bought the airline Areomexico with just a fraction of the Fobaproa monies it continued receiving as late as 2006. The buy, moreover, was a steal: a mere $249 million dollars, barely the price of one new airplane. Bidding for the airline was prematurely cut off, preventing other bidders from getting involved and the price from going any higher. This transaction was widely seen as a payoff by Felipe Calderon to Roberto Hernandez, ex-director of Banamex and current member of the boards of both Banamex AND Citibank (and Televisa, for that matter), for favors received during the presidential campaign of 2006.

6. In November, 2008, the US Government announced that it was bailing out the Citigroup as part of the $700 billion bailout passed the month before. This includes the direct injection of capital as well as a government guarantee of $300 billion dollars of Citibank assets. The government further guaranteed to protect Citigroup against future losses over and above the first $29 billion. This despite a New York Times exposé (see: that shows that the Citigroup, through lax oversight and mismanagement, has only itself to blame for, among other things, getting over-involved in collateralized debt obligations (C.D.O.'s): bundles of sub-prime mortgages and other bad debt, as it turned out.

7. Robert Rubin, who was involved in this Citigroup strategy from start to finish, is now a key economic advisor to President-Elect Barrack Obama. He is unapologetic about his stint at Citibank, which has lost 70% of its shareholders' value this year and, in the same week as its bailout became news, announced 52,000 more layoffs, the "second largest job cut ever undertaken by any company on record" as Crain's new york reports.

Conclusion: the Mexican taxpayer bails out a previously-privatized asset that is then sold to an American banking group without the payment of a dime in taxes. Said group uses a fraction of that money to buy one of Mexico's privatized airlines in a pre-arranged, favor-swapping firesale as well as to engage in risky investment practices which lead it to the point of collapse. Not to fear, for where the Mexican taxpayer leaves off, the American taxpayer comes in, allowing Banamex-Citibank, in the space of little over a decade, to benefit from massive bailouts on both sides of the Rio Grande. Who says globalization ain't great?

Friday, November 21, 2008

Three Minutes Sixteen Seconds / PRD R.I.P./ We're not Paying for Your Crisis

Three Minutes Sixteen Seconds
The following from Rocio Ortega, newly-unemployed radio producer, Oaxaca: "This past November 6th, the program 'Music Non-Stop' (which I was the producer of on 96.9 FM) had on as its guest the artist and curator Olga Margarita Dávila for its segment, 'Biographies and Personalities'...In order to put into context the founding of 'La Curtiduria,' a space devoted to promoting contemporary art and taking in artists from all over the world, Olga cited the Oaxaca conflict of 2006 in the following manner:

And amongst all the ups and downs life has provided me with, one of them has been to come to Oaxaca and work here thanks to Demian Flores at the Curtiduria, which is a contemporary space for the arts, for artist's residences, for projects and workshops, education. It's a space that was born out of the movement of 2006 as an inclusive space, as a response to everything that moved this great conflict, this great force, this big, little transformation that we all experienced, even more those who were behind the barricades and involved in the whole process. This allowed the Curtiduria ['The Tannery'] to be named what it was: in an abandoned space in the old tannery area on 5 de Mayo Street in Jalatlaco, we inaugurated this space in 2006 with the help and logistics and strength of a large community of creators and artists who...asked what can we do and how can we do it, who are we as artists and what are we to do with this occupation of life, and we decided to open this space. And I joined in at the end of 2006, the beginning of 2007 intermittently at first, coming and going, I had commitments in Los Angeles and Tijuana, and little by little I kept getting more involved until, starting in the middle of last summer, I began to stay in La Curtiduria and began to make Oaxaca my home. Now I have been living in Oaxaca definitively for the last six months, with a great deal of pleasure, and tranquility....

"This audio segment lasted 3'16", and preceded some music that the guest shared with our listeners. The listeners, however, were not able to hear it. On orders from Mercedes Rojas Saldaña, director of CORTV, the transmission was interrupted and music was broadcast with the excuse of technical problems, thus censuring the program's content.
"If this were not enough, and without any reasons, the head of programming informed me by phone that I was being suspended (on the 11th, one week later), that my programs would not be going on the air anymore and that my professional relationship with the station was being terminated. He alleged they had tried to contact me to tell me that the people invited onto Music Non-Stop 'weren't Oaxacans' and as well that the program's music 'didn't convince them.' Along with this the program 'Music para Respirar' (Music for Breathing), which I am also the producer of, will be taken off the air - a progam devoted to genres such as world beat, new age, ambiental and hetero...
"If this is not to be seen as a lack of ethics and professionalism, a demonstration of ignorance and incompetence, a brazen and high-handed act, an attack of free speech and fundamental rights perpetrated by the director of a station paid for by our taxes, I demand an explanation and make a call to the support, friendship and gratitude of those who that afternoon, on this station, could not and now will not be able to hear me any longer.

Rocio Ortega,
Oaxaca, Oaxaca November 18th, 2008

If two radio progams can be pulled from the air and a producer fired for comments as innocuous as Olga Margarita Davila's, if people are being kidnapped in broad daylight only 7 blocks away from where the Governor is gearing up for his State of the State message (, is it not clear that Oaxaca is suffering through the worst of both worlds: on one hand, the arbitrary repression of a police state, and on the other, the lack of any state-provided security whatsoever?

(Spanish speakers can read the full text of Rocio Ortega's comments at:

Friends, please break out your mourning clothes to attend the political wake of the year (no, not Mouriño): the PRD is dead, cut down in the flower of its youth at only 19 years old. The party, founded by Cuauhtemoc Cardenas and the coalition of parties that had supported him in the 1988 presidential elections, died last week when the Federal Electoral Tribunal - the same one that installed electoral deliquent Felipe Calderon into the presidency of the nation, installed electoral delinquent Jesus Ortega into the party presidency of the PRD. The decision, an unprecedented meddling in internal party affairs which flagrantly overruled a wise internal party decision to simply annul the damned thing, was made even with the Tribunal itself admitting that a mere 22.88% (!) of precincts contained anomalies, and in grand Mexican style, included in its final count the results of polling places which were never set up on the day of the election! As I understand it, the high-minded ethical reasoning of the Tribunal goes thus: even if Ortega did do what they say he did, as long as what he did didn't "change the final results" (however circumlocuitously those are gotten at), his little shenanigans - oh you, Chuy! (slap slap) - are A-okay in the ledgers of justice. Kant is dead: there are no wrong acts as such, only wrong, results subject to change.
With this, the circle is closed, and the party is pulled off the life support it had been on since its circus-like internal elections earlier this year. Felipe Calderon, with the help as always of his state-level surrogates (namely the governors of Oaxaca, Chiapas and Veracruz, from whence came the phantom results from inexistent precincts) have succeeded not only in installing their own man in the presidency of the PRD - one who will make a "modern" left that "Mexico can be proud of" (I can see the 30-second spots now), but in converting the party, born in the aftermath of one electoral fraud and toppled by another, sixteen years later, into yet another co-opted organ of the state. The clear intent is to remove any institutional channels for the mass popular movement led by López Obrador, and by attempting to marginalize him within his own party, make him look even more extreme and that much more cut-off from the normal political life of this grand, inclusive republic. With Jesus Ortega and his new-left "chuchos" in control of the party's apparatus, expect a bland and innocuous slate of compromised candidates for next year's legislative elections, absent any Lopez-Obradoristas or other rabble rousers. Expect, too, a sound thrashing for the PRD at the polls, not only due to the pre-announced (Garcia Marquez style) defeat of the left by the right (he who controls the electoral mechanisms controls the votes), but due to massive defections of the what was formerly the base of the PRD brand in favor of the other two members of the Broad Progressive Front: Convergencia and the Worker's Party (PT). For what it's worth (a bag of chips? cup of watery decaf?), this blogger, for one, will be voting PT/Convergencia.

We're Not Paying for Your Crisis
The three-time Berlusconi government in Italy (talk about electoral masochism) has recently introduced an educational counter-reform which, among other enlightened measures, slashes elementary school class time, eliminates up to 100,000 teaching positions, reduces the number of degree programs offered at the college level, and opens up the university system to privatization by stealth by allowing them to create "foundations" to traffic in private dollars for supposedly public ends. The massive protests stemming from this (surrounding the Senate building a la Mexicana, among other things - we should send over the Adelitas as back-up) have as their rallying cry: "We're Not Paying for Your Crisis."
I loved that. We're not paying for your crisis. The world financial system, by means of rampant speculation, disproportionate greed and sheer, deregulated stupidity, has dug itself into the biggest hole it has managed since 1929, and already, the cuts are coming everywhere to compensate it all. But not where the cuts should be made - in the boardroom - but in the living room, the classroom, and the lecture hall. This is also, in Naomi Klein's paradigm, the use of a "shock" (world financial crisis) to force through draconian cuts in education which, just as in Mexico, has the goal of dismantling one of the last functions of government (with its accompanying unions) that hasn't been privatized or sold off. Now I am no fan of public education as it exists in any country I know of - where the main goal has historically been that of producing docile capitalist cogs rather than questioning, creative human beings - but the practical matter is, public education and teacher's unions are pretty much the last thing standing the way of the final dismantling of many nation-states, and thus must be disposed of when the shock is right. Hence, Mexico's Alliance for Education, the closing of the normal schools, the ongoing war against dissident sections of the national union.
All this not to mention the twenty-some-odd increases in the gas tax this year in Mexico and the application of the flat-rate, regressive 16.5% IETU tax, which has nailed those of us who actually try to be honest and declare our earnings with the Revenue Department (que pendejos somos...!). We're not paying for your crisis. You broke it, you clean it up.

