THEM~ OREPORT TheRatinu Game

THEM~
OREPORT
•
ys1s
News,
Vol.ill
• • •
• • •
October 21, 1994
TheRatinu
Game
Foreign Currency Reserves
(billions of dollars)
[)eo.!D
Deo-91
Deo-92
Deo-93
P<Jg-9l.
Source: Banxico
Nobody Here But
Us Angels
1
l)f)~''l llf)(~I{
'1 111~
1
No. 21
'l ll()tJf•U
1
An official of the U.S. Drug Enforcement
Agency told foreign reporters that there is
no evidence of a connection between the
daylight assassination of Frimcisco Ruiz
Massieu and Mexico's drug barons. "We
have seen no evidence that there is a
connection between drug trafficking
groups and either one of the two
assassinations" this year, a senior DEA
official, who asked not to be identified, told
Reuters. The same official probably
believes that the Mexican govenunent is
doing its utmost to fight drug trafficking
and that pigs can fly.
There's a saying among old Mexico hands
in the foreign business and political
conununity: Don't rock the trough. This
message is being drununed into Mario
Ruiz Massieu, the brother of the slain PRI
secretary general and the official in the
Mexican Attorney General's office
responsible for combating drug activities.
Following his public, televised statements
about an official connection to his brother's
murder, the office of President Salinas
forbade further conunents by Ruiz and now
is reportedly reviewing his statements to
the press before-the-fact.
Press Clips, Page 6
Politics, Page I 0
Finance
Minister
Pedro
Aspe
announced that 52 foreign financial
institutions will be allowed to operate in
the country, including banks, brokerage
firms, financial groups and insurance
companies from around the world. The
move comes as speculation mounts as to
when Mexico's investment rating will be
raised. Sources at several New York banks
say that S&P is prepared to raise Mexico's
rating to just above the "junk" level, but the
same financial analysts expect rival
Moody's to hold its ground. "The boys at
S&P will raise the rating, but they will
eventually retreat when this situation falls
apart," says one banker from his Park
Avenue office. "Without new money in
very large quantities, there is no way to
avoid a currency devaluation." Another
banker at a large Japanese conunercial
bank says that he sees Mexican banks
hitting the short-term money markets "very
hard." He adds: "Japanese banks as a
group are waiting for the opportunity to
rush into Mexico and start lending. As
usual, they will increase their exposure at
the eleventh hour. At least some things
never change." As the chart illustrates,
Mexico's reseive position is eroding under
the pressure of a $2 billion-plus current
account deficit. Liquidity is scarce and
rising U.S interest. rates make raising new
money ever more difficult. What next?
Continued on the next page.
«)Copyright 1994 The Whalen Company, Inc. Published 24 times per year at 1717 K Street, N.W., Washington, D.C. 20006-1504
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THE MEXICO REPORT
PAGE 2
OCTOBER 21, 1994
Venezuela, the government is likely to
Juan Arturo Covarrubias
be asked to bail-out failing institutions Valenzuela, head of the board of Banco
and their customers.
Industrial, says that it could take more
than a decade for Mexican banks to
One source tells TMR that streamline operations and eliminate
Banco Obrero, owned by the state- problems with bad loans. But new
controlled
Confederacion
de competitors in the shape of foreign
Trabadores Mexicanos (CTM), is banks are not likely to allow Mexican
broke and will probably require banks such a long transition period.
government intervention. Bad loans
Indeed, despite signs that
equaling more than twice the bank's Mexico's banking system is in for a long,
paid-in capital have reportedly crippled painful period of restructuring, the
the institution, which serves as trnstee foreign banking community seems
Here are the key points that for the pension benefits of millions of
undeterred and even anxious to jump
must come into play in any meaningful unionized workers in Mexico.
into this new market. Luis Tomas
analysis of Mexico's overall financial
Ivandic, a vice president with Bank of
situation:
Moreover, as the government
Nova Scotia, told El Financiero that the
takes steps to prevent fraud and other
great optimism about the changes taking
+
Estimates
for
the abuses, the changes are increasing the
place in Mexico and his institution's
current account deficit for 1994 range pressure on financial institutions already
desire to enter the market have not been
$25-30 billion, with a bias on the upside. under great strain. Under the new rnles
altered by recent financial scandals and
This figure includes an ex-maquiladora imposed by Nacional Financiera in the
political
assassinations.
The
deficit of $22-25 billion -- perhaps more. wake of the Grupo Havre and Cremirepresentative of the large Canadian
The fact that Mexico's reserves have Union scandals, as many as 160 small
bank, which has operated an office in
fallen by almost 33 percent this year is a credit unions could be forced out of
Mexico for 25 years, says Mexico's
clear indication that it has not been able business, according to La Jornada.
country risk, on net, has actually been
to raise the $25 billion in new money
lowered.
need to finance its external deficit.
A report in the October 11 issue
of La Jornada states that Mexico's
reserve position had fallen to $16.230
billion by the end of June 1994. El
Norte, however, goes a step further and
says that reserves were $15.884 billion
at the end of August, indicating further
slippage. This level of reserves covers
only two months' worth of imports.
Officially, Mexico claims $17 billion in
reserves as of the beginning of October,
but doubts remain.
+
Mexico's foreign debt
now totals over $140 billion. In the first
six months of 1994, Mexico paid
$15. 154 billion in service on its external
debt. For 1994, the cost of servicing the
external debt will roughly equal
Mexico's current account shortfall. A
recent analysis from Citibank says that
next year Mexico must raise a minimum
of $34 billion in new money to finance
its current account deficit, a 29 percent
increase from this year.
IEl Financieroj
+
The com1try's internal,
peso-deno1ninated debt reached N$283
billion ($85 billion at N$3.3 per dollar)
as of September 15, an increase of 17.5
percent since the end of June. At the
current rate of increase, the internal debt
will top $100 billion by year-end.
+
Mexican banks and
commercial companies are continuing to
see a deterioration in the quality of
assets and receiveables. As in the case of
~;i
Copyright 1994.
