Frontera NorteSur Apr-Jun 2008

 Seeking Alternatives to Remittances

In the Mexican state of Michoacan, remittances from migrant workers in the US have played a key role in the economy of recent years. Now, officials are concerned that the slackening of the migrant dollar boom could have negative repercussions on the local economy. To stave off negative effects from less remittances, state officials plan to invest upwards of $50 million in alternative economic development programs.

In comments to the press after a meeting with businessmen, Michoacan State Economic Development Secretary Eloy Vargas Arreola said the new administration of Governor Leonel Godoy, who is a member of the center-left PRD party, will tap into funds from both public and private sources as a means of creating alternative economic possibilities for migrant-dependent communities.

Arreola affirmed that members of Michoacan’s private sector are willing to invest in migrant-expelling regions of the state. A portion of the investment could be plowed into the operation of industrial parks, he added.

In his meeting with members of the Business Coordinating Council, Arreola underlined the importance of private investment in Michoacan’s economy. The state official said the Godoy administration views small business as the motor of local development, followed by outside investment and the creation of new jobs.

Like other migrant-expelling regions of Mexico, Michoacan is vulnerable to the economic difficulties-especially in the construction sector which employed many Mexican migrants- and immigration restrictions currently prevailing in the US.

In a report this week, the official Bank of Mexico noted that remittances from workers abroad, mostly in the US, fell by 2.76 percent during the first two months of 2008 compared with the same period of 2007. Sent in 9.8 million operations, this year’s remittance averaged $343.21, or 0.02 percent less than the average remittance sent in January and February of 2007. Tracked by the Bank of Mexico, remittances for the first two months of 2008 totaled $3.39 billion. The latest figure reflected a noticeable slow-down from 2007, a year when remittances reached an annual sum of nearly $24 billion.

Taking into account the weak dollar, the remittance downturn is even worse than the official numbers suggest. In comparison to a few years ago, the dollar fetches less pesos, even as prices continue to escalate for all manner of goods in Mexico.

Sources: El Universal/EFE, March 31, 2008. La Jornada (Michoacan edition), March 29, 2008. Article by Antonio Aguilera.

US Agribusiness ¨Migrates¨ to Mexico

Confronted with the possibility of losing a labor force because of immigration law crackdowns, some US growers are simply moving their operations to places where workers abound. While the presence of US agribusiness in Mexico is nothing new, Mexican authorities and farm industry representatives say immigration controversies north of the border are encouraging a fresh infusion of US investment in export crops.

¨In Baja California, 17 US enterprises associated with Mexican producers are dedicated to the cultivation of horticultural products and vegetables¨ said Israel Camacho, undersecretary for Baja California´s state agricultural promotion department. ¨The Mexicans supply the land and water, and the foreigners supply money, seed and other implements. ¨(Foreigners) are coming to Mexico because of cheap labor, and more are going to come.

¨ Baja California farmworkers, many of whom hail from the states of Guerrero and Oaxaca in southern Mexico, earn on average $12 per day, officials said.

According to figures released by Mexico´s Economy Ministry, annual foreign investment in the country´s agricultural sector shot up from less than $20 million in 2005 to $62.3 million in 2007. Ninety-five percent of the new money came from the US. Sonora, Baja California, Jalisco, Guanajuato, Queretaro, and Sinaloa were the states which received the bulk of the investment. Firms doing business in Mexico included Bill Packer, Capurro Co., Sahara, Veg Packer, and Driscoll, among others. Trendy Chinese vegetables represent a hot segment of the new export business; farms specializing in Asian-origin produce are at work in the states of Sinaloa and Nayarit.

No information was immediately available on the amount of Mexican land that is being converted for export crops, but Sinaloa tomato farmer Eduardo de la Vega, said the arrival of more US capital was increasing land values.

the US, meanwhile, the Bush Administration is responding to growers´concerns that tougher immigration law enforcement measures will deprive them of workers. Late last week, the US Citizenship and Immigration Services division of the Department of Homeland Security announced it was extending a public comment period on proposals to facilitate the increased use of the existing H-2A guestworker program. According to a press statement, formal notice of an expanded public comment period lasting until April 14 was expected to be published in the March 31 edition of the Federal Register.

Sources: Tribuna de la Bahia/Agencia Reforma, March 31, 2008. Article by Moises Ramirez. US Citizenship and Immigration Services, March 28, 2008. Press update.

Do Maquila Layoffs Herald Recession?

Dependent on the US economy, the ups and downs of Mexico's maquiladora, or export assembly, industry are indicators of larger trends in the US and global economies. In Ciudad Juarez, the birthplace of the Mexican industry, scenes of idled production lines and laid off workers back in 2000 foretold the US recession that hit some months later. While US economists debate the prospects for recession in 2008, maquiladora industry observers in Mexico are also split in their assessments of whether or not recent factory layoffs mean bigger economic storm clouds are brewing on the horizon.

In a reversal of a job growth trend that held for much of 2007, export manufacturing plants in Ciudad Juarez have dismissed significant numbers of workers in recent months. According to El Diario de Juarez, 9,089 maquiladora workers lost their jobs during the last four months, including 5,802 in the months of the November and December. Overall, the layoffs lowered employment in the local maquiladora industry from 243,845 workers last November to 238,043 in December.

Arnulfo Castro Munive, human resources director for Columbus Industries
Mexico, predicted more layoffs will occur by the summer. Jorge Doroteo Zapata, Chihuahua state leader of the Workers Confederation of Mexico, concurred with Castro's projections. Citing the planned closing of Ciudad Juarez's emblematic RCA plant this year, the labor leader contended that US economic conditions will make 2008  a "very difficult year" for border workers. Dedicated to producing televisions, RCA's Ciudad Juarez division employed as many 7,000 workers in its heyday three decades ago. According to Doroteo, the RCA shut-down will leave an additional 600 workers without jobs.

Other maquiladora industry watchers are more upbeat about 2008. Officials with the Chihuahua Secretariat of Industrial Development challenge the notion that the maquiladora sector is in a renewed crisis. Recent layoffs, they argue, are merely part of normal end-of-the-year production restructurings. Adan Gomez, promotional director for the secretariat, insisted that "stability" reigns in the maquiladora industry, with Ciudad Juarez even expected to attract new high-tech jobs. Cesar Castro, president of the National Council of the Maquiladora and Export Manufacturing Industry, even predicted a four or five percent growth rate for the Mexican maquiladora business in 2008.

Sources: La Jornada, February 22 and 25, 2008. Articles by Ruben Villalpando and Julio Reyna Quiroz. El Diario de Juarez, February 22, 2008. 

Feds Evict Striking Copper Miners

Mexican federal and state police evicted hundreds of strikers January 11 from a copper mine operated by Grupo Mexico in the northern state of Sonora.  Reportedly backed by Mexican soldiers,  police used tear-gas and rubber bullets to dislodge members of the National Miners, Metal and Allied Workers Union from the struck mine in Cananea, a historic town located south of the US-Mexico border. Mexican press accounts reported between 20-40 miners were injured and several others briefly detained during the eviction. A counterattack by miners armed with Molotov cocktails resulted in some damage to property and vehicles, government officials charged.  

The police action came just hours after the Federal Labor Conciliation and Arbitration Board ruled that the strike was illegal. Now entering its six-month and involving 1,300 workers, the strike erupted over safety grievances last July 30. Union members are also on strike at mines in Guerrero and Zacatecas states. 

According to independent labor journalist David Bacon, a binational delegation of Mexican and US health and safety experts found evidence of bad working conditions, including large accumulations of lung-threatening dust, at the Cananea mine during a visit last fall.  An April 2007 inspection by Mexico’s federal Labor Ministry also detected unsafe conditions, resulting in the issuance of a list of 72 needed corrective actions. Quoted by Bacon, Garret Brown, a California health and safety inspector and director of the Maquiladora Health and Safety Network, contended that “none of the (72) mandated corrections” had been carried out by the time of the July strike action.

Labor leaders and their supporters denounced the Sonora eviction as a violation of Mexican law that allows 24 hours from the time a strike is ruled "non-existent" for workers to return to their jobs or be dismissed. Union activists contended that their members were not given sufficient notice before police moved in on the mine. Their  position was supported by Mexico City labor lawyer Arturo Alcalde. 

"You cannot intervene this way before the 24 hours is up," Alcalde said. "It was a totally illegal action." Carlos Pavon Campos, political affairs secretary for the union, said the use of force against his organization's members was a "clear violation of legality and the constitutional guarantees of Mexico."

On January 12, a federal judge granted preliminary approval to the union’s legal challenge of the labor board’s ruling. “What the resolution says is to suspend things and keep them the way they were, which is a state of strike,” said union attorney Nestor de Buen. “Consequently, the strike is legal and it should stay that way.”

In response to the eviction, Sonora state legislator Reynaldo Millan Cota filed a complaint with Mexico's National Human Rights Commission.

The Labor Ministry, which oversees the labor board, defended the legality of the strike nullification, rejected accusations of official violence and denied reports that the Mexican army was participating in strike-breaking. Sonora Governor Eduardo Bours justified the use of Sonora state police as a necessary measure to allow workers back into the mine.

"We were notified (January 10) of the illegality of the strike in Cananea, that the movement was declared non-existent, and together with the federal forces we were  asked to permit the entrance of workers who wanted to work beginning this Friday," Governor Bours said.

Benjamin Bolanos Becerra, spokesman for Grupo Mexico, said company personnel were returning to the mine to resume work and clean up alleged damages to the facility. Bolanos contended that copper was missing and other materials were stolen or damaged. He said the company lost $500 million during the last six months of the strike. According to Grupo Mexico, about 400 workers, or almost the equivalent of one work shift, returned to work after January 11.

The Cananea incident is the latest episode in a nearly two-year-old battle that involves the union,  Grupo Mexico and Mexico's federal government.  Conflict escalated after a February 2006 explosion at a Grupo Mexico coal mine in Coahuila state killed 65 workers. Soon thereafter, the administration of former President Vicente Fox pressed legal charges originating from an earlier accusation of embezzlement against union leader Napoleon Gomez Urrutia   Parallel to the legal moves against Gomez, the Labor Ministry recognized a rival leader who unsuccessfully attempted to take complete control of the union. Gomez fled to Canada, and the two union factions battled for leadership of the organization. Currently, a company-friendly union headed by former Grupo Mexico contractor Francisco Gamez is vying with Gomez’s union to represent mine workers across the nation. 

In reaction to strikes by Gomez supporters throughout the country in 2006, 
the Mexican Employers Confederation and other business leaders urged the Fox administration to use force if necessary to bring the labor turmoil to an end.

In an interview with the Mexican magazine Dia Siete prior to the Cananea violence, Gomez announced he will return to Mexico from Canada next month. He said legal investigations against him initiated by the Fox administration have collapsed for lack of proof. The exiled union leader accused former President Fox and his wife, Martha Sahagun, of colluding with Grupo Mexico owner German Larrea to take over the union's leadership and put Gomez behind bars. He contended that Fox and his wife, through Sahagun's Vamos Mexico Foundation, had received financial support from Larrea.

In a weekend video message to his supporters in Mexico, Gomez called on union members to remain steadfast.  He vowed to call a national strike if matters in Cananea were not resolved to the union’s liking.

In Cananea, meanwhile, tension pervades the town as Mexican police beef up their positions and strikers regroup. Nationally, the important Mexican Electrical Workers Union and the Mexican Labor Front quickly expressed support for the Cananea workers. In Sonora, the State Front Against Repression announced it will stage January 17 demonstrations against the eviction in Nogales, Ciudad Obregon and the state capital of Hermosillo. Many historians consider the 1906 killing of strikers in Cananea by Arizona Rangers as one the key events that helped spark the 1910 Mexican Revolution.

Sources: El Universal, January 12 and 13, 2008. Articles by Alejandro Paez Varela, the Notimex news agency and editorial staff. La Jornada, January 11  12 and 13, 2008. Articles by Ulises Gutierrez, Carolina Gomez, Gustavo Castillo, and the Notimex news agency. Truthout.org, January 13, 2008. Article by David Bacon. El Imparcial (Hermosillo), January 12, 2008. Articles by Claudia Rojo and Norma Valenzuela. Proceso/Apro, January 11, 2008.