Saturday, November 8, 2008

Why Obama and not Obrador?

For this blogger, the festivities and rejoicing of last Tuesday night, where Barack Obama swamped John McCain in the electoral college and the Democrats picked up decisive majorities in both Houses of Congress, came with a bittersweet edge. Watching the returns at an election party, surrounded by cheers and clapping as the networks projected an Obama victory and the epicenter of the global party erupted in Chicago's Grant Park, I turned to my wife and said: "Mexico deserved this two years ago." At that moment, applauding along with the rest, part of me was back on that infamous night of July 2nd, 2006, watching the networks, and then the President of the IFE, proclaim the race to be too close to call, watching the helicopter shot from above following Lopez Obrador's car as it wound its way through the Mexico City night, watching as he arrived in the Zocalo to ensure his puzzled and mystified supporters that he was not going to accept the doctored results being offered up by official channels, that the fight would go on. The next morning, July 3rd, all of us got up to see that Obrador had taken a decisive lead in the district-by-district vote count, one he maintained throughout the entire day, only to lose it at 3 AM in the morning as the yellow and blue lines crossed on the chart and Calderón was annointed with a virtual victory of one-half of one percent. Losing honestly, disappointing though it would have been, would not have been a problem; it was having the thing snatched away through dead-of-night machinations that hurt so much.

So what did Obama do that Obrador didn't? First off, it is important to point out that the similarity between the two men is substantial. In general terms, as Jaime Aviles pointed out in yesterday's Jornada, "Both [of them] - the 'legitimate president' of Mexico and the president-elect of the United States - agree that, in order to reduce the devastating effect of the crisis amongst the most vulnerable sectors of the population, it is necessary to strengthen the role of the state, revive the internal market, stimulate the creation of jobs and rescue the poor." That last one may be a bit of an overstatement: whereas it was Obrador who made a focus on the poor the centerpiece of his campaign ("For the well-being of all, the poor come first"), Obama's campaign, with its obsessive focus on the middle-class (read: swing voters) ignored the poor just about as much as the McCain camp did. Nevertheless, the platforms of both the Democratic and PRD candidate were strikingly alike in a series of key areas: Obama: tax cuts for the middle class to be paid for by tax increases for those making over $250,000; Obrador: lower gas and electricity costs for individuals and businesses to be paid for by having the rich actually pay taxes instead of deducting and deferring them away. Obama: energy independence through alternative energies and increased domestic oil production; Obrador: energy independence through increased oil production and the construction of three new refineries. Obama: an immediate stimulus package including money for public works, extended unemployment benefits and aid to state and local governments; Obrador: an immediate stimulus package including money for public works, a modern train link to the US, and a national public pension for those 70 and over. And so on.

Obama and Obrador are also alike in another very important way: both have attempted to create a political structure independent of the traditional party system, Obama through his website, network of donors, and community organization, and Obrador through the "redes ciudadanas," the "citizen's networks," before the election and the several million-member strong "legitimate government" after it. It is in the differing successes of these networks, in fact, that a large part of the differing fortunes of the two men can be pinpointed. Obama succeeded in raising tremendous amounts of money through his network within a plutocratic elections system that heavily favors the haves over the have-nots in terms of campaign cash. In the US, public financing, and the limits associated with them, are optional. In Mexico, public financing is obligatory, as is, theoretically, the spending limits associated with them. Obama's network, inspired by the candidate's charisma, succeeded in identifying large numbers of new voters and getting them to the polls. Obrador's network, inspired as well by its candidate's charisma, motivated a large number of voters, but failed in organizing sufficient oversight of the actual voting and vote-count processes, and, like Gore in 2000 and Kerry in 2004, did not succeed in racking up a large-enough advantage to counteract the shaving-off of votes through identical means of electoral fraud: the purging of voter rolls, the manipulating of ballots and the untoward interventions of the US Supreme Court, on one hand, and Mexico's Federal Electoral Tribunal on the other. To this should be added two more important factors: the identical negative campaign tactics which Obama was more successful in both utilizing and neutralizing, and which I believe American voters have become more inured to after seeing them in use over and over again, year after year. In Mexico, these tactics, especially the 30-second attack ad, are much newer on the scene, and consequently had a much more visceral effect. And lastly, the economic crisis, which detonated just in time for Obama this past October. Would he have won, or won as handily, in July of 2006?

Overall, though, it must be admitted that Lopez Obrador had to fight a much more uphill battle, with more against him. In the US, for example, the Clintons grumbled and groaned, but did eventually get out and campaign for Obama. How much of a difference would it have made here, for example, if Cuathemoc Cardenas could have put his ego just a couple of inches aside and hit the hustings for his party's candidate. Plus, Obrador had Mexico's absolutely hermetic, all-powerful political, financial and media elite to contend with. As José Agustin Ortiz Pinchetti writes:

"The election of Barack Obama induces us to make some unpleasant comparisons. Let's compare the evolution of American society with our own over the past 40 years. In 1968, Martin Luther King was assassinated and the Mexican government ordered the slaughter at Tlatelolco. Since then, Americans have succeeded in dismantling white hegemony and banning racism without a civil war breaking out. Obama's triumph is symbolic; for many years, racial minorities have opened a breach in the elite due to a system of meritocracy. We, meanwhile, have founded in a decadence that now threatens us with collapse. Our racism has only become more acute, without our being capable of admitting it. A minority of Creoles that doesn't represent even 5% of the population continues to impose an economic dictatorship on the rest of the classes and castes. Control over the media provides a soporific effect while poverty and destitution increase. The American crisis detonated our own, but we have neither their resources nor their flexibility. Our country has not grown in 25 years because 50 groups control the market and prevent competition. Whereas Amercian democracy has just demonstrated its vigor, our own democratic transition has been shipwrecked."

Agree or not with all of Pinchetti's black-and-white comparisons made in the glow of this past Tuesday - and I do not see America anywhere near as rosily as Pinchetti paints it here - it is a fair assessment of Mexico, and by extension what Lopez Obrador in his campaign, was and continue to be up against. This does not excuse Obrador his campaign's failings, but fraud is fraud, and one can only hope that Mexico will only need one 2006, while the United States needed both a 2000 and a 2004, to realize that "Yes, we can."

Tuesday, October 21, 2008

The Great Temptation: Oil in Mexico, Part II (translation)

Today, the conclusion of my two-part translation of excerpts from Andrés Manuel López Obrador's The Great Temptation, available in Mexico from Grijalbo.

The Great Temptation: Oil in Mexico
by Andrés Manuel López Obrador
translated by Kurt Hackbarth

“The Gangrene of Corruption”

This entire disaster in the nation’s energy sector has been fed by the corruption that reigns in the government, Pemex and in the Federal Electricity Commission. This is the evil that most afflicts Pemex and torments the nation. Though the examples of corruption are endless, I will limit myself here to a few of the most current cases which I consider relevant.

The first contract for multiple services [contrato de servicios múltiples] which was granted – in violation of the Constitution – to a foreign company was signed when Felipe Calderón was Secretary of Energy and President of Pemex’s Administrative Council. On November 14th, 2003, without any other company having participated in the bidding, a contract for $2 billion 437 million dollars was awarded to Repsol of Spain to explore natural gas deposits in the Burgos Basin (Cuenca de Burgos).

In the annex to this multiple-services contract with Repsol, entitled “Catalog of Maximum Prices,” it is shown how the costs of the services contracted for and their astronomical overpricing were arrived at: for the acquisition of infrastructure, an additional 120% over and above the direct cost is stipulated; in the case of maintenance services, up to 320% above the direct, daily cost. Moreover, the original per-unit price is to be applied independently of whether the contracted company uses new or used materials; it is the contractor itself that has the “absolute responsibility” to inspect, test and certify the materials, and if that were not enough, a series of additional, unforeseen expenses are added on such as import fees and tariffs, labor taxes, taxes for the acquisition of premises and permits, licenses and public registries.

The worst of it is that these contracts have proven beneficial only for the foreign companies, but unproductive and downright harmful for the national interest. Pemex agreed to pay a sum total of more than $5 billion for all of the unfair contracts it shelled out to Repsol, Tecpetrol, Petrobras, Teikoku, Schlumberger and Haliburton, among others, using the justification that natural gas production would increase by 50% in the Burgos Basin, which would have meant 500 million cubic feet per day. In five years, however, these companies have increased production by only 63 million cubic feet, going from 126 million – the level of production Pemex was obtaining when it handed the fields over – to 189 million cubic feet; an increase, that is, of 4% of the estimated production in Burgos. Over the same period, Pemex increased production in the fields it itself operated from 1 billion to 1 billion, 347 million cubic feet. In short, the multiple-services contracts have increased production only very marginally, but at an elevated cost. They have been a disaster.

“Useless Investments”

For the retooling of the Cadereyta oil refinery, the companies Sunkion Limited, Siemmens and ICA were contracted in 1997. The job was supposed to be concluded in July of 2000, but it went on more than double the amount of time agreed upon. The work was handed over unfinished, with irregularities, and with the per-unit prices paid being much higher than as originally contracted. A November 2001 audit quantified the losses, up to then, at over a billion dollars. Pemex, which had renounced jurisdiction of the national courts, was sued by the consortium in international tribunals. Due to the lack of an adequate defense, it was obliged to pay an additional $630 million dollars. Not one person has been held officially responsible, much less sanctioned, to the present day. The cumulative loss to the nation has been at least $1 billion, 630 million dollars.