The
Whal e n Company, Inc .
All Rights Reserved
OCTOBER 21, 1994
THE MEXICO REPORT
PAOE 3
+
In Brief
+
Interest rates for Cetes
rose in the past week. Investor concerns
about Mexico's rising external red ink and
the strong demand for dollar liquidity by
Mexican banks pushed rates higher,
although interest rates are still well below
levels seen only a year ago. Mexican banks
have been heavy buyers of Cetes and face
big losses should interest rates spike
upward. Finance Minister Pedro Aspe has
predicted that inflation will be below 7
percent in 1995, but this assumes no
change in the current N$3.4 peso/dollar
exchange rate. Stock prices moved
sideways as slack demand in New York
and expectations of another interest rate
increase by the Federal Reserve dampened
demand for equity.
Holders of dollardenominated notes issued by Banca
Cremi got a rude shock when formal
notice of default was given on October
6th. The "managerial intervention" of
the merged Cremi-Union Group caused
a technical default, triggering the notice
by agent Bank of New York. While the
notes are still current as to interest
ECONOMIC INDICATORS
The New Peso
(pesos per dollar)
October 6, 1994
October 20, 1994
3.4180
+
According
to
an
Agriculture Department North American
Free
Trade Agreement
(NAFTA)
Economic Monitoring Task Force report,
U.S. agricultural exports to Mexico rose
nine percent for the first seven months of
1994 to $2.5 billion. U.S. farm goods
exported to Mexico are expected to reach a
record $4 billion by year's end.
3.41SS
Interest Rates/October 19, 1994 Weekly Auction
Change/basis points
28-day Cetes
91-day Cetes
182-day Cetes
13. 80 percent
14.14 percent
14.19 percent
13.86 percent
12-month Cetes
+47
+40
+21
+3S
BOLSA MEXICANA DE VALORES
(dollar index)
+
The purchasing power
of a minimum wage salary has fallen over
70 percent in Monterrey since 1987,
according to El Norte. In a study by the
leading Monterrey daily, the ability to pay
for ten key consumer goods and services
has plununeted steeply as a result of the
wage and price controls imposed on
Mexico since 1987. Whereas the minimum
wage salary ofN$5.99 an hour in 1987 was
able to purchase the basket of goods and
services 5.2 times, in 1994 the nominally
higher minimum wage salary of N$14.19
was able to cover the same purchases just
1.18 times, a drop of more than threequarters in real, inflation-adjusted terms.
This study illustrates the true cost of wage
and price controls. the negative effects of
which are increasingly visible in the
deteriorating asset quality of Mexican
banks. finance companies and retailers.
payments, holders of the 9 percent notes
due 1995 and the 8 3/8 percent notes due
1995 have the right to put their notes
back to the issuer for immediate
redemption if at least 33 1/3 percent of
note holders indicate that they want their
money back. No word from trustee
BONY whether it intends to recommend
early redemption.
2000
1750
06.30.94
08.08.94
09.13.94
10.19.94
Trade Balance
(millions of dollars)
Imports
1987
1988
1989
1990
1991
1992
1993
1994
s 12,223
s 18,898
s 25,438
$31,272
$ 38,184
$ 45,460
$ 48,925
$ 28,141
Exports
Balance
$ 20,656
$ 20,565
$ 22,842
$ 26,838
$ 27,120
$ 27,360
$ 29,980
$ 16,665
$
$
8,433
1,754
$ -2,595
$ -4,433
$ -11,063
$ -22,100
$ -18,945
$ -11,476
*All figures exclude in-bond maquiladora transactions. Figures for 1994 Jan-Jun.
Petroleum
(price pt:r barrel*)
Ohneca
Istlunus
Maya
I0/13
$15.33
$15.64
$12.94
09/30
$16.21
$15.91
$12.29
Change($)
- 0.88
- 0.27
+ 0.65
• New York spot rates.
Sourct:s: Bloomberg, El Financiero; Fi11a11cial Times
Cc''
Copyright 1994.
The Whalen Company,
Inc.
All Rights Reserved
PAGE
THE MEXICO REPORT
4
+
The U.S.
ExportImport Bank has approved several
guarantees for Mexico. The first deal
was a $19 million sale of electrolytic
tining line equipment to Altos Hornos
de Mexico, in Monclova, Choahuila by
Delta Brands Inc. of Irving, Texas.
The second application was made by
Bank of America to finance up to $87
million in communications services. ExIm also recently made claim payments
on a default involving Plasticos Core of
Ciudad Juarez, Chihuahua, which failed
to pay T. Brewer & Co. for roughly $1
million in synthetic resins.
+
N afinsa, t11e state
development bank, issued DM300
million
in
2-year,
floating-rate
Euronotes via Swiss Bank Corp. in
Frankfurt. The paper pays 64 basis
points over 3-month LIBOR and was
priced at par.
+
Retailer Saks Fifth
Avenue is considering an alliance with
an unnamed Mexican partner, according
to the Miami Herald. Neiman Marcus is
also rumored to be considering a similar
move into Mexico.
+
In an effort to attract
new money into the country, Banxico
has approved the establishment of
futures contracts on interest rates and
inflation, an important move toward the
development of a local derivatives
market, central bank officials said. The
Wall Street Journal reports. Banxico's
decision will create a futures market for
Nominal Interest Rates and for the
National Index of Consumer Prices.
Details of the contracts are expected to
be issued shortly. There is no indication
that Banxico intends to drop restrictions
on short-selling the currency, a
necessary condition for a peso futures
contract.
Questions? Comments? Suggestions?
:~
Need Information About
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Do You Have Questions About
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~'Copyright
1994.
The
Whalen Company, Inc.
0 CTOBER21, 1994
+
Petroleos Mexicanos
(Pemex) finally issued 20 billion yen of
5.15 percent worth of four-year "Samurai"
bonds at the issue price of 100 by Daiwa
Securities Co. The deal had been
cancelled on four previous occasions.