The Growing Gouge of January

Now that that the free-spending holiday season has drawn to a close,   Mexicans are staring straight at the annual, grim cost of January. Every year, property taxes, vehicle registration fees and school tuition come due immediately after Mexicans spend generous amounts on vacations, family dinners and Three Kings Day gifts. And this year's gouge to the pocketbook promises to be a painful one. Among others, costs for transportation, cross-border travel permits, building and eating will shoot up in 2008. Chicken breasts, for instance, which sold for about $3 per kilo at Mexico City’s main wholesale market last month now fetch more than $3.50. 

Approved by a majority of congressmen from the PAN and PRI parties,  a phased-in, 18-month increase in the prices of gasoline and diesel goes into effect this month. The hike is expected to trigger increases in the costs of other products as well. Price leaps of 30 percent for steel and 10 percent for cement could hit the construction industry in 2008. Arturo Guillen Arambula, president of a supplier trade group in Jalisco state, urged calm in the face of fuel price increases.

“We don’t agree with speculation and inflationary bubbles, because it is a way of taking advantage of the situation to affect the final consumer of products,” Guillen said.

Prospective Mexican visitors to the US will also have to fork out more up-front money in 2008 than they did last year. Beginning on January 31, US government fees for tourist, business and student visas will jump from $100 to $131. In Mexico, the fees are collected by Citibank-owned Banamex branches. US tourists visiting Mexico are charged approximately $22 for a 6-month tourist card. The fee is included in the price of airline tickets, or collected by Banamex and other private banks from land travelers. Besides higher fees for US visas, Mexicans will pay up to 50 percent more this year for their own government-issued passports which are good for 3, 6 and 10 years.

Once again, widespread trepidation is surfacing over the price of the corn tortilla.  A Mexican food staple, tortillas jumped from about six pesos per kilo to more than 10 before public protests forced government action to stabilize the "official" price at 8.5 pesos early last year.  However, tortilla kilo prices in places like Lazaro Cardenas, Michoacan,  locked in at 13 pesos in 2007. In recent days, news dispatches from Chiapas, Guerrero, Veracruz, Baja California, Tamaulipas, and Chihuahua report actual or imminent price increases reaching or surpassing 9 pesos per kilo. Lorenzo Mejia Morales, president of a national corn millers and tortilla distributors trade association, affirmed the price for each kilo of tortillas will increase between 20 and 30 percent in the coming days. 

"As you can imagine, (tortillas) are what everyone eats at home, even when you don't have anything to buy meat or chicken," said Tijuana resident Victor Ramirez, "but you can't go without tortillas, and wages don't go up.."The factory worker buys two kilos of tortillas a day to feed his family of five. 
 
Citing the official Bank of Mexico, Mexico City’s La Jornada daily reported that the inflation rate for 42 basic commodities including food came to 34.9 percent in 2007. Last year, minimum wage increases averaged about four percent.

New tortilla price increases are first likely to be felt in the thousands of traditional, corner-store tortilla outlets across the country. In Ciudad Juarez,Chihuahua, large supermarket and convenience store chains including Soriana and Wal-mart, which are able to purchase and sell large amounts of corn flour and tortillas, are reportedly holding tortilla prices at 5.5 pesos per kilo.

Debate is growing over the possible price impact on tortillas of the January 1 elimination of Mexico's tariff on imported foreign corn, a measure mandated by the North American Free Trade Agreement.

Jose Guadalupe Saenz, general director of basic industries for the federal Economy Ministry, blamed last year's price hike on shortages stemming from the diversion of white corn used to make tortillas to the animal feed market. Saenz said the tariff tear-down will allow Mexican livestock producers to import more yellow corn at affordable prices, thus freeing up white corn for the tortilla market. But a recent report by the International Food Policy Research Institute predicted steady increases in international corn prices through 2020, largely due to the use of maize in manufacturing ethanol. 

To pay for their past due bills as well as pending ones, hundreds of thousands of Mexicans are making the now-ritualistic trek to pawn shops. After queing up outside storefronts, Mexicans will hock jewelry, watches, electronics goods, autos and even real estate in return for a temporary, interest-bearing loan. "I have my jewels pawned," said Mexico City school teacher Maria Estrada Magana," because I am retired and pensions are very small. It no longer supports me."

Gustavo Mendez, spokesman for the Nacional Monte de Piedad pawnshop chain, said the number of Mexican families utilizing his company's services this January will reach 750,000, a customer base up 120,000 from 2007. Mendez estimated that Monte de Piedad's January business will be worth about $90 million. He added that 96 percent of customers will recover their properties.

Although it is the oldest and best known outlet, Monte de Piedad is far from alone in the thriving pawn business. Since Mexico liberalized the pawn shop market in 1996, the number of national and foreign-owned hock shops has grown to at least 3,500 branches of 50 privately-owned businesses. Reports that some pawnshops are charging as much as 800 percent interest,
prompted Ciudad Juarez Congressman Enrique Serrano to recently propose legislation that would put a 48 percent annual cap on pawn industry interest rates.  

The pawn industry boom is one facet of the bigger credit explosion in Mexico, which like in the US has helped fuel the economy. As 2007ended, Mexican interest rates on mortgages had slipped to 12.57 percent on average, though some lenders were charging less than 10 percent. Consumer credit was at 31.08 percent, a rate which will ensure that the pinch of January is a sharp one for many this year.

Sources: Frontera, January 2 and 4, 2008. Articles by Sandra Cervantes and Myrna Sanchez. Lapolaka.com, January 3, 2008. El Universal, December 30, 2007; January 3, 7, 8, 9, 2008. Articles by Ricardo Jimenez, Juan Cervantes Gomez, Fernando Martinez, Ramiro Alonso, Sergio Jimenez, other correspondents, and the Notimex news agency. La Jornada, December 14, 2007; January 6 and 9, 2008. Articles by Angeles Mariscal, Rene Ramon, Juan Antonio Zuniga, Susana Gonzalez G., Roberto Gonzalez Amador, and editorial staff. El Diario de Juarez, December 13, 2007; January 1, 2, 3, 4, 8, 2008. Inter Press Service, December 6, 2007. Article by Abra Pollock.

Nafta at Fourteen: Historic Showdown Looms

As  the 14th anniversary of the North American Free Trade Agreement (Nafta) fast approaches, rural opponents of the trinational pact are stepping up their mobilizations on both sides of the US-Mexico border. Mexican farm groups and their supporters are gearing up for border-wide actions on January 1, 2008 to protest the final elimination of tariffs on corn, bean, sugar and powdered milk.

This month, adherents of the “No Corn, No Country” campaign, a movement which has drawn the support of hundreds of rural and urban organizations across Mexico,  kicked off the latest in a series of planned actions with a Mexico City hunger strike that attracted the support of artists and intellectuals. In a country where maize is part and parcel of a long indigenous history,  the specter of foreign corn overwhelming local producers and markets is stirring nationalist sentiments.

“For Mexico, corn and beans are not just food, but they are also part of its history and culture,” said nationally-known cartoonist Jose Hernandez. “With the total opening of Mexico to importations, the destruction of the natural patrimony and culture of our country is being permitted.”


Still No Level Playing Field

Nafta’s opponents contend Mexico cannot fairly compete with the United States and Canada in the production of basic grains. Recognizing asymmetries between the nations, the trade pact’s negotiators allowed a 15-year phase-in for the complete elimination of  tariffs on agricultural products. As the tariff tear-down date draws near, the structural inequalities that existed in 1994 are still pronounced today.


Cited in a US press story, the Mexican Institute of Competition reports that Mexican corn farms yield 6 tons per acre compared with the US average yield of 22 tons per acre. Other press accounts report that US subsidies for corn growers average $20,000 per farmer, while Mexican subsidies amount to about $770 per grower. Currently, Mexico produces between 19-21 million tons of corn annually, a sum dwarfed by the US yearly production total of 300 million tons.

Registering a production deficit, Mexico has grown increasingly dependent on corn imports from the US since the advent of Nafta in 1994. Annual corn imports of 10 million tons account for nearly one-third of the country’s corn consumption. In dollar terms, the value of basic grain imports leaped from $778 million in 1992 to almost $2.5 billion in 2006, according to Daniel Villafuerte Solis, a researcher with the Center for Advanced Studies of Mexico and Central America (Cesmeca).

Nafta’s proponents argued that liberalized trade would benefit consumers through lower prices, but the promise has yet to materialize in Mexico’s corn tortilla market. According to a recent story in the Mexico-based Cimac news service, tortilla prices have shot up 738 percent since 1994. With international corn prices going up in the wake of the ethanol biofuel boom, Mexican corn consumers are likely faced with further price increases.

The tortilla price pinch continues as Mexican consumers close out 2007, the first year of the Calderon administration, paying 35 percent more for the basic basket of goods than they did in 2006. Manufacturing wages have risen only 4.5 percent in the same time period, according to the Attorney General for Consumer Protection and the Bank of Mexico.

Anti-Nafta activists charge the trade pact has resulted in the loss of between 1.8 million and 3 million farm jobs during the last 14 years. Mexican Congressman Hector Padilla, the president of the agriculture commission in the Chamber of Deputies, said the rural hemorrhaging was even worse if statistics from 1991 are taken into account. According to Padilla, the number of people employed in the countryside plummeted from 9.9 million in 1991 to 4.9 million in 2006. As is widely documented, many of the displaced campesinos emigrated to the United States.

“According to the World Bank, the results of Nafta’s application   in the agricultural sector have been disappointing,” Padilla said. “We have a countryside in regression, economically stagnated…”

In a snapshot of  many rural communities, researcher Villafuerte studied the recent history of Frailesca, Chiapas, an area once known as the “breadbasket” of the southern state. According to Villafuerte, farm production fell from 169,000 hectares in 1983 to 88,000 in 2005. Like many other analysts, Villafuerte predicts the rural problem will only worsen after the full implementation of Nafta next month.

Don’t Blame Nafta

Other researchers challenge contentions that Nafta is the cause of Mexico’s deepening farm crisis on Nafta.  A 2005 study by Braulio Serna of the Economic Commission for Latin America and the Caribbean (ECLAC) concluded that Nafta had little impact on Mexico’s countryside. Instead of free trade, Serna cited other factors for the rural crisis, including government policies, low international commodity prices, backward farming methods,  climatic conditions, and global and national economic crises.

Concurring with the ECLAC report, Marcos Ramos, an agricultural researcher with the National Autonomous University of Mexico, said blaming Nafta for rural  economic failures was an “overly simplistic view..” Mexico City economist Luis de la Calle, who participated in the original Nafta negotiations, said recently that the January 1 opening should have little jolting effect on a market which has gradually opened over the years.

Perhaps in celebration of  Nafta’s 14h birthday, the federal Mexican Radio Institute (IMER) has been running spots sponsored by the Ministry of Agriculture, Ranching  and Fishing that tout Mexico’s performance in the global farm market. Featuring the voice of Mexican golf champion Lorena Ochoa, the messages stress Mexico’s “winning” roster of products capable of competing in the world market. According to a report in Inter-Press Service, less than four percent of the 31 million cultivated acres in Mexico is currently devoted to export production. The language employed in the IMER spots is reminiscent of the 2006 campaign rhetoric of presidential candidate Felipe Calderon who urged a “winning” Mexico.

Another Free Trade Showdown Looms

Among other members of Mexico‘s political class, however, criticism of Nafta’s agricultural provisions is mounting. Politicians from the center-left  PRD, Convergencia and PT parties, as well as sectors of the former ruling PRI, are increasingly calling for changes in the trade pact to protect producers of basic grains and other vulnerable products. PRD Senator Antonio Mejia Haro said the Mexican Senate’s rural development commission will conduct forums across the country in March and April next year to hear the concerns of rural producers and residents.

“We are looking at legislative actions that could result in the renegotiation of the agricultural chapter of the trade agreement,” Senator Mejia said. Concerned that reopening Nafta’s agricultural sections for negotiation could undermine the treaty as whole, as well as send a bad signal to world financial markets, the Calderon Administration and its supporters in the center-right PAN party are balking at reviewing the farm country clauses.

At the grassroots level, US and Canadian rural advocacy organizations including the Minnesota-based Institute for Agriculture and Trade Policy and El Paso’s Border Agricultural Workers Union (UTAF) are backing the “No Corn, No Country” movement’s demands to remove basic grains and food staples from Nafta and safeguard their production in Mexico. On January 1, 2008, the Democratic Campesino Front of Chihuahua, UTAF and other groups plan a “human wall” at the border in El Paso-Ciudad Juarez under the slogan of “No Walls for Corn, No Walls for Our People Either,”

In a December 14 letter sent to the heads of state of Mexico, Canada and the United States, scores of farm groups from the three nations appealed to the leaders to halt the imminent tear-down of Nafta’s remaining agricultural tariffs. Until now, no public response to the appeal has been forthcoming from the governments.

