At the moment of writing, there is something of a stalemate between the Mexican government and the Zapatista Liberation Army in Chiapas. It could, of course, be the calm before the storm. Nevertheless, Mexico is far from tranquil. And throughout this year, the economy has gone from bad to worse.
Negotiations between the United States and the Mexican government, in an attempt by the Clinton administration to bail Mexico out of its economic crisis, began in the middle of February, and lasted six days before an agreement was reached. The Americans offered Mexico a loan of $20 billion in an attempt to stabilise the peso. At least that was the idea. Mexico promptly raised short-term interest rates by 10 percent and the rate on some government debts to 50 percent.
The Americans naturally drove a hard bargain. They insisted that PEMEX, the state-owned Mexican oil company, must deposit payment into an account of the US Federal Reserve Bank, where it can be withdrawn if the Mexican government defaults on the loan. Instead of American companies and corporations paying Mexico directly for oil, American companies would deposit payments with the Federal Reserve Bank, which would transfer them to Mexico at a later date. Hopefully, Mexico would receive an international rescue package of up to $50 billion.
Slashing living standards
As always, the ordinary people, the workers and peasants, were the first to suffer the consequences of the agreement. Guillermo Ortiz, the Finance Minister, said that Mexico "had been living beyond its means and running up debts it could not pay”. And continued: "It will be difficult for all Mexicans . . . There are no easy solutions." Instead of the 4 percent economic growth which President Zedillo had promised for 1995, he now expected a recession. The economy would, in fact, decline by 2 percent, and prices would rise by more than 40 percent. But Mr Ortiz had a plan; he also called for “extraordinary efforts" from citizens (i.e. the workers and peasants) "to make the plan work”.
Most workers would get only a 4 percent rise in wages, with the minimum salary, on which large sections of the Mexican working class depend, up by 10 percent from April. Indeed, there had already been a 100 percent increase in public transport fares and a 56 percent fall in purchasing power since December 1994. Fuel prices were to rise 35 percent, and the sales tax (like VAT) would be increased from ten to fifteen percent In March, a survey showed that 46 percent of companies expected to sack at least some of their workforce; and 16 percent expected to close down altogether. About 750,000 workers were expected to lose their jobs before September.
At the end of May. however, Michel Camdessus, the director-general of the International Monetary Fund, said that he was confident that the economy in Mexico was "headed for recovery”. But Guillermo Ortiz admitted that the worst of the crisis was yet to come; and Jose Luis Romero of Canancintra, which represents small and medium-sized businesses, predicted that job losses could reach 1.2 million by the end of December. And, indeed, unemployment had risen by 800,000 by the middle of July, and by more than one million by early August. The suicide rate has also risen sharply since the end of last year. Writing in the Guardian (10 July), Edward Balls, editor of the 1995 World Development Report, said: “the recession is expected to last into next year and living standards continue to plunge". He added: "In today's world of fast-moving, global capital markets, it is the workers who bear the brunt of financial crises.” Of course! But it has always been thus. Controlling capitalism’s crises is an impossible task, as Mexico's politicians, and so-called economists, have discovered.
Mexico's workers and peasants have lot entirely taken the worsening situation lying down although, as workers elsewhere, they tend to react to effects rather than organise to get rid of the cause—capitalism itself—of their misery.
In March, more than 100,000 people converged on the Zocalo, in the centre of Mexico City, to demand the withdrawal of the Army from Chiapas. The army is still there. In recent local elections, the Institutional Revolutionary Party (PRI) which, under various names, has governed Mexico for more than six decades, has been losing out to the right-wing National Action Party (PAN) and, to a lesser extent, the left-wing Party of Democratic Revolution (PRD), both of which, despite their "revolutionary” tag. are thoroughly reformist
And away from Chiapas, in the adjoining state of Guerrero to the west, guerrilla activity has, once again, flared up. In June, 17 peasants on their way to a protest meeting, were killed in Coyuca dc Benitez by armed police; and at the beginning of July five policemen were ambushed and killed, and two wounded, near Cualiac, north-cast of Acapulco. This was almost certainly in revenge for the killing of the peasants. Indeed, armed insurrections in Guerrero against agents of the Mexican state have occurred on and off since 1910.
Peter E. Newell