Samurai bonds are yen-denominated issues
by foreign entities for settlement in Japan
alone. Payment for the bonds is due Nov. 2
and the Long-Term Credit Bank of
Japan is chief trustee. Moody's Investors
Service rates Pemex's long-term debt BA2.
+
Mexican officials have
lifted some tariff restrictions on U.S. steel
after domestic producers admitted that
their products could not meet customer
quality demands. In a related development,
Inland Steel and Grupo Ahmsa have
invested $60 million in Ryerson de
Mexico, a joint venture between the two
firms that will consolidate the far-flung
affiliates of Ahmsa around Mexico. Alunsa
is owned by Grupo Acero del Norte.
+
The financial troubles
affecting most airlines in Mexico (and the
world, for that matter) have caused
Aeropuertos y Servicios Auxiliares
(ASA) to run an enormous cash deficit this
year, totaling more than N$400 million.
Roughly N$100 million of the bad debt is
attributable to Mexicana de Aviacion, the
cash-strapped airline that was under
administration by rival Aeromexico until
the end of August. The Secretary of
Communication and Transport, which is
responsible for the state-owned ASA,
reportedly is investigating the situation.
+
Imports of autos and
trucks have increase 575 percent from
5,016 units in the first eight months of this
year to 39,012 through August, fueling a
rebound in overall sales after a slow start in
the first half of 1994. Sales for August were
up 22 percent for all automakers, with
Ford, Nissan and GM well into double
digits for the month. Chrysler nearly
tripled sales over August 1993, but sales by
VW, which is the largest producer of
vehicles in Mexico, fell 7 percent, causing
the company to lay off almost 1,000
workers at its facility in Puebla (see table
next page).
All Rights Reserved
Total Sales & Production
(cars & trucks)
Production
Sales
8 mos. 94
8 mos. 93
8 mos. 94
61,168
158,623
66,345
Chrysler
138,315
63,826
57,034
Ford
69,906
120,410
76,572
GM
127,139
83,025
85,193
Nissan
169,669
114,691
105,456
vw
393,268
714,156
390,600
Total
,S'ource: Automotive News
+
Lorenzo Zambrano
Trevino, the head of Cemex, says that
Mexico must raise a minimum of $100
million annually for new infrastructure
projects over the next decade. Zambrano
added that it is not enough to simply
build new roads, bridges and water
systems and that Mexico must make
existing
services
more
efficient,
particularly in areas such as petroleum
and electricity, two areas that were once
shut to free competition.
+
United Airlines will
drop its service to Guadalajara, Jalisco,
and Caho San Lucas, Baja California
Sur, as of December. The airline blamed
the decision on low volumes and a need
for overall restructuring in its Mexican
routes.
+
Edward
Munoz,
director general of Celanese in Mexico,
says that his company has no appetite for
acquisitions in the petrochemical sector
"for now," but adds that his firm might
be more interested if the government
were to privatize much of the state-run
industries en bloc. From 1991 through
1995, Celanese will have invested $200
million in its existing subsidiaries in
Mexico. The subsidiary of HoechstCelanese has 44 plants in Mexico
located in Vera Cruz, Estado de Mexico,
Jalisco, Queretaro, Guanajuato and
Michoacan. Together these plants have
an installed capacity of in excess of a
million tons of petrochemical allllually
and are currently rulllling at about 80
percent utilization. Munoz and other
officials of Celanese say they have great
C(' Copyright 1994.
0CTOBER2l, 1994
THE MEXICO REPORT
PAGE 5
8 mos. 93
149,615
134,978
125,152
123,408
172,142
705,295
confidence in the economic policies of
the Salinas government and that without
the market-opening measures taken
during the past six years, the firm would
not have committed the human and
financial resources it now has positioned
in Mexico.
+
Grupo
Pulsar
is
planning to invest $1. 7 billion to create
a new local telephone system in Mexico
between now and 1997. Alejandro
Perez, director of business development
for Pulsar International, says that his
firm is targeting 65 communities around
Mexico for the new telephone service.
This latest investment announcement
comes on the heels of a multi-billion
dollar project to develop a sustainable
forestry project in southern Mexico.
+
Office Depot of the
U.S. is teaming up with Grupo Gigante
to open a chain of office supply stores in
Mexico. Gigante is one of Mexico's
largest retailers and already operates 47
Radio Shack stores south of the border.
+
Of the 200 largest
exporting firms in Latin America, 37 are
based in Mexico and account for
$23.119 billion in foreign sales or onethird of the total volume of exports. The
top-ten leading export firms include
Petroleos de Venezuela, Pemex, GM de
Mexico, Codelco of Chile, Chrysler of
Mexico, Ford of Mexico, Petroecuador,
Vale de Rio Doce of Brazil, CVS of
Venezuela, and VW de Mexico.
Significantly, though Pemex is twice the
size of its Venezuelan counterpart, it
still generates less revenues and exports.
The Whalen Company, Inc.
+
Emilio
Lozoya,
secretary of energy, mines, and parastate
industry, says that despite the broad
opening given to national and foreign
private investors in the energy sector,
the state is unwilling to yield its
leadership and control over the country's
electric power industry. Lozoya stressed
that foreign investment in the electric
sector amounted to $6 billion during the
current administration.
+
Pemex
is
urging
national and foreign companies to
participate in bids to drill nine wells off
the coast of Campeche. According to
figures and information provided by
Banamex, despite the fact that Pemex
needs at least $20 billion to modernize
its operations over the next five years, it
only invested N$3. 860 billion new pesos
-- approximately $1 billion -- in
developing new wells and infrastructure
in the first half of 1994. If the current
trend continues, the capital budget will
barely double by year's end. If these
investment levels persist, Pemex will
only be able to meet 50 percent of the
goals set for the five-year period and
consequently, its modernization will be
delayed. Pemex's revenues dropped
approximately 11 percent in the first half
of 1994 compared to the same period in
1993. Meanwhile, close observers of
Pemex say that the oil monopoly is
seeing an accelerating decline in
production from some of its older, most
profitable wells located onshore. As the
output from these wells declines,
Pemex's ability to meet its need for
capital internally will algo decline.
+
Pemex plans to spend
$200 million to rehabilitate a dilapidated
refinery at Cienfuegos, Cuba. Pemex
chief Carlos Rojas describes the venture
as "strategic," but others note that the
deal, which includes the "swap" of
Cuban debt for equity in the largely
useless facility, gives Pemex a site on
which to build a new refinery that
eventually could be sold to investors.
The oil monopoly plans to produce
gasoline and naphtha at Cienfuegos. •
All Rights Reserved
THE MEXICO REPORT
PAL1E 6
Press Clips
"Do you want proof tllat tl1ey
The 'Imperial Court' Under Attack
are
not
military members? Instead of
by the Army
being punished, Domiro has been
protected. Where else in the world do
Ignacio Rodriguez Reyna
you
see this?" the military member
El Financiero, September 28, 1994
added.
When
Mario
Aburto
A specialist compared the EMP
Martinez pulled the trigger of the
to
the
Praetorian
Guard of the Roman
Taurus .38 special, he did it without
Empire
and
recalled
that, in the end,
knowing that the bullet would not only
these
guards
were
responsible for
end Luis Donaldo Colosio's life but
"We already
assassinating
the
emperor.
would eliminate the raison d'etre of the
have
our
first
assassinated
Caesar in
Presidential Staff (EMP).
Mexico."
The final countdown for an
Circles close to the Mexican
elite body created by President Lazaro
Army
are
aware of the contempt that
Cardenas in 1937 -- a body that for the
military
officers
feel for the members of
past two decades has had rather limited
the
EMP.
"We
have
the same training,
jurisdiction and is little known in the
but
later
we
have
different
missions:
history of the country -- began on the
ours is to serve; theirs is to reap
23rd of March.
benefits," a division general explained.
It will never be the same. The
Luis
Donaldo
Colosio's
"Imperial Court," as the career military
assassination
gave
the
military
officers scornfully call this security
leadership
and
its
class
the
opportunity
corps, has already shown how fallible it
is and is currently under fire by the to speak out loudly about tl1e
improprieties of having an EMP. The
Army.
failure of the security corps that was
protecting
the
PRI
The EMP was designed to be presumably
presidential
candidate
has
given
rise
to a
an infallible corps responsible for
long
and
patiently
restrained
settling
of
protecting the life and personal safety of
accounts
[between
the
Army
and
the
the person under its care. This body
failed [to protect Colosio] in Lomas EMP].
Taurinas.
It is true tlmt high-ranking and
mid-level
officers have spoken witllout
In
military
terms,
the
consideration
and with an openness
carelessness, negligence, and numerous
restricted
only
by
the
still
oversights by the EMP members, led by
insurmountable
military
command:
Brigadier General Domiro Garcia
Reyes, are unforgivable. "There is no Thou shall not speak about or discuss
excuse whatsoever; it failed. It deserves Army matters with civilians. Thus, the
to be punished by tl1e Army. Domiro officers request anonymity.
should be in big trouble. It was a failed
"The EMP has proven its
mission. Period. But the Imperial Army
inefficiency.
Why do we keep them?
does not understand this. Actually, tl1ey
Actually,
the
Colosio case was a coup
are not even military officers," an
d'etat,"
a
young
Air Force lieutenant
Armed Forces member said.
colonel pointed out. According to him
(('Copyright 1994.
The Whalen
Company, Inc.
0CTOBER21, 1994
and other military officers questioned,
now is tlle time for the EMP to
disappear as such. "It has no duties. To
be blunt, it must vanish from the face of
tlle eartll." In its place, a civiliancontrolled organization in which the
military sector could participate -without meaning that it belongs to a
divine caste -- has been proposed.
Many military attaches' offices
of tlle diplomatic corps accredited in the
country also evaluated the circumstances
under which the assassination took
place and the role played by the EMP. A
U.S. military source commented that
"this incident proves - that the EMP is
obsolete. Not only was it incapable of
protecting Colosio, but it is also running
the risk of not being able to protect the
president."
Behind Mexico's Violence
Andrew Reding
Los Angeles Times, October 18, 1994
Once again, the assassination of
a politician is raising troubling questions
about the power and the influence of
Mexico's drug cartels in the country's
politics. In August, a former attorney
general warned that drug traffickers
have forged links with prominent
members of the government and police,
and may have been behind tlle
assassination of presidential candidate
Luis Donaldo Colosio. Now, the slaying
of Jose Francisco Ruiz Massieu, the
deputy leader of the ruling party, seems
to add credence to the earlier warning.
Rules of Origin Won't Be Softened
Kevin Hall
Journal a/Commerce, October 19, 1994
Monterrey
Tough new
certification requirements for textiles,
footwear and apparel moving into
Mexico will remain in place despite the
outcry from companies that re-export tlle
products from the United States, a top
All Rights Reserved
PAGE 7
THE MEXICO REPORT
Mexican commerce official said.
Mexico's continued problems with thirdcountry exports of Chinese-made
products necessitate a tough policy since
there have been clear abuses, said
Eduardo Perez Mota, subsecretary of
industrial policy for Secofi, Mexico's
commerce agency.
and "dedazo" (hand-picking of political
candidate by the president) are
conspicuous examples of Mexican terms
that have been incorporated into the world
political dictionary. In recent times,
however, two practical innovations that
have arisen here could well lead to
theoretical considerations that will go
beyond our borders: the postmodern
Mr. Perez said Mexico has no guerrilla force and the postmodern party of
plans to change its certificate-of-origin the state.
rules that took effect in August. "The
evidence we have is that when we are
jProceso
flexible is precisely when we have
problems," the Secofi official said.
I
In an effort to stem the flow of
Chinese goods through countries like
North Korea, Hong Kong, Taiwan and
Vietnam, Mexico in August imposed stiff
rules on all merchandise coming from
countries not belonging to the GATT, the
rule-making body on world trade.