Additional sources: Inter-Press Service, December 6 and 19, 2007. Articles by Abra Pollock and Diego Cevallos. Cox News Service/San Francisco Chronicle, December 20, 2007. Article by Jeremy Schwartz. Prensa Latina, December 16. 2007. Frontenet/Notimex, December 14, 2007. Cimacnoticias, December 14, 2007. Article by Gladis Torres Ruiz. La Jornada, December 12, 13 and 20, 2007. Articles by Matilde Perez U., Roberto Garduno, Enrique Mendez, Roberto Gonzalez, Rosa Elvira Vargas, and Victor Quintana. Proceso/Apro, December 10 and 11, 2007. Articles by Patricia Davila.

Mexico Slipping into New Credit Crisis

 A new report from the central Bank of Mexico (Banixco) is another signal that the country's consumer credit card spending spree is headed for trouble. According to the Banixco, bad consumer credit card debt reached a record amount of more than $1.7 billion by the end of September. More than tripling in size since September 2005, overdue debts accounted for 7.19 percent of total purchases made with credit cards.  Significantly, the Banixco’s numbers come before the spend-crazy Christmas season.

The central bank's glum figures exceeded projections made earlier this year by Luis Pazos, president of the National Commission for the Protection and Defense of Financial Services Customers, who predicted that bad debts would account for 7.1 percent of the national credit card portfolio by June 2008.

Pazos warned that a bad debt number of 7.1 percent would be dangerous to the health of the Mexican banking system. However, the Association of Banks of Mexico (ABM), a trade industry organization, downplayed the latest report of soaring debts. Noting that bank reserves are nearly double the bad consumer credit card debt load, the ABM contended that the bad loans do not represent a threat to the viability of Mexico's financial system.

But Jose Antonio Alonso, home mortgage director for the Spanish-owned Santander bank, acknowledged that unmanageable credit card debts could have repercussions for other strategic sectors of the economy.

"The greater indebtedness with credit cards could make it difficult for a family to comply with other long-term commitments like home mortgages," Alonso said.  According to the Banixco, Mexico's overall home loan portfolio held by banks reached about $25 billion by September of this year. Approximately $600 million of that amount consisted of overdue loans.

Unprecedented in Mexico, the current spike in bad credit card debt even outdoes rates attained prior to the December 1994 peso crisis and bank crash that economically devastated the country. The previous crisis was overcome by a quick US loan and the Mexican government's bail-out of the banking system, which tax-payers are still paying off. A big difference between then and now is that Mexican banks today are almost entirely owned by foreigners, including Banamex, whose parent company, Citigroup,  was recently forced to write off $15 billion in bad US subprime housing loans.

Sources: La Jornada, November 22, 2007. Article by Roberto Gonzalez Amador. The Nation, November 6, 2007. Article by William Greider. Frontera NorteSur/Commerce, July-September 2007.

Mexico Slipping into New Credit Crisis

 A new report from the central Bank of Mexico (BdeM) is another signal that the country's consumer credit card spending spree is headed for trouble. According to the BdeM, bad consumer credit card debt reached a record amount of more than $1.7 billion by the end of September. More than tripling in size since September 2005, overdue debts accounted for 7.19 percent of total purchases made with credit cards.  Significantly, the BdeM’s numbers come before the spend-crazy Christmas season.

The central bank's glum figures exceeded projections made earlier this year by Luis Pazos, president of the National Commission for the Protection and Defense of Financial Services Customers, who predicted that bad debts would account for 7.1 percent of the national credit card portfolio by June 2008.

Pazos warned that a bad debt number of 7.1 percent would be dangerous to the health of the Mexican banking system. However, the Association of Banks of Mexico (ABM), a trade industry organization, downplayed the latest report of soaring debts. Noting that bank reserves are nearly double the bad consumer credit card debt load, the ABM contended that the bad loans do not represent a threat to the viability of Mexico's financial system.

But Jose Antonio Alonso, home mortgage director for the Spanish-owned Santander bank, acknowledged that unmanageable credit card debts could have repercussions for other strategic sectors of the economy.

"The greater indebtedness with credit cards could make it difficult for a family to comply with other long-term commitments like home mortgages," Alonso said.  According to the BdeM, Mexico's overall home loan portfolio held by banks reached about $25 billion by September of this year. Approximately $600 million of that amount consisted of overdue loans.

Unprecedented in Mexico, the current spike in bad credit card debt even outdoes rates attained prior to the December 1994 peso crisis and bank crash that economically devastated the country. The previous crisis was overcome by a quick US loan and the Mexican government's bail-out of the banking system, which tax-payers are still paying off. A big difference between then and now is that Mexican banks today are almost entirely owned by foreigners, including Banamex, whose parent company, Citigroup,  was recently forced to write off $15 billion in bad US subprime housing loans.

Sources: La Jornada, November 22, 2007. Article by Roberto Gonzalez Amador. The Nation, November 6, 2007. Article by William Greider. Frontera NorteSur/Commerce, July-September 2007.

Free Trade, Migration and Corn Crises

On the eve of the elimination of all tariffs on corn and beans imported into Mexico, a new World Bank study spotlights continued, major structural problems afflicting the country's agricultural sector. According to the report, one-fourth of all residents of the Mexican countryside abandoned their homes in a ten-year period studied. Especially noteworthy was the out migration of 25 percent of youths between 15 and 24 years of age. Increasingly, Mexican rural areas are becoming lands of women and the elderly. The study gives a strong hint of what helps explain the rural exodus: Mexican agricultural workers lost 30 percent of their purchasing power between 1988 and 1996 alone.

According to the World Bank, rural Mexicans make up 24.3 percent of the nation's population, or approximately 24,800,000 people. Although they still constitute nearly one-quarter of Mexico's population, rural Mexicans generate only 3.9 percent of their nation's Gross Domestic Product. The farm GDP of $24.3 billion is just slightly less than the amount of migrant remittances received by Mexican households in 2006. The World Bank's study indicated that migration had a double-edged sword-at least in the short to medium term. While draining the countryside of future farmers, migration provided remittances that allowed poor households to survive. Given slow-downs in the US economy as well as the stricter application of US immigration laws, it's uncertain how long the remittance economy outlined by the World Bank can sustain itself.

The time period studied by the World Bank coincided with the entry of Mexico into the World Trade Organization, the dismantling of government agricultural support programs and the first years of the North American Free Trade Agreement (Nafta). The World Bank report was released a little more than two months before all remaining tariffs on staple corn and beans are eliminated under Nafta’s provisions. Already, the study is fueling renewed debate about free trade's impact on the Mexican countryside. Since 1994, the first year of Nafta, corn imports from the United States have acquired increased importance in the Mexican food and animal feed sectors.

John Nash, an economist for the sustainable development department of the World Bank, predicted a modest or positive impact in Mexico from the pending tear-down of tariff barriers on basic grains. "There could be a positive effect with the opening of the border, especially for corn producers," Nash said.

But Karen Hansen-Kuhn, an analyst for the Washington-based non-governmental organization Action Aid, offered a different assessment of the World Bank study’s implications.   

"Nafta has been devastating for the small producers of Mexico," Hansen-Kuhn said. "Several million of them have been displaced from their lands since the agreement began functioning and now that the prices of grains have gone up significantly, the agricultural sector finds itself devastated to such a degree that it is very difficult for farmers to return and produce on their lands."

As the 14th anniversary of Nafta dawns, two prevailing currents of thought influence Mexican farm organizations. One side holds that Mexican producers must find their niche in the global economy and take advantage of new opportunities, but with some government support. For instance, Maria Esther Teran Velasquez, president of the National Confederation of Rural Landowners (CNPR) insists that the agricultural sector requires modernization to effectively compete on the world market.

Speaking at the CNPR's recent assembly, Velasquez called for investing more public funds in the countryside, implementing "clear operating rules" and fully eliminating "discretion in the approval of projects." Vasquez urged the government to extend a modest subsidy program for small producers known as Procampo for at least ten years, and to seek alternative means of support for producers with more than 75 acres who are currently enrolled in the program.

Upholding principles of food sovereignty and agricultural sustainability, another important sector of the rural population is attempting to block the corn and bean tariff eliminations beginning on January 1, 2008. So far, their efforts are not receiving a positive hearing in many government circles. Promoted by the National Council of Campesino Organizations, El Barzon and other groups, a law designed to strictly regulate the importation of beans and corn failed in the Chamber of Deputies last week. The initiative went down to defeat due to opposition from the Institutional Revolutionary Party (PRI) and its rural arm, the National Campesino Confederation, which still retains influence in the countryside.

Citing Article 31 of the Mexican Constitution that gives the congress power to protect strategic sectors of the Mexican economy, the unsuccessful bill nevertheless set the stage for a future revisiting of the power of Mexican national law over international treaties, an issue Mexico's Supreme Court has been willing to consider in water shortage complaints by Tamaulipas farmers and in other cases.

Anti-Nafta forces, however, are stepping up their mobilizations and organizing protests set for January 1. Across the nation, the "No Corn, No Country" campaign is building support among city dwellers for anti-Nafta rural organizations. The movement sponsored a youth-oriented rock concert in Mexico City which drew thousands to the capital city's Zocalo plaza last weekend. Dubbed "Lets' Save the Countryside to Save Mexico," the event was endorsed by environmental organizations, artists, intellectuals, and actors and actresses.

Concert organizer Lorena Paz, a representative of the Maya Institute, 
told attendees that while Mexico was one of the nations where corn originated, the country now faces a defining economic, political and cultural crisis. 

"The food of the people is in danger of dying and the campesinos are in danger of extinction," Paz contended. "If we don't take our corn and beans out of Nafta, we will be on our knees before the United States. We will have lost our food sovereignty and we will completely depend on other countries for eating." 

In a follow-up event to the concert, small farmers plan a November 8-10 Zocalo fair, where city slickers will get a chance of sampling Mexico's home-grown "agricultural richness."

In the big picture, Mexico confronts environmental and structural disadvantages in the agricultural sector when it comes to competing with its Nafta trading partners, the United States and Canada. According to the World Bank, Mexico has about 71 million arable acres of land. In contrast, the US possesses about 462 million acres of cultivable land, while Canada boasts more than 135 million acres of land suited for agriculture.

Sources: La Jornada, October 28, 2007. Proceso/Apro, October 24, 2007. Article by Patricia Davila. Cimacnoticias.com, October 24, 2007. Frontenet.com/La Jornada, October 20, 2007.

Mexican Consumers Hit Hard with Price Increases

Starting with tortilla price hikes, Mexican consumers have been slammed with escalating costs for necessities in 2007. New statistics from the Ministry of Economy and the Attorney General for Consumer Protection report that the prices for 43 commodities included in the basic consumer basket jumped by 34.17 percent between December 2006 and September 15, 2007.

The new numbers mean that the basic basket inflation rate is outpacing the official inflation rate of 4.2 percent by more than eight times. In the first 9 months of the Calderon administration, wages increased only between 4.1 percent and 4.75 percent, according to the official Bank of Mexico.

High food prices are emptying consumers' pockets. In recent weeks, prices for green tomatoes nearly doubled from about one dollar per kilo to almost two dollars per kilo.  Steak meat topped more than $6 dollars per kilo, and bread prices continued their steady creep upward. Not all the news was bad, however. Onion lovers, for instance, had occasion to celebrate. Beating the inflationary trend were tear-stoking bulbs, which actually decreased in price.

In the northern border city of Ciudad Juarez, inflation is topping the national average. During the first half of September, prices for pork increased by 2.6 percent, milk and dairy products by 4.5 percent, eggs by 9.09 percent, limes by 14.2 percent, tomatoes by 27.4 percent, and cucumber by 7.6 percent.

Analysts predict additional price increases in the months ahead. Staring at a 25 percent increase in feed costs, livestock and poultry producers are expected to jack up the prices for their products soon. Authorized by a majority of the Mexican Congress, higher gasoline prices are almost certain to trigger price hikes in numerous products ranging from consumer goods to household electric bills. By June 2009, drivers will spend about 75 cents extra to fill their tanks.
 
While all Mexicans are subject to the price pinch, inflation is particularly unwelcome news in households and communities dependent on remittances sent by US-based migrant workers. For a variety of reasons, remittances are diminishing. What's more, the dollar doesn't buy as much in Mexico as it once did because of relatively stable peso-dollar exchange rates.

