From: CIEPAC <[EMAIL PROTECTED]> Date: Wed, 04 Apr 2001 19:39:43 -0600 To: [EMAIL PROTECTED] Subject: [Ciepac-i] English Chiapas al Dia 236 I BULLETIN "CHIAPAS AL DIA" No. 236 CIEPAC, CHIAPAS, MEXICO (22 of March 2001) The World Bank in Mexico The EZLN approached the European Parliament for an opportunity to be heard on the old continent and the Social Group of the Parliament agreed to receive them in Brussels, Belgium. Meanwhile the Mexican House of Representatives of the Congress of the Union, not the Senate, agreed (with a majority), to give the Zapatistas a hearing in the highest tribune in the nation. However, some legislators recognize that the problem is not with the form of the COCOPA law but with the contraversy around the concepts of land, autonomy, use and enjoyment of natural resources, among other delicate aspects (delicate with respect to transnational capital) contained in the COCOPA law. The COCOPA law would see the San Andres Accords, signed by the EZLN and the federal government in 1996 transformed into constitutional changes. For their part, business people and leglislators are opposed to the initiative of Fiscal Reform proposed by President Vicente Fox which includes taxing medicines and foods. President Fox is now surrounded. The deals contracted with the World Bank (WB) and the International Monetary Fund (IMF) must be complied with at all costs as must the movement towards the Panama People´s Plan and the Free Trade Area of the Americas (FTAA), negotiations for which are intended to conclude this April in Canada. On the other hand, the economic crisis in Japan and above all, in the United States is now reaching into Mexico. This puts in jeopardy, yet again, Mexico´s trade with its northern neighbour where the majority of Mexican exports go. One option is to open international markets with Central America or Europe under the European Union´s Free Trade Agreement (EUFTA). However, if the EZLN is able to convince Europe that democracy, respect for and recognition of indigenous rights and culture do not exist in Mexico, the European Parliament will pressure the Mexican government into complying with the indigenous people´s demands by linking investment and trade with Mexico to such compliance arguing the democracy and human right´s clause in the EUFTA. This is likely to happen even though the crisis in the United States is an opportunity for Europe to compete for commerical dominance. The EZLN, or at least, Sub-Commandante Marcos, will be prepared to leap onto the international scene where the economic policies of the world are decided and elaborated upon. They will be integrated into the world struggle against globalization, an invitation that was formulated by Jose Bove of France and expressed around the meetings of the WB, IMF, Interamerican Development Bank (IDB), the World Trade Organization (WTO), the Davos Economic Forum, at the United Nations, the Summit of the Americas as they attempt to finalize the FTAA and, in this case, the European Parliament. How is the WB´s plan for Mexico defined? In the March 13, 2001 "Chiapas al Dia" bulletin 234, we explained what the WB is, its genesis, function and development. Now we are looking at how it applies to Mexico. The WB defines a Country Assistance Strategy for each country that it deals with. This plan is reviewed and revised by the WB every five years. This plan details the country´s evaluation and the treatment that will be applied, the strategy and the projects. It also defines which sectors/industries should be privatized, how to implement fiscal reform and how to reduce public expenses; which laws to change and which subsidies to eliminate; how to decentralize or which infrastructure to alter; etc.. If a government complies with these mandates, the WB will continue to pay out, in installments, the rest of the promised credit. If the WB is not satisfied that the adjustments they have imposed are being adequately fulfilled, it suspends the loans and this is a negative signal to other private banks or multilateral banks such as the IDB to suspend credits and supports to both the government of the country and to its industries. To this end, the WB sends personnel to Mexico to verify that the Structural Adjustment Plan for Mexico is being complied with. In the worst cases, such as those in earlier decades, the government and the army of the United States carried out military assaults and/or overthrew the president of the offending nation. Today, the crisis in Argentina is an example of this problem. In the case of Mexico, the Structural Adjustment measures have seen the government privatize more than a thousand of the 1,115 industries that it administered in 1982 and the opening of the borders to free trade which has provoked more poverty, unemployment and migration in the countryside. As part of the support that the WB offers to mitigate these effects which are caused by their own policies, it lends Mexico funds for assistance programs such as "Alianza para el Campo", vacines for children; for "Procampo" and "Progresa"; or for the Municipal Solidarity Fund in the times of President Carlos Salinas de Gortari, etc.. Meanwhile Mexican and foreign multinational companies increase their profits. Nonetheless, the majority of officials or legislators in the Union of the Congress, and even moreso, regular Mexican