OCTOBER 2 1, 1994
Indeed, it was here and now that
the postmodern guerrilla force, the
Chiapas guerrillas, was born in theory and
practice. An indigenous but neither racist
nor xenophobic guerrilla force, radical but
flexible and free of Cold War ideologies; a
guerrilla force that seeks not to take power
but rather to help modify it, that holds a
national convention out in the open and
that also takes part in national elections,
that subordinates itself to peaceful
·Af:ansitos
Naranjo
(Li es ! We have never
killed anybody !)
In doing so, Secofi made it very
difficult to sell in Mexico for retailers like
Wal-Mart and J.C. Penney, as well as for
apparel manufacturers like Nike and large
apparel re-exporters who import Asian
products. They feel they are being denied
access to the Mexican market since most
import into the U.S. and until August reexported a portion of their shipment to
Mexico.
PRI President
Ignacio Pichardo
Pagaza.
The Po111modem Party of the State
Lorenzo Meyer
Reforma, September I, 1994
Mexico has contributed very little
to political theory. All of our major formal
political tenns and principles (democracy,
federalism, liberalism, presidentialism,
etc.) come from elsewhere. And the same
goes for most of the temis that apply to our
actual politics (which is very different from
our politics under the law): caudil/o
power, cacique power, authoritarianism,
patrimonialism, or patronage. The fact is
that Mexico's contribution to political
theory is a footnote and nothing to be
proud of. The "mordida" (bribe), the
"tapado" (the concealed official candidate,)
(!'.' C opyright 1994. The Whalen Company, Inc .
All Rights Reserved
PAGE 8
organizations of civil society, and lastly
that asks to be rendered obsolete by
nonviolent political action. Now then, to
this innovation we must add another: the
postmodern party of the state, which was
born on 21 August.
On 21 August, in the wake of
elections that were marked by a high
turnout and were relatively well-monitored
by Mexicans and foreigners, the PRI once
again won the presidency and a majority in
Congress. The party of the state that was
born in 1929 in response to an emergency
within a closed government circle that still
reeked of gunpowder (the assassination of
General Alvaro Obregon, the presidentelect and last great caudi//o of the Mexican
Revolution), won its 12th consecutive
presidential election and is preparing to
continue governing until at least the year
2000, thus extending what is already a
world record this century for political
control over a society by one party. But
since the revolutionary elite that shaped the
PNR (National Revolutionary Party)/PRM
(Party of the Mexican Revolution)/PRI took
power in early 1917, the uninterrupted
transmission of power within the same
circle will celebrate its 83d amriversary by
the time Ernesto Zedillo's presidential term
concludes!
THE MEXICO REPORT
of Sin Fronteras (Without Borders) and
According to the Mexican
president of the Border Fann Workers' Chamber of Commerce, it takes two
Union, said.
minimwn wage jobs for a family of five
to meet 80 percent of their basic food
Marentes said the goal of the needs. As a result, children leave school
U.S. agricultural system is to make to work in the maquiladoras. "Mothers
profit and accumulate capital and results tell me, 'Those plants are destroying our
in the "most brutal exploitation of those families,"' Wirth said. "The people have
who work the land. The cruelest irony I lost their land. They've lost their culture.
see in the U.S. is farm workers going to They've come to the cities to work in the
the food bank begging for food."
maquiladoras and live in cardboard
shacks. Their families disintegrate as
Marentes warned that approval they try to live in a new world of
of NAFTA and GAIT allows U.S. poverty, violence and crime."
companies to control the agricultural
and food markets of Mexico and Latin War in Chiapas
America and leads to situations where
cheaper U.S. products displace those United Press International
produced domestically. Marentes said October 16, 1994
many Mexican apple producers have
Zapatista National Liberation
gone bankrupt because of cheaper apples
Army
rebels
said there will be civil war
from Washington State.
in Mexico if governor-elect Eduardo
Justus Wirth, a Franciscan Robledo Rincon takes office Dec. 8 in
priest from Juarez, Mexico, said that the southern state of Chiapas.
millions of farmers have been displaced
because ofpost-NAFTA changes in laws
governing land ownership that allow
corporations to buy land and because
Mexican banks have reduced the
amount of money available to farmers
through the rural bank of Mexico.
Workers Leave the Land
Tom Mohan
Internet, October 17, 1994
Over 100 people from around
the Midwest attended the Sept. 24 and
25 Bridges of Friendship/Puentes de
Amistad conference held in Iowa's
capital city to assess the impact of the
North American Free Trade Agreement
(NAFTA) and the General Agreement
on Tariffs and Trade (GATT) here.
"This nation's 4.2 million
agricultural workers are the foundation
of the U.S. food industry. They make
possible the stability of the nation. Their
wages and work conditions represent the
most inhumane aspects of North
American society," keynote speaker
Carlos Marentes, founder and director
0CTOBER21, 1994
"The Mexican government has
abandoned [these farmers] and wants to
turn them into factory workers in the
maquiladoras," Wirth charged.
He added that the 2,000
maquiladora factories in Mexico employ
600,000 workers, produce goods valued
at $5 billion and are Mexico's second
largest source of income.
"If they want bullets, we will
give them bullets ... If the Army wants to
impose Eduardo Robledo Rincon on us,
there will be war. I mean in Mexico, not
only in Chiapas," said Sub-commander
Marcos, the spokesman for the rebels.
The ruling Revolutionary Institutional
Party, or PRI, responded immediately,
saying its candidate, Robledo, will not
resign. The Zapatistas and opposition
Party of the Democratic Revolution, or
PRD, accuse the PRI of fraud and say
their candidate, Amado Avendano
Figueroa, was the true winner of the
state's elections.
Last week, the rebels broke off
peace talks with the government and
accused the Army of carrying out
maneuvers to provoke them. They said
the militia has mined all access roads
into their territory.
300
Wirth
said
the
maqui/adora plants in Juarez employ
130,000 workers, the city's population
has tripled in the last 15 years and that
60 families arrive in Juarez everyday to
"The Zapatistas cannot answer
work for $3.50 a day because it's "twice with a white flag again. We are an
what they can earn on the land."
army, not a union or social club "
Marcos told a caravan of civil
organizations carrying 130 tons of aid
for the rebels.