Business and popular sector leaders offered varied explanations for the price surge. Rafael Galino, leader of the Independent Campesino Central, blamed US-based transnational companies for manipulating the wheat and poultry markets, but did not offer any immediate evidence of illegal shenanigans. Leopoldina Aguirre, general director of the National Chamber of Small Commerce, a group that represents mom-and-pop grocery stores, contended that the rising cost of imports from the United States coupled with speculation stemming from the recent tax reform law passed by the Mexican Congress were contributing to inflation.

The escalating cost of living is bound to produce political consequences. Last December’s tortilla price hike provoked outbreaks of popular discontent across Mexico, with protests only subsiding after the Calderon administration pledged to hold the price of tortillas at 8.5 pesos per kilo. A new anti-inflation movement affiliated with the El Barzon organization, "Hunger is Wiping Us Out," kicked off its campaign in Mexico City last weekend. In tandem with former presidential candidate Andres Manuel Lopez Obrador,  federal  legislators who represent the center-left Party of the Democratic Revolution also announced recently that they will back nationwide street protests against  the latest price increases.

Sources: El Diario de Juarez, September 25, 2007. El Universal, September 23 and 24, 2007. Articles by Jorge Octavio Ochoa and the Notimex news agency.  La Jornada, September 14 and 20, 2007. Articles by Roberto Gonzalez Amador, Miriam Posada, Enrique Mendez, Roberto Garduno and correspondents.

Border Workers Fight Japanese Company

While residents of Eagle Pass, Texas, were celebrating the long Labor Day weekend, some of their neighbors across the border in the Mexican city of Piedras Negras were mulling over a bitterly-contested buy-out offer from a Japanese automobile parts manufacturer. Involving 725 workers, the controversy centered around a plan by the Fujikura company to legally lay-off its workforce and then re-contract employees with reduced benefits.

A large global company, Fujikura produces transmission systems, electrical wiring systems and other goods for clients that include Subaru and Toyota. The Japanese company assumed full ownership of the Piedras Negras plant from Alcoa in 2005. Workers in the maquiladora earn from $55 to $73 per week.

The buy-out battle culminated two years of disputes between Fujikura and workers over production shifts, seniority, pay, and the playing of radio music on the shop floor. A threatened strike by workers resulted in a 4.5 percent pay hike earlier this year. Later claiming economic difficulties, Fujikura announced it would lay off the plant workers and re-employ them under new conditions.

Since Mexican law requires employers to compensate laid-off workers, Fujikura initially offered each of its workers about $1,500 in severance pay. Countering that Mexican law stipulates at least 20 days of payment for each year of service, many workers demanded a bigger severance package.

After widespread protest erupted among the workforce, Fujikura raised its severance offer to almost $4,500 per worker. Veteran workers, many of whom are older employees with few alternative job prospects, insisted on the 20-day severance package.

The Piedras Negras conflict unfolded in a pattern familiar to other border maquiladora labor disputes. Dissatisfied with the responsiveness of the semi-official Mexican Workers Confederation (CTM) to their grievances, workers turned to the activist Border Workers Committee (CFO) for help. Local business leaders and government officials, who are promoting more international investment for Piedras Negras and Coahuila, criticized the CFO for allegedly jeopardizing economic stability in their town. Some also accused the group of acting as a front for US unions. "What is the crime of developing relationships with North American unions?" asked CFO leader Julia Quinonez.

Operating in the background, the CTM assisted workers who decided to accept the company's offer. Preserving labor-employer relations and jobs were the primary goals of the old-time labor federation. "The CTM is concerned about Piedras Negras...," said CTM spokesman Tereso Medina Rodriguez, "because we can all lose if there are no agreements."

Late last month, Homero Ramos Gloria, Coahuila state government secretary, arrived for talks with worker representatives, but no immediate agreement was announced. According to company lawyer Luis Garza Valdez, nearly all the factory workers had signed resignation letters and accepted Fujikura's offer by September 4,

In addition to severance pay, workers will receive compensation for vacation days, three-months' salary, savings and bonuses, Garza said. Fujikura also promised to re-contract all its workers and not retaliate against anyone, he later added. 

Labor leader Raul Rueda charged that threats of industry blacklisting dangled over the heads of workers who did not agree to the company plan. "Many workers signed and picked up their check because they were afraid of not being able to find employment elsewhere," Rueda contended.

Any remaining grievances stemming from the Fujikura conflict could wind up in the hands of the federal government's conciliation and arbitration service, a legal system set up to settle conflicts between workers and employers. 

Sources: Zocalo.com.mx, August 23 and 29, 2007; September 1, 3 and 4, 2007. Articles by Hilda Aguilar and Jose Luis Medrano. Proceso/Apro, August 22, 2007. Article by Arturo Rodriguez Garcia. Cfomaquiladoras.org

A Credit Card Debt Crisis in Mexico?

New numbers strongly suggest that Mexico's level of consumer credit card debt is steadily sliding from the "yellow" zone into the "red" one. A new report from the official National Commission for the Protection and Defense of Financial Services Customers (Condusef) reveals that the percentage of bad debts grew from 4.6 percent of total credit card debts during the first trimester of 2007 to 6.1 percent of the overall debt load by June of this year. The jump represents a 100 percent increase in the amount of overdue credit card debts from June 2005, when only 3 percent of the overall debt sector in question was in arrears.

Warning that if the present trend continues, Condusef  President Luis Pazos predicted overdue credit card accounts will amount to 7.1 percent of the total credit card debt load by June 2008. Pazos said that such a development would be dangerous to the health of the Mexican banking system. From 2001 to 2007, the percentage of Mexico's Gross National Product attributed to credit card spending rose from 0.59 to 2.38 percent. 

Approximately 12 million Mexicans, or about one in nine residents of the country, currently hold about 18 million credit cards. The average line of credit for each customer is slightly more than $1,500. In 1996, only 6 million credit cards circulated in Mexico. Despite the mounting consumer debts, Mexican banks and other lenders are still approving credit cards to the tune of about 6,600 plastic cards every day. In the last two years, 40 percent of new credit card holders reportedly did not have previous credit histories prior to receiving their plastic. 

High profits encourage largely foreign-owned banks to keep handing out new consumer credit cards. Pazos said that banks' aggressive promotion campaigns help explain the plastic money boom. Lines of credit have been expanded without the knowledge of card holders, Pazos added. The consumer official urged banks to exercise caution in approving new credit cards.

Source: El Universal/Notimex, August 27, 2007.
  

Debt, Development and Discord

Notwithstanding world financial jitters, Sonora's state legislature approved a controversial debt package this week. Passed by an 18-13 vote, the plan allows Sonora to contract new debts exceeding $1 billion to pay for development projects. Pushed by Governor Eduardo Bours of the Institutional Revolutionary Party (PRI), the new debt ceiling is in addition to the estimated $500 million currently owed by Sonora.

The legislative action was criticized by the center-right National Action Party (PAN), which earlier proposed limiting the amount of the new debt. Florencio Diaz Armente, leader of the PAN fraction in the state legislature, lamented that his party's amendments were not approved. Arguing that the new debt creates a 30 year-burden, Diaz said Gov. Bours’ Plan Sonora "puts  the future of the state at risk and will force the new generations to pay for projects that will not even later function."

On the other side of the political aisle, Gov. Bours received support from the center-left Democratic Party of the Revolution (PRD). While two elected PRD representatives were conveniently absent for the vote, fellow legislator Juan Manuel Sauceda Morales voted in favor of the debt bill. Sauceda's vote flew in the face of a directive from the PRD's national committee instructing its Sonora legislators to vote against the debt plan.

PRD President Leonel Cota warned that legislators voting for the Bours plan would be expelled from the party. Cota charged that Gov. Bours was plunging Sonora deeper into debt so he could purchase the Calmex tuna canning firm from the federal government for a $60 million price tag. 

PRD legislator Sauceda countered that he voted for Plan Sonora because it was in the best interests of Sonora's population. "I didn't sell out," Sauceda maintained. "It was a reasoned decision, with technical bases. I know there is a political cost to pay in the next election, but I assume it."

Prior to the legislative vote, Gov. Bours toured three Catholic churches undergoing restoration in the state capital of Hermosillo. The state's chief executive declared that he prayed every day for passage of his Plan Sonora, a project he contended is "for the good of the entire population."

While Gov. Bours was praying for political blessing, violence erupted in a renewed labor conflict between workers and the powerful Grupo Mexico corporation. On the evening of Saturday, August 11, a group of about 90 dismissed workers of the La Caridad coppper mine in northern Sonora was headed for a protest at the mine when a clash broke out with an opposing group. 

 Followers of National Mineworkers Union President Napoleon Gomez, the protestors claimed that they were ambushed by Grupo Mexico’s "white guards," who allegedly attacked workers and burned cars. Protestor Reynaldo Hernandez was killed in the melee. Carlos Pavon Campos, political affairs secretary for the union, charged that more than 20 workers were injured and 15 detained and tortured by Sonora state policemen. Pavon accused the state police of attempting to pin the blame for Hernandez’s death on union supporters.

Gov. Bours challenged the union's version of the incident, saying that only 6 persons were arrested in connection with Hernadez's death. Denying that a national union represents La Caridad’s miners, Gov. Bours blamed the incident on promises made by the mineworkers' union to reinstall former workers.

The La Caridad confrontation came while union miners pressed forward  a strike against Grupo Mexico's nearby Cananea copper mine. The Cananea work action began late last month over contract issues but now includes pay grievances as well.

Union spokesman Pavon charged that Grupo Mexico, with the connivance of state and federal authorities, was turning mining districts into hostile territories for labor and human rights. Hundreds of copper workers are laboring 12-hour shifts without benefits or contracts, he contended. "The ministries of Interior and Labor don't exist." Pavon said, adding that the union will request the intervention of the National Human Rights Commission.

The Sonora copper strike is drawing increased national and international attention. Mexico’s influential National Workers Union and the Authentic Union of Nuclear Industry Workers have expressed solidarity with the Sonora strikers.  In a letter to Mexican President Felipe Calderon this week, the United Steelworkers of America pledged to lobby against economic and security aid to Mexico in the US Congress, unless there is justice for dead Mexican miners.   

In Sonora, meanwhile, Gov. Bours dispatched 80 additional state policemen for strike duty. He rejected the notion that a state of siege exists in Sonora’s copper country. Grupo Mexico did not immediately issue any statements about the latest events in the labor conflict.

Sources: La Jornada, August 15 and 16, 2007. Articles by Ulises Gutierrez R. El Universal, August 14, 2007. Article by Marcelo Beyliss. Proceso/Apro, August 13, 2007. Associated Press, August 14, 2007. Article by Paul Kiernan.

Canada-Mexico Guestworker Program Under Fire

For some rural Mexicans, working in Canada is a viable alternative to the low pay of Mexico's northern borderlands or the dangerous crossing into the United States. Similar to the old Bracero Program between the United States and Mexico, Mexican farmworkers sign temporary contracts to work legally in Canadian agriculture. According to a Mexican congressional report, an estimated 15,000 Mexicans labor as agricultural guestworkers for up to eight months a stint in Canada. Now, the attractiveness of the Canadian option might be fading too.

Amid growing reports of abuses, a group of Mexican legislators is demanding that President Felipe Calderon raise the issue of working conditions when he talks with Canadian Prime Minister Stephen Harper as part of the North American Leaders’ Summit in Canada this month.

"We know that in October 2006, while he was president-elect, President Calderon expressed his disposition to expand the guestworker program for Canada to the service and construction sectors," said Edmundo Ramirez Martinez, a representative for the Institutional Revolutionary Party (PRI) in the lower house of the Mexican Congress.  "Before (President Calderon) does this, he should analyze how our countrymen our treated."

Recently touring Ontario, Quebec and other parts of Canada, a group of Mexican legislators encountered complaints related to the working and living conditions of guestworkers.

Federal Congressman Camerino Marquez Madrid of the Democratic Party of the Revolution (PRD) charged that isolated workers lack access to the Canadian health system, worker's compensation and interpreters. He said workers were subject to firings without proper recourse. Legislators also found that sending remittances from Canada was both difficult and costly. Congressman Ramirez contended that Mexican consulates in Canada are negligent in upholding the rights of their citizens, functioning instead like a "giant immigrant smuggling operation" in recruiting and contracting guestworkers. 