The contracts with foreign companies in Chicontepec, Veracruz also demonstrate, at the very least, the absurdity of privatization policies. With ample reserves of oil, the extraction of which, though, was said to be technically difficult, this area saw investment increase from $2 billion, 905 million to $4 billion 871 million pesos between 2004 and 2007, practically a 70% increase. These dates coincide with the contracting of the companies Schlumberger and Haliburton for the perforation of 300 oil wells. However, production over this period only went from the equivalent of 25 billion, 223 million barrels of crude oil a day to 26 billion, 625 million barrels, an increase of 6%. In sum, Burgos and Chicontepec turned out to be great business for the contractors but a terrible one for the nation.

In 2007, the Norwegian company PetroMena, owner of deep-water perforation platforms, rented three platforms for five years: the largest, for three thousand meters deep, to Petrobras America Inc. for $750 million dollars. The medium-capacity platform, for 2,500 meters of depth, was rented to Petrobras Brasil for $645 million dollars. The lowest capacity platform, for two thousand meters of depth, went to Pemex at a cost of $940 million dollars. In other words, Pemex rented the smallest platform for $300 million dollars more.

[…] Following such a litany of fraudulent acts, it becomes clear that what lies behind the current right-wing privatization mania are the ambitions of the same group that has been doing private business behind the shield of public power, at the cost of our national heritage, for years. Over and above any technical, financial or administrative considerations, the intention to privatize Pemex is based on the interest of rapacious minorities and corrupt officials who intend to stay mounted astride the oil business.

In synthesis, it is an undeniable fact that during the period of neo-conservative sacking, the powers that be have attempted to destroy the nation’s oil industry. Over this time, Pemex has suffered from more interventionism and point-blank sacking than any other company in the world. Nevertheless, it continues to be indispensable to defend Pemex against the current onslaught that seeks to destroy it for good, for upon the salvation of the oil industry depends, to a great extent, the destiny of the country and our people.

Monday, October 20, 2008

The Great Temptation: Oil in Mexico, Part I (translation)

On September 15th, the most recent book by Andrés Manuel López Obrador entitled The Great Temptation: Oil in Mexico was published by Grijalbo. As the Mexican Congress is just now on the verge of passing a Pemex "reform" law of some kind or other, I will over the next two days be presenting here a translated excerpt of Obrador's book, from the chapter entitled "La política irresponsable," or "Irresponsible Policies."

The Great Temptation: Oil in Mexico
by Andrés Manuel López Obrador
translated by Kurt Hackbarth

"Irresponsible Policies"

The neo-conservative governments have confiscated from Pemex all of its earnings. From 2000 to date alone, while Pemex has registered accumulated sales of $6 trillion 442 billion pesos, it has paid $4 trillion 467 billion of those in taxes, which amounts to 75.8% of its sales. In contrast, direct public investment in Pemex (without including debt) over the same period came to $162 billion pesos, barely 2.5% of its total sales.

These oil-obtained revenues have been used to finance the federal budget, to the point that, for every budgetary peso, forty cents (centavos) are derived from oil. Such a fiscal policy – one which bleeds Pemex to death – has been used to make up for the deficit in tax collection, in light of the fact that the large corporations in our country pay practically no taxes at all.

In 2007, for example, Pemex posted sales of $1 trillion, 134 billion 980 million pesos, and its contribution to public finances amounted to $846 billion 200 million pesos, that is, 74.6% of its sales. In this same year, according to Mexican Stock Exchange statistics, nine large corporations posted sales for $1 trillion, 209 billion 316 million pesos and paid $51 billion 325 million in taxes: 5% of their sales. Pemex, in other words, provided sixteen times more. It is necessary to add, moreover, that these corporations were allowed to defer $106 billion 296 million pesos in taxes in their balance sheets, making the fiscal credits they received amount to double what they paid in taxes. In the end, we do not know how much they really did pay because it often happens that corporations like these also wind up benefiting later from tax rebates.

The enormous corruption that is rife in the upper echelons of economic and political power in Mexico can be described by noting that a worker, a member of the middle class or a small-to-medium businessperson or entrepreneur is required to pay between 15% and 28% in income tax (ISR). However, the large monopolies linked to power, due to the privileges they receive, reduce their tax payments to a minimum, and in certain cases, pay nothing at all.

The fiscal reforms undertaken by the Fox government, and continuing to the present, have only aggravated the problem. This is confirmed by the recent report of the Federal Audit Bureau [Auditoría Superior de la Federación], which states that in 2005, “fifty large taxpayers were detected whose individual income tax payments, after deductions, were less than $74 pesos.” In the same vein, it points out that “tax rebates in the 2001-2005 period came to a total of $604 billion 300 million pesos. This generates a situation of privilege for a certain few taxpayers that goes against the principle of fiscal equity.” This situation continues unabated: during the first semester of 2008, tax rebates rose to a total of $93 billion 613 million pesos.

Finally, it is important to add that the PAN governments have had the advantage of having the highest oil prices in the history of the world. During his administration, Fox received budgetary contributions from oil revenue to the order of $335 billion dollars, and just for high prices alone, $10 billion dollars extra per year over the three-year period 2004-2006. And the disgrace was – and continues to be – that, this money, instead of going to modernizing Pemex, promoting development in Mexico and guaranteeing the well-being of the people, was squandered in top-level bureaucracy or was spilled down the drain of corruption.

Thus, in 2007, the de facto government took in $12 billion extra dollars due to the high prices of oil exports, and in 2008, it is on pace to take in $20 billion more. Let’s remember that the Chamber of Deputies [Cámara de Diputados, Mexico’s Lower House] set an estimated per-barrel price of $49 dollars in its Federal Revenue Law, and it has been selling instead at an average of $100 dollars a barrel. Since 1901 – when oil production began in Mexico – to the present, no president of Mexico has ever obtained so much money from oil as will the usurper Felipe Calderon this year. Nevertheless, just like with Fox, all of these resources have either been used to subsidize his large corporate allies, have been squandered in corruption, or have been funneled into maintaining the privileges of high-level public officials. It is worth noting that the de facto government has done nothing to reduce the enormous costs of its bureaucracy. On the contrary: in 2007, it increased it by $154 billion pesos. And it is projected to spend $250 billion more on bureaucracy in 2008. In only two years then, $404 billion pesos more. In short: ineptitude, corruption, and waste by the bucketful.

Monday, September 15, 2008

Corporatism, US and Mexico-Style

While Americans suffer through the psychological poison of another farcical election campaign charade with its by-now standard quota of lies, character assassination and fascistic bullying, and while Mexicans are gearing up for their annual celebration of their nation’s so-called independence, this blogger felt a few thoughts to be in order as to what is currently at stake both in the United States and Mexico in these such adverse times.

The radical regimes in power both in the US and Mexico got there, first and foremost, through undemocratic means: the constitutional coup is no less a coup for hiding behind the skirts of a nation’s constitution. Said radical regimes – aligned with sister movements throughout the word – seek nothing less than the absolute rollback of the national state’s welfare function, to turn the clock back to the no-holds-barred industrialism of the nineteenth century when men, women and children were wage slaves to their bosses in a penury hardly better than their great-great grandparents under feudalism (and worse in the sense of the factory conditions they were forced to labor under), and when American and other foreign companies in a tax-free Mexican heaven with the most absolute of impunity (remember that one of the precipitating moves for the nationalization of PEMEX were the oil companies’ conspiring to split off the oil-producing states from the rest of Mexico to form “A Gulf Republic” all their own). Even now, a full hundred years since the outbreak of the Mexican Revolution, historical revisionism is alive and rife on the Mexican right: maybe Don Porfirio wasn’t such a bad guy after all – he did industrialize the country, didn’t he, bring in the railroads (since sold off) and factories and French fashion? Lest we forget what things were really like, I refer the reader to John Kenneth Turner’s México Bárbaro, an account of an American’s tour through the hell of Mexican slavery in 1907, a scant three years before the outbreak of revolution, which is required reading in many Mexican secondary schools – we’ll see for how much longer.

Mind you, these radical-right regimes do not have the balls to bring their philosophy to its logical conclusion: the abolition of the state altogether. That would be an altogether more interesting, and more honest, point of view. Oh no, they want a state all right – a police state, whose exclusive functions are to protect property, enforce contracts, and keep enough of enough of a lid on dissent that we can all keep schlepping off to work and the mall every day. The multi-national corporation (considered to be a person by both the American and Mexican juridical systems), the jewel in the crown of the neo-right, could not exist without the state, could not exist without its infrastructure, roads and airports and traffic lights, could not exist without its police and army (to suppress internal dissent, as Calderon is so blatantly using them together for), could not exist without the courts that put a legal veneer on their purchasing of justice, and above all, could not exist without its television, not only to sell its products but to render us all brainwashed and neurologically passive enough so that all of this can go on with our full complicity as “autonomous” citizens.

The state and the corporation exist, in neo-con land, in a perverted symbiosis: the state protects the corporation and the corporation buys its protection by enriching the upper echelons of government, which are often one and the same: the revolving door between corporation and government ensures that it is often the same functionaries serving themselves with the big spoon (as the Spanish expression goes) from both sides of the bowl. The state sucks taxes, Matrix-like, out of its citizens in order to provide the above-mentioned services, along with selective tariff protection and fat public contracts for armaments, energy and the like, to the corporation. If the corporation fails, the government bails it out; if the corporation becomes an abusive monopoly, the government does its best not to have to break it up. Thus the government allows the concentrating tendencies of the free market to go unchecked (monopolies, cartelism – can anyone say Telmex and Cemex?), but carefully reigns in the corrective effect of bad business practices in the form of selective bail-outs (can anyone say Fobaproa, Bear Stearns and the Citigroup?) and preferential tax treatment, including the turning of a blind eye to offshore tax havens. The free market does not apply to the corporation that is ‘too important to fail’. Free speech, on the other hand, as Chomsky points out, is just another commodity to be bought if you have the money; for everyone else it is restricted to the bubble of the ‘free-speech zone’ far from the cameras (try to stray from that and just watch how fast the FBI will barge in and steal your laptop).

