NEWS AND ANALYSIS MARCH 14-20, 2011

1 - NEWS FROM THE OTHER CAMPAIGN
2 - MARCOS ISSUES COMMUNIQUÉ

3 - WIKILEAKS CONFIRMS COMMON KNOWLEDGE AND CLAIMS FIRST VICTIM
4 - ARIZONA BACKTRACKS ON IMMIGRATION UNDER PRESSURE FROM BOYCOTTS
5 - US AGENTS STATIONED IN MEXICO
6 - PRD HEADED FOR ANOTHER DIVISIVE INTERNAL ELECTION
7 - MEXICO’S EXTERNAL DEBT EXPLODES


1 - NEWS FROM THE OTHER CAMPAIGN

  • The Digna Ochoa Human Rights Center in Tonala, Chiapas, denounces the arrest of their Director, Nataniel Hernandez [link
  • The Fray Bartolome Human Rights Center in San Cristobal de las Casas, Chiapas, denounces the disappearance of the bodily remains from the 2007 massacre in Viejo Velasco, thereby obstructing investigations into the massacre [link]  

2 - MARCOS ISSUES COMMUNIQUÉ
Subcomandante Marcos sent greetings this week to the 41st assembly of the National Network of Organizations “Todos los Derechos para Todas y Todos.”  The communiqué is written in colorful and colloquial language eulogizing the recently deceased Bishop Samuel Ruiz, who inspired much of the work of the National Network.  Marcos also debunks persistent rumors about his health, assuring his readers that he is not ill with either emphysema or cancer.  He also requests that supporters continue to send gifts of pipe tobacco.
[Lee el comunique entero en español]

3 - WIKILEAKS CONFIRMS COMMON KNOWLEDGE AND CLAIMS FIRST VICTIM
The Wikileaks scandal claimed another victim on Saturday when US Ambassador Carlos Pascual resigned.  According to a statement issued by Secretary of State Hillary Clinton, Pascual decided to return to Washington “based upon his personal desire to ensure the strong relationship between our two countries and to avert issues raised by President Calderon that could distract from the important business of advancing our bilateral interests.”  Pascual came under attack after Wikileaks revealed a series of diplomatic cables that, to no one’s surprise, questioned Calderon’s strategic orientation in the “war on drugs.”  Clinton’s explicit mention of Calderon is likely a feint to prop up the weakened President and his party’s bid to renew power in the 2012 elections, especially given Calderon’s tendency toward excessive deference to US authorities as revealed in the leaked cables.

La Jornada, one of Mexico’s most important daily newspapers, has published a series of articles over the past month based on US diplomatic cables released by Wikileaks.  In general, the cables confirm much that is common knowledge in Mexico, while giving it the added weight of recognition by US authorities.  Among the cables released this week is a series of three dedicated to a surprisingly frank analysis of monopolies in key sectors of Mexico’s economy, particularly the media.

A 2006 cable describes a meeting of the Monterrey Business Summit at which Roberto Newell, head of the Mexican Institute for Competitiveness, gave an impassioned speech on the need for increased competition.  But when asked “to name a Mexican company that needs to open up to competition ... he would only name Coca Cola and Wal-Mart, to the nervous laughter of the audience.”  Certainly both companies maintain monopoly positions.  Coca Cola controls 60% of the soft drink market by forcing many small retailers to carry only their products, while Wal-Mart is the largest private employer in the country and dominates the retail market.  Yet the author of the cable was hoping to draw attention to the monopolies of Mexican companies, which are also substantial in the following industries:

  • Beer: Grupo Modelo controls 65%
  • Bread: Bimbo controls 68%
  • Broadcasting: Televisa and TV Azteca control 94% of TV stations, characterized in the cables as a “duopoly”
  • Cement: Cemex controls 88%
  • Telephone: Telmex controls 80% of landlines and 70% of cell phones
  • Banking: Bancomer (Spain), Banamex (US), Santander Serfin (Spain), Banorte (Mexico), HSBC (UK) and Scota-Inverlat (Canada) control 90%

Given this data, it is unclear what Mexico’s Federal Competition Commission actually does.  In a recent highly public struggle for control of the “triple play” (telephone, internet and television) market between Carlos Slim, whose companies account for one-third of the valorization of Mexico’s stock market, and the media duopoly Televisa and TV Azteca, the Commission was relegated to issuing a press release hoping the three giants could work out their problems.