Reminiscent of the old Bracero Program, reports indicate that the official Canada-Mexico program serves as a cover for deceitful labor contractors and extra-legal relationships. Last June, for instance, a group of indigenous Mexicans from the municipality of Tlapa, Guerrero, agreed to work in Canada without a contract.

In the run-up to the trinational Canadian summit, the PRI and PRD representatives in the lower house of the Mexican Congress urged President Calderon to discuss the treatment of guestworkers with his Canadian counterpart.

Sources: El Universal/Notimex, August 12, 2007. El Sur/Agencia Reforma, July 2, 2007.

A Mexican Beach Fire Sale?

Editor’s Note: Today’s article is the first part in a series about economic, environmental and security issues involving Mexico’s coastal borders.

A senator from Baja California Sur is pushing legislation that would remove constitutional restrictions on direct foreign ownership of lands situated within 50 kilometers of Mexico’s coasts. Senator Luis Alberto Coppola Joffroy  a member of President Felipe Calderon’s National Action Party (PAN), is expected to introduce the measure in the Mexican Congress this week. If approved, the constitutional  reform will eliminate a long-standing law that was crafted to protect Mexican sovereignty from foreign encroachment.

Many coastal properties are indirectly owned by foreigners who purchase through trust funds administered by banks. Arguing that new global economic and political conditions favor the lifting of all ownership restrictions, Senator Coppola contends that friendly legislation would boost economic growth.

“It will open up a new, very profitable opportunity for foreign and national investors, with the goal of creating a more solid market,”  Senator Coppola said.

An unsuccessful candidate for the governorship of Baja California Sur in 2005,  Senator Coppola presides over the Mexican Senate’s tourism commission. In his private life, he is an owner of the Coppola Hotel Group and a long-time promoter of tourism in the Baja Peninsula.  

The PAN senator’s proposal is sparking sharp polemics in the national  press and in high political circles. In the Mexican Congress, the National Front of Rural Sector Legislators has firmly come out against a constitutional reform of coastal ownership nationality requirements. 

Citing the creeping loss of coastal ejido lands and the privatization of beaches in Cancun and elsewhere, the lawmaker’s group views Senator Coppola’s proposed reform as an assault on the rights of indigenous Mexicans.

“Hundreds of complaints exist about the surrender of coastal zones to foreigners, and the government has not defended either the national patrimony or indigenous people,  who are not allowed to sell their arts and crafts even after being stripped of their lands,” said Senator Heladio Elias Ramirez Lopez, president of the rural legislators’ group. 
 
Claiming indigenous Mixtec descent, Senator Ramirez is a member of the Institutional Revolutionary Party, a former governor of Oaxaca and the current leader of the National Campesino Federation.

Ramirez disputed Senator Coppola’s position that a constitutional reform would trigger economic development. “It happens,” he said, “but in a fragmented and generalized way.”

Senator Coppola, who made headlines earlier this year for his vocal opposition to new environmental regulations meant to protect sharks and rays,  unveiled his legislative plans during a time of feverish development along Mexico’s coasts.

On all coasts, posh luxury resorts, towering new condominiums,  breathtaking private villas and giant cruise ship terminals increasingly crowd the landscape. North American, Spanish, Japanese and other  investors are betting the beach sands will turn gold. 

Even gritty Acapulco, which was rocked by bouts of narco-violence from 2005 to early 2007,  is experiencing an intense pace of real estate and commercial development.

“For the second year in a row, we have achieved first place in private sector investments,” Acapulco Mayor Felix Salgado Macedonio told Frontera NorteSur earlier this summer. “There are big developments in Acapulco’s Zona Diamante.”

From Baja California in the north to Cancun in the south, residential tourist properties constitute a hot spot in the coastal real estate market. A recent market analysis by the CB Richard Ellis firm estimated sales in Mexico’s  residential tourist sector reached $5 billion in 2006, a figure stunningly  above the $3 billion in sales which were anticipated for last year. According to the company, annual sales of residential properties could soar from an average 5,000 units to 20,000 units in the next five years.

CB Richard Ellis ranked Puerto Vallarta, Cancun, Ensenada-Rosarito, Acapulco, Puerto Penasco, Los Cabos, and Mazatlan as the most popular residential sales locations. The company’s study calculated that 70 percent of the new buyers are foreigners, principally Canadian and US citizens, while only 30 percent are Mexican nationals.

“Mexico offers US citizens the possibility of acquiring the kinds of homes they used to purchase for the same prices and same sizes in the United States, but which have doubled in cost and been reduced in size during recent years,” said Manuel Garnacho, director of corporate services for CB Richard Ellis’ Latin American and Caribbean division.

Additional Sources: La Jornada, July 27 and 30, 2007. Articles by Andrea Becerril, Ivan Restrepo and editorial staff. El Sur/Agenc ia Reforma, July 30, 2007. Article by  Karla Ramirez. Senado.gob.mxFrontera NorteSur (FNS): on-line, U.S.-Mexico border news Center for Latin American and Border Studies

The Billionaire and the Border

Considered by some to be the world’s richest man, Mexican magnate Carlos Slim is increasingly showing interest in the US-Mexico border region. Slim´s latest foray into the borderlands was at an economic development conference held in the Sonora state capital of Hermosillo this week. At an event attended by business leaders and government officials from all the US-Mexico border states, Slim suggested that the Border Governor´s Conference, which is scheduled to meet later this summer,  play a leading role in pushing a new development plan for both sides of the border. Arizona Governor Janet Napolitano and Sonora Governor Eduardo Bours were among elected officials in attendance at the Hermosillo meeting.

“The important thing is to have a clear view of the future,” Slim said, “in order to focus actions with short-term, three-to-five year programs of action that define the direction.”
In general terms, Slim called for mixing public and private financing to develop the border region. The public sector can contribute educational, health and legal resources, he added.

Slim´s appearance in Hermosillo came at a time when Gov. Bour´s  Sonora Project Plan is generating hot debate over its proposed strategy of assuming more public debt to finance development.  The speech also occurred a moment when state and federal resources available to meet the needs of a growing population are shrinking.  

While no concrete deals were immediately announced between Slim and border state leaders, the billionaire has advocated the construction of a new border highway. Last year,  Slim launched a new company, Ideal, to specialize in public works development in Mexico and Latin America. In other recent declarations, Slim has proposed the construction of a network of new hospitals in Mexican border cities to serve financially hard-pressed US patients

The 67-year-old Slim was rated as the world´s richest man by the Mexican website Common Sense last month.  According to Common Sense, a profit surge allowed Slim’s fortune to reach nearly $68 billion-a sum that is equivalent to almost 8 percent of Mexico´s Gross Domestic Product.

Earlier this year, Fortune magazine counted Slim as the world´s second richest man, falling slightly behind Microsoft´s Bill Gates. Slim´s personal wealth is rooted in his control of the telecommunications industry in Mexico and much of Latin America, as well as investments in the retail, tobacco and restaurant industries.

¨”I do not have ambitions to surpass anybody,” Slim has been quoted as saying. ´

Sources: El Sol del Centro, July 12, 2007. El Financiero, July 10, 2007. El Sur, July 4, 2007.

End of the Remittance Bonanza?

In the past decade, remittances from migrant workers in the United States emerged as one of the pillars of the Mexican economy. From north to south, entire communities became dependent on the flow of money from relatives laboring away in El Norte. Current trends, however, suggest that the remittance boom could have hit a peak. Recent statistics from the official Bank of Mexico (Banxico) report a slowdown in remittances entering the country. The central bank reported that $7.3 billion was received during the first four months of 2007, an amount that represents a drop in comparison to 2006’s remittance total that reached an estimated $25 billion. What’s more, Banxico disclosed that remittances registered a drop this year of approximately $13.5 million from March to April.

Some analysts attribute the dollar downturn to changes in the pattern of migration.
Rodolfo Rubio Salas, a researcher with the Colegio de la Frontera Norte, told a Ciudad  Juarez reporter that more family members of migrant workers in the US are joining their relatives north of the border. “There has been a process of family reunification in recent years,” Rubio said, “and this means that migrants don’t have to send money to their families in Mexico.” 

Mexico is likely to witness significant economic and political consequences if migrant remittances continue on a downward spiral. According to Chihuahua economist Ruben Borunda,  small  retail businesses represent one sector of the economy that could be hurt by further decreases in remittances. A study by the lower house of the Mexican Congress reported that almost all remittance monies are spent on personal necessities, with less than two percent invested in productive activities.

Politically, remittances have emerged as a point of contention in the debate over the Calderon administration’s proposed tax reform, which includes a proposal to slap a two percent tax on bank deposits. Edmundo Ramirez Martin, a federal congressman from the opposition Institutional Revolutionary Party (PRI) recently warned that taxing bank accounts could have an adverse effect on the migrant-fueled economy. Congressman Ramirez contended that 25 percent of remittances arrive in the heavy spending and traveling month of December.

“(Remittances) are not made by electronic transfers but are personally deposited in bank accounts in Mexico by the migrants and their families,” the federal representative added.

From 2002 to 2006, remittances registered in Mexico leaped from $9.8 billion to nearly $25 billion. As a source of foreign exchange for Mexico, remittances are only surpassed by oil exports and overshadow revenues from direct foreign investment and tourism. Some accounts now report that Mexico is the biggest receptor of remittances in the world, even ahead of India and China.

Sources: El Diario de Juarez, July 4, 2007. Article by Aracely Castanon. El Sol del Centro, June 27, 2007. La Jornada, June 15 and  23, 2007. Articles by Roberto Gonzalez Amador and the Notimex news agency.

Credit Card Debts with Foreign and Mexican Banks Grow

The central Bank of Mexico (Banxico) has issued a report that gives a “yellow light” to the growing trend of unpaid consumer debt.  In a report this week, Pascual O’Dogherty, chief analyst for the bank, revealed that the percentage of overdue credit card accounts rose from 3.1 percent in 2005 to 4.6 percent in the first trimester of 2007. Banxico and private bank sector officials gave mixed assessments of the news. O’Dogherty urged credit-card granting institutions to be cautious in their business practices, but discounted an immediate threat to the financial system.

Enrique Castillo Sanchez Mejorada, president of the Association of Banks of Mexico, recognized that more credit card holders have fallen into arrears, but maintained that the problem was “under control.” In Mexico, credit card accounts are considered overdue when holders are more than 90 days late in their payments.

In the last few years, mostly foreign-owned banks have dramatically expanded
their Mexican credit-card debt portfolio. According to Banxico’s O’Dogherty, banks approved 8.7 million new credit cards last year, awarding 40 percent of the new accounts to customers with no previous credit history. Credit card consumer spending reached about $37 billion in 2006, but now shows some signs of slackening.

With their aggressive, street-hustling style of signing up new credit card holders, banks are taking on many risky clients. On the other hand, banks are clearly cashing in on the business.  The Banxico reports that the percentage of banks’ income derived from commissions rose 14.9 percent in 2006, with a good chunk of the cash stream attributed to income from credit cards.

Much of the new business is targeting lower and middle income sectors of the population, and enticing non-financial sector companies like Wal-Mart into starting up their own banks. In 2006, the last year of the Fox administration, 15 new banks were authorized to operate in the country. A recent story in the Mexican press reported that Mexico’s budget and taxation ministry is holding negotiations with Volkswagen and the Bank of New York to add the companies to the list of the country’s banks.

Pushed by banks, the credit card boom is redefining the meaning of foreign debt in Mexico. Previous to the country’s economic liberalization, the government typically contracted large debts with foreign lenders. Now, individuals from all walks of life are acquiring debts with foreign financial institutions and corporations. 

As consumer credit woes mount, so are complaints against banks. The Ciudad Juarez division of the Office Federal Attorney for Consumer Protection (Profeco) lists the Mexican-owned Grupo Elektra, a large transnational with a presence across Latin America, as third in the total number of local complaints on record with the agency.  Ciudad Juarez  Profeco official Vicente Diaz Montano said that most of the complaints against Elektra were actually filed against the affiliated Banco Azteca, which maintains outlets in Elektra’s popular department stores. Diaz said that high interest rates allegedly charged by Banco Azteca were the common cause of the consumer complaints.  Banco Azteca offers new credit card customers a 10 percent discount on a first purchase if it is made with Elektra on-line or in person. 

Sources: El Universal, June 7, 2007. Articles by Jose Manuel Arteaga and Romina Roman. Norte, June 7, 2007. Article by Francisco Cabrera. La Jornada/Notimex,
June 6, 2007. Sec.edgar-online.com. Elektra.com.mx

Justice Elusive in Mine Disaster

More than 15 months after an explosion ripped apart the Pasta de Conchos coal mine in northern Mexican state of Coahuila, families of dead miners and their supporters press ahead in a struggle to hold the mining company and federal regulatory authorities accountable for the disaster. The bodies of only two of 65 victims were recovered before early last month, when Industrial Mining of Mexico (IMMSA) the Carlyle Group-connected Grupo Mexico subsidiary that owns the closed mine, announced it was suspending recovery operations.

The mining company based its decision on a report by Daniel G. Wooten, a vice-president of operations for Kentucky’s Phoenix Coal, who reportedly determined that still-high concentrations of methane gas and possible deposits of contaminated underground water posed unacceptable health and safety risks for more than 100 recovery workers. Cited in Mexican and US media reports, Wooten warned that recovery workers could be exposed to infectious diseases including hepatitis, HIV, enteric pathogens, and tuberculosis.

Coming at a time when Mexicans were distracted by Holy Week vacations, IMMSA’s April 4 announcement was denounced by miners’ families as a ploy to cover-up the company’s responsibility for a tragedy that rattled Mexico and added combustion to the fiery political situation that prevailed in the country in the lead up to the 2006 presidential election. Elvira Martinez, widow of miner Vladimir Munoz, charged that the suspended recovery was designed to hide evidence "we have discovered" which would expose long-running, unsafe conditions in the mine.

Answering critics, IMMSA spokesman Oscar Kaufmann recently said that misinformation persisted about his company's response to the tragedy. Reiterating that recovery operations are not possible at the moment, Kaufmann insisted that his company has complied with federal and state labor laws by making $70,000 reparation payments to families as well as paying survivors an extra 13 months of salary for each dead miner. But miners’ relatives like Jose Tabares maintain that money can’t buy justice for their loved ones. “We want our dead, and we want justice for those that work in the mines…,” widow Claudia Escobar Pacheco earlier said.

Fueling a growing sense of outrage was the discovery by miners' families that the federal Labor Ministry had withheld official files which reported on gas levels exceeding legal norms in the mine going back several years. The files purportedly confirm miners’ accusations that dangerous gas build-ups in the mine preceded the explosion on February 19, 2006.

Following the blast, reports quickly surfaced of alleged bribery and cover-up involving federal mine inspectors. To date, no company or government official has been convicted of a crime. Cristina Aurebach of the worker advocacy group Pastoral Laboral contends the disaster is a case of willful homicide.

Pasta de Conchos was high on the list of thorny issues left unresolved by former President Vicente Fox when he departed office last December. Although the mine explosion was supposedly under government investigation in the last months of Fox’s term, Fox’s Economy Ministry granted five new coal mining concessions to IMMSA from June to December of last year.

Questions linger in the Mexican press about the relationship between Grupo Mexico CEO German Larrea Mota and the Vamos Mexico Foundation, which is run by Fox's wife, Martha Sahagun. Larrea is also connected to other big companies that reportedly enjoyed influence in the Fox administration, including Banamex (Citigroup) and Grupo Televisa.

Earlier this year, the Pasta de Conchos controversy was revived when Coahuila Governor Humberto Moreira, a member of the opposition Institutional Revolutionary Party (PRI), publicly accused Fox of pressuring him to fabricate scapegoats in the wake of last year’s disaster. In a controversial statement, Gov. Moreira blasted Fox's alleged request as "perverse and immoral."

Prominent members of Fox's National Action Party (PAN) and former Fox administration cabinet members, including ex-Education Minister Carlos Abascal and former Interior Minister Santiago Creel, attacked Moreira's credibility. Insisting that that he was in the meetings where Fox allegedly solicited Gov. Moreira, Abascal countered that "nothing of the sort" claimed by Gov. Moreira ever happened.

An ensuing war of words featured noisy mass demonstrations organized by the PRI in support of Gov. Moreira, as well as public backing for the Coahuila governor from political broker Elba Esther Gordillo of the National Teacher's Union.

More recently, Gov. Moreira has clammed up about Pasta de Conchos. Until last month, the Coahuila state attorney general's office had been very vocal about prosecuting federal and company officials allegedly responsible for the deaths of 65 miners.

Then in early in April, while Mexicans were still immersed in their spring break, a Coahuila state court suddenly dismissed wrongful death charges against five IMMSA
officials in return for reparation payments made to families that totaled about $1 million.

The Coahuila state attorney general's office declared it would be up to the Federal Office of the Attorney General (PGR) to pursue legal charges against 6 federal employees from the Labor Ministry, which is charged with inspecting and certifying mine safety. Despite the dismissal of the state case, the conflict is far from over. In one form or another, Mexico’s major societal have been drawn into the controversy.

In recent weeks, miners' families and members of the National Mining and Metallurgical Workers Union have staged separate, multiple demonstrations in Coahuila, Mexico City and elsewhere demanding justice. Some miners’ advocates like Pastoral Laboral’s Aurebach also blame miners’ union head Napoleon Gomez, who fled to Canada following a legal conflict with the Fox administration that erupted after Pasta de Conchos, for allowing a dangerous situation to fester at the doomed mine.

Most recently, a special commission of the lower house of the Mexican Congress released its long-awaited report on the Pasta de Conchos tragedy. Holding IMMSA and the federal government responsible for negligence and omission, the May 17 report contradicted a February 21 statement by current Labor Minister Javier Lozano Alvarez that it wasn't possible to determine the cause of the disaster.

On the contrary, the Congressional report concluded that the disaster was a “product of a great explosion whose source was an excessive concentration of methane gas and coal powder that produced practically the collapse of the entire mine.”

The report also contended that poor structural conditions, scanty ventilation, lack of monitoring equipment and non-existent emergency exits and alarms were all grave problems at Pasta de Conchos.
 
Among its recommendations, the special commission demanded that the Calderon administration pursue wrongful death charges against the responsible parties, sanction current Economy Minister Eduardo Sojo for allegedly hiding information about disaster investigations and cancel IMMSA's Pasta de Conchos concession. There has been no public response to the report from Los Pinos, the Mexican White House.

The Congressional report was approved over the objections of the PAN party. Special commission member Jesus Flores Morfin of the PAN sparked a new round of polemics when he affirmed that the mine explosion was a "natural disaster."

In the long months that have passed since the deadly explosion, Coahuila Bishop Raul Vera of Saltillo has emerged as a leading voice for miners' families. Bishop
Vera regards the Pasta de Conchos disaster as the latest chapter in an ongoing horror story of poverty and death that haunts the northern Coahuila coal mining district, a region which extends to Piedras Negras on the US-Mexico border. According to a report by La Familia de Pasta de Conchos, at least 1,663 miners have perished in accidents in the zone during the last 117 years. In a recent sermon, Bishop Vera implored government officials and IMMSA to assume a sense of justice and dignity and abandon attitudes of "irresponsibility and contempt for the poor."

Sources: El Diario de Juarez, May 24, 2007. Cimacnoticias, April 9 and May 21, 2007. Articles by Sara Lovera and Hypatia Velasco Ramirez. Proceso/Apro/Cimac, February 19, 2007 and April 23, 2007. Articles by Rosalia Vergara, Soledad Jarquin Edgar and Arturo Rodriguez Garcia. La Jornada, February 20 and 24, 2007; April 20, 2007; May 17, 19 and 21, 2007. Articles by Patricia Munoz, Jaime Martinez Veloz, Enrique Mendez, Roberto Garduno, Miguel Concha, Carolina Gomez Mena, correspondents, and the Notimex news agency. El Universal, February 19, 21, 23, 24, 2007; April 6, 9, 10, 23, 2007; May 25, 2007. Articles by Hilda Fernandez Valverde, Francisco Cardenas Cruz, Jose Luis Ruiz and the Notimex news agency. Mineweb.com, April 5, 2007. Article by Dorothy Kosich. Southernperu.com. Grupomexico.com
 

Gas Guzzlers Roar South

Gasoline prices will be on the minds of many US motorists who hit the road this Memorial Day weekend. The record prices at the pump have some giving a hard and long look at fuel efficient cars, hybrid vehicles and even slower driving speeds. Meanwhile, fleets of older gas-guzzling vehicles continue crossing from the United States into Mexico and points south where a brisk demand for used cars and trucks exists.

Figures recently obtained by the Diario de Juarez newspaper via Mexico's Freedom of Information Act show that the number of used vehicles imported into Mexico at Ciudad Juarez soared six times from 2002 to 2006. The import surge occurred at a time when Mexican environmental officials expressed repeated concerns about air pollution stemming from old, emissions-spouting vehicles in Ciudad Juarez and other cities.

According to El Diario, the number of vehicles officially registered as crossing at Ciudad Juarez rose from 24,090 in 2002 to 169, 387 in 2006. The vehicles counted only included cars and vans. Pick-up trucks maintained an official importation rate of about 33,000 units each year during the time period information was available. Ciudad Juarez is now considered the second biggest port of entry in Mexico for used US vehicles. El Diario cited Matamoros, Tamaulipas, as the leading point of entry but did not provide vehicle numbers.

Luis Manuel Amador Galvan, president of the Independent Used Auto and Truck Dealers Union, attributed the import leap to the easing of paperwork requirements. Amador said that the majority of US vehicles imported at Ciudad Juarez are destined for the Mexican interior. Minivans, sport utility vehicles and pick-ups are the most popular models, he added.

The import numbers cited by El Diario do not include figures for illegally-imported vehicles known as "chuecos.” Contending that inspectors are lax about regulating the
passage of vehicles into Mexico, Amador predicted even greater numbers of illegal vehicles will enter his country.

"Once again, we are going to be swamped with 'chueco' cars," Amador said. "There are easy ways (to bring them in), but the authorities don't check and the people buy and drive them without so much as being bothered."

Source: El Diario de Juarez, May 18, 2007.

Wal-Mart's Mexican Empire Steadily Advances

Consumers in Ciudad Juarez and other Mexican cities will now have access to cheaper medicines at the numerous Wal-Mart company retail outlets across the country. The corporate mammoth has started rolling out a line of 250 generic pharmaceutical products that cost less than $4 per item. For instance, a 400-milligram supply of penicillin that costs nearly $3 at other commercial outlets will sell for less than one dollar at Wal-Mart stores. What's more, Wal-Mart is considering offering low-cost medical consultations to the public.

"We are constantly looking at diverse projects and analyzing the best options of attention to our clients, although there is nothing concrete (concerning medical
services) at the moment," said Raul Arguelles, vice-president of corporate affairs for Wal-Mart.

Wal-Mart's splashy plunge into Mexico's generic pharmaceutical market is the company's latest advance in dominating commercial and financial life south of border.
First entering Mexico in 1991, the Arkansas-born giant controlled an estimated 44.8 percent of the Mexican department store market by 2005. Wal-Mart's Mexican
division, Walmex, operates 411 retail outlets and 285 restaurants.

Now Mexico's largest private employer, Walmex owns the popular Bodega Aurera, Sam's Club, Vip's and Superama stores that stand as landmarks of Mexico's NAFTA age. According to company spokesman Arguelles, Wal-Mart will open 14 banking branches under the name of Banco Wal-Mart Adelante by July 30 of this year. In 2007, Walmex is expected to open 70 new stores with a capitalization of $750 million. The new growth will mean that Wal-Mart has averaged a new retail opening almost once a week during the last 16 years.

Wal-Mart's Mexican retail sales are projected to reach $21 billion this year, a 16 percent increase over last year's numbers. At a time when Wal-Mart is showing sluggish growth at home, the Wall Street Journal calls Mexico "the crown jewel" of the corporation's global empire. Wal-Mart's spectacular Mexican growth is showing the way for its expansion into China, India and other developing nations.

While confronting smart-growth advocates and labor critics in the United States, Wal-Mart has tempered greater potential opposition in Mexico by paying workers slightly higher-than-average salaries and providing employee medical insurance. Scattered attempts by some leftist organizations to boycott Wal-Mart in solidarity with Mexican migrants in the US or to protest alleged fraud in last year's presidential election have fallen flat.

Unlike other competing department chains that are appealing to higher-income Mexican consumers, Wal-Mart is increasingly eyeing the lower-middle and lower-income economic sectors as the source of its future revenues. In this sense, Wal-Mart is following a sales and credit trend that has companies like Banco Azteca or Nissan increasingly offering services and products to long-underserved, low-income consumer populations.

Wal-Mart's retail strategy implies wooing Mexicans away from the traditional markets that still exist in the country. While many older consumers are reluctant to part
ways with the past, Wal-Mart could achieve plenty of success among younger shoppers. Carlos Ruiz, a business professor at the Pan-American Institute of Business
Administration, predicted that "Mexico is going to become more oriented to (big box) stores." Ultimately, large numbers of market vendors and employees could be displaced by Wal-Mart and other large commercial chains.

Many Wal-Mart store items in Mexico, however, are as expensive or more expensive than similar products in the United States, and low-income consumers can still locate many better deals on the streets and in the marketplaces. If Wal-Mart slashes prices for more products than just medicines, the company's Mexican conquests will likely continue piling up from north to south for the near future.

The entry of the US-owned company into the medical services field could unleash a fierce competition with a well-known Mexican provider of generic pharmaceuticals and medical services: Farmacias Similares, which is owned by the colorful businessman and sometimes presidential candidate Victor Gonzalez Torres, who is better known as "Doctor Simi." In addition to his Mexican economic and political ventures, Gonzalez is expanding his business presence throughout Latin America. He also has been associated with Guatemalan presidential candidate Rigoberta Menchu.

Additional sources: El Financiero, May 4, 2007. Article by Alma Lopez. El Diario de Juarez, April 27, 2007. Article by Alfredo Mena Martinez and El Universal. Frontera.info/SUN, March 5, 2007. Christian Science Monitor, February 22, 2007. Article by Ken Bensigner.

Who Makes What in Ciudad Juarez

Different Ciudad Juarez news organizations have recently reported on salary averages earned by professionals and workers in the Mexican border city. Not surprisingly, still at the top of the list are the managers of the mainly foreign-owned assembly plants known as maquiladoras, who start earning around $100,000 per year. Many maquila managers live in neighboring El Paso, Texas, and commute to work across the border. Running a close second in the salary scale are top federal officials assigned to Ciudad Juarez.

Rolando Alvarardo Navarette, who directs the Office of the Federal Attorney General in Ciudad Juarez and Chihuahua state, reportedly makes about $11,000 per month. Jose Antonio Gracia Aguirre, who heads up the Mexican Social Security Institute (IMSS) offices in Chihuahua state, earns almost the same amount as Alvarado, according to information obtained via Mexico’s freedom of information law.

Generous fringe benefits that include extra payments for years of service, punctuality incentives, home utility subsidies, and more are added to the salaries enjoyed by
some upper and middle-management federal employees.

According to figures attributed to the IMSS, average working-class salaries in Ciudad Juarez range from a reported daily high of about $48 for employees of the
Federal Electricity Commission and the Municipal Water District to a low of approximately $14 for service sector workers.

As of December 2006, the IMSS reported that the average Ciudad Juarez worker made about $20 per day. The federal agency also reportedly calculated that the
daily average assembly line worker wage was slightly less than $20, a figure questioned by some labor activists.

Elizabeth Flores, the director of Pastoral Obrera, a Ciudad Juarez worker advocacy group affiliated with the Roman Catholic Church, said in an interview with Frontera NorteSur that most maquiladora production workers bring home slightly less than $60 for a 45-48 hour work week, or about $10 per day. According to Flores, the vast majority of workers earn the base minimum wage of less than $5 per day plus slight bonuses for household supplies, attendance and other reasons.

Flores, who was employed for 11 years as a human resources manager and administrator in the maquiladora industry, was quick to add that gender and age discrimination affect the salary levels and job opportunities of even the middle and upper management sectors. “It’s easier for a man to be considered for a post than a woman,” Flores said. “Men can’t get pregnant or have children.”

The IMSS salary numbers quoted in local press reports do not include the tens of thousands of people who earn a living in the informal sector of the economy. Domestic workers who earn from $18 to $23 per day make more money than many of their counterparts in the formal sector, but they are not enrolled in the social security system and ultimately ineligible for benefits.

According to Flores, check-out stand baggers for Wal-Mart, Soriana and other department and grocery stores represent another informal sector of the workforce that does not show up in official numbers. Traditionally, baggers have been children who work solely for tips and are not considered official employees of the store.

A Pastoral Obrera study discovered that some 10-year-old baggers were working until 10 pm, Flores said. The labor advocate added that many children are now being replaced by older adults who work under the same conditions. Flores questioned the vast wage gap that exists in Ciudad Juarez and other places. “This is the proportion of the pauperization of the worker,” she contended.

Additional sources: El Diario de Juarez, April 27, 2007. Article by Ramon Salcido. Norte, April 9, 2007.

Payday Lenders Head South

Criticized for charging exorbitant interest rates that take advantage of vulnerable, low income populations, so-called pay day lenders face growing attempts to regulate or prohibit their business in the United States. But the $28 billion a year industry may be able to compensate for any business restrictions at home by expanding abroad to Latin America, where a vast market of cash-needy borrowers exists.

In Mexico, both the pawn shop market and payday lending markets are emerging as promising sectors for companiesthat offer high-interest loans to customers with little or no credit history. "Mexico has a largely unexploited pawn market," commented Rich Duprey, an Internet blogger who specializes in financial issues.
  
Since Mexico liberalized the pawn shop market in 1996, the number of Mexican and foreign-owned hock shops has exploded. At least 3,500 branches of 50 privately-owned businesses give loans in return for deposits of jewelry, electronics equipment, musical instruments, homes, and automobiles. Some businesses now even offer collateral-free, two-week payday loans in advance of the borrower's next paycheck.

Big names in the new industry include, among others, Mulitprestamos, Grupo Adalfi, Sepremex, Oportuno, Soluciones de Nuevo Laredo, Servicios Financieros del
Golfo, Soluciones de Puerto Vallarta, Soluciones del Norte, and Soluciones de Monterrey. Two Texas-based companies are leaders in the US expansion into the Mexican pawn and payday industries. The Arlington-based First Cash Financial Services counts 150 Mexican pawn shops in its portfolio, while the Austin-based EZCorp has plans to open more EZPawn shops in Mexico during 2007.

US pawn and payday lenders expanding into Mexico and other parts of Latin America will be operating on familiar turf. In the US Southwest, payday lenders are familiar sights in Spanish-speaking immigrant and Latino communities. A 2003 study of payday loans in Tucson's Pima County by the Southwest Center for Economic Integrity found that 37 percent of payday loan storefronts were situated within one-quarter mile of Latino neighborhoods.

According to one estimate, Mexican pawn companies and payday lenders could have a potential market of 40 million customers. Certain seasons of the year, especially after the Holy Week and Christmas holidays, are considered prime business times as many people find themselves in need a quick infusion of cash to pay off vacation spending.

Sources: El Universal, April 9, 2007. Article by Jose Luis Ruiz. Fool.com, January 31 and April 13, 2007. Articles by Rich Duprey. Montgomeryadvertiser.com, February 24, 2007. Article by Michelle Singletary. Austin Business Journal, January 24, 2007. Consumerfed.org

Social Security Reform, Privatization Issues Spark Teacher Strikes

Federal school system teachers in the northern border state of Chihuahua are mobilizing for a March 27 national strike against the passage of a new social security reform law. Late last week, thousands of teachers in Chihuahua City, Cuahtemoc and Ciudad Juarez got a head start on the national work stoppage when they suspended classes, spray-painted slogans and occupied a toll booth on the Pan-American Highway. 

Prompting the job action was the federal Chamber of Deputies' approval March 22 of a new law that changes pension plans and significantly increases the retirement age for 2.6 million school teachers and other federal employees enrolled in the national government’s ISSSTE program.

Among the most controversial provisions was a 10-year lengthening of the  minimum retirement age. As stipulated under the new law, women will have to reach 58 years of age before retiring, while men will have to count 60 years of age before retiring. The new rule will be phased in over time. An outraged Ciudad Juarez educator, Juan Morua Torres, said that he couldn't imagine how a 60-year-old teacher will handle a classroom of 40 or 50 students.

Pedro Gonzalez, Chihuahua ISSSTE delegate, contended that the system confronts a financial crisis stemming from too many pay-outs and too little revenue. Gonzalez said that pension payouts jumped 48 percent in Chihuahua state alone from 2005 to 2006, an increase he attributed to a spike in people retiring by age 56.

The ISSSTE reform was approved as opponents clashed with the Federal Preventive Police outside the Mexican Congress in Mexico City. In an action reminiscent of last December's protest against President Felipe Calderon's inauguration, lawmakers from the Broad Progressive Front (FAP) briefly occupied the legislative tribunal prior to the vote.

Approved by a vote of 313-146, the PRI and PAN fractions in the Chamber of Deputies guaranteed majority passage of the reform. They were joined by the smaller PVEM, PANAL, and PASC parties, the latter organization led by feminist Patricia Mercado. The center-left FAP, consisting of the PRD, PT and Convergencia parties, voted against the new law. Two members of the PRI abstained from voting, while dozens of other Priistas who originally were against the reform were eventually convinced to go along with it. Chihuahua PT Deputy Ruben Aguilar was reportedly not present for the vote.

The new ISSSTE law awaits action in the Mexican Senate next week. Supporters, possibly including PRD legislators in the Senate, pledge to strengthen the reform.

Speaking at a national bankers' convention in Acapulco, President Calderon hailed the Chamber of Deputies' action as the most important reform in recent years. "We were able to come to an agreement," he said. In Chihuahua, Governor Jose Reyes Baeza praised the new ISSSTE law as a necessary step in reforming archaic social security systems. Gov. Reyes reiterated that the Chihuahua state pension system will also have to be overhauled in the coming months; he pledged to first consult all the affected parties. But many teachers were not buying the government's plans. Besides Chihuahua, protests quickly broke out in Zacatecas, Michoacan and Guerrero states.

The Devil is in the Details

The reform's supporters insist that opponents are overreacting. They contend that the new reform will sanitize the ISSSTE's messy finances, improve the troubled institute's decrepit health care system, allow home medical visits, and create a new pension fund called Pensionisste. Under the proposed pension scheme, the federal government will contribute slightly more than three pesos for each peso contributed by members. Proponents project that pensioners will see a rise in minimum payments from an average of about $5 dollars  to $10 dollars a day. After a stint in the government program, pensioners will then have the option of putting their money into an individual, privately-managed account known as an Afore.  

Considering that 95,000 ISSSTE members were laid off during the recently-concluded Fox Administration, it is unclear how the increased payouts in Pensionisste will be fully funded, or who will ultimately control the management of the individual accounts. The ISSSTE is headed by Miguel Angel Yunes, who served as former President Fox's national security council chief. Citing statistics from SEI Compass Investments that report only five percent of heads of Mexican households save enough money to guarantee a pension income similar to their current salaries, La Jornada columnist Gustavo Leal F. questioned how decent pensions could be built up in the current economic situation. 

Whether by accident or design, the ISSSTE reform vote in Mexico was immediately preceded by Chilean President Michelle Bachelet's official state visit to Mexico. In Latin America, Chile pioneered the enactment of private retirement accounts, which were implemented in Mexico in another branch of the country’s social security system after 1995.  Urging the Mexican Congress to proceed with care, Bachelet said that the Chilean experience had both positives and negatives to offer.  

The Opposition Spreads
 
The ISSSTE battle casts a renewed spotlight on the split in the National Teachers Union between leader Elba Esther Gordillo, who backed the new law and was largely credited with ensuring its passage, and much of the union's rank-and-file. Chihuahua City protest leaders charged that the teacher base wasn't consulted about the plan, and they argued that the federal government should accord ISSSTE the same treatment it has to bailed-out highways and banks.

"The federal government has left the institute in deplorable conditions, contended teacher Lucia Acosta, "especially with regards to a medical service of poor quality."

Repudiating union dissidents, anonymous sources in the Ciudad Juarez press blamed the protest on unnamed, outside “agitators” imported from Mexico City, Puebla and Oaxaca. The ISSSTE conflict erupted as the leadership of the teachers’ union in Chihuahua was changing hands. Gordillo loyalist Ramon Alvarez Valdez was elected as the new head of the state union in an early-morning session March 24 at Chihuahua City’s Palacio del Sol Hotel that was closed to the media and dissident teachers.

Teachers in Chihuahua City and Ciudad Juarez are expected to cancel classes on Monday, March 26, as well as March 27, the day of a planned national protest. Other federal workers impacted by the social security reform are likewise expected to participate in the action. On March 30, Students will file out of Mexican classrooms for the two-week Holy Week and Easter vacations, and it remains to be seen whether the battle over ISSSTE’s future will extend the shut down of schools after classes are scheduled to resume. 