What the radical-right regimes in power in the US and Mexico aspire to, then, is the corporate state – corporatism par excellence. The state for the corporation, the corporation for itself, everyone and everything else, especially democracy, be damned (although the farce of elections will have to continue in order to keep up appearances). And when I say ‘corporation,’ I of course also mean ‘bank’: the concentration of international capital in certain institutions used both to lubricate the cogs of corporatism and to bludgeon weaker countries into falling in line with their strictures. Of course, the people will eventually rebel against all of this (although Americans seem to have entered into a state of terminal passivity, much like the wife who has been abused for so long that she rallies to her husband’s side when he is called onto the carpet), but that’s what the armed forces – arms supplied by the corporation – are for. This is more of an imminent danger for ‘weak states’ like Mexico, which is why the upper classes here have become more practiced in taking the money and running – to Miami, Madrid or Mallorca, to states that are just that much stronger in order to protect their loot. Plan on seeing Calderon on an extended sojourn abroad in 2012, if not before.

The point here is not whether the corporation can or cannot fulfill a positive function or whether it can or cannot provide useful services to people. It is, rather, that this sickening symbiosis between corporation and government is creating, has created, a stratified, authoritarian structure where the freedoms (political and social and labor) our forefathers fought for have been subsumed into a dictatorship of capital that is as abusive as any aristocracy ever was – and in the arming of the world for profit and the mass destruction of its natural resources and social fabrics, much, much worse. So let the campaign in the US drone its sad way on, let the grito be uttered in every town square in Mexico tonight, but then let us go home and work to start liberating our minds, each and every one of us individually and then together, of the insidious notions that have been implanted in our minds: that life is a war of all against all, that we must simply pay our taxes and keep our heads down, that this is just the way things are.

Saturday, September 6, 2008


As Michael T. Klare, author of "Blood and Oil" and "Rising Powers, Shrinking Planet: the New Geopolitics of Energy" puts it succinctly, America's wealth and power (as well, this blogger hastens to add, its profligately wasteful lifestyle) "has long rested on the abundance of cheap petroleum." Unbelievably now, the United States was once the world's largest producer of oil; the fortunes of the Rockefellers, of course, did not come from nowhere. Says Klare: "Abundant, exceedingly affordable petroleum was also responsible for the emergence of the American automotive and trucking industries, the flourishing of the domestic airline industry, the development of the petrochemical and plastics industries, the suburbanization of America, and the mechanization of its agriculture. Without cheap and abundant oil, the United States would never have experienced the historic economic expansion of the post-World War II era." The year domestic American oil production hit its peak, in 1970, was also the peak year of the post-war economic boom. From there on in, it would be oil shocks, stagnant wages, the slow but inexorable rollback of America's already-minimal welfare state, and of course, an increasing dependency on foreign oil: the United States now imports 65% of the stuff, transferring in the process $548 billion dollars a year to its happy suppliers, who use the profits in turn to gobble up American assets through sovereign-wealth funds (SWFs): "state-controlled (note) investment accounts that buy up prized foreign assets in order to secure non-oil-dependent sources of wealth." As Klare point out, the Abu Dhabi Investment Authority alone has assets of $875 billion dollars, and has over time bought into Citigroup, Advanced Micro Systems, and the Carlyle Group, to the financial benefit, not surprisingly, of both the Bushes and the Bin Ladens.

In short, America would not be able to toss so many of its bombs around the world without the oil to do it with (one last Michael Klare stat: the US Department of Defense uses more oil per day than the entire nation of Sweden). It is not so hard to envision a not too-distant future in which the United States military invades other nations simply to get the oil to keep itself going enough to invade the next country in order to get the oil to...until, spent, it simply grinds to a halt, all of its tanks and Humvees wasting away, Mad-Max style, rusting hulks in whatever desert they were stationed in before the black gold ran out.

Where does this leave the world's energy exporters? Financially speaking, pretty good: these are the Petro-Superpowers, the 21st century answer to the outdated, 20th century, just-plain Superpower. We have already mentioned the Arab States through the example of the Abu Dhabi Investment Authority; its neighbor Saudi Arabia, of course, is the world's largest oil producer, a big-time investor in the US stock markets, and a fast friend of every White House. Meanwhile, Russia, the world's number two oil producer - and its top natural-gas producer - has been recently flexing its muscle in very blatant fashion in Georgia, but has been building itself back up for a good decade now, throughout the period the US State Department was so contemptuously writing them off. Instead of letting American oil companies buy up its assets after the fall of the USSR, they concentrated most of them in state-owned Gazprom which, as Ukraine learned in 2006, can turn on and off the supply to its neighbors at will. Closer to home, Venezuela under Hugo Chávez is using its oil wealth both to provide cheap gasoline to its own citizens (a starker contrast to current Mexico there cannot be) and to lead the way in the financial and energetic integration of South America.

And Mexico? Petro-superpower? Petro-power, at least? Petro-pussy, more like. With the alacrity of Richard Pryor in "Brewster's Millions," Mexico's current constitutional-coup installed government (in cahoots with the top brass of its state-owned company PEMEX) is doing everything possible to squander and sell off the nation's oil wealth as fast as it humanly can, without, like Pryor, the possibility of getting something back at the end for its efforts. The scandal-of-the-week of PEMEX having acquired a piece-of-crap ship entitled "El Señor de los Mares" for up to ten times its market value is just one more example, tedious in its predictably, of the spectacular waste of the nation's oil wealth in a web of corruption implicating PEMEX head Jesus Reyes Heroles (who first haughtily denied López Obrador's allegations regarding the just slightly-marked-up ship acqusition only to have to eat crow through surrogates by the end of the week), Vicente Fox's ever-present stepsons, the Bribiesca boys, and practically everybody else in the federal government with keys to the storeroom. Rather than use its oil revenue to reinforce the state's stewardship of the economy, environment and internal security, Mexico is witnessing the exact opposite: the sinking of said state under the waves in a losing war with the better-funded, better-armed and better-trained drug cartels and a policy of transferring whatever public wealth and resources that happen to be left over into private - and foreign - hands through bogus, inflated contracts and bullshit buys like "El Señor de los Mares".

"Whether we know it or not," Michael Klare says, "...the United States is an ex-superpower in the making." How much sadder is it, then, that Mexico is simply going to go from poor to poorer when the last of its oil is sucked right out from under its feet - and with so precious little to show for it.

(Read the Michael Klare piece in full at:

Sunday, August 24, 2008

Kidnappings and Congress

Back in the sunny old days of 2006 when only Oaxaca of among the 32 states seemed to be on the verge of social collapse, a political joke made its rounds. A rich kid says to his friend, "Boy, I really hope López Obrador wins the election this year." The friend, incredulous, responds, "Why?" And the friend explains: "Because my daddy said that if he wins, he's going to take us all to live in Miami!"

Now its 2008, and the rich are going to Miami. And to Houston. And to Spain. And not because of López Obrador, but because they are no longer safe from kidnappings wherever they go, whatever they do to protect themselves. 13-year old Fernando Marti, son of a wealthy businessman, is kidnapped and killed even though he was traveling in a bullet-proof car with escort and bodyguard and even though his father paid the kidnappers a six-million dollar ransom. Police are alleged to have been involved. María de Jesús Delgadillo, 27 years old and ten weeks pregnant, is kidnapped in the State of Mexico when she goes out to visit friends, is kidnapped and held four days, 150 thousand pesos is charged for her release but she is killed anyway. An ex-police office is arrested in relationship to the case. In the state of Jalisco, an anti-kidnapping agent is arrested along with six accomplices for the kidnapping, extorsion and execution of a family; in Baja California, a series of anti-kidnapping agents are under investigation; in Ciudad Juárez, the federal police arrested a city police officer along with five accomplices for allegedly being part of a gang of kidnappers. Here at home in Oaxaca, a network of delinquents made up of police and members of the gang "Los Zetas" are being accused of a number of kidnapping and killings. Kidnappings in 2007 were up 35% over 2006, and it is estimated that for every reported kidnapping, of course, two or three more go unreported. According to a study at the Tec de Monterrey, approximately 400 professional kidnapping gangs are currently active in Mexico. A true growth industry in a time of decling profits.

Meanwhile, Congress is due to reconvene on the 1st of September, and besides considering whether or not to get tough and raise the penalties for all those kidnappers (useless if they are never caught, useless if the police who are supposed to catch them are involved in the first place, useless if the gap between rich and poor continues to rise), the issue of oil privatization will be right back on the front burner. Stalled in the spring due to public demonstrations, the oil privatization measure has been repackaged and rechristened as the "Beltrones" proposal, for the PRI senator proposing it. A close look at the list of ingredients, however, proves that the products are pretty much the same, and where not the same, even worse. Though this new and improved bill has been touted as a compromise which removes the most objectionable of Calderón's original proposal, turns out that ol' Senator Beltrones (himself a top name on the DEA's list when he was governor of Sinaloa for alleged involement in drug activities) copied his buddy's homework: 28 of his bill's 49 articles were copied directly from the original proposal. The privatization of exploration and development would proceed apace, but now the "sharing" of national oil profits would not only occur with private companies, but with the Mexican states (dominated by PRI governors the likes of Mario Marin and Ulisses Ruiz), as poor PEMEX would find itself being divied up into a series of decentralized, state-level companies, all financed with public capital. These chopped-up PEMEX companies could then contract out the construction of refineries, etc. and clearly, in the future, be simply bought out outright: much easier to sell off a series of small regional companies on the sly than one, big, prominent national entity. In fact, the bill specifically provides, in the future, for the "desincorporation of the descentralized organizations...without being bound by the Federal Law of State-Owned Entities" As El Fisgón points out, that is code for privatizing in parts once the protests die down. The war shaping over this issue for the fall should prove to be very interesting, indeed.