The US Embassy is particularly concerned with control of broadcasting by the Televisa/TV Azteca “duopoly.”  Efforts to open a third national station failed, largely for political reasons described in a December, 2006 cable: “Though no officials like to admit it ... candidates depend on Televisa and TV Azteca for advertising during the political campaigns.  PRD's support of a third channel stems from its opposition to the so-called ‘Televisa Law’ passed by Congress in April, which the PRD and others condemned as strengthening the existing duopoly.  Televisa and Azteca in turn angered PRD leaders with their coverage of the hotly contested presidential election and Calderon’s inauguration.”  The Embassy supports the efforts of General Electric and its Mexican partner, Isaac Saba, notorious for his monopolistic pricing of medicines in the Mexican market, to open a third television network, demonstrating the importance the State Department places on control of the media.

A 2009 Embassy cable analyzes Mexico’s business climate for foreign investment.  The author notes with approval, “Mexican states have begun competing aggressively with each other for investments, and most have development programs for attracting industry. These include reduced price (or even free) real estate, employee training programs, and reductions of the 2 percent state payroll tax, as well as real estate, land transfer, and deed registration taxes, and even new infrastructure, such as roads.”  These policies are the result of Structural Adjustment Programs adopted by Mexico in the 80s and 90s at the encouragement of the International Monetary Fund, whose “second stage” neoliberal reforms included government “decentralization” programs.  Of course, more state aid to multinationals means less social programs.

Other neoliberal reforms friendly to international business include the “IMMEX (Industria Manufacturera, Maquiladora y Servicios de Exportacion) program.  The IMMEX program adds services, such as business process outsourcing, to the maquila scheme ...   The new program continued to exempt companies from import duties and applicable taxes (e.g. VAT) on inputs and components incorporated into exported manufactured goods.  In addition, capital goods and the machinery used in the production process are tax exempt ... Two export programs implemented during the 1990s, ALTEX (Empresas Altamente Exportadoras) and ECEX (Empresas de Comercio Exterior), also allow expedited VAT [value added taxes] returns and financing from government-owned development banks.”  In addition, “the implementation of NAFTA opened the Mexican financial services market to U.S. and Canadian firms.  Banking institutions from the U.S. and Canada have a strong market presence, holding approximately 70 percent of banking assets.”  US banking operations in Mexico are among their most profitable investments, with profit rates almost always exceeding those generated by US domestic business and resulting in a net flow of capital from Mexico to the US.   The cable also warns, “corruption has been pervasive in almost all levels of Mexican government and society.”

The Embassy disapproves of “Mexico's Federal Labor Law ... Mexican workers enjoy the rights to associate, collectively bargain, and strike.  The law sets a standard six-day workweek with one paid day off. For overtime, workers must be paid twice their normal rate and three times the hourly rate for overtime exceeding nine hours per week. Employees are entitled to most holidays, paid vacation (after one year of service), vacation bonuses, and an annual bonus equivalent to at least two weeks pay. Companies are also responsible for these additional costs.   These costs usually add about 30 to 35 percent to the average employees' salary. Employers must also contribute a tax-deductible two percent of each employee's salary into an individual retirement account. Most employers are required to distribute ten percent of their pre-tax profits for profit sharing.”  However, the Embassy cable notes approvingly “the Labor Secretary has repeatedly affirmed that labor reform is and remains one of the top priorities of President Calderon's government.”  Labor reforms promoted by the Calderon administration include hourly rather than daily pay, flexible workdays with split shifts, and the ability to hire provisional workers for up to 90 days without benefits or job security.

In another cable released this week but written in March, 2009, the Calderon administration’s efforts to control organized crime in Ciudad Juarez come under criticism.  Ciudad Juarez Mayor Reyes Ferriz, who lives in El Paso, “has informed Consulate officers that of the 1,600 municipal preventive police officers who were on duty on January 1, 2008, 800 have been fired, quit to avoid completing a federal government background check, or been killed.  Their replacements are brand new...   Moreover, municipal police lack any sort of investigative capacity, and the city appears to either not understand or to be disinterested in taking on the investigative responsibilities that the state attorney general says were assigned to them in the 2008 federal reforms.  In practice, this keeps the city police from doing anything but the most rudimentary arrests and complicates their ability to complement the state's progressive judicial reform efforts.  Contacts also reported a need for higher police salaries and the development of a career service and benefits plan for officers.  Most officers currently make 600 to 800 USD a month, which leaves them highly vulnerable to bribes from drug trafficking organizations.  The city government is uncertain about future federal funding levels.”