The ISSSTE controversy is adding fuel to simmering fires over the North American Free Trade Agreement, agriculture policy, privatization plans, and economic conditions in general. Delegates to Andres Manuel Lopez Obrador's National Democratic Convention held in Mexico City this weekend endorsed the struggle against the ISSTE reform as part of a broader mass movement that will feature major national mobilizations  leading up to January 1, 2008, the day all remaining tariffs for corn are lifted under the free trade agreement. 

In neighboring Guatemala, meanwhile, classes were paralyzed during last week as teachers conducted a national strike over low wages, scarce educational resources and privatization plans.  An agreement between the government and union leaders that provides for an immediate eight percent wage hike and the delivery of resources to schools could lead to the resumption of classes this coming week.

Sources: Norte, March 24 and 25, 2007. Articles by Salvador Castro, Angel Zubia Garcia and Ricardo Espionza. Lapolaka.com, March 23 and 24, 2007. La Jornada, March 21, 22 and 24, 2007. Articles by Ernesto Martinez, Ruben Villalpando, Veronica Gonzalez Cardenas, Gustavo Leal F., correspondents, and the Notimex news agency. El Diario de Juarez, March 21, 22, 23, 25, 2007. Articles by Sandra Rodriguez Nieto, Guadalupe Felix, Martha Elba Figueroa, Ramon Chaparro, Juan de Dios Olivas, Luz del Carmen Sosa, editorial staff, and the Notimex news agency. El Universal, March 20 and 22, 2007. Articles by Carlos Coria Rivas, Andrea Merlos, Ricardo Gomez, and the Notimex news agency. Proceso/Apro, March 23, 2007. Articles by Patricia Davelo Valero and editorial staff. Univision, March 24, 2007. El Sur, March 23 and 24, 2007. Articles by Aurora Harrison, Brenda Escobar, Zacarias Cervantes, and Francisco Magana. Frontenet.com, March 24, 2007. Prensa Libre (Guatemala), March 24, 2007. Article by Luisa F. Rodriguez and Claudia Mendez Villasenor. 

Gaming Fever Strikes Mexico's Southern Border

Once a remote jungle outpost where sights of swinging monkeys and slithering jaguars provided the most thrills, the Belizean district of Corozal now buzzes with the joyful shouts and sorrowful moans of gamblers. Strategically located just yards from the Mexican border, three casinos do a steady business as players try their luck with slot machines, routlette wheels and poker tables. Of 10 gamblers entering the Belizean casinos, 8 are Mexican nationals, according to Julio Enrique Tzul, assistant administrator of Belize's free trade zone.

"Cheap gasoline used to be the draw, but the three casinos are the attraction ever since a few years ago." Tzul said. Lured to the flashing temptations of fortune, Tzul reported that tour buses from the Mexican interior unload their passengers at the casinos' doorsteps. Passengers come from the Yucatan, Tabasco, Veracruz, Mexico City, Michoacan, Jalisco, and Nuevo Leon, he added.

Employing 800 workers and operated by businessmen with US and Middle Eastern ties in Belize's free trade zone, the popular gaming palaces include the Princess Casino and Golden operated by Turkish entrepreneur Sudi Ozcan; the Las Vegas Casino run by US businessman George Hardie, and the floating Midnight Gambler owned by Issac Hamui Abadi, who has expressed interest in opening a fourth casino. Lebanese-descended, Hamui Abadi is an acquaintance of Joaquin Hendricks, the governor of Mexico's southern Quintana Roo state that borders Belize.

Now enjoying a foothold in Central America, Las Vegas Casino owner George Hardie...

Across the Belize-Mexico border, meanwhile, the Mexican gaming industry got another shot-in-the-arm when a new bingo parlour opened its doors this month in the Chiapas state capital city of Tuxtla Gutierrez. Publically inaugurated on November 9, the Bingo 777 offers remote sports betting and electronic number games. Owned by businessmen Raul Fernandez Quintana and Pablo Cortina de la Fuente, the new gaming outlet is operating on a 25-year permit granted by Mexico's Interior Ministry last year. The permit is one of 198 controversial concessions granted by the Interior Ministry in May 2005 just before Interior Minister Santiago Creel left office to mount an unsuccesful bid for the Mexican presidency.

According to one report, the number of gaming concessions awarded just in May 2005 represented almost double the total of permits granted in Mexico from 1917 to 2004. Promojuegos and six other enterprises received the 198 permits during Creel's last days in office. The other firms include Mio Games, Eventos Festivos de Mexico, Promociones e Inversiones de Guerrero, Apuestas Internacionales, Entretenimiento de Mexico, and Juega y Juega.

Promojuego's Quintana is also reportedly associated with three professional soccer teams and Televisa, one of Mexico's two dominant television networks. Attending the public opening of Bingo 777 in Tuxtla Gutierrez were Roger Grajales Gonzalez, Chiapas state government secretary and Rosario Pariente Gavito, mayor of Tuxtla Gutierrez.

Little hard data is available about the social, health and economic impacts of Mexico's new gaming boom, which so far hasn't evolved into approval of full-blown Las Vegas-style casinos. Hector Marin Lopez, a psychologist with the Quintana Roo state Health Ministry, said that 20 percent of the Belize casino clients are housewives, especially divorcees or women having conflicts with their husbands. Marin said that only 30 percent of casino players have the financial means to engage in gambling, and that 15 percent turn to loans to keep the roulette wheels rolling and the slots shaking.

One economic consequence of the gaming boom has been a boost to the pawn shop trade in the Quintana Roo state capital of Chetumal, which is located near Corozal. Sleiman Tamaor Saoud, a Chetumal pawn store owner, said 23 hock shops currently serve the small city of 150,000 people.

Sources: La Jornada, November 10 and 11, 2006. Articles by Javier Chavez and Angeles Mariscal. Proceso, September 25, 2006. Article by Beatriz Pereya. juegos y sorteos.gob.mx presidencia.gob.mx

Banks Leap Across Borders

Given the green light by the Federal Reserve Board, a Mexican bank has finalized its majority-ownership purchase of the Texas-based Inter National Bank (INB). Luis Pena Kegel, director general of the Banorte Financial Group, said the INB will use its base from the city of McAllen on the Texas-Mexico border to expand into other regions of the United States.

"With this operation, Banorte has the intention of getting closer to families and businesses on both sides of the border with innovative financial products that nobody else is offering," Pena said in an interview with the Mexico City daily La Jornada.

Transferring remittances from the United States to Mexico for no charge is one big enticement that the INB will employ to attract new customers. A booming business, remittances in Mexico could reach an oversall sum of $24-25 billion dollars in 2006- an increase of more than 20 percent increase over last year's amount. Figures from the central Bank of Mexico estimate that total remittances during the the 6-year presidency of Vicente Fox, which concludes December 1 of this year, will reach almost $93 billion dollars.

According to Pena, binational mortgages will be another product offered by the INB. While providing financing to US residents interested in purchasing real estate in Mexico, the INB will also assist Mexican residents seeking to purchase a home in the United States, Pena explained.

Possessing deposits of more than $1 billion dollars, the INB counts 18 branches in Texas' Lower Rio Grande Valley and in El Paso. The firm employs 305 people. Banorte paid $259 million dollars for a 70 percent ownership stake in Inter National, and could buy out the remaining shares in the future.

Banorte is associated with prominent Monterrery businessman Roberto Gonzalez Barrera, whose fortunes as the head of the Grupo Maseca milling and tortilla company soared during the administration of former President Carlos Salinas Gortari (1988-94). Enjoying ties to the Salinas family, Mexico's so-called "Tortilla King" oversaw the successful expansion of Grupo Maseca into the US, Costa Rica and other nations. In a cultural and culinary milestone, Grupo Maseca inaugurated China's first tortilla plant in the city of Shanghai last September.

In 1992, investors headed by Gonzalez purchased Banorte as part of the Salinas administration's bank privatization program. Currently capitalized with $7.85 billion dollars, Banorte has 1,000 branches and 3,050 automatic teller machines in Mexico.

Even as Banorte is expanding into the United States market, US and Spanish firms are stepping up their banking activities in Mexico. In one of the final decisions of the outgoing Fox adminstration, Wal Mart and Prudential Financial were among 5 new companies authorized to operate in the banking sector last week. Manuel Somoza Alonso, a former chief of the Mexico

City stock market, has been named as the individual likely to head Prudential's new Mexico operation. Together with two additional banks awaiting final approval, the new banks will join a roster of 13 new financial services businesses given official authorization by the Mexican federal government during the last year of Vicente Fox's presidency. Also among the latest round of banks authorized to operate is Bancoppel, a company associated by the rapidly-expaning Coppel department store chain of the Sinaloa businessman Enrique Coppel Luken.

Finding new niches, the new banks are expected to offer credit opportunities for lower and middle-income consumers who are often hard-pressed to purchase household goods and other items. "They will orient their business to segments of the population that have not been traditionally served by banks," said the federal Ministry of Budget and Taxation in a statement.

Flowing in cash, some Mexican banks are agressively enrolling new clients-even without customers' knowledge. Controversy recently erupted in Tijuana after students at the Autonomous University of Baja California were assigned debit cards issued by the Spanish-owned Santander Serfin bank that were meant to be used as university indentification cards. "(University officials) gave out confidential information to Santander Serfin, charged Mariana Cota of the newly-formed University Student Movement. "Our names and personal data are on a debit card that we did not solicit."

Once languishing in the pits, Mexico's banking sector has made an impressive comeback during the Fox administration. Recently given a favorable report by the Standard and Poor's financial rating service, Mexican banks are estimated to have raked in more than $15 billion dollars in earnings during the Fox administration, thus registering a 541 percent increase over their earnings obtained during the previous Zedillo administration, when the Mexican government initiated a costly public bail-out of institutions that were on the verge of collapse. Ultimately, most Mexican banks were peddled off to foreign investors, who now control about 90 percent of the stock in the country's financial institutions. Investors can expect about a 20 percent rate of return from Mexican banks, according to the Bank of Mexico.

Analysts credit much of the recent banking boom and profit surge to the widespread reintroduction of consumer credit, a growing market which earns banks about three times the rate of interest charged in the United States and Spain. Bank of Mexico statistics report that consumer credit increased 47 percent during the first months of 2006, while credit destined for productive activities grew only by 11 percent in the same period. Service commissions, considered among the highest in the world, and tax breaks also serve to fatten a cash cow.

Some analysts warn that the entry into the bank business of companies like Wal Mart, which don't specialize in banking, is beginning to resemble the privatization "pinata," when individuals with little banking experience were given control of financial institutions that eventually required government intervention. On the other hand, the CNBV, Mexico's federal agency in charge of overseeing banks, has assured investors that it will scrupulously safeguard their money, and fulfill its oversight function in relation to the new banks. The CNBV vows it will meticulosly review the financial health of the new companies competing to handle the public's money.

Sources: La Jornada, November 12 and 17, 2006. Articles by Juan Balboa, Roberto Gonzalez Amador and Antonio Castellanos. Frontera, November 14, 2006. Article by Lorena Arellano. Banorte, November 16, 2006. Press statement.

Real Estate Development Grips Mexico 's North

Backed by some of the world's biggest names in capital, mega-projects are transforming the landscapes of northwestern Mexico . Representatives of US tycoon Donald Trump, for instance, recently announced a new $200 million-dollar condominium development slated for Baja California 's Rosarito Beach area, a popular tourist destination located about 30 minutes south of San Diego . Sources inside Trump Ocean Resort Baja disclosed that the 400-unit condo complex in the exclusive, ocean-front Punta Bandera zone will be flanked by a shopping center and world-class restaurants.

Gabriel Robles, president of Tourist Developers Association of Baja California, commented that Trump's project joins the fast pace of growth in the Tijuana-Rosarito-Ensenada corridor, where 2,500 new projects are underway. "This shows us that foreign capital is confident about investing in Mexico , especially Baja California ," Robles said.

The Baja real estate boom is the Pacific Coast 's version of a similar condo and real estate frenzy that is unfolding across the Gulf of California in the state of Sonora . As a result, residents of Phoenix , Arizona , once consigned to a landlocked, blistering piece of desert described by some as a hell-hole during the high months of summer, now enjoy their own beach. The three-and-one-half hour trip from Phoenix to Puerto Penasco , Sonora , is getting cut considerably with the completion of a coastal highway in northwestern Sonora . Already, an estimated 1.6 million tourists, especially Arizonans, visit Puerto Penasco and Rocky Point every year.

Boosting the fortun