Saturday, August 16, 2008

Calderon: The Region 4 Bush

For those of us of American descent living in Mexico or naturalized as citizens, the most depressing thing about having to live under the Calderon junta is that, well, we have seen it all before. We have seen it all exactly before. In fact, Mexico's current agonizing descent into chaos is such a precise replay of what Americans have - with heroic stoicism (to be fair) or resigned passivity (to not be) - had to endure since 2000 that one can only wish that the world was such that we would be able to qualify for an exemption the second time around. Or that, as with DVDs, what plays in Region 1 wouldn't work in Region 4. Unfortunately, it looks like we were all fed a pirate version that plays on all machines, however jerky the image or shrill the sound (jerky and shrill: the modern right in a nutshell, ha!).

So here's the script: Bush and Calderón, both mediocre men piggybacking to prominence on the shoulders of their famous fathers (Bush Sr., himself son of a senator*, head of the CIA and one-term president; and Papa Calderón, one of the founders of the PAN, the political party set up in 1939 by oil interests in order to - yep, oppose the nationalization of the oil industry by Lazaro Cardenas). Both boasting of Ivy League degrees of more-than-questionable value (see my post: So Where Did You Go to College, Presidente?). Both rising to power through fradulent elections, using voter-roll manipulation (Florida and the Hildebrando connection in Mexico), vote-rigging (Ohio and the IFE), and the complicity of the judicial branch (the US Supreme Court on one side and the Federal Electoral Tribunal here on the other), beneficiaries of smear campaigns based on exploiting fear and dividing the population (Swift-Boating, for example, vs. 'Peligro para Mexico'). Both, to be blunt, installed in office by energy interests, for energy interests and of energy interests (through the invasion of Iraq and privatization of its oil, and, in reverse order, the privatization of Mexican oil followed by potential US invasion through the Plan Mexico to safeguard its future new holdings), each coming personally from a background replete with energy interests personally (Bush, failed oil man bailed out time and again by the Saudis, Calderón, failed Energy Secretary bailing out family members with contracts). Both the puppets (peleles) of far stronger men (Cheney) and women (Elba Ester) behind the throne. Both, in their puppet/pelele status, serving the interests of counter-revolutionary right-wing movements who see no positive role government can play in society except that of lining their pockets and those with 'preferred partner status' (Haliburton, Repsol...), using free-trade ideology as a convenient smoke screen to cover the construction of ever-more corporatist states (a highway bailout here, a Bear Stearns bailout there; some institutions are just "too important to fail..:"). Both, boxed in by that very ideology, criminally negligent when it comes to situations where government is indeed necessary (Bush in New Orleans, Calderon in the Tabasco flooding). Both flaunting their essentially-fundamentalist religiousness for political gain. Both kept in power through the complicity of a compliant corporatist media. Both presiding over the lower-growth, higher-inflation economic decline of their respective countries. Both benefiting the rich (tax cuts for the rich and tax breaks for the oil industry in the States, tax exemptions and enormous give-backs to individuals and corporations in Mexico) at the expense of the poor (an ever-more regressive tax structure, higher unemployment and price increases on staple goods). Both masking with tough rhetoric the increasing insecurity of their countries (in Mexico, the obvious rise of drug killings and kidnappings; in the US, the long-term, largely-ignored deterioration of its urban areas). Both subject to impeachment, if the ineffectual Congresses supposedly keeping checks on them would ever fulfill their respective Constitutional roles.

Region 1 Bush; Region 4 Calderón. Aren't we lucky to have one foot on both sides?

*Clarification: In my original post, I referred to Bush Sr. as son of a "censured senator", this in reference to his father, Prescott Bush. Prescott Bush was never, in fact, censured by the Senate in the manner of Joseph McCarthy. The controversy swirling around his legacy - and the reason he is often referred to as having been "censured" - is that four of his business interests, the Union Banking Corp, Holland-American Trading Corporation, Seamless Steel Equipment Corp, and Silesian-American Corp, were seized in 1942 under the Trading with the Enemy Act. Brown Brothers Harriman, for which Prescott Bush was a managing director, was the principal US banking partner for Fritz Thyssen, the top Nazi banker, and continued to do business with the regime even after the United States' post-Pearl Harbor declaration of war. Bush was never charged - the war was on and there were other priorities - but it remains an embarrassing black mark that the family has never fully been able to expunge.

Friday, August 8, 2008

The Rupture

The Calderon regime is in the early stages of advanced decomposition. Incapable of governing, haunted Hamlet-like by the ghosts of his electoral illegitimacy, propped up only by the US, Spain and Televisa, little Lipe and his band of incomptent blunderers reel from one issue to the next, turning everything they touch into dross, and converting the nation in the process into an economic wasteland, kidnapper's paradise, and drug-traffic battlefield strewn with the cadavers of a dozen dead a day. And every day, with every assassination, social restiveness gets ratcheted up one step further. "There does not exist one single measure taken by the current government nor an agreement made among all of the political forces that will diminish these pressures," writes José Agustín Ortíz Pinchetti. "On the contrary, a series of crises are converging at once: crime is on the increase and the security apparatus is crumbling. No response has been given to the agricultural deficit. We are entering into a recession. Inflation is increasing and growth decreasing. Every social and economic indicator is on a downward slope. The oil reform touted in such an irresponsible manner has thrown the whole country up in the air."

Calderón makes cosmetic changes in his cabinet by replacing his Finance Minister, a Fox lackey (Eduardo Sojo) with a lackey of his own (Gerardo Ruiz Mateos) who, incidentally, has no experience in the field whatsoever. But who needs experience when you can just improvise? Meanwhile, prices soar on practically everything that has a price to soar with. Gasoline is up, for the second time this month alone, to 7.32 pesos for a liter of Magna and 9.13 for Premium. Diesel is up eight centavos on the liter. Gas LP, used by 80% of Mexican homes for heating hot water and for stoves, is up 7 cents in August - a little 20 kilo tank now rounds out at just about 200 pesos. Electricity is up ten percent since this time last year. And these are all prices controlled by the federal government, mind you (now I thought the surplus produced by high oil prices was supposed to be subsidizing the price of imported gasoline, which is why there supposedly wasn't a surplus at all, but now that gasoline's going up too, what happened to those subsidies after all? Where did the FUCKING SURPLUS GO, CARSTENS, YOU FAT FUCK? Sorry, sometimes it just escapes me.). Food prices, of course, are up globally, and Mexico - ever more dependent on imports to compensate for its NAFTA-induced agricultural crisis - is in no way an exception. According to the Bank of Mexico, any salary gains won by workers in 2007 were completely wiped out by the price increases in April, May and June of 2008 alone, and are now lagging behind. Running faster just to stay two steps back, that is (see:. The only figure that is headed down, besides economic growth, is remittences from Mexicans living in the United States.

Here we see the travesty of the neo-liberal economic model at work. In the name of keeping inflation under control (thus protecting the value of the financial assets of the haves), genuine, broad-based economic growth is hamstrung and worker salaries are eviscerated. This of course, knocks the engine out of things, because poor people can't buy anything, except on credit. So flood the market with credit cards and keep people buying - for a while. Meanwhile, inflation goes up anyway for reasons - energy and food, primarily - that have nothing to do with worker salaries, but in Mexico at least, everything to do with poorly-timed tax increases and handing over of national economic sovereignty to the globalization taskmasker. And who gets nailed again by the consequent higher interest rates used to fight this inflation? Yes - the workers! Higher inflation, lower purchasing power, no credit (except those credit cards at 60% interest). Mexico, not dissimilar to the United States, is settling into a worst-of-both-worlds situation: deflating economy with inflation to boot. And situations like that, once mired into, become very hard to get out of.

I don't suppose Calderón has much time to really grapple with this, however, because he is too busy simply trying to save his scalp. "Before I thought the rupture was possible," writes Ortiz Pinchetti, "now I think it's probable. It is impossible, however, to predict how close it is. Years may pass before it arises, or it may strike in the near future, around the symbolically-charged elections of 2009-2010. We also can't discard the possibility that things, and the country, will just keep stumbling along in agonizing decadence. The deterioration has no limits."

Monday, July 14, 2008

Oaxaca: Corruption and Impunity Without Limits (translation)

Instead of writing a piece of my own today, I'm including here my own translation of an op-ed piece by Gustavo Esteva in today's Jornada that describes recent events in Oaxaca better than I could have. For all of you living in Mexico, please join in the nationwide boycott of all Chedraui stores. I know that all corporations are doing something, and if we boycotted all of them we wouldn't be able to shop anywhere, etc...but what happened last week in the Colonia Reforma is happening now, under our noses - the late-night rape of a hectare of woodland, with the full collusion of the municipal government, that the neighborhood was trying to get converted into an ecological park. Read on...

Oaxaca: Corruption and Impunity Without Limits
by Gustavo Esteva, La Jornada July 14th, 2008
Translation by Kurt Hackbarth

“Yesterday at three in the morning, an army of para-police from the Chedrahui company, protected by actual police, entered into the Predio Sarmiento in the heart of the Colonia Reforma in Oaxaca City and destroyed, without the required permits but with the complicity of the PRIista [from the political party PRI] municipal authorities, an enormous ecosystem home to thousands of birds and squirrels. The destruction covered over a hectare of trees, including three, hundred-year-old huanacastles, dozens of jacarandas, pirules, willows, oaks and date palms. The clandestine tree-cutters chased out and macheted to death hundreds of squirrels – a truly pathetic image. Only the intervention of hundreds of neighbors managed to put a halt to the barbarity, but it was already too late to save this small urban woodland. The environmental damage caused is incalculable.”