citizens, know very little about the borrowed funds of the federal and states governments -- funds stemming from the debt contracted with the WB. What has been the relationship between the WB and Mexico? In 1982, Mexico entered into a serious economic crisis, made worse by the external debt that it had contracted with the WB. The WB and the IMF then modified their strategy with Mexico to incorporate it into the neoliberal model which gradually reduces the role of the state in the economy and moves towards freer trade. During the 80´s, the WB´s loans to Mexico concentrated on complying with the Structural Adjustment Plan and thus the elimination of tarrifs and duties for industries, the liberation of state price controls on products, the eliminatination of subsidies, increased taxation and the privatization of state enterprises. Given this, the WB has always defined its relationship with Mexico as being very positive. Bit by bit, the WB loans to Mexico increased during the government of Miguel de la Madrid (1982-1988). Between 1986 to 1990, the loans went up to $9,900,000,000 dollars of which only 8% was destined to counteract poverty. In the 80´s, the projects and the policies of the WB began to be seriously criticized by diverse sectors in many countries for violating human rights, destroying the environment, generating poverty and foreign debt as well as causing the displacement of various peoples from their place of origen, among other effects. The same WB stated that in the 80´s, the number of people living in poverty in the world had increased in almost the same proportion as world population growth. In the 90´s, the WB began to include Social Investment Funds to soften the effects of poverty resulting from their adjustment policies. Between 1991 and 1995 the WB loans to Mexico totalled $ 8,400,000,000 and of this, 27.9% were destined to combat poverty. In this decade, the WB´s strategy for Mexico concentrated on health, education and the improvement of basic services in some of the poorest regions of the country such as Chiapas, Guerrero, Hidalgo and Oaxaca; later this grew to include the states of Veracruz, Mexico, Campeche and Zacatecas, among others. Nonetheless, the largest amounts of money went to pay for interest on the foreign debt and the bank bailout. Between 1990 and 1997, Mexico became indebted to the WB for a total of $ 12, 183,500,000 plus interest, for 44 projects. Two of these projects, which represent a mere 4.5% of the total projects in this time period, received 30% of monies borrowed: The Support for Payment of Interest on the Debt and the Restructuring of the Financing Sector which includes, as well, the bank bailout that resulted from one of the most scandelous cases of bank fraud in the country -- carried, of course, on the backs of the Mexican people. The projects that received less funding included the communal forestry sector, the rural financial markets, aquaculture, the agriculture sector, health care and education, among others. The projects that were supported between 1990 and 1998 were related to forestry, housing, basic and higher education, health care, drinking water and sanitation, irrigation and drainage, aquaculture, seasonal agriculture, water resources management, solid wastes, the environment, natural resources, communal forestry, credit, atmospheric pollution, social service programs, agricultural technology and commercialization, science and technology, job markets, savings and debt interest payment support. As well, there were projects for the transmission and distribution of electricity, highway transport and the maintenance of highways and telecommunications, technical assistance for telecommunications, for the financial sector, for the privatization of infrastructure, for private sector competition, for decentralization and regional development, for mining sector restructuring and reform, for agricultural exportation, for the health sector and for the development of rural zones, among other projects. The projects that received the most WB financing were the Support for Payment of Interest on the Debt, the Agricultural Reform Sector, Highway Maintenance, Decentralization and Regional Development and work towards restructuring the Financing and Savings Sector. Among the institutions that are adminstering the loans are: The Secretary of Public Finance and Credit (SHCP), BANOBRAS, National Finance (NAFIN), National Water Commission (CNA), BANCOMEXT, the Secretary of Social Development (SEDESOL), CONALEP, INIFAP, National Science and Technology Advisory (CONACYT), (FOVI), the Secretary of Public Education, the government of Mexico City, the Secretary of Livestock and Rural Development (SAGDR), the Secretary of Communications and Transport (SCT), CNBV, SEMARNAP, IMSS, among others. The WB loans to Mexico represent 9.4% of the total loans authorized by the WB globally. This puts Mexico in second place worldwide with a total loan of $ 11,100,000,000. Between 1949 and June 2000, the WB granted 173 loans to Mexico for a total of $31,500,000,000. This said, not all of the WB documents on Mexico contain the same information and at times, data does not coincide. What is the WB strategy for Mexico today? The total financing received by Mexico between 1997 and June 2000 was $3,900,000,000 for 13 projects. Up until June 2000, WB loans to Mexico were comprised of 24 operations, with upcoming payments valued at $ 2,900,000,000. Mexico is the country that has accumulated the greatest debt of all the 181 member countries of the WB. Just between 1990 and 2000, the WB and the IDB loaned Mexico $ 23,747,250,000. According to the WB, "the reduction of poverty, begun by the Mexican government, is the fundamental objective of the World Bank in Mexico. Between 1999-2000, the anti-poverty forces concentrated on: i) Protecting the poorest people from the negative consequences of macroeconomic adjustments, as well as from external pressures, including natural disasters; ii) Integrating the poor in the anti-poverty work; iii) Contributing to consultations and projects that encourage sustainable development. For the WB, health care and education are part of a strategy to create the "development of human capital" in impoverished zones. The poor are converted into a labour market that must be kept alive by projects such as Basic Attention to Health and Primary Education. In June 1999, the WB´s executive directors approved a loan of $ 5,200,000,000, "to improve the conditions of the poor, to refortify macroeconomic stability and to intensify reforms to the function of government" for the time period 2000-2001. The objective of this strategy is to control public spending on social sectors, the elimination of obstacles to investment, to increase government efficiency and to decentralize public administrations. "This strategy approaches one of the fundamental elements of the development program in Mexico." For the WB, Mexico should reduce its dependence on income from petroleum sources (around 30%) and increase taxes on medicine and foods. Fox knows that he should comply with the goals of the WB and the Structural Adjustment Plans as the acquisition of further loans depends on this and such funds are necessary to alleviate the looming economic crisis. But this is not the whole story. The WB, using data from 1996, stated that 28.6% of the Mexican population live in poverty, while other sources put the figure at 50 or 60%. For this reason, in the middle of 2000, the Secretary of Public Finance and Credit announced the extension, until December 2001, of its program of financial strengthening (to a tune of for $26,400,000,000) against the crisis caused by two years of debt and other credits from international financial organizations (for $ 19,700,000,000) and from the United States and Canada (for $ 6,700,000,000). To be able to receive these credits and to avoid the recurring crisis every six years when the president changes, the Mexican government promised to pay its debt with the IMF in advance -- a debt approaching $ 3,600,000,000. Of the $ 5,200,000,000 from the WB mentioned previously, about $ 725,000,000 of this will be channeled into the health care sector. It will be used to modernize the Secretary of Health, to decentralize its services to the states and to modify the functions of the Mexican Social Security Institute`s (IMSS) health insurance. Another $ 595,000,000 will be destined for the primary education sector, for higher education credits to students as well as for science and technology research, "as applied by private industy and institutes of higher education." For Rural Development, $ 547,000,000 was planned for the program, "Alianza para el Campo", for the decentralization and delegation of administrative responsibilities to the states. With respect to the environment, the WB has funds destined to strengthen the institutional capacity of the Secretary of the Environment and Natural Resources and Fish (SEMARNAP) and to decentralize its functions to the states; as well as to counter the environmental pollution in Mexico City, among other projects. Also, for commercial banking, $ 505,000,000 is destined for the Protection of Bank Savings Institute (IPAB) and to save the banks from the numerous frauds realized by FOBAPROA. Finally, $ 400,000,000 is destined to reform the pension systems of private sector workers and $ 505,000,000 is aimed at restructuring the FOVI. In addition to its strategy of decentralizing the federal government´s control over health care, education, rural development and the environment, the WB is also directing the decentralization of public services including privatization of these sectors. In 1999, the WB directed $ 606,000,000 towards the decentralization of fiscal management with the idea that local governments can get more taxes directly, "for which local governments can acquire the public debt." In December 1999, the vice-president of the WB for the Americas and the Carribean, David de Ferranti, affirmed that decentralization, "... will allow the operation of indebted state and municipal markets in Mexico to improve ...". It is worth noting, that between 1998 and 1999, for this first time in history, the WB directed more resources to the Structural Adjustment Programs in 65% of its member countries, than to investment. According to recent WB reports, two thirds of its loans are directed to supporting the private sector: the purchase of public industries and the substitution of these private industries as the providers of basic services, credit, financial reforms, decentralization and the freeing of the market. The WB recognizes that it is easier to privatize industries in the poorest and smallest countries as opposed to the average nation. In this way, decentralization towards the states and municipalities is accompanied by a vulnerability before the policies of the WB by means of political and administrative balkanization, and this in turn will facilitate the direct imposition of the Structural Adjustment Programs upon these same states and municipalities. Hence, the Congress of the Union and local congresses will lose their ability to make decisions about public finance. Nonetheless, the WB will face the strengthening of the Zapatista´s Autonomous Municipalities in Chiapas. Thus, the local processes and alternatives that arise from there will be one of the most important pillars of indigenous resistance. Between July 1999 and June 2000, the WB also allocated $ 550,000,000 worth of loans to industries, primarily for infrastructure projects such as railway transportation, water supplies, gas distribution and the generation and distribution of electricity. In 1996 the priority was assisting companies in the investment of electric energy, finances, telecommunications, petroleum, gas, industry and mining. Now we see the consequences: the pressure for Fox to open the production and distribution of gas and petroleum to investors and next the privatization of water which is among the strategic world resources that will be in dispute in the upcoming years. Some of the companies that have seen benefits from the WB are: Ferrocarriles Chiapas Mayab (Chiapas Mayab Railway) and Fondo Chiapas (Chiapas Fund); American British Cowdray Medical Center; Turborreactores S.A. de C.V.; Grupo Calindra (Calindra Group), S.A. de C.V. and Banco Bilbao Vizcaya (Bilbao Vizcaya Bank); Grupo Industrial Ayvi S.A. de C.V. (Ayvi Industrial Group); Colorada Silver Mine; Comercializadora la Junta Marine Terminal (Marine Terminal Marketing Board); Consorcio Internacional Hospital and Consorcio Hospitalario Internacional (International Hospital Consortium and International Hospitality Consortium) and NEMAK. Also the Mexico Desarrollo Industrial Minera S.A. de C.V. (Mexican Mining Industry Development company); Grupo IRSA S.A. de C.V. (IRSA Group); Agropecuaria Sanfandila S.A. de C.V. (Sanfandila Farming); Grupo Corporativo Ava S.A. de C.V. (Ava Corporate Group) y Central Saltillo S.A.; InverCap S.A. de C.V.; Cifunsa S.A. de C.V.; Teksid Hierro de Mexico S.A. (Teksid Iron of Mexico); Grupo Posadas S.A. de C.V. (Accomadations Group); Grupo Aceros Corsa S.A. de C.V. (Corsa Steel Group); Forja de Monterrey S.A. de C.V.; Mexicana de Cobre (Copper) La Caridad; Grupo Industrial BIMBO S.A. de C.V. (BIMBO Industrial Group) and the Grupo Minsa S.A. de C.V. (Minsa Group); as well as the Mercantil Bank of the North; ALFA; Mexico Partners Trust and the Altamira Cogeneration Project, among others. In February 2000, as the government repressed the protest in Cancun against the World Economic Forum, the vice-president of the WB for Latin America delineated the eight priorities for Mexico: fiscal reform, the in-depth study of financial reform, sustainable public finances, quality in education, investment in infrastructure such as electricity, telecommunications and water, government improvements in order to have an efficient judicial system, reduction in poverty and dealing with environmental problems. What have been the results of the WB in Mexico? In 1994 the WB evaluated its projects in Mexico between 1948 to 1992 and determined that 32% of the projects had "unsatisfactory" results - 23% higher than the average amount of failures worldwide for the same period. In 1995, James Wolfensohn, president of the WB, visited Chiapas where he noticed how little the projects financed by the WB affected Chiapas. The situation continued to worsen. The 1999 World Development Report indicated that 40 out of every 100 Mexicans (38.4 million people) survive on less than two dollars a day - a situation similar to that in Romania, Venezuala, Panama and Sri Lanka. In 1998, the Gross National Product (GNP) for Mexico, went from 410 billion dollarss to 484 billion dollars in 1999. This increase was the fruit of the structural adjustments that facilitated privatization as well as the exportation of products from the maquiladoras, among other factors. Nonetheless, development and fairness cannot be meaured by macroeconomic indices. The failure of global financial liberation which was supposed to bring development benefits to all countries has resulted in a situation where 447 multimillionares around the world possess a wealth greater than half of the humanity´s income and where 16 of America´s richest companies possess a wealth equivalent to Mexico´s GNP. This liberalization has also given rise to unemployment, massive company bankruptcies, internal migration, increased poverty, insecurity, reduced full-time employment, irreversible environmental impacts, loss of biodiversity, increased ethnic and racial tensions, international conflicts, corruption, monopolies, loss of food sovereignty in countries, gigantic and unpayable external debts which, in Mexico´s case is greater than $ 160,000,000, loss of cultures, languages, indentities and indigenous territories. The WB recongnized that it has failed, in the past 50 years in its supposed mission to combat poverty. From 1970 to 1985, the average income per capita en the poorest nations decreased by 3.1%. In 1999, the WB affirmed that of the 490 million inhabitants of Latin America, more than 50% lived in poverty. The trend now is towards a new concentration of wealth which includes the issue of land which will not be for those who work it but for the person that can buy it using the wealth and natural resources that he/she possesses. For this reason, one of the conflicts underlying the Zapatista struggle and for many other indigenous peoples of the world, is the problem of territory -º the conception of territory and autonomy. There is a movement towards negating the social function of property. In the "International Meeting of Those Without Land", held in Honduras in the year 2000, delegates from 24 countries in Africa, Latin America, Asia and Europe expressed the following, "We reject the ideology that considers land to be just a market entity. We observe with concern that the dominant agrarian policies in the framework of neoliberalism are attempting more and more to replace Agrarian Reform leaving only the market as regulator, violating the human rights of the campesino families that need to accede the land in order to meet their right to food and their economic, social and cultural human rights - all of which are recognized under international law. For this reason, organizations from many countries are demanding that the WB, "suspends approval and support of market agrarian reform programs" and that "it puts into practice the Action Plan of the World Food Summit regarding agrarian reform and the right to adequate food." In Central America, South Africa and Asia, the privatization, concentration and control of land began to worsen with the expulsion of peoples from their land of origen. In Mexico, the so-called Certification of Ejidal (Communal) and Undeveloped Urban Lands Program (PROCEDE), accelerated the rental and privatization of communal lands to large transnational companies for experimentation and cultivation of transgenetic agricultural products and monocultures (e.g., corn, soya, cotton, eucalyptus, african palm, oilskin, etc.). Who directs the Economic Secretariate? President Vicente Fox designated Luis Ernesto Derbez Bautista - born on the first of April, 1947 in Mexico City. Derbez Bautista worked for 14 years at the WB and was responsible for the regional areas of Africa, India, Nepal and Butan. Moreover, he managed, defined, executed and supervised the Structural Adjustment Programs of Chile, Costa Rica, Honduras and Guatemala, as well as Multilateral Economic Support Programs. He is the principal author and supervisor of the Macroeconomic Reports for the nations in which he worked as well as of the Sector Report in the area of Banking and Finance. Between 1997 and the year 2000, he was an independent consultant for the WB office in Mexico City and for the IDB in Washington, U.S.A.. Derbez has expressed pride in being a "neoliberal." Given this panorama, it is clear that the globalization of this neoliberal model does not reduce poverty but rather augments it. The same WB has warned that poverty will not be solved with globalization. However, the WB recognizes the need to lend more and more money to combat poverty, poverty that is generated by its own policies and thus generating a viscious circle of debt and loss of national sovereignty. It is for these reasons that the whole world has risen up in protests, marches and demonstrations against the Multilateral Bank (WB, IMF and IDB). And these people have been strongly repressed by governments. The alternative is not just to warn others about what the WB is doing, monitor their projects, influence their policies or just have this institution disappear. Rather, it is necessary to generate development alternatives, a new world order that is more just and humane and where the benefits of development reach all people. The new world architecture should be cemented in justice, the distribution of wealth, gender equality, respect for human rights, environmental protection, democracy, peace and transparency and right to information. Sources: WB, IMF, Tranparencia, Interpress Service, World Bank Bonds Boycott, Fondo Chiapas, the Mexican Presidency (www.presidencia.gob.mx), Citizen InterAction and Evaluation of Structural Adjustment (CASA-SAPRIN). Translated by Sherry for CIEPAC, A.C. Gustavo Castro Soto Center of Economic and Political Investigations of Community Action, A.C. CIEPAC. CIEPAC, member of the "Convergence of Civil Organizations for Democracy" National Network (CONVERGENCIA), and member of RMALC (Mexico Action Network on Free Trade) Notes: · OECD: http://www.oecd.org · Greenpeace: http://www.greenpeace.org.mx · Accion Global de los Pueblos: http://www.agp.org Note: If you use this information, cite the source and our email address. We are grateful to the persons and institutions who have given us their comments on these Bulletins. CIEPAC, A.C. is a non-government and non-profit organization, and your support is necessary for us to be able to continue offering you this news and analysis service. If you would like to contribute, in any amount, we would infinitely appreciate your sending to the bank account in the name of: CIEPAC, A.C. Bank: BANCOMER Bank Account Number: 1003458-8 Branch: 437 San Cristobal de las Casas, Chiapas, Mexico. Thanks! 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