 The cable author inexplicably notes the importance of civil society in fighting crime: “Observers across the board -- from politicians to federal prosecutors -- highlighted the need to more involve civil society in combating the violence problem.  Ciudad Juarez is a city of passing or temporary residents, with many people arriving to try to make their way to the United States or to work in the maquilas.  Perhaps because of the transient nature of the population, little has evolved by way of civic identity or consciousness.  PRI deputy Andreu indicated that the state is working to replicate the creation of citizen security observatory councils to offer insight and input into security operations and solutions.  City Manager Dowell also highlighted efforts by the city government to encourage stronger values, sense of community, and an understanding for the value of civic participation at the community level, in part through a Municipal Alliance for Order and Respect.”  Given the history of Ciudad Juarez over the past 30 years as the center of a binational neoliberal project that relies on cheap immigrant labor, resulting in a population that is perhaps ¾ immigrants, the call for “stronger values” and a “sense of community” would appear to be the most cynical of rhetoric.  Several of the most active members of civil society have been murdered in recent months.  The Mexican State has exhibited no interest in protecting active citizens, and the US State Department appears bent on discrediting human rights activists.  For example, in January, 2010, the Embassy issued an entire cable aimed at discrediting Josefina Reyes by linking her family to cartel activity.  Reyes was an outspoken critic of military presence in the state of Chihuahua and her murder was condemned by Amnesty International as “an aggression against human rights defenders.”

 The cable ends with a pessimistic assessment which eventually proved largely true in Ciudad Juarez: “In the best case scenario, the presence of federal forces bearing the burden of local law enforcement activities may provide a window of opportunity for rebuilding the city's ruinous municipal police, which is critical to a long-term, sustainable improvement in Ciudad Juarez's security environment...  The window is closing fast, however, as the local government will move forward with its efforts to create a 3,000-strong police force, with or without a clear strategy or endgame in mind.”  The “clear strategy and end game” never materialized, and today Ciudad Juarez suffers higher murder rates and more violence than when this cable was written.

4 - ARIZONA BACKTRACKS ON IMMIGRATION UNDER PRESSURE FROM BOYCOTTS
Under pressure from businesses suffering from boycotts of conventions and tourism, the Arizona legislature rejected new anit-immigrant measures on Thursday.  The State Senate defeated five bills that, among other things, required hospitals to inform police when treating patients suspected of being undocumented and encouraged the Supreme Court to rule against automatic citizenship for US-born children of undocumented migrants.  The move was seen as a rebuke of State Senate President Russell Pearce (R), the driving force behind last year’s anti-immigrant legislation, which is currently under review by numerous courts in an expensive litigation process.  Business leaders admit boycotts cost Arizona between US$15 and US$150 million, with the economic decline felt particularly strongly in Phoenix.  The city’s ranking on hotel bookings dropped from the top four in the US to 23rd under the impact of boycotts.  It appears that businesses in other states with pending anti-immigrant legislation may be mobilizing to block the bills.


5 - US AGENTS STATIONED IN MEXICO
Several hundred US agents from the Drug Enforcement Administration, ICE, the Marshall Service, the FBI, the State Department, the Secret Service, the Coast Guard, the Transportation and Safety Agency, and the Bureau of Alcohol, Tobacco and Firearms are currently working in Mexican territory providing intelligence information from electronic surveillance and unmanned drones and training Mexican security personnel.  There are so many State Department personnel dedicated to narcotics that they moved into a building separate from the Embassy that is shared with their Mexican counterparts.  Private contractors are also active, including the HALO Corporation that helps rescue kidnap victims and electronically tracks vehicles and people.  The operations cost about US$364 million, from a total Merida Initiative budget approved in 2008 of US$1.5 billion.  On Wednesday, news broke of unmanned Predator drones operated over Mexican territory for the past two years by US Customs and Border Protection personnel and US military Global Hawk drones in operation since March.  While the Calderon administration invited the surveillance through the National Security Council, Mexican politicians were never notified.  Some characterized the operations as violations of Mexican sovereignty. 

6 - PRD HEADED FOR ANOTHER DIVISIVE INTERNAL ELECTION
The Party of the Democratic Revolution (PRD), Mexico’s poor excuse for a leftist alternative, is in the midst of another divisive and potentially embarrassing internal election for party president.  Three hundred and twenty representatives from a dozen factions will decide the party’s future.  Armando Rios Piter, a little known moderate Congressman, is supported by Mexico City Mayor Marcelo Ebrard, one of the contenders for the PRD’s presidential slate in 2012 national elections.  Jesus Zambrano is the choice of current party president Jesus Ortega, who has been widely criticized for negotiating with the National Action Party (PAN) to support unity candidates in some state-wide races and the 2012 elections.  Dolores Padierna is the choice of a coalition of smaller factions denominated the “group of eight.”  Stay tuned for fraud, fist fights and other dramatics as the latest in Mexico’s ongoing political soap opera unfolds.

7 - MEXICO’S EXTERNAL DEBT EXPLODES
Mexico’s external debt, which includes both public and private foreign debts, reached US$182 billion in January, an increase of 54% during the four years of Felipe Calderon’s presidency, according to the Bank of Mexico.  The total private debt is US$75 billion, while the public debt exploded from US$55 billion in 2006 to US$107 billion this year.  Mexico paid US$54 billion in interest on the debt over the past four years.