I take this quote from the manifesto of the organization “Pueblo Jaguar” which, together with others, has been circulating through Oaxaca this week to denounce last Wednesday’s aggression, the goal of which, obviously, was to prevent the consolidation of a citizens’ movement that for weeks has been working to prevent the building of a shopping center on the site, seeking instead to turn the forest into an ecological park. And clearly, the action [taken by Chedraui] has proven counterproductive. The movement has taken on an uncommon strength, working to organize a national boycott against Chedraui, as well as demanding punishment for the guilty parties and a stop to the construction. It will surely spread to other regions. After the destruction of the most beautiful of squares, the Plaza de la República, which lost some of its own hundred-year-old trees in a “modernization” project that sought to turn it into a sort of subway station, the Alameda de León, adjacent to the Plaza, is next on the list for being torn apart.

This is the state of things. On July 2nd, the local leader of the Employer’s Confederation of Mexico described the prevailing climate in Oaxaca: “Here they can kill two young indigenous radio announcers, and nothing happens; they can kidnap, and nothing happens; they can break into a house and rob it, and nothing happens; they can commit any offense, and nothing happens.”

No one should be surprised. When the Mexican Supreme Court discussed how to contribute to reestablishing constitutional order in Oaxaca, creating an investigative commission for this purpose, it stated: “We cannot allow arbitrary detentions and tortures of prisoners to become ordinary and normal in our country…The Oaxacans have lived through, and are perhaps still living through, a state of emotional and legal uncertainty…It is logical that people are living in anxiety when faced with authorities that make limitless use of public force, to the point of ignoring the human rights that our legal framework recognizes (La Jornada, 14/6/07)”.

While the Court continues with its apparently interminable investigations, the arbitrary detentions and torture of prisoners have become ordinary and normal in our country. In León, the police receive training in torture practices…so as to refine them. In the first six months of 2008, the Attorney General’s Office for Human Rights in Guanajuato has opened fourteen cases for torture and degrading and inhuman acts. The secretary for human rights for the United Nations recently indicated that respect for human rights is not a priority of the Mexican government. The unlimited and illegal use of public force is a daily practice throughout the nation. For the president of Mexico City’s Human Rights Commission, in national public security policy and in the administration of justice “no controls are placed on the action of the police, and the message is sent that everything goes in order to fight crime” (Proceso 1652, 19/6/08). And it is a crime, for the authorities, to participate in social movements. Not only the Oaxacans are currently living through emotional and legal uncertainty.

The leader of Coparmex reacted in Oaxaca to the kidnapping of one his own, a prominent Spanish businessman, which provoked the local leader of the National Chamber of Small Commerce into making the elegant expression: “That’s a load of crap!” The leader of the National Chamber of Transformative Industry said: “We want zero tolerance for those who disrupt the peace of Oaxaca!” Legislators from the PAN party, for their part, demanded the immediate intervention of the army and federal police in order to apply a remedy clearly worse than the disease, as the Oaxacan experience demonstrates, one which has begun to spread throughout the entire country.

Practically a year ago, Carlos Monsiváis stated that the continuance of Ulises Ruiz in power was “a profound enigma and a very severe insult to republican logic.” Perhaps it has stopped being an enigma. The insult is now open to all: it defines national policy. In different ways and in different degrees, the entire nation is suffering the consequences of not having adequately reacted against the intolerable affront that the people of Oaxaca have suffered, and are suffering still.

Monday, July 7, 2008

The Interests Behind the Interest Rates

Two weeks ago, in the face of a slumping economy, declining remittances from the United States, and a spate of regressive tax increases that are destined to further dampen consumer spending, the Stamford-educated President of the Bank of Mexico Willy Ortíz did the only logical thing to be done under such dire circumstances: he raised interest rates a quarter point to 7.75%. The ostensible reasoning for such an ass-backwards maneuver was to fight inflation; the underlying realities of such a decision, however, tell us a good deal more about both Mexico’s incestuous political-economic system and the equally-incestuous global system it has become so openly a part of.

Without going into too much detail of the finer points of economics, high interest rates tend to help creditors, who have money to lend, as well as people who live off investment incomes, both of which categories in Mexico are restricted to an elite, wealthy strata. Conversely, lower interest rates help debtors, who pay lower interest on money they owe, and entrepreneurs who seek to borrow money to start or expand businesses. When the economy is sluggish, lowering interest rates is one way to stimulate people to borrow and spend, and thus stimulate the economy; when it is “growing too fast” and the inflation monster appears again on the horizon, raising interest rates can tamp down excessive borrowing and spending. But here, all signs point to a substantial economic slowdown in Mexico, yet interest rates go even higher. Who gains, who loses?

For a generation now, governments the world over have held the Damocles sword of inflation over workers’ heads in order to force them to accept minimal pay raises that have essentially amounted to zero in real terms. Such a threat has been particularly effective in Mexico, where the painful memories of the devaluations of 1982 and 1994 are still fresh in people’s minds, and where unions have historically acted in collusion with the government in turn, often in direct opposition to the interests of their own members. One would at least expect that the reward for all this “good behavior” on the part of the working class would be lower interest rates in order to make it easier to borrow money and get credit. In fact, the only place in Mexico where interest is low (read: non-existent) is in bank accounts; everywhere else, interest rates are, and have remained, stratospherically high, enough to make the most die-hard usurer blush with embarrassment. The great unsung tragedy of this country, in fact, is the inability of the average person to get credit on anything resembling reasonable terms. Mortgage rates routinely run three to four times what they are in the States, with mountains of up-front costs loaded on, so practically no one ever gets one and houses remain half-finished until someone in the family can scoot back across the border and send some cash back down. Credit card rates shamelessly shoot up to sixty percent or more, and now that banks are peddling credit cards like water, ever more Mexicans are going to get the chance to get caught in sickening, American-style debt spirals at several times the interest rate. Feasbile small-business and first-time-homebuyer loans are practically non-existent. What you get back, however, pales in comparison: interest on “inversiones” (COD-like investments) often runs less than a half-percent a month, even on large sums; interest on “Afores” – the individual pension accounts Bush didn’t manage to turn Social Security into but Mexico has already been experimenting with for a decade – were running around 9% annual last time I checked mine, with more than 3% of that taken out for commissions; in six years of working at a job with benefits, I’d saved up the equivalent of about six months of salary. And who’s administering my Afore? Citibank, eh, Banamex, the National Bank of Mexico.

And therein lies the rub: the American and European banks who dominate Mexico’s banking system charge high commissions on everything and lend out money at usurious rates, not because Mexicans are such a credit risk, but simply because they no one is stopping them from doing so. This makes running a bank here extremely profitable, more so than in the bank owner’s home country – look at Bancomer’s surge in profits in Mexico profits in 2007 ( or Santander’s 208% leap in profits in the first trimester of 2008 ( Why else would Mexico’s banks have so quickly been gobbled up after being cleaned up at taxpayer expense (to the tune of 6,000 pesos per Mexican as of 2004, and growing) by the Fobaproa bank bailout? And the revolving door between government and bank board – witness Fox’s finance minister Gil Diaz’s quick leap to HSBC – ensures that government regulators will never lean very hard on what these banks do. Let’s face it: Citigroup, Santander, Bancomer Bilbao and HSBC are simply not interested in making sure Juan Pérez gets a home mortgage or a micro-credit to start a shoe store; as multi-national conglomerates, they’ve got much bigger fish to fry, like speculating in Asian futures and then crying to their governments of origin when they get burned. Giant, multi-national banks are not interested in making relationships with local (poor) clients or in becoming part of a (poor) community; they are much more like vultures, swooping down to suck in commissions, reap large profits and invest the money elsewhere. Meanwhile, Willy Ortiz at the B of M raises interest rates in the midst of imminent recession in order to fight the inflation caused by the government’s increasing, NAFTA-ized dependence on food imports and the rising prices for its own oil which, instead of using to its own advantage, said government is trying to sell off as fast as possible.

As for me, I’m pulling my money out of my local multi-national bank and opening an account at the Caja Popular Mexicana. The Caja Popular is a cooperative, and by opening an account you become a member of that cooperative, not just a client, with a right to participate in the cooperative’s decision-making. Plus, the Caja Popular offers – gasp! – savings accounts that pay interest, investment opportunities, loans for people who wouldn’t otherwise get them from banks, deposit protection, and – gasp again! – no commissions. To paraphrase Hemingway, what if the big banks were still there, but nobody went to them anymore?

Monday, June 23, 2008

So Where'd You Go to College, Presidente?

Robert Lansing, former Secretary of State under Woodrow Wilson, wrote in 1924 that "Mexico is an extraordinarily easy country to dominate, as it necessary to control only one man: the President. We must abandon the idea of installing an American citizen in the Mexican presidency, as that would only lead us, once again, to war. The solution requires more time: we must open the doors of our universities to young, ambitious Mexicans and make the effort to educate them in the American way of life, in our values, and in respect for the leadership of the United States. Mexico will need competent administrators, and over time, these young people will come to occupy important positions and will eventually take posession of the presidency itself. And without the United States having to spend a single cent or fire a single shot, they will do what we want, and do it better and more radically than we ourselves would have done."

Lansing's counsel, directly or indirectly, was well-taken: the United States did not subsquently place a puppet onto the Mexican presidential chair, as it did with a laundry list of Mexico's Latin neighbors, and over time, it did open its doors for Mexico's political elite to come and study at its illustrious centers of higher education. A simple look at its roster of Presidents over the last twenty-five years confirms the success of Lansing's prescient vision: Miguel de la Madrid (1982-1988) - Master's in Public Administration, Harvard; Carlos Salinas de Gortari (1988-1994) - Ph.D. in Economics, Harvard; Ernesto Zedillo (1994-2000) - Ph.D. in Economics, Yale, currently a Yale professor of International Economics and head of the Yale Center of Globalization; Vicente Fox (2000-2006) - supposedly studied at Harvard, but definitely sold a lot of Coca-Cola; and Felipe Calderon (2006-how much longer will he hold out?) - Master's in Public Administration, Kennedy School of Government, Harvard. The year 1982, not coincidentally, marked a watershed in Mexican public policy, it being the year the country's leadership took advantage of the peso crisis to institute a neo-conservative, IMF-approved policy of economic shock therapy (see my previous post "Shocking and Awe-ing"), and has not looked back ever since. The results, as Hugo Carbajal Aguilar puts it (, "are on view for anyone who cares to look: rampant unemployment, drug trafficking on the increase with a consequent tsunami of insecurity, massive migration abroad - with all the risks that implies - disintegration of the family, lack of expectations for young people, students or not, deliquency in droves, ecocide..." As grandfathers around the world, eyebrows raised and brow furrowed, might ask in chorus: "What are they teaching you at that school of yours?"

Actually, that question is not at all hard to answer. Just as the proliferation of universities through the land-grant system were key in "winning the west" and just as the explosion of Latin-American studies programs in the 1960's was an instutional response to fears that we were "losing Latin America," US colleges and universities take in and groom future foreign leaders, no less than in Lansing's time, in "the American way of life, our values, and respect for the leadership of the United States." Said values entail massive privatizations, the scaling back of essential government services in the name of budgetary discpline, a hard-money, inflation-busting policy (note the Bank of Mexico raising interest rates lasty Friday in the face of a clearly-slowing economy) and the "opening" of the nation to foreign "investment" (or dumping, as the case may be). Anyone who opposes such obvious - and academically-tested measures - is a "protectionist," or worse, a "nationalist," as opposed to an internationist, cosmopolitan, English-speaking member of the trilateral world elite come home to be big fish. Father knows best: just check the framed diplomas on his wall. Whereas would-be dictators without an academic pedigree are simply sent to the School of the Americas in Fort Benning, Georgia to learn how to torture; those with 'more of a head on their shoulders' are sent to Harvard or Yale and taught to do regression analyses that demonstrate how cutting taxes raises revenues and other such - dare I say? - white man voodoo. The process is the same: the pimping of institutions to power. An austerity plan is one thing; an austerity plan by a Harvard-trained Ph.D. in a country which has been taught to fear and loathe itself is quite another. Didn't we learned from Kennedy's best-and-brightest Harvard-boy disasters in Vietnam and the Bay of Pigs not to trust those places once and for all?

Of course, educating the Latin-American elite is not all. Once their term of office is expired, or once the ignorant masses of their countries throw them out, the Ivy-League graduates usually wind up gravitating like magnets back to the source of their force. In a perverse form of retro-alimentation, Harvard, Yale and Stamford happily bestow their venerable names on the Salinises, Zedillos and Calderons, send them home to wreak havoc, and then welcome them back with open arms, padding out their faculty lists with an impressive line-up of former presidents and finance ministers to show off to the Alumni Board. Zedillo, as previously mentioned, schlepped right back to Yale to pimp globalization. Salinas and Calderon have been back to visit and gave stately talks. And most recently, Doctor Luis Carlos Ugalde (Ph.D. in Political Science from Columbia), fresh from doctoring the 2006 election as head of Mexico's Federal Electoral Institute and finding himself out of work ahead of time (wonder why....) found a comfortable sinecure in the Government deparement teaching Latin American Politics at Harvard. How a hack like that can lie into the camera before millions of Mexicans who saw their decades-postponed hopes of a genuine democratic transition dashed before their eyes, only to be allowed to lope across the lawns in professorial robes in Cambridge, Mass. is enough to make any honest person's blood boil. Lansing, however, would be proud: without spending a single cent or firing a single shot, America is getting what it wants out of Mexico, and then some.

Friday, June 13, 2008

Free for Whom? (part 2)

An article by David Bacon entitled "How Do You Say Justice in Mixteco?" that appeared this week on the Truthout news site ( begins by discussing the case of several Mixteco farmworkers living in California who were evicted from their trailers at the butt of a forklift, which lifted the trailers into the air and tipped them over, possessions still inside. One of the farmworkers, Erasto Vasquez, had lived in the trailer for seventeen years and raised his family there. Though the workers eventually won a settlement thanks to the efforts of the California Rural Legal Assitance (CRLA), the case is emblematic of the new wave of Mexican immigration into the United States and the dangers that new wave of immigrants faces. Bacon writes: "While farmworkers 20 and 30 years ago came from parts of Mexico with a larger Spanish presence, migrants today come increasingly from indigenous communities...[E]conomic changes like NAFTA are now uprooting and displacing Mexicans in Mexico's most remote areas, where people still speak languages that were old when Columbus arrived in the Americas." According to the Binational Front of Indigenous Organizations, 500,000 indigenous people from Oaxaca alone are currently living in the United States, 300,000 of them in California.

In another piece on the Truthout site (, Maya Schenwar considers the implications of the Plan Mexico, which is at the point of being tucked into the - note - Global War on Terror supplemental spending bill and approved, to the tune of $1.1 billion dollars over the next three years. After objections from Mexican lawmakers that they didn't want any strings attached to the funding, the American Congress (how nice of them to have listened!) dutifully took all the teeth out of the accountability and human rights provisions. Senator Chris Dodd, after first warning that the United States doesn't write "blank checks," later stated that the US would drop any provision that "smacks of certifcation." Yes, Chris: sounds like the only smacking that's going to be done is US-bought weaponry on the backs of protestors' heads.

The circle at work here is so elementary, yet so effective: free trade aggravates poverty, increasing immigration - US employers benefit from low-wage labor - increasing poverty aggravates social conflicts in Mexico - US contractors benefit from the sales of weapons used to crack down on the restive populace. Schenwar references a Mexican government study which concluded that 90% of the illegal guns seized in Mexico come from the United States (not to mention what the government acquires: a friend of mine, during the Oaxaca conflict of 2006, found and photographed tear gas cannisters from Pennsylvania among the debris left behind by the crackdown here - having breathed in said gas, I can attest to their effectiveness). As she further points out, much of the Plan Mexico money will never leave the States, but will go to buy "Bell Helicopters, CASA maritime patrol planes, surveillance software, and other goods and services provided by private US defense contractors." The drug trade, of course, will not be stopped - the Mexican government and military is far too complicit in it and demand from the US is certain not to fall off anytime soon. Not to worry: the militarization model is "easily and inevitably adapted to fighting internal dissidence." Gives 'em something else to do, you know.

Needless to say, the US is not alone in benefiting both coming and going from this most vicious of circles: the Mexican political elite do quite fine by the process themselves, thank you very much. It has often been said that immigration functions as an "escape valve" for the Mexican economic structure, siphoning off workers the system can't provide jobs for and getting back money in turn in the form of remittances the immigrants send back to their families from the States. This is doubtlessly true: with the twin pillars of remittances and oil money, a rigid, corrupt and hierarchical system has propped itself up for decades without ever having to face the need for a fundamental housecleaning. Less often mentioned, however, is how this "escape valve" functions in a political sense, siphoning off potential dissent. Forced immigration breaks up families, breaks up communities, and it is a no-brainer that communities that are less cohesive, less united, are easier to control and keep down. There are entire pueblos in Oaxaca where there is hardly an able-bodied man to be found, leaving behind women and the elderly to run the roost. Mixteco, for example, is the language spoken by the majority of those indigenous farmworkers in California, and it is in fact the case that the Mixtecs who have stayed behind are not, as a whole, as politically active in the state of Oaxaca as the Zapotecs of the coast (where the first ever socialist government was elected a generation ago and which is still a hotbed of activism) or the Trique or Mixe, groups who, not coincidentally, have also been more active on the linguistic front, preserving and promoting their languages. This is hardly the Mixtecs' fault - the loss of their forests years and years ago have led to their arid territory in the northwest part of the state becoming amongst the most eroded landscapes in the world - but rather a commentary on how displacement fosters passivity. The United States knew this very well in places like Vietnam, Guatemala and El Salvador: to control a nation, civic and religious groups must be broken up and ethnicites split up and moved. What the ancient Scandanavians called landnama - claiming the land you inhabit by naming it and ideally becoming one with it - must be reversed to make for rootless, disoriented peoples, whose only goal is to survive, both psychologically and culturally. And mass immigration from Mexico to the United States does this work for those in power without their having to lift a finger. Escape valve, indeed.

For me, one of the most telling parts of the documentary Fraude by filmmaker Luis Mandoki, which documents the fraudulent Presidential election in Mexico in 2006, was the part of the interview with Andrés Manuel López Obrador where he recalls receving the results of a national poll in his tent in Mexico's Zocalo, where he lived for a month-and-a-half along with his fellow protestors. The poll, taken by the respected Mexican polling firm Mitofsky to gauge the political climate in Mexico at that moment, found that a full 10% of those polled were willing to take up arms against the government. Projected onto a nation of over 100 million, that makes for fully 10 million potential citizens in open revolt. And even if many, or even a majority of those polled wouldn't actually go through with it, the fact that they felt strongly enough to say so to Mitofsky should indicate to somebody who's listening that even the escape valve won't be able to let off enough pressure to keep the tottering old system in place forever. López Obrador, to his credit, has eschewed the route of violence, opting for non-violent civil resistance. Provoke enough more people with American arms through the Plan Mexico, however, and it may become harder and harder, if not impossible, to convince people with nothing to lose that the path of non-violence is the most appropriate one to take.

