Mexico News and Analysis, Jan 5-25, 2009

1. Economy in trouble
2. Supreme Court finds human rights violations in Atenco
3. Carlos Slim invests in New York Times
4. Arrest warrants issued for heads of Interpol
5. Calderon meets with Obama 


1. Economy in trouble
Mexico’s economic deterioration accelerated in the final months of 2008, portending a difficult year for workers in 2009.  Manufacturing declined by 11.3% in December due mainly to a monthly decrease of 15.8% in internal demand and a 16% decrease in exports, according to a report by the National Institute for Statistics and Geography (Inegi).  And Mexico lost 400,000 jobs during the last two months of 2008, the worst job loss in urban areas during the last three sexenios.  The dollar traded in mid January at 14.5 pesos, the lowest rate in 16 years.  The peso has lost 23% of its value in relation to the dollar during Calderon’s presidency, making international loan payments more expensive.

Even the usually upbeat Treasury Secretary Agustin Carstens predicted zero economic growth in 2009 at the 20th annual meeting of ambassadors and consulates held at the National Palace.  At the same meeting, President Calderon tried to rescue declining foreign investments by offering these reassuring words to the international community: It is not true that in Mexico “the civilian population is being massacred in the streets.”

While manufacturing is in decline, the rural sector is in a virtual freefall.  Grain imports, mainly from the US, increased by 56% from January to October of 2008 in response to the first year of full implementation of NAFTA’s agricultural sections which abolished protective tariffs.  Corn, wheat, rice and sorghum were the major imports.  Before NAFTA, Mexico exported agricultural products, but during the first ten months of last year the country spent US$19.3 billion on food imports, a 26% increase over 2007, according to Inegi.  This left Mexico with a trade deficit of US$11.1 billion during the first ten months of 2008, of which half is attributable to increased food imports.  In combination with declining international prices (a bushel of corn fell from US$6.50 in 2006 to as low as US$2.00 today), increased imports have devastated the rural economy.

The six states along the US-Mexico border have also been hit hard by the “Uncle Sam Crisis.”  Almost 800,000 undocumented workers were expelled to Mexico in 2008.  Most won’t find jobs in the border’s maquiladora factories, where unemployment is reaching record highs.  The automotive sector, long considered the backbone of manufacturing for export, has been particularly hard hit with layoffs and work stoppages leaving hundreds of thousands of families without reliable incomes.  The dire situation leaves drug dealing or other criminal activities as the only viable option for many.

Employees at the office of the Federal Attorney General (PGR) may be in the most difficult straits.  Of the 20,000 employees at the PGR, 7,500 will be fired in coming months, including 33 department heads and 47% of the Federal Public Ministry, in charge of investigating federal crimes.  Most will lose their jobs after failing drug, competency, and/or lie detector tests.


2. Supreme Court finds human rights violations in Atenco
Federal and state authorities are responsible for grave human rights violations during the May 3 and 4, 2006, police invasion of San Salvador Atenco in Mexico state, according to an investigation by the Supreme Court.  However, the 940 page report does not name specific authorities nor suggest actions to remedy the violations.  The National Human Rights Commission, a government agency, condemned the same human rights violations last year and called for a series of actions by federal and state authorities, but Eduardo Medina, Security Secretary at the time, ignored the recommendations.  More than 2,000 federal, state and local police took part in the May 3 and 4 actions in which at least 30 women reported being raped by police and 200 arrestees were beaten on their way to prison.  Only 21 police are currently subject to legal processes, accused of misdemeanor “abuse of authority” or “libidinous acts.”  Not a single official has spent time in jail for the widely publicized abuses despite public calls for prosecution by the UN High Commission for Human Rights, many non-governmental organizations and politicians of various political stripes.


3. Carlos Slim invests in New York Times
While Mexico’s economy reels, the worlds richest man, Carlos Slim, will reportedly invest several hundred million dollars in the New York Times, according to reports in the Wall Street Journal.  Slim already owns 6.4% of the Times, making him the third largest shareholder, and he may be interested in improving his international image by wielding more influence in the “newspaper of record.”   The Times faces unprecedented financial problems and was forced recently to mortgage its Manhattan offices, increase the price of the daily paper to US$1.50, and place ads for the first time in its history on the front page.


4. Arrest warrants issued for heads of Interpol
On January 15, a federal judge issued formal arrest warrants for Rodolfo de la Guardia and Ricardo Gutierrez, the last two directors of Interpol Mexico.  Both have been under house arrest for months, accused of selling information to drug cartels.  They were taken to the federal prison in Nayarit.  Both were victims of the federal Attorney General’s “Operation Clean House,” initiated late last year when an informant from the Sinaloa Cartel provided inside information on corrupt government officials.  De la Guardia also worked in the Federal Investigative Agency (AFI) where he placed corrupt agents in strategic positions in exchange for monthly payoffs of US$10,000.  Gutierrez also reportedly worked for the Sinaloa Cartel.


5. Calderon meets with Obama
President Felipe Calderon and a host of high level officials traveled to Washington on January 12 to meet with President-elect Barack Obama and his transition team in what has become a pre-inauguration tradition since 1980.  Immigration and the war on drugs highlighted the agenda.  Obama supports the so-called Merida Initiative, which provides Mexico with US$1.4 billion over three years in military and police assistance.  Calderon called on the Obama administration to prevent weapons imports into Mexico.  The heavily armed cartels get most of their weapons from the largely uncontrolled US market.  Renegotiation of NAFTA may also be on the agenda, though it wasn’t mentioned publicly.  During his campaign, Obama supported renegotiation to provide more protection for US jobs, but Calderon rejected the suggestion, saying it would “not create more markets and more trade, but fewer markets and less trade.”