Cc' Copyright 1994. The Whalen Company, Inc.
All Rights Reserved
THE MEXICO REPORT
PAGE 9
The government offered to Clinton on the Border
install five camps so human rights
workers and others could verify and Michael J. Sniffen
document the rebels' accusations against Associated Press, October 13, 1994
the Army. The Zapatistas have not
responded to the proposal.
The Clinton administration
pledged Thursday [October 13] to halt
Authorities have also suggested illegal immigration across the Mexican
creating a special commission with border and accused California's
official and rebel representatives to Republican governor of demagoguery on
monitor the cease-fire agreed on since the issue in his re-election campaign.
tnid-January.
A year and a half into the
According to the rebels, their administration plan, new fences, lights,
people -- some 2,000, many of whom sensors, night-vision scopes and
are Indians of Mayan descent -- are additional Border Patrol agents are
surrounded by 50,000 soldiers.
being placed along the 2,000-mile
- - - - - - - - - - - - - - - border, Deputy Attorney General Jamie
The Wars Inside the PRI
Gorelick told reporters.
Federico Arreola
El Financiero, October 9, 1994
The assassinations of Luis
Donaldo Colosio and Jose Francisco
Ruiz Massieu must be part of the same
project meant to destabilize the country.
There is considerable reason to believe
that an attempt will be made to kill
another Priista of great importance.
This is neither alarmist nor
pessimism, but instead simply deduction
based on statistical evidence. Isn't it
curious: There is much discussion about
the existence of a list of people to be
killed [asesinab/es], but nobody has
suggested that there are any opposition
political figures on this list. I believe
that on this list are some of the top PRI
militantes.
0CTOBER21, 1994
the president, the attorney general and
Congress, we would not see the
resources the federal government is now
sending to the border. If Ms. Gorelick is
serious ... we are going to have to see
much more resources committed to the
border than what we see today."
Barbaric Mexico
Jorge Castaneda
Proceso, October 10, 1994
It must be said that it will be a
long time before we know who really
killed Jose Francisco Ruiz Massieu, but
someday we will know. If we simply
record the versions and counter-claims
following the murder of Luis Donaldo
Colosio, the result is that many of the
suppositions about the second killing
this year are discredited, but only to be
replaced by other equally implausible
explanations.
Justice Department officials
have even consulted the Pentagon's
Center for Low-Intensity Conflict for
advice on the most effective places to
locate the new officers and equipment,
These facts do not prevent us,
she added. The first intense efforts
began last fall at El Paso, Texas, and however, from making some initial
last month in California south of San conclusions about the death of the
secretary general of the PRI, and from
Diego.
speculating
about
the
possible
"We expect we will be able to interpretations of what has occurred in
secure the entire southwest border Mexico since May 1993, when the first
during this program," she said. "We do shock occurred: the killing of Cardinal
have a plan for the activities in El Paso Posadas in Guadalajara.
and San Diego to meet up.
First we must affirm the basic
"We intend to close the entire point presented by the evidence. In order
border" to illegal immigrants, a goal she to reject the notion of a lone madman in
acknowledged
"many
thought the Colosio case, and even if we separate
each assassination from the others and
impossible."
accept that they were not the result of a
"I like to hear them talking this unified conspiracy, it is clear that the
way," said Roger Braudemuehl of traditional procedures for clearing up
Belton, Texas, a 30-year Border Patrol controversies and differentiating among
veteran who headed the agency as an the elite groups in Mexico are in a
assistant immigration colllllllsstoner lamentable state of failure.
from 1980-1986. "El Paso is a major
What
the
collection
of
success and shows it can be done."
assassinations during the Salinas
The Priistas, it is clear, are
afraid. But they are less afraid of armed
threats and the wars from the
narcotraflco than from the campaigns
that are destroying the prestige,
destroying the moral force of the
political group that governs Mexico. The
war of publicity and the war of
Responding to Gorelick, Sean
calumnies is making Mexicans believe Walsh, press secretary to California
that the PRI's time has past.
Gov. Pete Wilson, said, "Without
Governor Wilson's relentless pursuit of
(('Copyright 1994. The
Whalen Company, Inc.
sexenio proves is that even as the level
of economic well-being has stagnated
since 1981, so too the mechanism for
resolving disputes among Mexico's elite
political groups has also collapsed. •
All Rights Reserved
THE MEXICO REPORT
PAGE 10
0 GTOBER 21 , 1994
~o1i~ics
If the answer is yes, then the
Mexican Army and security forces could
very quickly find themselves outnumbered.
confirmed that the Chiapanecos possess Almost half of the Mexican Anny's
sophisticated weapons, including anti- strength is deployed in and around
Chiapas.
aircraft missiles that could prove a serious
threat to Mexico's relatively modest air
Second and more important is tl1e
force.
issue of violence. If war begins anew in
For the guerrillas, the military Chiapas, then it is likely that a new round
situation is grim but hardly impossible. of assassinations, bombings and other
Although the Mexican Army e1tjoys vast forms of urban terrorism will hit Mexico.
numerical and material superiority, the As with the 1nilitary situation, the Mexican
apparatus
is
completely
guerrillas are well-motivated and enjoy the security
unprepared,
militarily
and politically, to
overwhelming support of the local
population. Moreover, Mexico's Army is deal with such an eventuality.
Storm Clouds Over Cbiapas
As this issue of TMR. went to
press, the Mexican Army was preparing for
offensive operations against the Zapatista
guerrillas in Mexico's southernmost state.
