Mexico News and Analysis: July 9 - 22, 2012

97

1 - DEMOCRACY IN MEXICO?
2 - HSBC BANK ACCUSED OF MONEY LAUNDERING
3 - CONGRESSIONAL REPORT CRITICIZES MEXICAN WAR ON DRUGS

In 1988, PRIista Carlos Salinas de Gotari stole the presidential election. PRD candidate Cuauhtémoc Cardenas was leading when ballot-tallying computers suddenly failed. Two days later, both the computers and the vote count were repaired, putting Salinas ahead. An irate and mobilized public looked to Cardenas, a former PRI politician himself and son of a popular 30s era PRI President, for leadership. Always the consummate insider, Cardenas refused to call for demonstrations and instead funneled popular energy into building the current PRD. Salinas assumed the Presidency with little additional fuss. He proceeded to become perhaps the most hated figure in Mexico over the past half century.

 

Fast forward three election cycles and another stolen presidential election. This time the PAN and a compliant Federal Electoral Institute (IFE), along with the machinations of former PRI party president and "leader for life" of the teacher's union, Elba Esther Gordillo (the political class is loyal only to power and money), imposed Felipe Calderon over PRD candidate Andres Manuel Lopez Obrador.  AMLO didn't repeat the Cardenas strategy, instead calling for street closures and demonstrations organized by the PRD's political and institutional apparatus in Mexico City, where the party controlled city politics. Carefully stage-managed by AMLO for his own benefit, the mobilization was a show of corporativist organizing at its best, including bussed-in, paid demonstrators enjoying free food, massive tents constructed by city workers, and comfortable lounge chairs. Calderon assumed the Presidency, and Lopez Obrador began a six year campaign culminating in - surprise, surprise - another stolen election.

 

In 2012, the PRI is planning a return to power, with the help of a compliant IFE and a sitting PAN President who doesn't want to rock the institutional boat too much.  PRI candidate Enrique Peña Nieto may set new standards for hubris. The PRD, in an unusual alliance with the PAN, accuses the PRI of campaign expenditures that may exceed legal limits by twelvefold, buying votes with pre-paid gift cards from Soriana chain stores, laundering tens of millions of pesos, campaign financing from government coffers in states controlled by PRI governors, and rigged vote-counting, to name only the most egregious sins. The PRD is calling for a new election, while the PAN is counting only on fines for the PRI that may weaken the party politically.

 

AMLO decided not to repeat the 2006 demonstrations, relying on institutional remedies instead.  But this time an irate public is not waiting for leadership from the political class. With little confidence in the IFE, the parties, or a clearly biased mainstream media that supported the Peña Nieto candidacy, hundreds of thousands of mainly young people are taking to the streets every week. Accusations of fraud and "No to the imposition of Peña Nieto" enjoy broad resonance, especially in the Capitol, but this time the demonstrations are not carefully manipulated by the political class. Students organized as "YoSoy132," the largest segment of the "no imposition" movement, are explicitly not supporting Lopez Obrador, or any other candidate. The PRD outlined a strategy this week that does not include popular demonstrations but rather "educational forums," a clear distancing from the popular movement. This does not mean AMLO would not love to utilize popular outrage to his own benefit, but instead may be an indication that the movement has surpassed a stagnant and out-of-touch political class for whom "democracy" is limited to elections (however clean) every six years.

 

YoSoy132 is joined by progressive unions, popular organizations, campesinos and irate individuals.  Last weekend they gathered in Atenco, a largely campesino pueblo on the outskirts of Mexico City famous for its opposition to construction of an airport on their lands. The assembly adopted a calendar of actions, which still awaits formal approval by YoSoy132, that includes the occupation of Televisa, the largest half of Mexico's television duopoly, and dozens of street demonstrations leading to a blockades of Peña Nieto's induction as President on December 1. In this, the movement is realistic - there is little chance the political class will do anything but endorse Peña Nieto, albeit perhaps with some modest fines and a few low-level sacrificial lambs.

 

The question is: What follows?  So far, the movement hasn't taken explicit political positions aside from a commitment to non-violence and a resounding NO to Peña Nieto. But what happens if/when he assumes the Presidency? Does the movement broaden and threaten the governability of the country? Or does it slowly fade away in the face of likely repression by the PRI, fatalistically accepting the decisions of the political class? In the midst of a neoliberal-inspired economic crisis that leaves half the population in poverty and a dwindling middle class, perhaps Mexico is prepared to for a resounding NO that extends well beyond Peña Nieto. A barely functioning bourgeois democracy that leaves corrupt elites in charge of politics and economics may not be enough for the next generation of Mexicans.

 

2 - HSBC BANK ACCUSED OF MONEY LAUNDERING

A US Senate subcommittee accused HSBC Holdings, Europe's largest bank, of laundering money for drug dealers and organized crime over at least a decade.  Senator Carl Levin presented a 355-page report charging the London-based financial institution with establishing "a US bank affiliate as its gateway into the US financial system and let[ting] its global network of affiliates abuse that gateway." 

 

The report follows a number of international banking scandals that shed light on the nefarious world of finance, including similar charges against Wells Fargo that resulted in a US$160 million fine, interest rate manipulation by Barclays, and a US$25 billion fine of five US-based banks for their roles in the housing crisis. Six banks currently have "deferred prosecution" agreements with the US Justice Department for violating regulations covering international money transactions, including ING Group, Barclays, ABN Amro, Credit Suisse, and Lloyds. Deferred prosecution means banks may pay fines but will not be prosecuted if they "play nice." To date no bank officials have been charged with crimes. Apparently regulators are under instructions to accept fines that will bolster Treasury Department reserves rather than prosecuting criminals.

 

HSBC officials tried to wiggle out of the charges: "We will apologize, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong." These may be hollow words, given that Mexican financial regulators warned the bank about money laundering beginning at least ten years ago, with no actions taken by the bank until recently. HSBC is the fifth largest bank in Mexico. For many years HSBC's clients included currency exchange houses identified by the US Treasury Department as hubs for laundering drug money. In 2007 and 2008, HSBC shipped US$7 billion in bulk cash from Mexico to its US affiliates, more than all other banks in Mexico combined. As much as 70% of Mexican drug money was laundered through HSBC during that period, according to a former bank official. About US$50 billion per year of "illicit capital" left Mexico over the past decade, according to a recent report by Global Financial Integrity.

 

3 - CONGRESSIONAL REPORT CRITICIZES MEXICAN WAR ON DRUGS

President Felipe Calderon's use of the military to combat drug cartels has been largely ineffective and has led to increases in human rights abuses, according to a report from the US Senate Foreign Relations Committee. The report cited widespread distrust of the judicial system and police as a hindrance to fighting organized crime. The authors called for at least US$250 million a year in aid under the Merida Initiative, a bilateral security agreement that has already sent US$1.9 billion to Mexico, largely for military and communications equipment. The report highlighted the need for extensive judicial and police reform.

Tags: 
Tags: 
Tags: 
Tags: