[Ciepac-i] English Chiapas al Dia 236 I

Les Schaffer schaffer at optonline.net
Thu Apr 5 14:41:27 MDT 2001

[BOUNCE Non-member submission from [CIEPAC <ciepac at laneta.apc.org>]]

(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

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

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)

·  OECD:                           http://www.oecd.org
·  Greenpeace:                     http://www.greenpeace.org.mx
·  Accion Global de los Pueblos:    http://www.agp.org

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