Thursday, June 5, 2008

Free for Whom?

As the speculation-fueled global food crisis aggravates Mexico's already-dire economic situation, now is a good time to shake a stick at the free-trade Santa Claus and see if the gifts he has promised to produce from his magic sack have actually made their way into any little boys' or girls' hands.

Santa's promise in the North America Free Trade Agreement of 1993 (the Tratado de Libre Comerico, or TLC, in Spanish - as noted before, in Mexico, it is a treaty whereas in the States it is merely an Agreement) was the same as the one perenially made by free-trade economic theory: by eliminating tarriffs and other hidden costs, free trade lowers prices for consumers while at the same time, by providing greater choice, it stimulates healthy competition between domestic and foreign producers, thus improving quality and efficiency. And like most economic theories out of a textbook, it looks good on paper, but depends on a heavy dose of naivité regarding how the world really works. Anybody who's ever been to a schoolyard knows that artificially leveling the playing field between unequal opponents (or in economic jargon, "trading partners") means essentially throwing the game to the stronger. That distinction is particularly bald in the case of Mexico vs. the United States, where Mexican producers are forced to compete against giant, multinational corporations who not only benefit from the obvious economies of scale, but are also the happy beneficiaries of all kinds of governmental largesse, from tax breaks (the oil companies) to subsidies (agro-business) to fat contracts (defense contractors) that the Mexican government, even if it weren't leaking millions by the minute in corruption, could hardly compete with (and if they did, would be lambasted by the World Bank, IMF and WTO). Not only, then, is the big kid on the schoolyard allowed to beat the puniest into a pulp in a "fair fight", the principal's office is paying for his membership at the gym and talking his teachers into letting him out of class early and getting him out of having to do his homework in order to give him time to go and lift weights, all the while humilliating the puny kid in front of his classmates for his inability to stand up for himself like a man.

No problem, say free trade advocates. Every country has a "comparative advantage" in something, and if each side can only exploit that advantage, both stand to benefit. Unfortunately, the miniscule benefit Mexico has gained in exploiting the comparative advantage of its low-wage labor pool is mostly located along a small strip of maquiladora factories located along the border, where workers slave away at the five-dollar a day wages that have hardly risen since NAFTA's infancy, with the cold comfort that they are making slightly more there than the even-worse pay they might get elsewhere in the country. Meanwhile, the American companies located along the border revel in tax concessions and freedom from pesky safety, health and union regulations - those that are on the books are hardly being enforced by the gang-that-couldn't shoot-straight currently in power. The devastation of the Mexican countryside, caused by farmers' inability to compete ("like a man") with their lavishly-subsidized neighbors to the north, along with NAFTA's recent removal of the last protections against bean and rice imports, means that there will always be a limitless army of unemployed refugees from the countryside willing to work for that little, or if not, to cross the desert in search of work in the US in a hellish odyssey across the desert that makes Dante's Inferno seem like an amusement-park funhouse, and which allows US companies to benefit from the human arbitrage opportunities showing up, hungry and desperate, right on their doorsteps.

At least in the late nineteenth century, when American imperialists like John Cabot Lodge were prying open markets for American overproduction at the butt of a gun, they were more forthright about they were up to. "Gunboat diplomacy" was just that. But the current feeble treacle of free-trade pap is supposed to make the losers not only accept getting reamed in the exact same way as before, but feel thankful for now being the glorified dishwashers of the global village. To be fair, prices for some consumer goods - cars, electronics - have come down for the average Mexican consumer over the last several years. But the questionable benefit of that boost to the consumerist lifestyle pales in comparison to the stagnant wages, dribbly economic growth, crippling monopolies, and massive immigration of family and friends that the average Mexican grapples with daily, not to mention - to return to the beginning of this post - the skyrocketing prices in staple food items. Meanwhile, Walmart has become Mexico's number-one private-sector employer, and was an active campaigner amongst its staff and customers for Felipe Calderón in 2006. Poorer countries, you see, have to accept that free trade means the domination of its economy by foreign multinationals. The policy that the US has the luxury of calling "stimulating domestic production" is scoffed at in the Latin American sphere as the "import substitution," as if the natural state of affair for our Latin amigos is to depend on somebody else making everything for them but letting them, at least, be the ones to sell it to their brothers and sisters.

In the final analysis, as I believe only Noam Chomsky has consistenly pointed out, NAFTA is not really a free-trade agreement at all - it is, in his words, an "investors' rights" agreement allowing multinational companies to shift production and profits in a shell game in and around their international subsidiaries for labor and tax advantages. The lion's share of the much-vaunted post-NAFTA increase in trade between the US and Mexico, in fact, has been just that - internal shifting around of goods within corporations with one foot on both side of the fence, straddling it for that good old comparative advantage. Have the American engineer design it, have the Mexican line worker assemble it, declare the profits in the Cayman Islands or the losses in the States, and each movement of the good from subsidiary to subsidiary counts as trade. Magic. We're all better off. Haven't you noticed?

Tuesday, May 27, 2008

Shocking (and Awe-ing)

In her remarkable new book The Shock Doctrine: The Rise of Disaster Capitalism, journalist Naomi Klein blows out of the water the fanciful notion that people around the world in the 70's and 80's spontaneously started waking up with the realization that free markets and free trade were the only way for their countries to go. In fact, Klein argues, free markets - with their associated privatizations and rollback of the social safety net - have always been imposed upon the prior basis of a shock, real or fomented, a shock sufficient in magnitude to disorient the public to the point that a radical, "Chicago Boy" program can then be rammed down their throats under the guise of a bitter but necessary pill. The US-provoked coup d'etat in Chile in 1973, followed by a radical economic revision designed by Milton Friedman himself (who apparently had no qualms about working for dictators), was the Ur-shock, though Klein subsequently guides us through a series of other examples, from the collapse of the Berlin Wall in Eastern Europe to the Asian currency crisis of 1997, the aftermath of Hurricane Katrina in New Orleans and yes, to the Mexican "tequila crisis" in 1995 that unleashed a second, massive wave of privatizations here.

So far, that's two shocks: the original one (coup d'etat, natural or economic disaster, massive societal upheaval) followed opportunely by economic shock therapy. But no public can be fooled forever; people everywhere inevitably start to protest when they catch wind of the implications of what has been done to them. This is when the third shock becomes necessary: repression and torture to break the back of the resistance. Drawing on a careful reading of psychiatric "shock therapy" practices as well as declassified CIA manuals dating back to the 60's, Klein notes that the fundamental goals of such torture (under whatever name it has been given over the years: de-conditioning, counter-insurgency, counter-intelligence) is to induce a regression of the subject to a state of child-like defenselessness: in short, to destroy their personhood. How ironic it is that the twentieth century, supposedly the century of psychoanalysis and the knowing of one's self, witnessed at the same time the widespread use of psychiatric techniques to achieve the exact opposite: the reversing, the canceling-out of psychological development on a mass scale in order to revert persons or peoples to a timorous, uncritical state of passive acceptance...or else.

The parallel with present-day Mexico is exact. After several previous, shock-induced waves of privatization (the first, by Presidents de la Madrid/de Gortari following the peso crisis of 1982 and the second, mentioned above, by Zedillo following the second peso crisis in 1995 which all the previous privatizations obviously did not forestall), the only public institution left that is worth anything to international investors is the big enchildada: petroleum. Whenever the public is objectively asked, however, if they believe oil privatization is a good idea, they overwhelmingly reject it. Calderón, knowing this, has done what any administrator of "disaster capitalism" has by now learned how to do: provoke a crisis - and allow for the torture of those who do not toe the line. His lack of originality, however, has led him to import a hand-me-down shock the neighbor to the north already wore out a generation ago: the "war on drugs". If the ostensible objective of such a program is to eliminate the drug trade, it is failing in Mexico just as it failed in the US and just as every such program that depends on militarism and killing alone will fail. Four thousand Mexicans have died in this futile war in the year-and-a-half since Calderón took office, the same as the number of American soldiers killed in Iraq in five whole years of equally-useless conflict. Viewed from the perspective of "shock therapy", however - the shock needed to disorient the public and ram through oil privatization - it remains to be seen if the "war on drugs" will prove to be, like its antecedent shocks across the world, a perverse success. It is true that the Mexican public has proven itself to be enormously resistant, but is also true that the government's willingness to apply the third shock (torture) is as strong as ever, the disappearance of two members of the EPR, the "white brigades" in Oaxaca that so terrorized the population here and which have gone unpunished at the federal level, the hammering of the population of Atenco into the ground for protesting the location of a planned new airport, and the slew of abuses committed by soldiers all over the country under the current administration are just a few of the most prominent examples. One shudders to think what else is going on unobserved, under the radar, nation-wide, as the militarization of the country (see the latest in the state of Sinaloa) proceeds apace.

Despite such bleakness, Klein points out in an interview available on YouTube ( that there is cause for optimism due to one, simple reason: publics worldwide have not chosen such economic shock programs of their own free will - have needed, precisely, to be shocked into them. If people can learn to psychologically resist the onslaught of shocks exploited or created by those who would use them for their own ends, they still have a chance to reverse the noxious effects these policies have had on society, culture, the economy and the environment. Mexico, that means you.