With talks between the government and the
Chiapanecos broken down and the
impending inauguration of PRI govemorelect Eduardo Robledo Rincon, our sources
in Mexico expect a crack-down by the
Mexican Army and police. Such repressive
measures, however, may not be limited to
Chiapas.
not known for either great efficiency or
tenacity, being a force designed more for
"We are headed for a very serious intemal security than defending against
political crisis in the next 60 days," notes external threats. On a given day, the
one Mexico City joumalist who has smaller Guatemalan Army, which has been
covered five presidents. "The PRI cannot engaged in counter-insurgency operations
back down in Chiapas by admitting that in tl1e northern part of that country for
Robledo did not win. TI1ey must impose more than three decades, would probably
him, probably by force, but this is a defeat its larger Mexican counteipart.
situation already familiar in other parts of
Guatemala
the country. My fear is tliat the PRI hard"Mexican soldiers are used to
liners will take this opportunity to settle old living in relative luxury," opines one close
scores with the left and some of the leading observer. "They ride into battle in their
Finally, renewed fighting in
trucks and armored cars. They are not Chiapas means that there will almost
intellectuals in Mexico City."
prepared to go into the jungle and fight the certainly be a new round of public protests
Columnist Carlos Ramirez Zapatistas on their own terms. If the and demonstrations in support of the
makes an explicit comparison between the guerrillas decide to fight, it could be a very guerrillas. While Mexican voters generally
situation in Chiapas and the 1968 massacre bloody engagement."
eschew violence and were not willing to
in Tlateloco. "In less than a month, the
support political candidates associated with
TI1ere is little question, however, the Zapatista rebels, including PRD
conflict in Chiapas is going to devolve
toward violence," he writes. "When the that the vastly superior numbers of the candidate Cuaubtemoc Cardenas, they
Secretary of Defense, Antonio Rivello Mexican Anny will prevail in any also oppose a violent solution in Chiapas.
Bazan, told a group of federal deputies th conventional engagement between the two
Should the Mexican Anny go to
at tl1e Zapatista guerrillas must put down sides. The real issue facing the Mexican
war,
it
will
reflect a decision at the highest
tl1eir weapons and become an open government as it approaches the
levels
of
the
PRI to discard any pretense of
political force, in this moment the situation confrontation in Chiapas is political.
seeking public support and will mark a
in Chiapas crossed the point of no return."
First, if the Chiapanecos decide return to the mano dura - the "hard hand"
Public statements by members of to fight or are attacked by the Mexican mentality characterized by PRI officials
the Mexican Army are rare events, but Army, what will be the reaction in other such as Ignacio Pichardo -- that caused
Rivello has made it clear that he considers parts of the country? Marcos has made it the 1968 Anny massacre of hundreds of
tl1e Zapati:;'fa\' a significant military threat. clear in his comments that he is prepared unarmed students. In the event, Mexico's
to die to set an example for his fellow economic and political opening will have
"The great majority of the citizens. Will insurgents in Guerrero, Vera ended very abruptly and a new phase of
Chiapas guerrillas are not from tl1at state," Cruz and other states also rise if fighting reactionism, repression and violence will
start in Mexico.
he told reporters on October 3. Rivello also begins in Chiapas?
((J
C opyright 1994.
The
Whalen
Company, Inc .
All Rights Reserved
THE MEXICO REPORT
PAGE 11
+
The fatnily of Manuel
Clouthier, the presidential candidate of the
PAN in 1988, has accused the Mexican
government of complicity in the death of
the charismatic conservative 5 years ago.
Rebeca Clouthier says that the fanrily is
convinced that the government is trying to
make any memory of the incident
"disappear" and she says that they refuse to
accept the "illogical" official explanations
of the 1989 auto accident that killed the
manknownas "Maquio."
In Brief
+
U.S. Labor Secretary
Robert Reich took a dive by rejecting
claims by Mexican workers that
Honeywell and GE violated their rights
in recent job actions. "The information
available does not establish that the
government of Mexico failed to promote
compliance with or enforce the specific
laws involved," a Labor Department
spokesperson told the media. The same
Labor official conceded, however, that
+
Earlier this month,
the dismissal of the workers in question
"appears to coincide with their [union Mexico awoke to the bizarre spectacle of
organizing] drives" in the GE and seeing a real live fugitive from justice,
Maria Eugenia Ramirez Arau,
Honeywell facilities .
denying charges of being involved in the
+
Former
PRD Ruiz Massieu killing on national TV.
presidential candidate Cuauhtemoc Ramirez fled from her home after
Cardenas says that there are still no discovering that her husband was
results for more that 10,000 casillas or harboring tl1e accused assassin of the
polling places from the August elections. PRI secretary general. After spending
Cardenas continues to campaign against over an hour protesting her innocence,
what he calls "el fraud descomunal" but Ramirez surrendered to police. A few
is receiving little attention because of the hours later, police officials announced
latest political assassinations and that she had made "a full confession."
growing worries about the situation in And so it goes in old Mexico.
Chiapas.
+
The October 12 poll by
Mori/Este Pais shows that 59 percent of
those questioned believe tliat the peso
will fall in value against tlie dollar in the
next month. One-quarter of those polled
tl1ought the stock market would move
higher, while 39 percent expected prices
to fall in the next montl1. Almost half
thought that the PRI was behind the
murder of Jose Francisco Ruiz Massieu,
40 percent didn't know or refused to
comment, and only 9 percent thought
the assassination was drug-related. In
the October 19 poll, 69 percent said that
the overall situation facing the country
was worse than the year before. More
than half expect a resumption of fighting
in Chiapas. Some 49 percent thought
tl1at inclusion of the Central American
states in NAFTA would be beneficial to
Mexico, but 29 percent opposed such a
move and 30 percent had no opinion.
~'Copyright
Sur
Pcwific Ocean
+
Four journalists were
murdered in a three-day period earlier
this month in the state of Sinaloa.
Killed were Jesus Reyes VilJegas,
Maria Isabel Aguanta Nava, Maria
Ramona
Barrera Castro,
and
Yolanda Reyes Vargas. All of the
journalists worked in the area of
agriculture and there is concern that they
may have been poisoned, but foul play
remains the chief explanation in this
rural Pacific coast state plagued by drug
trafficking and violence.
1994. The Whalen Company, Inc.
0 CTOBER21, 1994
+
Porfirio Munoz Ledo,
leader of the center-left PRD, says that
his party will talk with the ruling party,
despite the opposition of former
presidential candidate Cardenas. Munoz
has also called upon the government to
revamp the country's security apparatus
in order to help in the fight against
violence and narcotics-related murders.
"This latest assassination must be seen
as a call upon all Mexicans and all of the
political groups to push for profound
political change," he told reporters.
+
Where is fugitive
bariker Carlos Cabal Peniche hiding?
Speculation ranges from the U.S. to
Hong Kong, but our sources say that he
has taken refuge in the principality of
Monaco because of its legal protections
against extradition and because Cabal is
working to gain support from the Roman
Catholic Church for his case. The same
source says that the Vatican had invested
millions of dollars in the projects of
Cabal Peniche.
+
Humberto
Roque
Villanueva, a newly elected federal
deputy for the PRI, has been named head
of the ruling party's bloc in the Chamber
of Deputies, replacing Jose Francisco
Ruiz Massieu.
+
Roberto del Cueto,
the former director of Banxico, has been
named director of banking operations for
Banamex, according to Accion.
+
Herberto
Castillo
Martinez, Senator-elect for the PRD
from Veracruz, was recently denied
permission to enter the U.S. because
American officials considered the
venerable leftist to be dangerous due to
his participation in the 1968 student
riots in Mexico City. This latest
demonstration of the mindlessness of
American policy is laid bare by the fact
that the U.S. has allowed Eduardo
Valle, an organizer of the 1968 student
protests, to not only enter the country
but to take up residence in suburban
Washington.
All Rights Reserved
PAGE 12
THE MEXICO REPORT
OCTOBER 21, 1994
+
Ambrose
Evans- of the deputies in Mexico's lower house
Pritchard, writing on October 9 in the has been lost. "The momentum of the THE MEXICO REPORT
London Sunday Telegraph, says that PRI after August has been completely
Please enter my subscription to
police reports from Arkansas suggest nullified by the killing of Ruiz Massieu,"
The
Mexico Report. Enclosed is my
that Don Tyson, the millionaire head of according to Ricardo Pascoe of the
check,
payable to The Whalen
Tyson Foods and a close friend of PRD. "The members of the ruling party
in the amount of:
Company,
President Bill Clinton, has been are settling their differences in public
engaged in drug trafficking since the and the effect on the political situation is
•:• $450 for one-year.
mid-1970. "Memoranda that circulated very grave." Pascoe, who speculates that
•:• $800 for two-years.
in the Criminal Intelligence Section of more prominent people will be included
the Arkansas State Police show that Don in the scandal as time goes on, says that
Half-off for government and
Tyson was under suspicion of drug there are many rumors that Raul Salinas academia upon written request.
dealing from the early 1970s until the de Gortari, the older brother of D. C. residents add 6% sales tax.
late 1980s," reports Evans-Pritchard, President Salinas, was involved in the
who has written several articles about murder. Another source wonders why, in
Clinton's previous use of drugs and the midst of the investigation of the
association with persons linked to drug killing, there has been no attention on Title_ _ _ _ _ _ _ _ __ _
trafficking. He writes: "A file note dated the links between Ruiz Massieu and the
March 26, 1976, comments that Tyson Acapulco drug community. "Look at the Firm _ _ _ _ __ _ _ _ __
'is an extremely wealthy man with much development that occurred in Guerrero
political influence and seems to be during the term of Ruiz Massieu as Address._ _ _ __ _ _ __
involved in almost every kind of shady governor,"
the
source
protests.
operation, especially narcotics. However, "Guerrero is virtually broke; the state
(he) has to date gone without has no money. Where did the funds
implication in any specific crime. Tyson come from for all of the new sewers, toll City ______State _ __
likes to think of himself as 'King of the roads, and hotels in Guerrero? Who
hill' in north-west Arkansas.' The federal financed the millions of dollars for the Country --~Zip/CP_ __
Drug Enforcement Administration also fideicomiso in Acapulco that backed all
had a file, "Tyson, Donald J. et al," of these projects?"
Telephone _ _ _ _ __ __
including a document in which an
informant reports on what is referred to
+
In an anonymous letter Fax _ _ _ _ _ __ _ _ __
as "Donald Tyson's drug trafficking published in Excelsior on Sunday, October
For a Sample or
operation." Sources working with Evans- 2, alleged "drug traffickers" took
Subscription
Pritchard tell TMR that the "Redneck responsibility for the Ruiz Massieu killing.
Information
Mafia" in Arkansas has extensive ties to The text of the letter explicitly takes credit
call
individuals convicted in the money- for tl1e bold assassination and goes on to
laundering case in Brownsville, Texas warn that more politicians, business
1-800-238-5540
involving American Express Bank (see people, athletes and members of the
THE WHALEN COMPANY INC.
TMR 19, Vol. III) and several other Catholic Church will be killed unless the
1717 K STREET, N.W.
institutions. These convicted felons, who government gives up its fight against
8UITE600
are now in a federal penitentiary, are narcotics. While this conveniently timed
WASHINGTON, D.C. 20006-1504
tied to the Gulf Cartel of Juan Garcia letter suggests that the drug trade was
TEL: 1-202-293-5540
Abrego in Matamoros, Mexico. They directly responsible for the Ruiz Massieu
FAX: 1-202-293-1627
believe that Mexico's most powerful incident, it also deflects attention from
cartel has worked for years with drug government involvement by suggesting a
traffickers based in Arkansas to separation between (1) the drug lords and
transport cocaine and launder billions of (2) member of the Salinas Cabinet. There
dollars in illicit profits from the activity. really is no effective way to differentiate
between the "good guys" and the bad in
Mexico
except on the basis of personal
+
Even as Mexico settles
perfonnance
and allegiance to certain
down after the latest political upheavals,
political
groups.
Thus the letter, like
our sources say that any benefit gained
everything
in
print
in Mexico, needs to be
PRI
in
the
impressive
August
21
by the
victory by Ernesto Zedillo and a majority taken with ample amounts of salt. •
""'--------------'
((' Copyright 1994. The
Whalen C ompany, Inc.
All Rights Reserved